We use the same technical analysis principles used by professional traders -- volatility breakout filtered with momentum, cycles, and Fibonacci-time relationships. We then combine these techniques into mechanical systems.
These are all standard technical analysis tools. The volatility breakout can be a complete trading system all by itself. It provides the method of calculating the entry price and the stop and reverse price. This system in its basic form is always in the market and trade frequently. Applied to a daily chart of data the results are profitable swing trades. This method was very popular in the 1980's. Later due possibly to overuse and increasing market efficiencies, the profit per trade deteriorated until the profits were too small to support commissions and slippage. The users were now losing money.
Now with the volatility breakout system there are numerous trades. Some of the trades are profitable and some are not. The trick is to try to select out those trades that are more likely to result in large profits and avoid taking some of the losing trades. There are several technical analysis tools that can identify likely times for market turns (short-term trend changes). The ones I use are momentum, cycles, and Fibonacci-time relationships. Basically my programs filter the volatility breakout signals to select only those trades more likely to be large winners. This improves the profit per trade and makes more than enough per trade to pay the slippage and commissions. Another way these tools help is to warn that the technical condition has deteriorated for a trade already in place. In these cases, my program says to exit the trade at the next opening of trading.
Another tool I use is to only select those trades that are low in risk. No day trade is recommended with a risk greater than $1,100 and no swing trade is recommended with a risk greater than $1,300. One of the keys to profitable trading is managing risk. The market decides how much profit each trade makes by how much it decides to move. The only thing the trader can manage is the risk.
At last there is one more tool I use. Sometimes the market can move very quickly. In fact the moves are too far too fast. I use the ExitPoints technology to establish objectives just in case of large quick moves. These are excellent times to snag a quick profit by placing a limit order to exit at the objective. This is a money management tool that can sometimes provide a means to keep more of your gains. Most of our positions are exited either at a profit or loss with a stop loss. Some of our trades are exited at market on the open and just a few are exited at the objective. But those that do exit at the objective have large gains.
All the subscriber has to do or know is to use the trading recommendations with the trading instructions. All the knowledge and logic is built into the computer programs. My expert systems allow you to make professional unemotional trades day after day.
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