Over the past month, at The Elite Round Table, we earned a net gain of over 30%. This profit was achieved through 23 trades given to our subscribers, as seen here. While that is a great gain in a short period, our goal is not only to give you winning trades, but also teach you how to profit consistently.
Let's take a look at a recent trade we took and explain why we took it, so you can do it yourself...
In mid July we closed a short trade position in Hershey Co (NYSE:HSY) for a sweet gain of over 5%, after taking profits earlier on our first half. So, why exactly did we go short Hershey Co (NYSE:HSY), and how did we know it was the perfect time to trade it? There were many technical factors present which supported the decision to short the HSY stock. Today I will share with you a simple pattern and some of the factors that led me to short this equity.
As you can see, there was a wide range, high sell off candle put in place towards the end of April. This type of bar usually indicates that the equity will see lower prices in the near term. After the sell off, the equity moved sideways and was never able to "confirm" above the high from the wide range sell off candle, (The "confirmation rule" is a proprietary technique developed by www.InTheMoneyStocks.com)
Now we had two factors, wide range sell off bar and sideways consolidation. Even if you are not familiar with the confirmation rule, you can look for wide range candles and sideways consolidation. This type of pattern is often called a "Bear Flag."
We sold Hershey Co (NYSE:HSY) short at a price of $97.10 (which means we will profit from the stock going lower). From our entry, the equity proceeded to sell off as expected from this type of pattern, and on 7/16/2014 we closed it at a price of $91.75 for a very nice and easy gain.
This type of pattern can be found and utilized on all different stock chart time frames; which can give the short term traders as well as the longer term investors great opportunities to profit. Remember, this trade on Hershey Co (NYSE:HSY) had many technical indicators coming into play at the time we at, The Elite Round Table, took the short trade. The more factors you have when taking a trade, the better your odds of making money. You should always have an entry and exit strategy prepared for any given trade, prior to entering. Including a target at which to take profits, and a stop loss level where you know you were wrong and move out of the trade. When you properly analyze the chart of any stock you are looking to trade, the most optimal levels will reveal themselves.
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Elite Round Table, Pro Trader
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