Best of the Battle Plan: Trading the Biggest Edges and the Law of Large Numbers

A few days ago I got a very good email from a Daily Battle Plan subscriber asking me if the large sell-off in FXI is a reason to avoid entering the position. This gentleman’s question relates to the thought that too big a sell-off could potentially be a negative sign.

Based upon more than 15 years of testing, we’ve seen that historically, the larger the sell-off, the bigger the edge. Ideally when we’re buying, we want ETFs to drop as sharply as possible before entering the position.

This of course does not play out in every trade. But when you take the law of large numbers and look at many of thousands of historical set-ups, you’ll see that the larger the sell-off, the greater (on average) the bounce has been.

This is from Larry Connors’ Daily Battle Plan which he publishes each morning. If you’d like to take a free trial click here, or call 1-888-484-8220 ext. 1 to start your free trial today.

Larry Connors is CEO and Founder of and Connors Research.