High Probability Trading Report: EWZ, SPY and the Best of the Battle Plan
As of the close on Thursday, April 29th, Larry Connors’ Daily Battle Plan hit the 83% correct mark. That’s 53 correct trades out of 64 trades since the daily trading service began providing high probability ETF trading recommendations back in October 2008.
64 trades. 53 Correct. 83% accuracy since 2008.
Traders were able to lock in gains in two trades on Thursday: a modest gain in a three-unit scale-in in the ^EWZ^ and a more impressive gain in a one-unit scale-in in the ^SPY^.
In some ways, the three-unit scale-in trade in EWZ, while not as profitable as the SPY trade, is more informative about one key aspect of high probability trading: the science of scaling-in.
To learn more about the “science of scaling-in” click here. For now, understand that scaling-in to trades, buying additional units in a position as the positions’ edges increase, is staple of high probability trading with exchange-traded funds. In fact, it is not too much to suggest that scaling-in as edges grow can make the difference between a good high probability trade and a great one.
In the example of EWZ (above), Battle Plan traders were able to buy an initial unit when the fund became oversold, and two additional units as the fund continued to move lower, becoming increasingly oversold. This lowered the cost basis of the trade – in this case, from 73.36 to 73.15 – which, given Thursday’s bounce, allowed the trade to close in the green.
The trade in the ^SPY^ (below) was relatively straightforward. The fund pulled back into oversold territory on Tuesday, allowing traders to begin scaling-in to the position. However, SPY began climbing almost immediately afterward, allowing traders to lock in gains of approximately 2% on the close on Thursday.
83% correct in ETF trades since October 2008, Larry Connors’ Daily Battle Plan includes incisive market commentary, charts of the day, a Model Portfolio of past trades and daily pre-market audio commentary to help traders prepare for the trading day. For a free, 7-day trial to Larry Connors’ Daily Battle Plan, click here or call 1-888-484-8220 ext 1. today.
David Penn is Editor in Chief at TradingMarkets.com.