ERY Setup and Trade Plan

Today's Featured Trade Idea is ERY .

Members can join us in Trading Room #1 as Rick reviews this setup and other Trade-Ideas at 9:10am Eastern.  For now, here are my own analysis and a potential trade plan made using our Trader Vision 20/20 software.

Note: Beware the overall market indecision. Mixed trends (short and long-term) and very volatile action (many "gap and fade" as well as intra-day reversals) make this a treacherous market.  Bear Market bounces are not when we should be getting very long in our account unless we are very quick and agile in our trading style.  This chart also lays out far less than optimal.  Great caution should be used!

ERY has been putting in a bottom since Spring. In the last week it formed a Bullish Pennant-type and is consolidating right at S/R. No earnings to worry about for this ETF itself, but the underlying companies will report over the next few weeks. Also keep in mind that anything in the news related to Saudi Arabia (or Iran) can greatly impact Energy markets.

Also note that the 200sma must be breached prior to the 1st target and there may even be a S/R level about $37.50 that needs to also be breached. Much caution is advised.

That said, you see the b/o Entry, protected Stop and Targets off Weekly charts that I laid out.

Trader Vision shows us that ERY has no earnings of its own to worry about. However, as an ETF, the underlying industry companies will report and that may well impact ERY. It also shows us that this is a dicey market to trade. Only 3 bullish conditions and 2 bearish conditions are in place for this trade.

TV20/20 then tells us this trade plan is questionable. At the first target, we do achieve better than 2:1 Reward/Risk. However, the dollar gain is minimal (if we sold the entire position there we would only make $234.50). Still, if we can sell half there and then achieve the 2nd target, we can net a 4.18:1 Reward/Risk overall and a $409.50 profit.

While this demonstrates the process of trade planning, this is an example of a trade I would personally pass on due to market and industry volatility as well as a weak layout.

Again, both common sense and Trader Vision are urging caution in this market. While this is a nice chart setup, not every day is one to be trading and a Bear Market Trend bounce it's certainly not a great time to be taking on as many Long trades.

Having this knowledge before a trade is even entered makes it much easier to control emotions and maintain discipline.

Below is my markup of the chart and the trade plan as laid out by Trader Vision 20/20.  As a bonus, if you click the green button below, you'll be able to watch a video of the chart markup and trade planning process.

The ERY Trade Setup - As of 10-17-18

ERY Chart Setup for 10-17-18

The Trade Plan

ERY Trade Plan for 10-18-18

Note how Trader Vision 20/20 does so much of the work for you.  Knowing the ratio of Bullish Conditions to Bearish ones as well as the overall risk of the position size, the risk to Stop out and the Reward possible at each Target price can help a great deal with controlling our emotions.  Knowing the dollar impact of every scenario ahead of time, allows us to make calm decisions during the trade.  It really takes the pressure off.  No guesswork.  No surprises.  No emotional roller coaster.

To see a short video of this trade's chart markup and trade planning, click the button below.

 

Put the power to Trader Vision 20/20 to work for you...

 


Testimonial

Trader Vision immediately simplified the process...immediately it provided that information and guidance to me. I knew what I would risk for how much reward, I began taking trades off at the 1st target, 2nd target, I was no longer holding all my trades for the homerun. I also began implementing the stop losses if and when they were reached, not just hoping the stock would recover.  It then became easier to see what patterns were working for me and which were not.  It provided a much more relaxed and stress-free environment. -Joan G

 

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Investing and Trading involve significant financial risk and are not suitable for everyone. Ed Carter is not a licensed financial adviser nor does he offer trade recommendations or investment advice to anyone. No communication from Hit and Run Candlesticks Inc. is to be considered financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.

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