The 80/20 Trade: "Pounce Like a Cat"

June 6, 2012

Copy the tiger when stalking and capturing a "pounce-ready" trade.

Tigers know the prey they covet is elusive: they show great patience and care when stalking the target.

I came across this description of the tiger’s technique:

"When hunting, this cat…may take twenty minutes to creep over ground which would be covered in under one minute at a normal walk…the tiger will sometimes pause…move closer and so lessen that critical attack distance…before finally raising its body and charging.
"…they wait until a victim comes close and spring up…This ambush method of hunting uses less energy and has a greater chance of success."

You must "ambush" high confidence trades. Long-time professional trader and teacher Dick Diamond says patience is vital before the ambush.

I talked to Diamond about his famous 80/20 trade, which he means literally — he says it has at least an 80 percent chance of success. It’s the only trade set-up Diamond will take.

————

Q: Could you tell me about the 80/20 trade?

Diamond: The 80/20 trade is based on indicators that create a specific trading set-up. A trader must act on this set-up immediately. You must wait, and then pounce like a cat when the opportunity presents itself. Then you set stops. In shorter time frames, like trading from a five minute chart, the 80/20 set up may come along a few times a day. If you’re trading a longer time frame, like off of a 120 minute or 240 minute chart, the 80/20 will come along less frequently, but when it does, the opportunity will be bigger. The 80/20 trade can be especially rewarding for position traders. Sometimes the indicators reveal what I call 90/10 or even 95/5 trades.

Q: What emotional factors do students need to work on the most?

Diamond: Traders must be calm and confident. You can’t be a Nervous Nellie and succeed at trading. Calmness comes from learning the proper trading techniques.

Q: What’s different about trading today vs. when you started out in the 1960s?

Diamond: When I started trading, execution took up to five minutes — now it takes less than a second. Time is money, so computers provide a great advantage to today’s trader compared to pre-computer days. At the same time, while computers allow the trader to see multiple indicators on the screen, one must avoid indicator overload. One must learn to narrow down the number of indicators.


Get instant access to our FREE report from Veteran Trader Dick Diamond

In this 12-page report, you will learn practical tips and tricks from veteran trader Dick Diamond.

He and his assistant, Roberto Hernandez, share many of their time-tested techniques with you, with excerpts from interviews and course materials designed to accelerate your trading progress.

Download your FREE 12-page report today >>

This article was syndicated by Elliott Wave International and was originally published under the headline The 80/20 Trade: "Pounce Like a Cat". EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Publication source
ForexCycle information  ForexCycle reviews

January 16, 2017
XM Back to China with a Free Forex Seminar
Forex instructor Mario Pashardes and XM company representatives are returning to China in March with a free forex seminar entitled Directional Movement and Candlestick Reversal Patterns...
January 9, 2017
Free Seminars by XM in Morocco this February
We are glad to inform our clients about two upcoming forex seminars hosted by XM in Morocco in just a few weeks time. Senior Market Strategist Habib Akiki, accompanied by XM company representatives, look forward to welcome all those interested to acquire hands-on knowledge about swing trading techniques...
December 22, 2016
XM Free Seminar Awaits Clients in Thailand
In February 2017 XM will return to Thailand with a brand-new seminar topic designed for beginner and more advanced traders ready to tap into the most intrinsic details of price action trading...

FOREX.com Rating
Larson&Holz IT Ltd Rating
XTB Rating
Z.com Trade Rating
Fort Financial Services Rating
FBS Rating

OptionFair Rating
TropicalTrade Rating
Beeoptions Rating
365BinaryOption Rating
Banc De Binary Rating
OptionRally Rating