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After such a successful launch to a limited client segment, it’s a good time to reflect on the first 2 months of the Tradingkey and review the methodology that has yielded close to a 70% success rate. Around 150 students have already been through the course predominantly made up of CFD, Gann and options traders from Australia, United States and a couple hailing from the United Kingdom. With these hit rates and the overwhelming positive feedback, it looks like the December and January sessions are already beginning to fill up. TradingKey students are either looking to supplement their current learnings or add a very practical and prescriptive checklist which describes exactly:
- Which trade looks better than others
- Where to enter
- Where to exit
The strategy is quite simple. By using a combination of Elliott Wave, basic technical indicators and technical analysis (all taught in the online classes and workbook), theory is covered before the presenter works through the day’s available trades with the students. During this time the instructor will explain the merits and pitfalls of each potential opportunity. For students of the October sessions, one of the trades that came up was an Elliott Wave continuation trade on the Australian share, Wotif (WTF.ASX).
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One of the best patterns to look for when picking Elliott Wave continuation trades is the channel. A stock moving between a support and return line provides a great way of building some degree of technical analysis prediction. When this is combined with the Range Projector and Time and Price Projection targets, a trader has 3 separate (and non-related) forecasts. Of course, there were other elements of the chart which supported the view that this was a better trade to take, but there is not enough time to discuss these in detail here.
There are several different entry criteria which we can use to confirm the end of the 4th wave and enter into the 5th wave trade and the amalgamation of all three provides a conservative entry.
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Stops are placed using the usual TradingKey trailing stop methodology. By using Volex and back testing, the optimum ATR multiple is discovered and implemented as the ‘price barrier’ to reflect an appropriate distance of stops to market (taking into account price volatility). In the instance of the WTF trade found with clients, the multiple was around 1.9.
Wotif turned out to be a successful trade reaching the TAPP, RP and return line within our desired time frame whilst not triggering the trailing stop. Without a forced exit from adverse price movement, we are left with the opportunity to take profits using a discretionary ‘at market’ sell order. Despite the success of the trade, what happens if the price goes higher? Although I suspect this not to be too likely with the price forming some congestion around the return line, the answer should always be the same: stick to the plan. The price target has been reached, lock in the profit and use the same successful stock picking formula to find a new trade.
Stay Sharp,
John Jeffery
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