Saturday, April 05, 2014


Here is one of the few trades we have put on in recent weeks which is doing very nicely. I have no idea or interest in what the company does - all I know is it was a setup which came up on our scans, and satisfied the 'visual characteristics' (as Ed Seykota would say) that we look for. The set up triggered an entry in early February.

Since then, the stock has moved up steadily, with the trailing stop obediently following on behind. Moving up in a parallel fashion like this keeps the open risk at acceptable levels. This is a classic example of a stable trending market.

Even though there may currently be some indecision in the general market, there is no rushing to close a trade like this for fear of losing any profit. The trailing stop will take us out of the position, and future price action will determine when that is.

Remember that with a trend following strategy, more than 50% of the trades taken do fail (we are currently below a 40% win rate!), with small losses incurred. It is the letting of trades like this one running which eliminate a bunch of those losses, and leave some profit left over.

If you want to know more about how we trade, including what we look for in potential setups, risk management and the psychology required when trend following, all with full ongoing support, then consider signing up to our mentoring programme.

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