Using a blend of fundamentals and technical analysis is a great way to build the story for a trade idea and plan ahead for what you want to see in a trade. When you are looking to put your money to work in the market, you ideally are looking for an early entry into a building story for the best ‘bang for you buck’. We have traded and followed MVP for a while and see it as a great way to illustrate the ‘Evolution of a Trade’.
MVP is a solid story that has been building for a long time as their flagship product gets adopted across the globe. With the story supporting buying pressure, we could see that price action went through a solid ‘accumulation’ phase for the best part of 2017 when this came onto our radar. We then went looking for the buy entry setup to support our view and let other traders do the heavy lifting to get the ball rolling. Any good entry setup should aim to get on the right side of the action when a market is starting to rise. Two entries are shown on the below chart that played out perfectly; one a little more aggressive than the other.
After any good entry, the idea is to then manage risk and look for when the dynamics of price action is starting to change. We can see this in the ‘distribution’ phase on the chart as price may have got a little ahead of itself and the fundamentals. This is the ideal zone to take some profit off the table (depending on the trade timeframe) or call it a day and look for other opportunities.
We are looking to get in at the most opportune times when a market is starting to make its move either higher or lower. This means that we can take the ‘meat’ out of the move without having to tie our capital up for long periods of time….which is essentially is the ‘Art’ of trading.
MVP and the Evolution of a Trade