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Some great trading advice from The Technical Traders:
At Active Trading Partners, we take a different approach to trading than most online services in terms of advising our subscribers. Our methodology revolves around behavioral characteristics of the crowd, and taking advantage of the extremes in sentiment, whether bullish or bearish.
In the case of ETF trading, we often work with 3x Bull or Bear ETF’s like BGZ, ERY, ERX, TZA, TNA and so forth. Using a combination of Fibonacci re-tracements and Elliott Wave theory, we look for high probability set-ups and extreme overbought or oversold situations to trigger a trade recommendation. A most recent example with ETF’s was a short position we took against the rising energy stock index, the XLE. This index had become incredibly overbought in just a few weeks, and looking at prior topping indicators and fibonacci trading day cycles, we felt it was a “Low Risk” bet to short the rally. We recommended ERY at $45.40 as the XLE headed over $56 and was becoming overbought. Within 7 days we had a 15% plus gain by going against the crowd. I saw a 13 fibonacci day trading rally at extremes, so we used the XLE chart below, to identify the timing to enter into ERY.
Read the rest at Active Trading Partners.
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