Today, I want to introduce you to a beginner-friendly trading strategy… one that helped my readers beat the market four-to-one…
I call it the “Pulse system.”
So today, I thought I would take you into how it works…
Simple Method, Repeatable Results
It’s simple, really… the Pulse system looks for stocks that have moved far away from their moving averages and are set up to snap back to them.
Here’s an example, using one of my favorite stocks to trade – the VanEck Vectors Gold Miners ETF (GDX):
In mid-April 2023, GDX was trading near $36 per share. The stock had rallied from $27 a few weeks earlier. It was now in an extended, overbought condition – and vulnerable to a pullback.
The various moving averages (the squiggly lines on the chart) were extended far away from each other. And at $36 per share, GDX was trading historically far above its 50-day moving average (the blue line).
At first glance, this looked like a good setup for betting on a decline in GDX.
But I didn’t recommend a trade – because something was missing…
Waiting for the Right Pulse
Instead, I waited until the momentum indicators showed “negative divergence” – which they did by early May.
Following that quick decline in April, GDX rallied to the $36 level. Once again, the stock was overbought and trading far above its 50-day MA. All of the moving averages were extended far away from each other.
So, the chart showed nearly the same setup as it did in mid-April – with one key difference…
This time, the MACD and RSI indicators were lagging behind the move.
While GDX was rallying and trying to make a higher high, the momentum indicators were making lower highs. The momentum behind this rally was weakening, an early warning sign of a decline.
This was a much better setup for a short trade.
GDX was just as overbought and extended as it was a few weeks earlier. Yet this time, there was a higher probability that GDX could pull back toward its 50-day moving average line.
So I recommended a position that would profit as GDX snapped back toward its 50-day MA.
Here’s what happened next…
It took less than two weeks for GDX to snap back to its 50-day MA. Folks who bet on the decline by selling the stock short could have made $3 per share. That’s a gain of nearly 9% – in just two weeks.
That’s not bad.
But we generated a gain nearly seven times greater by using options.
Rather than selling shares of GDX short, I recommended an option trade that earned 65% over the same time frame.
Free Trading Resources
Have you checked out Larry’s free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out.
You Can Do This, Too
This isn’t luck… it’s a system that I’ve carefully created over my 41-year trading career.
And you could have achieved an 82% win rate by following it since October 2022.
If it seems hard, don’t worry. You can learn more about the Pulse System right here.
I’ll guide you every step of the way.
Best regards and good trading,
Jeff Clark
Editor, Market Minute