A KC Collection trade, analyzed step-by-step below....
The Market: We chose an E-Mini S&P 500 live screen since many of our clients enjoy trading this market (for its reasonable margin requirements, high liquidity, etc). However, we find that any liquid market can be traded profitably with the KC Collection.
1/23/03, 2:30PM: The KC Collection's system gave a buy signal, as shown above.
There are two ways to work this trade:
Option #1 - Use only the strategy element of the KC Collection:
Procedure: Take the buy signal, and then simply take the scalp (trailing stop) exit as shown, with a profit. This is exactly how all of the detailed KC Performance Summaries on this site were calculated by TradeStation.
Option #2 - Use the entire KC Collection (strategy + confirming/filtering elements) as a trading methodology:
Procedure: First check what the rest of the KC Collection is telling us, and then take that buy signal (because now we have confirmation that it is excellent), forget that scalp exit signal (because now we have confirmation that this is going to be a powerful, longer term trade), and continue to use the entire KC Collection to profitably manage the trade to completion.
This second way is how we recommend using it. Why?
The money! We can capture far greater profits when we use the entire KC Collection in conjunction with the system.
The KC Collection tells us exactly which entry signals to take, which to avoid, and then let's us know the very best places to exit each trade!
Using the full KC Collection, this is what we did in the above trade:
GO Confirmations and ENTRY:
We got the buy signal and we see that it occurred directly on top of the middle Keltner Pro band (the Keltner Pro, our seven-years-in-the-making proprietary version, is shown as the three white bands). This is a very strong confirmation that we have an excellent signal. Trades taking off from our middle Keltner Pro band almost always represent the beginning of a third Elliot Wave, the largest part of any trend move.
Second, we glanced at our P/V Oscillator (shown as the red line) to see a clear higher high peak occuring several bars before the signal. The P/V Oscillator is a powerful leading indicator, and this is a super-strong confirming "GO" indication.
Third, our GANN Time alert went off, telling us that it is time for a major market move. Another GO confirmation.
Fourth, we saw the beginning of the "profit fan" developing on our XMA Set (magenta, yellow and cyan lines: see our guidebook for further information and illustrations). Another GO confirmation.
Fifth, we confidently take the trade and have no doubts that it will head north in a powerful way. It heads north. A few bars later we get the scalp (traling stop) exit signal. We ignore it. With all of these positive and powerful KC (Keltner Confirmation) Collection elements working in our favor, we're definitely staying in. The trade continues strongly in our direction until it starts hugging the top Keltner Band.
Since the outer bands of our super-wide Keltner Pro indicate both extreme overbought/oversold market conditions and dynamic support/resistance areas, we often exit when the trade touches an outer band. But in this case we notice something extra is happening:
This "hugging the outer Keltner" situation almost always indicates that an explosive reversal move is imminent. At these junctures we look for any slight KC Collection confirmation of that imminent move (it doesn't take much at these points), and then we reverse our position (to profit in both directions).
That confirmation came soon after in the form of our P/V Oscillator peaks diverging from the price highs (circled -- see page bottom for another example of the huge profit potential of P/V Oscillator divergence). This occurred just before the "action bar" that traded through the top Keltner band, but failed to close above it. The action bar becomes our signal to go short.
We reverse our position and go short, the market reverses explosively to the south, and we exit MOC (market on close).
Using the full KC Collection, we raised the profit-capturing potential of the above system signal approximately six times! That is the power of trading with synergy, and that is how our software is designed to work. In practice, checking our "GO confirmation" indicators takes a few seconds only (we explain all about this in our guidebook and software manual).
The great thing is that these kinds of profitable signals and confirming indicator patterns are common occurances with the KC Collection.
Our clients tell us that since they started trading with the KC Collection, they can't imagine trading without it.
So why not take advantage of these amazing tools in your own trading?
Further examples of the unique profit-capturing potential of P/V Oscillator divergence (one aspect of the KC Collection).
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