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Quick Trends--More Profits!
How to trade them now
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PUZZLE. Is there a trade in here? How do you decide? If yes, when and why? Yep, there is a well-defined trade underway. If you picked it right, scroll down to see the potential profit to date and method.
Paradigm 2000 Portfolio
Hypothetical Profit 11.3% in Four Weeks
Two Top-Ranked Stocks Ready to Collapse
Sell Short or Buy Put Options
October 28-November 25, 2011
Chart below
TABLE OF RESULTS
Percent (%) Profit / Loss
|
|
sell |
|
|
|
|
symbol |
short |
price |
Nov 25 |
%delta |
|
Apple, Inc |
AAPL |
Nov 4 |
400.24
|
363.57
|
-9.2
|
|
Internet hldrs |
HHH |
Oct 28 |
79.64
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68.90
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-13.5
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|
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|
|
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|
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|
|
avg profit |
11.3% |
For options, multiply profits by 3x to 6x.
THE TREND RUNS from October 28 through today. See the chart below, or better still, click here to open it in a separate window which you can move around and still read this text.
A trend defined here is a series of values which rise or fall over time. It can be in any increments from trade-by-trade to decades or longer. Here, the values are weekly. What we want to know is when has a trend turned? The moment of the turn is the perfect, best time to enter a new trade. Also, when values are at extremes is a best time, too. Because prices are too erratic (being random), this system is better suited to oscillators, which are indicators with fixed upper and lower limits.
The benchmark for change is 'nodes'. A node is any closing value, in this case, the rankings, bracketed by two lower ranks or two higher ranks.
See the examples in the rank scale at the bottom of the chart.
The 1 magenta and 3 magenta rank levels bracket magenta 2. Magenta 2 is the node for its series. Blue 1 and blue 3 bracket blue 2. Blue 2 is the node for its series.
Trend change. The next rank that goes beyond the node level signals that the trend has reversed and now follows the direction the node is headed in. This happened when blue 4 broke below node blue 2 on October 28. Sell short Internet Holders (HHH) or buy put options. Magenta 4 broke below node magenta 2 on November 4th. Sell short Apple (AAPL) or buy put options.
Holding period. No trade is complete until you exit. Here we want fast trades. Hold two, three, or four weeks. In the example, the trades show the profits in the table (%delta is the price change--the signs become + since these are short sales).
Annualized profit is 167%. I believe that any time you can calculate an annualized profit of 100% or more, take it. Or take half of it and hold the other half for exit later based rules you determine.
Notes. This little system is designed specifically for use with the 100 Stocks--3 Portfolios group. It can be adapted to other portfolios.
Of course, a single example does not a system make. But that's the way they all start out.
Prices and dates are Fridays' closings. No matter--if you have access to the market just before the close on Fridays, you can easily calculate whether the trades have met your fixed targets. Alternatively, you can fix your targets as exit limits at the time of trade entry.
SUMMARY
1- Enter trades precisely when they start.
2- Use nodes to tell you when.
3- Exit on fixed time-price targets.
~Copernicus
November 25, 2011
Amended and published
November 28, 2011
3:50 pm EST
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2011 The 2000 Corporation.
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