After recently closing our SILJ BAN trade, we want to take this opportunity to dissect our trade, including the process of selecting the proper exit targets and protecting capital within a trade. The BAN Trader Pro strategy incorporates these same techniques automatically within the decision-making process of taking/generating trades/signals. Yet, many traders can find value in reviewing their completed trades to learn how to improve their trading picks and techniques.
With our recent SILJ trade, we initiated the entry on the upside breakout in price on November 5, 2020 – near $15.50. This upside breakout move prompted a new BAN trade trigger with SILJ near the top of the BAN Hotlist. This suggested further upside trending would continue.
The COVID-19 vaccine news was announced shortly after we entered the trade, which took the momentum out of this bullish trend. The immediate downturn in price activity resulted in our SILJ trade staying below our entry price for more than 30 days. We had properly allocated capital into the trade because of risk factors and our initial stop was setup below recent low price levels (ON CLOSE). You can review the initial SILJ BAN Trade trigger message below:
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The lessons to take away from this SILJ trade recap are:
- Trust your system/strategy and make sure you are following the system rules 100%.
- Let your trades work out for you (or not) and then revisit them to determine if your rules/strategy operated properly throughout the trade.
- When your system/strategy was successful with a trade, use this success to attempt to learn how to improve successful trading processes or how to better reduce risk.
- When your system/strategy was NOT successful with a trade, it is very important to FOCUS on these losers to learn if your strategy is efficiently capable of managing risk and/or a series of losses.
Trading systems are designed to attempt to generate profits by making a series of quantitative computations and real-time decision making. I have learned to focus on attempting to improve the success of my system/strategies, but I’ve also learned that I must continue to “focus on failures”. Doing so helps me to develop ways to improve inefficiencies or failures in my strategy and also helps to improve the long-term success of my system/strategy.
This SILJ trade worked out very well, albeit a little longer than expected because of the vaccine news. After watching the price move lower after our entry trigger, the momentum in price continued to support price above recent lows. This is the key strength of the BAN Trader Pro strategy. It not only attempts to find great entry triggers, but it also ranks symbols based on key momentum metrics so we are always attempting to trade the “Best Assets Now”. The COVID-19 vaccine news disrupted the momentum in this SILJ trade but did not disrupt it enough to represent a full Stop Loss.
Over 30+ days, SILJ recovered into a solid momentum base and began another rally near December 7, 2020. This prompted a solid price rally that reached our first Target level (#1). At that point, our BAN system moved the stop level to the entry price – eliminating all the remaining risk in the trade.
After Target #1 was reached, SILJ rolled lower again and was recently stopped out with a solid 11% gain in the trade from the first target. Of course, we would have wanted this SILJ trade to continue higher and rally to $25 or more, but sometimes trades don’t rally 20~35% every time.
The important concept to take away from this is that it was a trade with a process that worked to generate profits and protect against risk. We’ll share more trade recaps as BAN Hotlist trades are closed. Some of these trades have rallied more than 20% recently – so there are some really solid 20~35% trends out there. It is just a matter of being able to execute your strategy/system with confidence and let the system tell you what to trade and when.
One of the first rules of system/strategy trading is “follow the rules of your system 100% – all the time”. This is what the BAN Trader Pro strategy is all about. It is a quantitative process that allows us to find and execute the best trades in the best-performing assets as new trend triggers are generated. All we have to do is “follow the system” and “stay true to the rules 100% of the time”. If you want to learn how to find the Best Asset Now to trade yourself without any proprietary indicators or tools, then join my Free BAN Strategy webinar. The BAN strategy has been developed to trade in any bullish or bearish major trend – so we will always find opportunities in the markets over the longer-term.
We like to share successful trading processes, strategies, and techniques using real trading examples and hope this helps you better understand how to develop efficient trading strategies/rules for your own use. If you want to learn more about my BAN Trader Pro newsletter service, including how to get access to my members’ only daily pre-market video analysis, BAN Hotlist updates, and BAN trade alerts then visit www.TheTechnicalTraders.com/BAN.
Chief Market Strategist