“You can’t always get what you want,” rock ‘n’ roll legends Mick Jagger and Keith Richards insisted years ago. “But if you try sometimes, you might find, you get what you need.”
That’s the song traders following Larry Connors’ Daily Battle Plan are singing at midweek, as full positions in two top ETF PowerRatings exchange-traded funds – the ^SPY^ and the ^EWC^ – were sold into the buying frenzy on Monday and Tuesday for another net gain.
Officially, the Battle Plan went 1-1 this week. But when you consider that the first “1” was an average gain of approximately $2 per share and the second “1” was an average loss of 5 cents per share … well, as the saying goes, you get what you need.
There are two qualities of high probability trading in general, and high probability ETF trading in specific, that were on display this week in Larry Connors’ Battle Plan. The first quality is the high degree of accuracy. From August 2008 until present, the Battle Plan has been correct in short term ETF trades 48 out of 59 times – more than 80% accurate.
The second quality is keeping non-winning trades to a minimum in terms of cost as well as frequency. While not every non-winner will be as minimal as the one this week, the research on high probability ETF trading going back to inception in a wide variety of liquid exchange-traded funds shows that non-winning trades, when they do occur, are no more sizable than winning trades – and often less so, as was the case this week.
The short-term exchange-traded fund trades in Larry Connors’ Daily Battle Plan are based on the research in the book by Larry Connors and Cesar Alvarez, High Probability ETF Trading: 7 Professional Strategies to Improve Your ETF Trading – now in paperback (click here to order your copy).
This research quantifies an approach to short term trading Larry refers to as “buying the selling and selling the buying”. And while this approach to trading goes against many popular notions about how markets really work in the short term, it is one that market makers and specialists have employed successfully for decades.
More importantly, this high probability approach to trading is based on backtested, quantified studies involving thousands of simulated trades in both stocks and exchange-traded funds, for example, going back to 1993 in the case of the SPDR Trust S&P Fund ETF, or SPY..
Are you ready to make 2010 your best trading year ever? Click here to join Larry Connors’ Daily Battle Plan for free for one week. See what quantified, high probability trading can do for you.
David Penn is Editor in Chief at TradingMarkets.com.