High Probability Trading, Consistency and Focus

As I mentioned in the Daily Battle Plan today, the Model Portfolio has been profitable in 16 of the 17 ETF trades for this year. This is the type of high probability trading we aim for. We’re looking to be correct at least 75-80% of the time (its been correct 94% so far this year) with the gains being greater than the losses.

There are many ways to trade these ETF signals. They can be done with the Single ETFs (1x ETFs), they can be done with the leveraged ETFs, they can be done in some cases in the futures markets, and they can be trade numerous ways in the options markets including bringing in income on credit spreads and ratio spreads. High probability trading in ETFs offer so many opportunities and it allows you the flexibility to achieve your profit goals while keeping risk in check.

Some months there will be only a few opportunities that have healthy edges and other months there will be many. We never know ahead of time what any month will bring but what we do know is that if we do this long enough, the trades begin adding up as they have in 2009.

What’s also interesting is that in spite of April being a month with an upward bias, every trade the Daily Battle Plan took was on the short side and all the trades were profitable. A few of the gains were small, like the one we just took on EWJ (Japan). Others were much bigger, for example the gains the Model Portfolio took in mid-month in the SPYs. Going short the final unit at the highest closing price of the month of April at 87.08 (we get lucky sometimes).

The key is consistency. Looking at the market the same way everyday no matter what is going on is a big step toward gaining consistency. And I think most of us would agree, we’d rather be correct over 80% of the time using the same strategy over and over again than to be jumping around all over the place guessing what to do next. Having a solid trading plan in place using strategies which have had strong, solid performances over the years is a much better way to trade. It’s not CNBC with all the hype, sound effects and yelling. It’s professional and the proper way the market is supposed to be traded.

As I mentioned yesterday, become great at one or at most two things in the market. Be the best at the world at it. Because once you reach this goal, everything becomes easier and the profits naturally flow from there.

Quick Note: I’m going to be doing a 60-90 minute online presentation today about our upcoming Summer 2009 Swing Trading College which starts next week. Included in the Swing Trading College is the strategy I primarily focus on in the Daily Battle Plan for ETFs. If you’d like to attend this presentation please call 213-955-58585 ext. 1 to reserve your spot. The Swing Trading College is nearly sold out (as of last night most of the 50 spots had been reserved). Once it sells out (likely by tomorrow), I may add a few more spots and after that everyone else will be placed on a waiting list. Please let us know if you’d like to attend today’s presentation which starts at 4:30 pm ET.

Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.