• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Education
    • Articles
      • Connors Research
      • ETFs
      • Options
      • Stocks
      • Volatility
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Python
  • Quantamentals
    • Quantamentals: The Next Great Forefront of Trading and Investing
    • Quantamentals Resources
  • Courses
  • Store
    • New Book! The Alpha Formula
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Swing Trading College 2019
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker Strategy Add On Modules
You are here: Home / ETFs / Larry Connors’ Daily Battle Plan: Getting into ETF Trades 101

Larry Connors’ Daily Battle Plan: Getting into ETF Trades 101

October 13, 2009 by Larry Connors

A market that has been rallying for day after day after day suddenly stops, reverses and begins to pull back. If you are a high probability trader, then you know that this is the kind of market environment you have been waiting for. Moreover, you’ve subscribed to Larry Connors’ Daily Battle Plan and have read a Market Intel report that points to a pair of ETFs that have become exceptionally oversold.

Maybe the ETFs have fallen for two days in a row and are looking likely to close down for a third. Maybe the ETFs have developed 2-period RSIs of less than 15 – or even less than 5. Maybe the ETFs have earned ETF PowerRatings upgrades to 9. Or even 10. Whatever the reason, you arrive at the Battle Plan home page and after perusing the market analysis, you read this line:

“Buy the first of potentially up to three units in … if the ETF closes lower today.”

That line is the “gentlemen start your engines” of high probability ETF trading in Larry Connors’ Daily Battle Plan. And as of October 2009, those engines are roaring. Since adding ETF trading to the Daily Battle Plan a year ago, the service has gone 42-8. Our most recent trade, a play on the ^FXI^ in early October, gained nearly 5% in a matter of days.

See: “Battle Plan Reaches 84% Correct as Traders Lock in Gains in SPY, FXI”

Let’s take a look at the three main components of high probability ETF trading in Larry Connors’ Daily Battle Plan. Understanding how these components work is critical to making the most out of the service and to keeping the edges on your side as a high probability trader..

“Buy the first …”

High probability ETF trading in Larry Connors’ Daily Battle Plan is about buying pullbacks in trends. Our quantified approach to trading tells us that we should look to buy our first piece of a high probability ETF position AFTER the ETF has become oversold above the 200-day moving average. Conversely, if you are looking to sell short, then your strategy is to sell short the first piece of a high probability ETF position AFTER the ETF has become overbought below the 200-day moving average.

EWH Chart

Above, a Battle Plan long trade from early September in the ^EWH^. A gain of nearly 5% in three days.

” … of potentially up to three units …”

One of the more impressive discoveries of our high probability approach to short term trading of ETFs is the fact that by scaling-in to positions, buying more shares as the ETF trades lower, traders can dramatically boost returns.

Because ETFs – especially country and equity index ETFs – have a pronounced tendency to revert to their mean, high probability traders can get an edge when buying additional shares as the ETF becomes more oversold, straying farther and farther from their mean or average price. This tendency can be so strong that in some instances a trader will see larger gains from the final piece of an ETF position than they might from all the other, earlier scale-ins combined.

DIA Chart

Up more than 5% in less than 5 days, this short trade was one of the bigger winners in the Larry Connors’ Daily Battle Plan this spring.

“… if the ETF closes lower today.”

Our strategy when buying ETFs for high probability trades is to take positions on the close. In the same way that we look for intraday weakness to take positions when buying stocks on pullback, we want to see ETFs that we are interested in buying close at their oversold extremes. This is a way of assuring – as much as possible – that we are truly “buying the selling” and taking as much advantage as possible of the historical edges that support buying oversold markets and selling overbought ones.

Isn’t it time you gave the high probability ETF trading strategies of Larry Connors’ Daily Battle Plan a try? Click here to launch your free, 7-day trial today. After 50 high probability ETF trades with 42 profitable exits over the last year, this is the kind of trading edge that more short term traders need to know.

80% winning trades! Find the best ETF setups with Larry Connors’ Daily Battle Plan, a highly accurate trading service with daily entry and exit signals for ETFs. Get your free 7 day trial now – Click Here.

Originally published Oct 13, 2009

Filed Under: ETFs, Recent, Trading Lessons, Trading Lessons Tagged With: Daily Battle Plan, ETF Fund, ETF Trading, ETFs, rules for trading ETFs

About Larry Connors

Larry Connors has over 30 years in the financial markets industry. His opinions have been featured at the Wall Street Journal, Bloomberg, Dow Jones, & many others. For over 15 years, Larry Connors and now Connors Research has provided the highest-quality, data-driven research on trading for individual investors, hedge funds, proprietary trading firms, and bank trading desks around the world.

Larry has been published extensively, with titles like How Markets Really Work, Short Term Trading Strategies That Work, High Probability ETF Trading, and The Connors Research Trading Strategy Series including our latest Guidebook High Probability Trading with Multiple Up & Down Days.

Buy The Fear, Sell The Greed

Buy The Fear, Sell The Greed

Swing Trading College

New Book From Larry Connors and Chris Cain, CMT – "The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk"

We’re excited to announce the release of a new investment book written by Larry Connors and Chris Cain, CMT. The book, “The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk “ combines… Hedge fund legend Ray Dalio’s brilliant insight into combining uncorrelated strategies… With new, minimally correlated, quantified, systematic strategies to trade… [Read More]

Buy The Alpha Formula Now

Connors Research Traders Journal (Volume 57): 7 Real-World Reasons Why Short Strategies Should Be Included In Your Portfolio

In our new book, The Alpha Formula – High Powered Strategies to Beat the Market with Less Risk, we show the benefits of including short-strategies in your portfolio. As a reminder, building portfolios should be based on First Principles – otherwise known as truths. These truths are: Markets Go Up Market Go Down Markets Go… [Read More]

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2020 The Connors Group, Inc.

Copyright © 2023 · News Pro Theme on Genesis Framework · WordPress · Log in