Saturday, December 06, 2014

A current example of exploding profits

Earlier this week I received an update from a trader based in Australia who is part of our mentoring group. Now, this guy has already had the experience of a run of losses, which were more than covered by one big win (see here for more). With his permission, below are some extracts from his latest email:

"You aren't wrong about getting onto winning trades, I've been having a pretty good time of it lately, incredible gains this past 3 days!

Aside from CNU, which is +8.5R, I'm also short in MRM and SKE for another +8R
(NB: charts are below).

Trading has almost become an obsession now.... Aside from the scans, for the past few months, I've been looking for trade ideas wherever I can find them, and then bringing them back into 'our' world to see if they make sense. Admittedly most are rubbish but some work out. CNU came from the scans and I think MRM also. SKE the chart looked good.

After 6 months I'm finding the Volatility Factor indicator a very important 'tell' of what is happening. I would almost consider this of higher importance than overhead resistance, for example. I find a lot of comfort in the structure of the chart setup (Upper, Lower), and as long as you keep within the parameters you teach (risk, staircase, low VF, risk, risk, risk) you have every chance of winning trades."

In recent blog posts I talked about how, when one or two trades take off in this manner, there can be an explosion of profits in very short order. As his email highlights, he has accrued open profits of more than +16R within a matter of days. And as he says, if you are able to control the downside, and don't limit the upside, then this kind of thing can happen.

The other point of note is that one of these positions is a long trade, the other two are shorts. In all these cases, he is trading within the context of a longer-term trend in that individual stock, which is happening regardless of whatever the general market is doing.

If you are interested in learning more how to profit from such moves, then join us today!


  1. How would you recommend avoid false breakouts? For instance, in CNU chart above, I can see 3 false breakouts: failed long breakout in Jul, failed short breakout in Jul, failed short breakout in Nov. Thanks in advance

  2. Unfortunately, if you look at my trades list, most of my losing trades are as a result of failed breakouts - they are a cost of doing business. In the case of CNU, the failed short breakout in November did not meet either our scan or visual criteria. The two failed breakouts in July occurred within a long period of consolidation between March and October, and also didn't meet some of our visual criteria (this element cannot be programmed into a scan code) so again you wouldn't have taken either of those signals.

    Even the long signals given in late September/early October would not have come up on our scans. The recent breakout did, however, and also visually was a great set up.