Archive for the ‘COMMODITIES’ category

MONEY MANAGEMENT

March 31, 2015
  • Reduce risk & increase profits by closing transactions at 3 profit points:
  • #1 – initial move
  • #2 – short term objective
  • #3 – long term objective
  • After the correction following #2 (short term objective) , establish another new 3 part position. You will continue this accumulation process while the long term trend remains in effect.
  • #3 is your long term profits that are accumulating while the bull/bear market rolls on.
  • The following is an edited version of Walter Bressert’s money management system.
  • To put this method into action, you must scale the figures to fit your situation.  It’s necessary to think of your initial purchase (or short sale) as consisting of three parts.  This example uses 3 futures contracts, but a similar concept scaled into three equal parts works for stocks.  Example: If you were buying 300 shares of stock, you need to think of your purchase as consisting of three blocks of 100 shares each.  You can buy all 300 shares at one time, but you will sell the 300 shares at 3 different times of 100 shares each.
  • Blog where many things are explained about my methods (see index in the right column of this page)

 

  • MONEY MANAGEMENT
  • All three contracts can be entered at once, or bought (or sold) at different times and price levels.
  • Contract No. 1: The Money Contract
  • The first contract, called the Money Contract, is the most important.
  • Profits on the money contract should be taken as quickly as possible.
  • When the money contract is liquidated, your risk is lowered and you have closed profits in your account.
  • Contract No. 2: The Short-Term Profit Objective Contract
  • The Short-Term Contract is designed to take profits at a short term objective.  This can be the crest/trough of a trading cycle or a preset objective.  Liquidate the contract as prices approach your price objective or move stops closer and let the market take you out.
  • As the correction is ending following the sale of contract #2, three more contracts are bought for a total of four contracts.  You now have two Long-Term Contracts, one Money Contract and one Short-Term Profit Objective Contract.
  • With the purchase (or sale) of 3 new contracts, you repeat the same scenario outlined above.  Liquidate the Money Contract and the Short-Term Profit Objective Contract as they meet their short term objectives.  The two Long-Term Contracts are held expecting better prices as the long-term objective is met.
  • You keep repeating this scenario until the bull/bear market is finished and a major correction is anticipated.
  • If you fail to purchase (or sell) 3 new contracts as a correction ends, you will have your Long-Term Contracts and can still participate on a primary direction move.
  • Contract No. 3: The Long-Term Profit Objective Contract
  • The purpose of the Long- Term Contract is to stay with the larger and longer market trend until that trend exhausts itself and becomes subject to a significant correction.*   Liquidated short term contracts generates the profits to give you breathing room during smaller corrections.
  • Should the market fail to reach your long-term price objective, fail-safe stops will liquidate your long term position. 
  • * The long term price objective can certainly be different for everyone.  For me, when the market has reached a “possible” major reversal point during a major 3rd step, I am unlikely to hold an investment position for long due to the possibility of a significant reversal taking place.  After that point I will trade frequently and not buy Contract #3, but continue following Contract 1 and 2 rules.
  • You can thank Walter Bressert for this money management system.

 

MY CHARTS

  • My charts consist of all the items that Paul Desmond warned about in his paper, “THE WARNING SIGNS OF MAJOR MARKET TOPS”, which you can find at the following link

WAVE COUNTS

  • If you aren’t familiar with my unorthodox wave counting method, there is a simple explanation at the beginning of the glossary. The glossary also contains lots of other details (explanations) that don’t appear in the blog.

All Rights Reserved  © ™

Advertisements

%d bloggers like this: