How Running Winners Covers a Multitude of Sins

Hello traders,

I hope you’ve all had a good week.

If the financial media are anything to go by, all the attention seems to have been on retail investor darlings Bitcoin and Tesla – check out the ‘most read’ articles on Bloomberg on Wednesday!

Bitcoin has indeed been on a tear since September, approaching the record high seen around this time of year in 2017…

Is the world rife with speculation again as we approach Thanksgiving? Only time will tell, but with many people unfortunately having a tough time in 2020, there may be greater temptation to try and make some money around the holiday season. Perhaps Tesla will provide confirmation of that if the stock stages a breakout on news of its admission to the S&P 500...

Leaving the noisy speculation to the amateurs, lets return to our usual programme. Last Friday’s post was titled ‘good trades come in threes’, where I explained how we identified setups in equities and the US dollar with the help of our Checklists. Today I want to provide a final update on our trading before our next Monthly Checklist Report is released next week.

First up, lets begin with equities. Stock market sentiment was a little shaky as we began the month, following a decline in October. However, the positive score presented by our US Equities Checklist highlighted this as a clear buying opportunity.

This was further assured by the +3.5 score presented by our Market Risk Checklist, which suggested support for risk assets (including stocks) over safe havens.

Although undoubtedly helped by the positive news flow which followed, it proved to be quite a rally following such a clear setup (remember, every setup requires a catalyst!).

The US currency has also been kind to us this month. Here’s how the Checklist looked as we began the month. The clear negative score of -3 put us on high alert to look for short setups amidst US election volatility…

In last week’s post I commented: “We’ve seen a slight retracement towards 93 where the market was once again short term ‘overbought’ and may well prove to be another opportunity to short the dollar through next week...”. As you can see, we did get our third opportunity to sell short this week, following the two successful trades earlier in the month (the first assuming an average entry around 93.75 following the two overbought signals when we updated the Checklist on the 28th). The DXY Index is now pretty much back at the 52 week low just below 92.

These trades have clearly worked well for us this month. To quote the bible, ‘love covers a multitude of sins’. In trading, running a couple of big winners can cover for a multitude of smaller losses and ensure our profitability.

If you would like to join us for our analysis in real-time including new insights each week, or learn from the ground up with online tuition from Lex in our MDT online course, then head to milliondollartraders.com and take your financial knowledge to the next level right away!

P.S. Check out the brand new videos we’re producing on our YouTube channel here‍

Have a great weekend,

James

Disclaimer: For educational purposes only. Even though we do our best to provide reliable data, you should not trade based on this information. For more information go to www.milliondollartraders.com

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