Trading from the trenches

Trading from the trenches

There are very few (if any) writers out there that cover any aspect of the practical tactics of trading.  That is because most are not real traders who are in the front line trenches day in, day out.  Yours truly must be one of the few that is happy to pass on my experience as a full-time trader.

And that simile is most appropriate with the 100th anniversary this week of the terrible Battle of Passchendaele with the two sides learning very quickly how to fight from the trenches.

No, most of the writers on trading focus on what to buy and sell but offer few if any ideas on how to use appropriate methods to find low risk entries and exits.  It is one thing to be bullish on a market and quite another to find a suitable entry.  And even in bull markets, it is entirely possible to lose money – if you get in just before a big correction.  Have you ever had that experience?

But that is what I specialise in – finding low risk entries – and my Tramline method is the basis of my approach.  Here is a great example this week from my PRO SHARES service.

In my Trade Alert I sent to members last Friday, I had a feature on STANDARD CHARTERED where I believed I had found a relief rally high.  I had been tracking this share for many weeks, waiting for such an opportunity (patience is surely a virtue in trading). This is what I wrote:  Appears to have completed the A-B-C relief rally I have been tracking

With the mom div here, odds high we have seen the top of wave C.  I am looking for a move down to at least the B wave low at the 680 area.
ACTION  I advise shorting (currently 827) with Warning level at 850.  If stopped out, you can look to re-establish shorts.
That was a firm low risk trade based on my reading of the waves and the 62% Fibonacci level, combined with a weakening momentum into the rally.
But on Monday, the shares rallied above my Warning level at 850 and we were stopped out.  Normally, that would be the end of it.  But note the little comment I put in “If stopped out, look to re-establish shorts”.
I put that in there because I knew on Friday that there was a chance the rally had not finished and there may be a little more upside before the market would turn down (of that I was confident).
And lo and behold, with our new shorts above the 850 level, the market turned down with a vengeance and this is the updated chart:
The shares are down a massive 60p in two days and are currently bouncing up off the upper gap edge, which is normal.
The point is this: other writers will not offer you any advice on how to trade a market when it initially goes against you and you are stopped out.  This is real trading in the trenches!
Dow at 22,000
The current melt-up phase is most certainly a magnificent third wave of at least two degrees of scale (the strongest wave in the book) and I have no idea when it will turn.  Many of my sentiment indicators are flashing overbought – but they have been doing that for weeks now.  As I mentioned before, a major top is unlikely while the MSM are so bearish and the public so very cautious.
But turn it will – and I want to be there to catch a huge fourth wave down of many hundreds of pips.
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