Better Trader

Position trading strategy performs well this year

It is early days but so far the results are impressive:

Since December 2020:

Number of points gained: +1173
Win ratio: 90%
Number of trades: 10
1 loss
9 profits

Breakdown per market

FTSE 100: +280
S&P 500: +65
10Y T-Note: -13
Gold: +23.5
Carbon Emissions: +525
Silver: 1.5
US Dollar: +291

As you can see this strategy works well for the following reason:

Not many trades: people tend to lose because they do too many trades. It is better to concentrate on a few trades that have a high probability of success rather than many low quality trades.

No stop loss: You can be right on the direction of the market but if your stop loss is not in the right place you will lose. This does not happen with position trading because we don't have a stop loss. Instead we trade small and it works better because this enables us to collect many small profits. In the last three months nine out of ten trades were profits.

Hedging: as there is no stop loss some trades are protected by others.

Long term moves are easier to forecast than intraday or short term moves. If a position is in a loss and we wait, in most cases it will recover. There is no need to close it at a loss. We can do this because the trade size is small.

All is explained in this video:

https://youtu.be/ebU76eJOP8s

What I did not say in the video is that if a trade does not go in the intended direction I have the option the hedge, to protect it with a market that is causing the trade to go in the wrong direction.

Special offer £10

Try Position Trading (medium term trades, no stop loss, small trade size) click:

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Should I use a stop loss?

The stop loss is often the problem, too many traders do not know where to place the stop loss. They take too many unnecessary losses and they never recover.

When you trade you need to take into account volatility. Is volatility high or low?

The best trading results occur when there is no news. Without major news volatility will be low and the markets will follow the Elliott wave closely. In this case my forecast will be more accurate. Minor news is okay, no impact on the markets.

If we are in a period of high volatility it will be hard to make a profit with a stop loss. You can see the US election and new vaccine announcements have caused some unexpected moves. Stop losses and volatility don't mix well. When there is uncertainty and volatility the stop loss has a greater change to be activated. And the tighter the stop loss the harder it is to make money.

Basically there are three main strategies I work on, intraday, swing trading and position trading. In my experience the worst strategies are those with a small stop loss.

For that reason I don't recommend intraday trading, it is the worst strategy because the stop loss is tight. Whether there is volatility or not it is hard to make money from intraday trading.

Swing trading is fine and very profitable when volatility is low, but more difficult to make a profit when volatility is high. Again because of the stop loss. If you have high volatility and the stop loss is wide there is still a good chance the stop loss will be hit.

Position trading without a stop loss is fine, in fact it is a good strategy in terms of reliability and profitability, whether volatility is high or low. But the trades are small, that is the difference. Position trading is safer than swing or intraday trading so if you are worried to incur large losses I recommend position trading, as long as you keep the trades small. I can guide you with this strategy, I can tell you what to do to make it a success. Read more about this strategy click on the link:

http://www.e-yield.com/position-trading/

I suggest you try position trading, I am sure you will like what you see.

Special offer £10

I offer a one month trial for just £10. You can join the service here:

start one month trial

On the road to profitability

In my previous articles I discussed the importance of the size of the stop loss. This can make the difference between profit and loss.

I also discussed what you need to do in order to succeed.

But the most important thing in my view is the size of the stop loss. To increase the odds of success you need a wide stop loss or no stop loss. Don't worry next week I will show you how to trade safely without a stop loss.

I run two strategies, intraday (day trading) and short term (swing trading), and I can tell you the swing trades make ten times more than the intraday trades. Why? Simply because the swing trade have a large stop loss of 100-130 pts, so the stop loss is less likely to be hit. Furthermore a swing trade is held for longer than an intraday trade, the profit is larger.

Basically the longer you hold a trade and the wider the stop loss the more profitable you will be. That is because a) there is less chance the stop loss will be hit, b) the profit potential is larger because a swing trade targets the big moves.

Now if I increase the holding period, I remove the stop loss and I reduce the trade size, I gets a better system. This strategy is called position trading, it is an interesting strategy that I will introduce next week.

Whether you choose swing trading or position trading, in both cases we target the big moves lasting weeks or months. We recently went long Gold at 1875, I am looking for a large profit on Gold. I have explained to my members why gold should move higher in the weeks/months ahead. Gold is breaking out...as I expected.

That was the chart I published just before we bought:

 

 

Special offer £10

Receive regular analysis and trade signals on FTSE 100, Dax, S&P 500, EUR/USD and gold for one month. You will need to download the e-Yield app. I offer a one month trial for just £10. You can join the service here:

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Gold Forecast

 

Gold	Today	Next few days	Next few weeks
Trend	Up	Up	Down
Action	Buy	Buy	Sell
Trend reversal	50%	50%	75%
	Key Reversal Levels
Gold spot	below 1316	below 1316	above 1372
Gold Future	below 1317	below 1317	above 1373
	Trade setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield

S&P 500 Forecast

 

S&P 500	Today	Next few days	Next few weeks
Trend	Down	Up	Down
Action	Sell	Buy	Sell
Trend reversal	25%	25%	50%
	Key Reversal Levels
S&P 500 cash	above 1980.5	below 1944.5	above 1983
S&P 500 Future	above 1973	below 1937	above 1975
	Trade Setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield

Gold Forecast

 

Gold	Today	Next few days	Next few weeks
Trend	Up	Up	Down
Action	Buy	Buy	Sell
Trend reversal	50%	25%	75%
	Key Reversal Levels
Gold spot	below 1306	below 1306	above 1372
Gold Future	below 1306.5	below 1306.5	above 1372.5
	Trade setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield

S&P 500 Forecast

 

S&P 500	Today	Next few days	Next few weeks
Trend	Down	Down	Down
Action	Sell	Sell	Sell
Trend reversal	50%	50%	50%
	Key Reversal Levels
S&P 500 cash	above 1968	above 1971	above 1980
S&P 500 Future	above 1960	above 1963	above 1972
	Trade Setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield

Gold Forecast

 

Gold	Today	Next few days	Next few weeks
Trend	Down	Down	Down
Action	Sell	Sell	Sell
Trend reversal	50%	50%	75%
	Key Reversal Levels
Gold spot	above 1324.5	above 1324.5	above 1373
Gold Future	above 1325	above 1325	above 1373.5
	Trade setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield

EUR/USD Forecast

 

EUR/USD	Today	Next few days	Next few weeks
Trend	Up	Up	Down
Action	Buy	Buy	Sell
Trend reversal	25%	25%	50%
	Key Reversal Levels
EUR/USD spot	below 1.3601	below 1.3560	above 1.4000
EUR/USD Future	below 1.3600	below 1.3559	above 1.4009
	Trade setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield

FTSE 100 Forecast

 

The decline is well underway in the FTSE but the S&P is still trading near the recent high. There is a lack of fear in the US, the CBOE volatility index (VIX) also known as the fear index is at record low. When there is no fear investors are complacent, and when investors are complacent we should be fearful. History tells us that complacency can lead to a market crash, this is why we must be cautious. The latest economic reports were disappointing, yet the S&P closed up. Durable goods orders and GDP were lower than expected, but because there is no fear stocks rose. Sentiment is bullish but a correction is underway in the UK.

FTSE 100	Today	Next few days	Next few weeks
Trend	Down	Down	Down
Action	Sell	Sell	Sell
Trend reversal	50%	25%	25%
	Key Reversal Levels
FTSE 100 cash	above 6785	above 6841	above 6895
FTSE 100 Future	above 6738	above 6794	above 6848
	Trade Setups

The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.

Research provided by e-Yield