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Frequently Asked Questions

While you are new to Investing Daily’s Profit Catalyst Alert, and before you post questions on our forum, please read through these FAQs. If you have a question about getting started, you can be sure that many others have had the same question before you!

How do I log into the Profit Catalyst Alert website?

For general account questions and login instructions, and to control the messages you receive from Investing Daily, see Managing Your PCA Account.

Can I get PCA trade alerts as texts on my smartphone?

For general account questions and login instructions, and to control the messages you receive from Investing Daily, see Managing Your PCA Account.

How do I contact Investing Daily to manage my PCA account?

For general account questions and login instructions, and to control the messages you receive from Investing Daily, see Managing Your PCA Account.

What is Linda McDonough’s strategy for choosing trades?

Profit Catalyst Alert is powered by Chief Investment Strategist Linda McDonough’s proprietary Launchpad stocks system, which screens for companies with near term catalysts.

Step 1: To find a list of prospects, she screens for stocks with improving or deteriorating fundamentals. This can be an accelerating or decelerating rate of revenue growth, a change in profit structure or a new product launch. A second screen reveals any near term events that might send the stock significantly higher or lower.

Step 2: Then she weeds out names by market capitalization and earnings. Most stocks below $300 million or above $10 billion are discarded. These are too big to find some unknown angle or too small and risky
The companies for long stock trades must be profitable – no exceptions! (Although she’s often tempted to ignore this rule she’s learned through experience she cannot.) For option trades where the holding period is shorter she will sometimes include unprofitable companies with a big change on the horizon. Bearish trades will often include unprofitable companies.

Step 3: This is the most time-consuming and intensive work. Each stock’s financial records are picked apart. Management’s track record is taken into consideration by reviewing old conference call transcripts and the history of the company.

Transcripts and SEC filings are scoured to ensure the company has sufficient capacity, such as machinery or human capital, to fulfill future growth. Balance sheets and cash flow statements are analyzed to determine if the company can access the capital required to fund the growth. Management and even customers are interviewed to either corroborate or refute the story told by the numbers.

All the stocks recommended are ready to launch based on new developments in their businesses. It might be a new product, a new significant customer, or an acquisition that provides them with key technology. Whatever the news is, it must be powerful enough to improve earnings for an extended period.

Research has shown the market often misses or underreacts to these cues or underestimates their impact.. That’s when individual investors should jump in, and providing these opportunities is what Profit Catalyst Alert is all about.

How will I be notified about Profit Catalyst Alert trades?

As soon as Linda determines that a stock fits her Systematic Wealth qualifications, we’ll immediately let you know by email (and text message, if you’ve set that up – see Managing Your PCA Account), so that you can take action as soon as possible. We’ll then continue to follow up on all open trades with detailed information on a regular basis, until the stock achieves maximum gains. Once we’ve determined that it’s time to trade out, again, we will email and text you immediately.

Can I use my current brokerage account to trade with Profit Catalyst Alert?

To trade all of Profit Catalyst Alert stock and option recommendations, you’ll need a margin account. To date all of Linda’s option trades have been simple buying of puts and calls. However there may be times that options are sold short which requires a margin account. A standard cash account will typically allow you to execute straight buys and sells of options but the margin account is required for short selling options. 

If you haven’t already opened a brokerage account, review the Financial Industry Regulatory Authority’s advice, and then start researching potential brokers using websites such as Investopedia and Barron’s. (At Investing Daily, we’re not affiliated with any brokers.)

To trade Profit Catalyst Alert options, you’ll additionally need to be cleared for options trading even if you have a standard brokerage account. See also How do I choose an options broker? How do I get approved to trade options? below.

How much money should I fund my account with to get started with Profit Catalyst Alert?

For trading Profit Catalyst Alert options, a typical straightforward put or call purchase averages $1.50 per contract. The price of each individual trade will differ but this is the average price. Each contract is for 100 shares so the cost of the entire contract is 100 x $1.50 or $150. Profit Catalyst Alert typically has three or four option trades live at one time so you would want to plan your account accordingly if you choose to act on all of the trades.

When purchasing PCA-recommended stocks, Linda always recommends that members “dollar cost average” into each position. For example, if you intend to buy $1,000 of a stock, consider buying 25% of that position each month for the next four months. That will ensure you buy more shares when the stock is priced low and fewer shares if the stock begins to rise.

I’m new to options trading. What do I need to know?

To start off on the right foot, read Investing Daily’s Introduction to Options.

How do I choose an options broker? How do I get approved to trade options?

If you don’t currently have a broker, please see Comparing Options Trading Brokers: Which One is Right for You? for a list of some brokers that are highly rated by Barron’s Magazine. (We at Investing Daily receive no compensation for recommending any of these brokers and simply offer this tool to help our new members get started.)  The brokers we see mentioned most often by experienced Investing Daily members are TD Ameritrade’s thinkorswim, Fidelity, E*Trade, and Interactive Brokers. When trading options, you can either phone in your orders and speak to a live broker or you can input the trades online yourself using the broker’s website.

Here are a few tips to help you answer the authorization questions:

Investment Objective

Your best chance for a high trading level authorization is if you put down “speculation” as one of your objectives. Selling put credit spreads at an appropriate position size is no more speculative than buying shares of stock, but brokers seem to think all option trades are speculative, so you will want to state “speculative” for the sake of your broker’s policy guidelines, not because you actually intend to trade speculatively.

Trading Strategies

The more strategies you check off, the better your chances of getting full authorization. Feel free to check off all of the strategies listed even if you don’t initially plan on trading all of them.

Trading Experience 

Don’t be shy when answering this question, but honesty is the best policy. The more years you say you’ve been trading stock and options, the higher your trading level authorization will be.

Net Worth

Higher is better, but again honesty is always the best policy.

I only got approved for Level 1 or 2, but I want to trade spreads. What do I do?

Several of the trading platforms, including Think or Swim and OptionsExpress, allow you to do “paper trades” as a way to practice options trading using fake money.

Paper trading is a great way to increase your trading experience (and confidence!) so that you can reapply for a higher trading level than you were initially granted.

Read more about paper trading here.

How do I communicate with Linda McDonough and the other Profit Catalyst Alert members?

As much as we would like to talk to each one of you individually, federal regulations prohibit subscription companies like Investing Daily from giving personalized investing advice – that’s something a licensed financial planner or stockbroker would do.

At Profit Catalyst Alert, the best way to communicate with Linda McDonough and the other PCA members is through the Stock Talk forum. This is where experienced and novice members come together to learn from each other and help each other out.

A Stock Talk posting form appears at the bottom of all website alerts and articles. If you have a question or comment pertaining to one particular alert or article, please post your question at the bottom of that alert or article.

If you have a question about trading in general, the answer can probably be found by searching using the white Search bar in the website’s upper right. If you don’t find your answer, the Forum lets you begin a discussion about a particular topic or join in other ongoing discussions.

Please be sure to read all of these “Frequently Asked Questions” before posting any questions. Many of the questions that novice traders have are already answered in the FAQs.