Increase our edge in directional trading - sector analysis

Kudos to Mike Wade and the technical support team of Hubb Corporation in Sydney, 2-day seminar students in Singapore and Hong Kong have the knowledge of sector analysis, and for those folks who purchased Profitsource (http://www.profitsource.com), they can even enjoy the new Sector Scan which is currently available to students elsewhere at ICT and ITT levels.

Have you ever heard a complaint like Wave Theory does not work or Profitsource sucks?

"i have hat lot of failed trades with my profit source for the last 2months, i would like to know what i did wrong. eg i bought lots of wave4 trade that went the exact opposite and i have lot quite some money in the process, what should i do as am starting to doubt the process"

In the past, as this student politely said, I will reply this way:

"Profitsource W4 setups are just that: SETUPS. There is no guarantee they will turn into great profits. It is of most importance that you have a trade plan before you open position. Having exit points when things go wrong saves you money. Adjustment points when things go your way will save you a lot of frustration. If you are up $7K and end up loosing $4k is highly irritable, you need to take care of your winners so you can win more but limit your losses.

Once you are in a trade, it doesn’t matter what EW formation you see on PS. By then you have predefined exit/adjustment points.

There is always a chance that if you can be right about what the underlying is going to do and loose money on options. Learning more about how options work should eliminate that danger."

Here is what I would have said in the past:

"I strongly suggest taking advanced seminars. I was struggling for two years, then after ICT, ITT and POMM I was able to become a full time trader in 14 months. Yes I had to do homework as well as sacrifice vacation time to attend seminars and OASIS; however, telling my employer that my last day on a job will be 9/12/08…priceless."

However, as an instructor now, I know I should not reply with emotion and insist others to follow what I am doing. At the same time, I know very well that if something is not working, I may not be convinced to get additional education as a means to change my strategy. There are more costs involved and not everyone is ready to do so. Grateful to Mike because he studied sector analysis and found that it works well to increase his hit in directional trading.

In this respect, the 2-day Singapore and Hong Kong seminars in July 2008 incorporated sector analysis as part of the agenda. This agenda is exclusive to only Singapore and Hong Kong students as far as I know. The sector analysis discussion is only available to other students who are at ICT and ITT levels (which means they have to pay to get such knowledge).

So, what should a student do? He should start looking at the sector analysis to understand how smart money flows from one sector to another sector. He should understand how different sectors react at a prevailing time or at a particular market condition. This is the starting point.

As part of the identification of trading opportunities, 2-day seminar students may considerfocusing on

1. Strong stocks in the strongest sectors that display a Wave 4 Buy set-up, or a bullish break-out set-up
2. Weak stocks in the weakest sectors that disaply a Wave 4 Sell set-up or a bearish break-out set-up

The amount of trades obviously will be reduced but the hit rate increases, and this is something I discovered over my backtesting. My hit rate in July on sector directional trading is 80% correct, and suddenly a non-directional trader like myself finds the niche and confidence to come back to directional trading. Do I need to take additional courses to do that? Not really. At the end of the day, additional education is useful in helping us to improve our skill. But nothing comes with building confidence based on the basic stuff that still works well. A 2-day student does not need to any advanced courses to gain this experience. Just come to any of our 2-day seminars either in Singapore and Hong Kong, which is free re-attendance to them. So, why paid $4,000 to get something that may potential be free.

Our next 2-day class is scheduled to be in Singapore on 23/24 Oct and in Hong Kong on 28/29 Oct. If you are an existing Optionetics 2-day student living in Asia, you may consider taking action to see us.