Big Picture Update
The most likely end point for a corrective Wave 2 counter-trend rally in a five wave impulse pattern is between 50% and 61.8%. As these three charts below illustrate, we are there. Although a Wave's 2 are allowed to retrace as much as 99.9% of Wave 1, the highest and best probability is at 50% or 61.8%, and not necessarily in that order.
Trade Small - Trade Often
Betting with the House
Trading stock options is akin to gambling, only it's our own game, our own rules, and there is no house to compete against other than ourselves. Much like the house advantage in Vegas, the edge in this system is that the trading signals are based upon statistical probabilities derived from a proprietary mix of algebra and geometry. It is up to us to carefully base the bets and know when to take our chips off the table.
35/75 Exit Strategy
We have described a few different profit-taking/stop exit ideas to make the most of the trading signals under the observation that one size does not fit all when it comes to the psychology of trading. The use of profit-taking targets and stops has been somewhat of a moving target because so much of it is personal: Comfort zones, risk vs. reward, active or passive trade management, bunt singles or home runs, home runs vs. grand slam home runs.
Last weekend I introduced a new trade management strategy, the 35/75 exits, and this weekend I am putting an exclamation point after it. Winning small and often has an appeal well beyond the adrenaline rush of that occasional grand slam home run...in the end it adds up, it takes a lot of risk off the table, and a lot of angst out of trading the market.
Since the inception of the system in May 2018, there have been 142 trade signals sent out to subscribers Of those 142 trades, we have come up with the following profit taking statistics:
Trade Signals & Performance
Using, "Trade small - Trade Often," two of the 13 trades have been stopped out (shaded rows) while 9 have already hit +35%. The latest three trades (TLT, X, FCX) hit +35% in a matter of days. Based upon the 142 real time trades since last May, this type if performance for 35/75 is the rule, not the exception. I like this enough to devote a second consectutive Weekend Update to it. Take note.