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Small Cap Trading Strategies

- The document discusses three strategies for the Investa Cup championship round: focusing on potential wave 3 biases, counter-trending moves with bullish divergence setups, and risk management. - Wave 3 is described as usually being the longest and strongest trend of a sequence, with peak acceleration. The counter-trend strategy aims to capture short-lived peak accelerations off support levels. - Risk management is emphasized as the most important strategy - to cut losses and let profits run. Price action and setups are more important than biases or opinions. Operational discipline and following patterns, not thoughts, is key.

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406 views16 pages

Small Cap Trading Strategies

- The document discusses three strategies for the Investa Cup championship round: focusing on potential wave 3 biases, counter-trending moves with bullish divergence setups, and risk management. - Wave 3 is described as usually being the longest and strongest trend of a sequence, with peak acceleration. The counter-trend strategy aims to capture short-lived peak accelerations off support levels. - Risk management is emphasized as the most important strategy - to cut losses and let profits run. Price action and setups are more important than biases or opinions. Operational discipline and following patterns, not thoughts, is key.

Uploaded by

Depraved Reader
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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- Investa Cup -

Championship Round
* Prioritize Small Caps - separate watchlist; opportunity cost in big caps
Strategy #1 - Focus on Wave 3
1. Prioritize potential WAVE 3 biases

“Usually the longest and strongest trending wave of the sequence.” - RN Elliott

“ Peak Acceleration” - Robert Prechter

"...every superperformance stock made its BIG GAIN while in STAGE 2 of its price cycle” - MM
Strategy #1 - Why does W3F Strat Work?

- Edwin Lefèvre on biography of Jesse Livermore (1877-1940)

Elliott Wave Theory was developed in late 1920’s but popularized in 1970s

Isolate that part of “SITTING TIGHT” where the roller coaster ride is the fastest = WAVE 3
Wave 3 Strategy = 64% of Total Profits

Full (3) of 3 - E2E breakdown to follow

3 of (3)

3 of (5)

1 of (3) (?)

3 of (5) extended

3 of (5) - E2E Breakdown to follow

1 of (3) (?)

part of (3)

3 of (3)
Strategy #2 - Counter trending (bullish div)
1. Prioritize Countertrend moves… with bullish divergence set-ups… off support levels

- a more advanced technique vs. sticking with uptrends / strong issues


- but offers a similar albeit “short lived peak acceleration” of Wave 3

- Distinguish between “BULLISH LATE PEAK ARCS” vs. “BEARISH EARLY PEAK ARCS”

- Geoff Goetz/Bill Cara, “Four Pillars Report” Trader Wizard subscription


Countertrend Strategy = 30% of Total Profits
Full A wave - E2E trade breakdown
2follow

RSI bullish divergence + 0.618 fib support

RSI bullish divergence (class B) + volume

RSI bullish divergence + 0.618 fib support


Strategy #3 - RISK MGT Strategy
1. MOST IMPT of all 3 Strategies —> “RISK FIRST, PROFITS SECOND.” - EKL

VAR CUT STRAT (to BE cut) ASHWANI CUT STRAT (to BE cut)
MAX 1% VAR = 1000 Php + intraday entry 20min low / max 1000 Php + intraday entry c/o Dr. AE
= lower hit ratio = higher # of trades = but higher edge ratio

Sept 4 Dec 28
Halfway Point of
Investa Cup
most important slide of this presentation!

Operational Discipline / Execution

The 2 STRATEGIES are essentially DIRECTIONAL BIASES (opinions) = the LESSER HALF of the equation

STRATEGIC BIAS + PRICE ACTION SET-UP = EXECUTE BUY/SELL ✅


PRICE ACTION SET-UP = EXECUTE BUY/SELL ✅
STRATEGIC BIAS = EXECUTE BUY/SELL 𝙓
PRICE ACTION SET-UP = BUY ONLY WHEN (1) BOUNCE OFF SUPPORT…. OR… (2) BREAKOUT OF AREA PATTERN RESISTANCE
SELL ONLY WHEN (1) BREAKDOWN OFF SUPPORT…. OR … (3) UNTOG OFF RESISTANCE

OPERATING PRINCIPLE: SET-UP > BIAS


“We trade what we SEE … NOT what we THINK… NOT what other ppl THINK… certainly NOT what we hear”
AKA

PRICE ABOVE EVERYTHING, and EVERYONE ELSE

most important slide of this presentation!


E2E Breakdown of PXP (Wave 3 Strategy)

entered here (R)

entered here (IC) @4.23


10d ema set-up w/
Follow through day w/ vol next day
E2E Breakdown of X (Countertrend)
E2E Breakdown of X (Countertrend)

entered here (IC) @3.2


Last exit 5.68

intraday entry at 3.20


E2E Breakdown of NOW (Wave 3 Strategy) - wave (3) inside 5

0.618
E2E Breakdown of NOW (Wave 3 Strategy) - wave (3) inside 5
E2E Breakdown of NOW (Wave 3 Strategy) - wave (3) inside 5

entered 2.53

BIG money is made in the sitting and holding - JL


Maraming Salamat sa inyong lahat!!!!

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