Last month, we told you about an intriguing ETF trading strategy with a 90% win rate.
After publishing that awesome article about a “boring” trading strategy, a trader named Matt told us:
This ETF trading system is interesting and makes sense to me. Next time, I would love to see an actual ETF trade setup being entered in real-time.
We agree.
There’s no better way to explain a trading strategy than with a live, actionable trade entry.
Let’s do it!
Dr. Jack Loftis
November 14, 2017
I personally entered this trade yesterday (Nov. 13), at market on close — and sent trade alert to subscribers at the same time.
The trade can also be entered on today’s opening.
The “Boring” Setup
The iShares Emerging Markets ETF ($EEM) has been “oversold” for a couple of days on its 2-period RSI [top panel on the chart].
With the RSI(2) indicator, I consider a dip to around 30 or lower to be “oversold.”
At the same time, $EEM is also approaching the horizontal support level shown on the chart (~$45.85).
All this happened on a day when the benchmark S&P 500 Index ($SPY) also began to make a bullish stand (in sync with market bounce attempt).
Simple and boring, but high odds of success — just the way I like my ETF swing trades.
The Trade Plan
For the most “bang for the buck”, I entered this ETF swing trade using $EDC, the 3x leveraged version of $EEM.I allocated 10% of my trading account (yes, you read that right!) to this swing trade.
But I have entered this trade with a 2%, 3%, 5% progression.
Specifically, I bought 2% worth of $EDC on yesterday’s market close.
If the trade moves against me, I will add the next 3% to the trade.
If it moves against me again, I will add the final 5% — for a full 10% position.
For an equivalent options trade, I would buy the $EEM December 45 calls (closed at $1.65 on Nov. 13).
Just as a reference point, my average return on an options trade like this is +20% profit.
Trade Tracking
Want to follow along and see the eventual result of this ETF swing trade?
Just head over to my StockTwits feed or Twitter feed to see my real-time tracking of this trade (don’t forget to “follow” for more future setups).
Regardless of outcome, you’ll see the result of this trade. There are hundreds of other trades to check out too.
As always, feel free to personally contact me by email or phone with any questions or comments.
Cheers,
Jack Loftis, PhD | founder
