My Recent $ERX Trade Example
Chart courtesy of stockcharts.com

Here is a recent example of one of my trades.

  1. I was looking to trade a trend in the energy sector after it recovered from it’s long term downtrend.
  2. I was using $XLE as my signal chart but I traded $ERX for leverage. 
  3. The chart had started to turn upwards after finding a bottom.
  4. My signal line was going to be the 250 day SMA as it backtested well as a stand alone signal for entries and exits.
  5. I was stopped out for a small loss on my first buy with a price break over the 250 day SMA but entered again on the November 29th break and close above the 250 day SMA.
  6. I got a quick run higher and set my stop loss for a close back under the 250 day SMA.
  7. After some volatility it began to trend higher.
  8. After price quickly got extended from the 250 day SMA I moved my stop loss to a trailing stop of a 5 day EMA cross under of the 20 day EMA.
  9. XLE stopped going higher and then reversed with the 5 day crossing under the 20 day EMA on January 31st so I locked in a 26.37% gain on capital at risk.
  10. This is an example of a moving average trend trade using a long term entry signal and trailing your stop loss during a fast trend and using leverage to create Alpha in a slower moving ETF in percentage terms.
My Recent $ERX Trade Example
Chart Courtesy of StockCharts.com

By Steve Burns

After a lifelong fascination with financial markets, Steve began investing in 1993 and trading his accounts in 1995. It was love at first trade. After more than 30 successful years in the markets, Steve now dedicates his time to helping traders improve their psychology and profitability. New Trader U offers an extensive blog resource with more than 4,000 original articles, online courses, and best-selling books covering various topics.