Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.
-
Welcome Guests
Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.
Search the Community
Showing results for tags 'prop trading'.
Found 39 results
-
Identifying and trading along with institutional money moves works for all asset classes: Stocks, Commodities, Currencies, and Treasuries. In this article, we focus on stocks. Who are institutional investors and what is their core focus? Table 1: Key Institutional Investors Table-1 shows: “Prop Traders” also act as “Liquidity Providers”: On one hand, some institutions trade their own money and on the other hand, they are providing liquidity. Hence, if a core “Prop Trading Company” wants to accumulate or dispose stocks, they have to bypass their key competitors. Even so, they try to hide their actions, the other market forces spot what is going on and trade along with it – and you can do the same. Graphic 1: GOOG – Spot Institutional Money Moves Table 2: Spot Institutional Money Moves The highlighted trade situations on the chart identify that: Price consolidation is going hand in hand with decreasing volumes. Price expansions to the up- or downside is going hand in hand with increasing or collapsing volume. Putting it all together provides you a chart-based strategy to trade right at the highlighted instances: With the direction of the price range breakout. With the Gap. With a Strong Directional Candle. Graphic-2: AAPL Trading Institutional Price Moves Over the years, we developed multiple indicators and studies, which highlight institutional price moves by spelling out potential trade entries and exits. For an example, please check: http://www.neverlosstrading.com/Top_Line.html After we clarified when to initiate a trade, the next question is which stocks to trade? To follow institutional price moves, pick stocks which are widely held by multiple institutions. When you select the S&P 100 and the NASDAQ 100, you already found the core of the trading opportunities. Each of those stocks is held in most mutual funds and by multiple institutional investors. The next challenge is to find trading opportunities. We developed special scanning programs; however, you can find tradable stocks by picking those with a stronger price move than the referring index: For the S&P 100 choose OEX. For the NASDAQ 100 choose QQQ. Stocks to trade are those with an above or below the comparison index price-moves. With the NeverLossTrading mentorships, students will receive daily reports on trading opportunities. If you want to be part of some specific reports, please sign up with our free report link…click here. To be a successful private investor, the skills and experience for being able to make money when the markets go up and down is essential. When a major price move occurs, expect to trade one direction for no more than 10 trading days and after that expect a reversal. If you want to catch a longer trend trade, trail your stop: To the upside: Below the low of the prior candle. To the downside: Above the high of the prior candle. Why is an institutional follower strategy successful? Private investors have the advantage of speed: They can enter and exit entire positions, while Institutions need a longer time to get in and out of a position by sheer size and SEC (Security Exchange Commission) regulations. By the smaller size, you have an easier way to leverage and hedge trading positions. With a short- rather than long-term strategy, money can be made on up- or down-moves. Short-term trading allows for constantly generating and compounding interest, which gives you accelerating returns. With modern technology on hand and competitive commissions, the private investor can access all markets real time, similar to institutions.
-
Good Morning All; Of all the articles I have written, my favorite articles are ones that bring out some of the subtleties of chart patterns that many new traders may miss. But the purpose of this letter, "Eyes", is not to 'teach' technical analysis; that is what our seminars are for. That is why perhaps the most helpful articles, for those that listen, are the ones that talk about how to go about learning the business of trading. Through the Cracks That is correct, the business of trading. It is a business like any other. True, it does not generally involve employees or large facilities for most traders. But it does involve education, planning and preparation. Traders need to be educated in the method of making money in the markets, as well as all of the surrounding concepts that are needed. They need to plan the business in the big picture by opening accounts, allocating money, figuring out living expenses for a period of time, allocating the proper time and money to the new venture, allocating money to initial and ongoing education, as well as many other important issues. Traders also need to prepare for each and every trade by forming trading plans and proper follow up procedures, and the proper research for their trade. Let's take a harder look at the first concept; getting an education in the markets, as well as all of the surrounding concepts that are needed. Deciding what approach is right for you; fundamental or technical, long term or short term or both, using news or not, understanding how to use platforms, how to enter orders, what types of orders should be used, understanding what actually moves prices, and the 'math' of making money. It should seem obvious that everyone would have a handle on all these topics before risking capital in their new business. But experience tells me nothing could be further from the truth. Learning the actual concepts of technical trading is what our Trading the Pristine Method seminar is all about. But that course is about understanding price movement; how prices go through stages, transitions, and how to play those movements to make money. Plus a whole lot more. But many of the other concepts are things traders need to understand but often don't. Many are touched on in seminars, but some are not. It is expected that traders will learn from our free webinars, or from their broker, and maybe some are even in the 'common sense' category. Many important items seem to 'fall through the cracks'. Sitting in the Pristine Method Trading Room, I am often mildly shocked at some of the things that 'experienced' traders ask. To that end, we have created a new course, "Online Trading Essentials". It covers many important topics. If you are looking at a career in the markets, or if you have recently begun pursuing that opportunity, this class is a must. I also feel 'anyone' would enjoy the class. It is free to current clients who have attended a seminar. If you are currently talking to your counselor about becoming a client, see if you can get into the class for free. Closing Comments Paul Lange Vice President of Services Pristine Capital Holdings, Inc. Day Trader School
-
It was almost twenty-five years ago that I began my education on the markets and technical based trading. After a period of time using the indicator based method still used today, I came to the realization that method was too subjective. I also saw times (too many) that price could move in the opposite direction signaled by an indicator or a group of them. Pattern recognition was the only concept that made sense; however, the most powerful price concept I discovered was NFT. Before I get to the concept of NFT, I first have to touch on some basics of Candlesticks. Candlestick analysis essentially is the recognition of reversal patterns. There are one, two or three bar candlestick reversals have different names like Dark-Cloud Cover, Morning Star, Evening Star, Shooting Star, Star, Hammer, Inverted Hammer, Doji and there are many more. All indicate a turn and the probability of a price movement in the direction of the reversal. Some with a stall in momentum first or at the same time of the reversal pattern. It all depends on the time frame being viewed, so candle patterns change or can even conflict. The explanation of these candle reversals related to multiple time frames (MTF) analysis is virtually non-existent in the education industry. Why? Because an understanding of MTF makes all of these names unnecessary. If you understand that if prices move in one direction and suddenly turned in the other, it's a reversal. What difference does it make if it happened in one, two or three candles? A two or three candle reversal is a one candle reversal in a higher time frame and vice versa. It comes down to understanding MFT and retracements between reference points. You're getting an insight into Pristine education. As I studied and traded these individual candle or multiple candle reversals that had No follow Through (NFT), it became clear that NFT was a very powerful message. Price patterns are a reflection of what traders and investors believe and have acted on with real money. Money, put into action has emotion connected to it, and when beliefs and emotions in the moment change abruptly - it's a message to pay close attention to. Let's look at a normal or typical type of a reversal and an NTF. Both are tradable when combined with other supporting technicals; however, the NFT concept expands your opportunities and increases your odds of profitable trading setups. The above chart of Citibank © shows typical reversal signals within an uptrend. It doesn't matter what the name of the signal is according to the candlestick textbook. Even the novice to candle technical analysis can see the turn. Can you begin to see how the names are irrelevant now? If there was a Doji candle between those reversal candles, would it change your opinion of the turn? In the above chart of QCOM, there's a big bearish candle (doesn't matter what its name is, it's big) signaling lower prices. Rather than following through lower, QCOM had NFT and negated the bearish signal. Clearly, buyers were in control and were going to continue running over sellers. Can you imagine being a seller inside that big bearish candle? How are feeling the next day? What are going to do? As a trader or investors recognizing the NFT, can you take advantage of this? he concept of NFT is universal to all tradable instruments, since anything traded is affected by human beliefs and emotions. In the above chart of the Aussie dollar versus the U.S. dollar is another big bearish candle that had NFT. The move above that bearish candle hasn't happened to confirm the signal yet, but the NFT to it suggests that short-sellers are caught and a counter-trend move that will likely test price resistance and the declining 20-MA is coming once prices move above that bearish red candle. No Follow Through is a concept that I developed years ago after getting caught in trades based on candles that were negated. The NFT concept along with my Bar-by-Bar concept will put you the right side of most trades. While there is no guarantee of a sure thing in the markets, NFT when combined with other Pristine concepts is the closest thing to it you're going find to it. Greg Capra President & CEO Pristine Capital Holdings, Inc
-
Good Morning All; Sometimes identifying the process we go through in learning can help the learning process itself. For example, any difficult task, such as trading, is generally learned in four phases. This assumes of course that one even gets to the later phases. When students read the following, it often helps them understand they may be making great progress, even if it does not appear that way. The Learning Process The first phase is what we call the "unconsciously incompetent" level. This means that we do not know the material, and worse than that, we are unaware of the vast amount of material we need to know. Most traders are in this phase when they begin trading. Perhaps you know someone like this. They feel they have all the tools they need to make proper decisions and are completely oblivious to what the market has in store for them. The next learning level is a vast improvement as it is what we call the "consciously incompetent" level. At this level, the trader still does not know material, but at least they are now aware that there is a vast amount of information they need to learn and they need to begin that process. In other words, at least at this level, they are aware of their ignorance, and that is a big step forward. Many traders who seek out seminars or who begin to look for training are at this level because they have tried on their own, and not succeeded. The next level of learning is the one that takes longest time. It is to get to the point of being "consciously competent". This is all that traders should be striving for, realistically. This is the ability to be able to know and memorize all the techniques that have been studied, and to be able to reproduce them, with the trader consciously making an effort to follow the same plan every day. The next level would be the final level and considered one of mastery. It is rarely found in trading. It is the level of "unconscious competence", where all the rules and strategies fall into place without effort by the student to enforce them day after day. Closing Comments If you are learning to trade, you will pay your tuition one way or another. You can pay a fair amount toward education, or you can pay a lot more to the market. Often when you pay it directly to the market, it is more of a 'fee' because you do not get an education in return. People often put off an education thinking they will try it on their own, or they should wait for a better market. Unfortunately new traders often get the attitude of waiting to pay for an education with the profits they get from the market without an education; so it never happens. The market is ALWAYS good. There has never been a better time to get involved in the market. Paul Lange Vice President of Services Pristine Capital Holdings, Inc
-
Gaps occur every day to varying degrees on stocks and indices. To the stock trader, these gaps can offer enough trading opportunities to be done trading by mid-morning and many are. That being said, these gapers, depending how they have gapped, can provide additional trade setups later in the day as well as in the coming days. In this Chart of the Week, we'll review two gaps and a strategy how to have played them, use in the future and why they should continue the move. As I mentioned, gaps occur in varying degrees. Those gaps also can be in the direction of the prior day's movement or against them. With the prior days of movement the gap can be a continuation (pro) type of gap or it can be an exhaustion (novice) type of gap. The difference is based on whether the gap occurred after some type of correction within a trend, e.g., a gap up after a pullback or a consolidation base within an uptrend. The exhaustion gap occurs after prices have been trending in one direction for a period of time and then prices gap in that direction. All price movement reflects traders' and investors' beliefs and emotions; however, gaps can provide a shock element to price movement when the gap is against the recent price direction. Those educated and experienced trading gaps aren't shocked by continuation and exhaustion gaps, since they are expected based on the existing trend, location of support, resistance and pattern of candles. When prices gap in the opposite direction of the current pattern that partially or completely reverse the direction of the prior bar or two, it's a shock. The larger the immediate candle before the gap and the size of gap against it, the greater the shock and potential opportunity to profit. Let's look at two. American Express (AXP) had started to move lower with a large gap down, slightly recovered, stalled and then broke lower and closed with a huge red candle that closed near the low of the day. That day also occurred with an increase in volume. The pattern was pointing toward AXP moving lower, but that didn't happen. Rather, AXP gapped up the next day more than 50% into the prior red candle's range! Gaps like this shock traders since the prior pattern did not suggest such a large move in the opposite direct. We can correctly assume that traders are short were expecting AXP to move lower based on the pattern. What do you think they are going to do if AXP doesn't immediately collapse lower? This is what sets up a "Gap and Go" type of morning for stock traders to take advantage of. If AXP can move higher above the high (red line), it should continue moving up. But let's look at the intra-day chart that day and how it setup. On the gap up AXP cleared its resistance area, but the gap higher also leaves a partial void of support that has the potential to be filled. For that reason, entering long immediately could result in a move lower and without a clear area to place a stop-loss. What to do? Let AXP form a price pattern signaling that buyers are stepping up and taking control again in the form a reversal pattern. These patterns can happen in many ways, but the trained trader will follow Bar by Bar and see whatever the pattern is as it unfolds. The odds are AXP will move up based on the daily shock setup. AOL Inc. (AOL) is another example of a gap and shock. AOL was moving up toward resistance, but had closed strong the near the day's high and with an expanding range. The next day AOL gapped under that large green daily bar. What are all the traders that bought AOL that day now holding or anyone that bought in the prior two weeks? Right, losses! What would you do if you were long? Cut and run? Hope it comes back to get even? Buy more? The last two choices typically don't work out very well. No one likes losing, but it happens. Professional traders and investors have a plan that includes a stop-loss and stick to it. A gap lower under a large daily green candle strongly signals that prices will go lower, but gaps create voids and the intra-day entry must be formed. Here I have included the15-minute chart to see why prices stalled moving higher; the resistance (supply) to the left. The 2-minute detail provides the pattern signaling the setup on the current day in alignment with the big picture. These are some of the basics of what to look for when trading a gap. Look for daily shocks, prior areas of support or resistance where traders will take positions and a current pattern that forms in alignment with the big picture analysis. The odds will be in your side. All the best, Greg Capra President & CEO Pristine Trading -
Your level of confidence (not arrogance) as a trader will have a huge positive impact on your success. The more confident you are the less time you will spend on second guessing your decisions. The more confident you are the more positive energy you will focus toward your desired outcome. Confidence is based on two things; what you do and who you are. When a trade stops for a loss your confidence becomes rattled. This is because confidence is based on what you do. When confidence is based on who you are and your ability as a trader, one who is prepared for all outcomes whether a loss or a profit, then you are consistent with yourself no matter what the result. You will feel confident because you took the loss as intended or because you closed with a profit. You will choose correctly in either scenario! This is because confidence is based on you. Each time you correctly make a decision in trading whether it is for a loss or gain, the more confident you will become with your ability to act accordingly to the current market situation in a manner that is appropriate. Your confidence is now based on your awareness as a trader (you) not on failures, mistakes or missed opportunities. Let me say that again . . . Your confidence is now based on your awareness as a trader, one who will make the correct decisions. Help build confidence by reviewing your trades diligently to discover when, why and how you chose to act during the time of the trade. It will help your understanding of the markets and yourself. The more you choose to learn from each trade failure and success the stronger and more confident you will become. This confidence will increase your flexibility in your decisions and your behavior. This flexibility will help create comfort in your trading. This comfort will feed your confidence and the cycle continues. Begin working on your confidence today. Believe in yourself and have faith in your abilities. KURT CAPRA Contributing Editor Instructor and Traders Coach www.pristine.com
-
Good Morning All; Have you ever felt the inability to pull the trigger to get in a trade at the right moment, and then chased the stock only to your detriment? Have you ever taken profits way before your target the first time a stock 'jiggled', only to sit on the sidelines as your stock ran to its original target? If so, you are experiencing the effects of fear. You are not alone. Psychological aspects make up 85% of the trading equation. Fear is one of the aspects. Ideally, we would all be "emotionless" traders. No fear, no greed, just pure discipline. While this may be a worthy goal, not many can take the leap to this level just because I say you need to. While most people cannot eliminate fear, there are some things you can do to keep it in check. Here are some suggestions. First, the greatest enemy of fear is a well-laid plan. Have a trading plan that you use that clearly spells out what strategies you will play, when, you can trade, when you cannot trade, how many shares you will play, how much money you are willing to lose on a single trade. There are many aspects to a trading plan, these are some of the basics. Next, plan the individual trade. When you see a trade come up that fits into your plan, study the play to find the proper stop loss and target. Play the proper share size so a stop out does not violate your maximum loss per trade. Make your decisions before the trades hit, while you have a clear level head, then follow the plan without question. You must "execute" the trades you have "planned". The next step may be the most important. Let your plan go to work. Let the play finish. Unless something changes about the trade, let it come to its natural conclusion, either the target or the stop, or perhaps management based on your plan; not an overreaction to what you see. Think about it. You have planned a trade while you had a clear head. You believe the trade is worth your hard earned money. Give it a chance to finish. There are sometimes reasons to end the trade early. Perhaps there has been a change in market environment. For example, you might be long in your play and the futures just took out key support. Alternatively, maybe you planned on reaching the target by reversal time and it is almost at the target with reversal time now here. However, this happens the minority of times; the majority of times you should leave the play alone. Do not be jiggled out by your Level 2 screen. The chart pattern is all that matters. If you are still so nervous that you can't handle it, try this next. Sell half the position at the reduced target. Get used to taking partial profits and this will let you have confidence letting the back half hit the target. This will also be likely to put you in a 'no lose' situation with the trade, giving you some patience. Good traders sell incrementally, on the way up all of the time. If that does not help, then you need to cut back on your share size so the size of the potential loss does not trigger your "pain factor". Closing Comments The real answer to this question is 'just do it', but few are able to. Playing with a share size that doesn't trigger your 'fear button' is critical until you develop a winning record. Try these ideas if you are having a problem with 'fear'. Paul Lange Vice President of Services Pristine Capital Holdings, Inc. www.pristine.com
-
APPLE Inc. (AAPL) moved the NASDAQ 100 Index (QQQ) for the most part for a long time, but in 2013 that disconnected. AAPL moved lower as QQQ moved higher in 2013. Now AAPL has reached a point where those that have been in love with this stock (rightly so) have to step up to keep the very long-term trend alive. AAPL made its high in mid-2012 and QQQ pulled back also into the end of that year, but in 2013 that correlation disconnected as the two moved in opposite directions. AAPL is now retesting the low it made in April and buyers have an opportunity to add to those positions. With last week's reversal in the QQQ at support and AAPL retesting the prior low made in April, it's a point in time where the two are aligned again to move higher. If one or the other fails to hold its support level shown, the odds are that the QQQ will move to the second support shown and AAPL will move to the $350 dollar area marked. Join us for this week's Free Workshops and Happy 4th of July to you all! PRISTINE - A Trading Style, Often Imitated, But NEVER Matched! All the best Greg Capra President & CEO Pristine Capital Holdings, Inc.
-
Good Morning All; "Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'press on' has solved and always will solve the problems of the human race." Calvin Coolidge. Perseverance There is a famous story that is told about a prospector that set out to find fortune in the famous gold rush days. He took his life savings and bought the necessary mining equipment, and set out for the 'hot' mining spot. After months of drilling, he was on the last hole that his finances would allow him to dig. He was running out of money, and would not be able to set up in a new area. Another man came by and observed this prospector's operation. This man had seasoning and experience and made his living picking up the deserted mines of others. He had come to recognize when the rock formations in a mine were such that a gold vein was more likely to be close. He also knew that it was not hard to pick up old mines from miners who were broke and tired and had not found their fortunes. So it came to be that this man struck a deal to buy the prospectors equipment and rights to his mine that had not yet produced one cent of gold. The prospector had been mining for months, was tired and discouraged, and happy to get a little money for his worthless mine and equipment. He quit digging and sold all to the man. The man who took over only had to dig six more feet before running into what proved to be one of the biggest gold veins of that time. Had the prospector held out one more day, skipped one lunch, taken one less break, or done anything to delve six more feet, he would have had his fortune. Read today's quote at the top of the page. It is more than just a quote to fill in space. Today, it is the theme of the story and one of the best quotes of all time, and applies nicely to trading. Most traders who come to the market are talented, smart, and well educated. Most traders who come to the market fail at trading. You must resolve to do more than rely on your past successes. Read this quote and article again. It may prove to be one of the most important paragraphs you ever read. Closing Comments The process of learning to trade is unique because in addition to learning the technical skills, you are battling your emotions all the way. You will find that you will accumulate lots of knowledge, without seeing a marked improvement in your trading results. Then, all of a sudden, you will have what seems to be an epiphany, and soar ahead, and wonder how you could have even struggled at something so easy. Then you will stumble, and doubt if you are really making progress. If you are going to be successful, you will find your stumbles are less severe, last shorter each time, and your surges ahead are stronger. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
Every trader at some point in his career will face one or several "losing streaks". This is a fact of this business, and whoever tells you this isn't so has not traded very long or at all. Losing streaks can be produced by the faulty use of a tactic, inefficient analysis of market direction and internals, or other situations. These consecutive losing events can not only produce a drastic drawdown in your account, but even worse, can cause considerable psychological damage that might take a long time to correct. Let's talk about some of these issues and some ways to correct them. The first problem with a losing streak is the fact that it "tends to produce mounting losses". After the trader has finished his paper trading period (Interestingly, losing streaks rarely happen at this stage), the trader will have to deal at some point in his development with the diminishing capital caused by a streak of losses. Depending on whether the trader has established a proper trading plan to deal with his development, this streak will be more or less bearable. Consistency in the application of a plan and a set of tactics takes time, so it's more likely that a trader will have to contend with losing streaks during his development when he is trying to grasp and refine his approach. Thus, a proper money management scheme that looks to protect capital during the developmental stages is paramount. As the trader gains consistency, his plan will protect him from extremely bruising losing streaks, by establishing maximum losses per day or month, and by regulating the steps a trader should take in case he is facing one of these streaks. Even more troublesome to the trader might be the psychological consequences of a bad losing streak. When you face a losing streak, and you lack a proper plan, you might have to deal with 'trader's paralysis". This occurs when you had a severe loss, which produces such a fearful state that makes it impossible in your mind to take a new position. Confidence is lost. To climb back in the saddle, the trader has to create a process to recuperate such confidence step by step. It should begin with a brief paper trading period. Then, when the trader begins to trade real money, it's a very common mistake to try to enter into positions with very small stops. This might be a huge mistake. I believe that in order to regain confidence, the trader should enter into positions with wide enough stops so that the probability of it getting hit short term is very small. He might even consider entering into positions with not so great risk/rewards, just so he'll be able to remain in the position for as long as it takes until it hits the target or stop. This might allow him to regain his confidence that he can hold a position. Small shares during this process is suggested until a regained good win to loss ratio is achieved. Of course, this is only to regain confidence, and afterwards the proper selection of risk-reward plays is still paramount to a trader's success. If you have not taken a trial to our Interactive Live Trading rooms in a while, drop on by to see how you can gain more experience in how you trade and learn from some of the profitable trading idea's we generate daily. Take a free trial or call your Counselor at 1-800-340-6477. Would love to see you drop by with any questions you might have or to just gain some great insights into trading the current market. Jeff Yates Contributing Editor Interactive Trading Room Moderator Gap, Intra-Day and Swing Trading Specialist Instructor and Traders Coach pristine.com
-
Good Morning All; One of my favorite trading quotes; "You must be rigid in your rules and flexible in your expectations. Most traders are flexible in their rules and rigid in their expectations." Mark Douglas, Trading in the Zone. Rules and Expectations Read today's quote again. "You must be rigid in your rules and flexible in your expectations. Most traders are flexible in their rules and rigid in their expectations". This is from Mark Douglas in his book, Trading in the Zone. This should be one of the top quotes you keep near your monitor at all times. You may have read this quote prior to this, but perhaps many of you have now gained the experience to recognize the pure wisdom in the words. That is the reason an entire "Eyes" is being devoted to this quote, so everyone reading can recognize its importance. The reason that this advice is so important is because two of the most common problems among new or struggling traders are addressed here. The first problem raised is that most traders are flexible in their rules. Actually, the truth is most traders do not even have a firm set of rules they trade by. Sure, if you ask most traders they will say that they follow stops, and set targets. However, very few have the rules that are generated by a quality trading plan. Those that do, usually view them as optional, which really defeats the purpose of having rules. The second problem is that traders are rigid in their expectations. They form or acquire a market bias, or a 'feeling' about a particular stock, and hold to that expectation regardless of what the chart (reality) is telling them. When good news is released, they go long the stock and stay steadfast in their bullish view; even though the chart (reality) is telling them that the stock is falling. Some say that you cannot follow rigid rules, because trading requires your expectations to be flexible and change as needed, as the second part of the quote implies. Obviously, it is true that trading requires you to be flexible. However, all of the contemplated flexibility can be part of your plan and your rules. For example, you can decide ahead of time and define what a 'change in market direction' is and then define how you react to that new information. You could react by selling all of your position, selling half, raising the stop, etc. Closing Comments Those of you that have not embraced these concepts will hopefully take a new look at the quote above and use it to help improve your trading. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
This stock isn't going to be the next big mover like Apple (AAPL) was in its hay-day, but it has formed a bottom and signaled the start of a move higher last week. Bottoming formations take time and typically have multiple retests of prior lows, breakdown failures (BDF) and false starts. One signal that has had a high degree of not being a false start coming out of a base is the Bullish Wide Range Bar (+WRB) on increasing volume. After falling lower with virtually no bounces at all in 2011, Corning Inc. (GLW) began to form a bottom. Like most bottoming formations GLW had its retests, failed attempts to move higher, (none ever cleared any prior highs) and a breakdown failure that was retested. Notice after the move up from that retest GLW based sideways at resistance. Pristine Tip: Basing at resistance after a move up signals buyers absorbing the supply and bullish. Last week, GLW formed a +WRB with increasing volume and closed above its recent resistance area. Look further to the left and you will see other large green candles, some even with an increase in volume, but none of them cleared prior highs. Those prior highs still have to be overcome; however, the price action that has occurred after them suggests that is going to happen. By putting together the parts of the overall price action that has occurred we have the making of a bottom and bullish signal. I could have put a few indicators on the chart to show you how they are becoming bullish and signaling a move higher also. Most likely would create a belief in those indicators as a reliable way of determining a bottom. In time, you would be moving on to the next indicator someone else used. This is the cycle most go through forever and never understand how to read the interaction between buyers (demand) and sellers (supply). Bottoms form in different ways, but if you learn to read the price action the way I've explained, you will be able to determine when that is happened. Whether you trade stocks, commodities, currencies or the market indices learn to read the price action, not indicators that attempt to read the price action for you. Greg Capra President & CEO Pristine Capital Holdings, Inc.
-
Pristine Trained Traders (PTT) whether Core Trading, Swing Trading, or Day Trading are "Pattern Traders." Each Pristine pattern is clearly defined and is taught with an understanding of not only the pattern, but also what the pattern communicates about those that created it. Most learn candlestick patterns and their names, which is elementary. Additionally, because the names define those patterns as bullish or bearish they can be completely misleading, wrong and result in losses. Here's one. In the above chart of Sandisk Corp. (SNDK), the combination of the last two candles is what is called a Bullish Harami. Any candlestick scanner software will mark it as such. The pattern is one in which a large red candlestick is followed by a smaller candlestick whose body is located within the lower range of the larger body. Obviously, the two candles meet that definition, but there is nothing bullish about them to an educated chart reader. To understand this from candlestick terms, the Bullish Harami views the large red candle range that is followed by a small candle range as the bulls taking control. While the selling pressure has eased for the moment, this pattern cannot be construed as bulls taking control. What's happened for the moment is that the sellers are taking a breather after crushing those bullish and will return. Supply clearly overcoming demand. SNDK was clearly in a strong uptrend and in an uptrend like this price either pullbacks to Minor Support (mS) or "creates support" during corrections. What they don't do is slice through Major Support (MS) like it isn't there at all. That is what SNDK did and it is a bearish event that is in no way bullish. What typically happens next is the pattern will continue lower if prices break under the low of the last green candle; a 123 continuation pattern. They may consolidate a bit longer under or slightly above the area that was MS, so it is possible to trade above the high of the green candle. That would not be a confirmed 123 pattern; it would develop into a slightly different continuation pattern. To understand what is happening let's take a look at an intra-day chart. Wide Range Bars (WRB) like the one that occurred in SNDK on Thursday (the #1 bar) are multiple smaller bars moving in one direction with strong momentum intra-day. The rapid price movement lower leaves little to no areas of consolidation or retracements. Without those areas to use as tradable reference points to sell into, we have what I refer to as a "Price VOID." After a period without a retracement (continued supply) a base forms intra-day and a narrow inside bar (the #2 bar) on the daily time frame. This is "creating a new area of resistance where there was none. If prices continue lower on the next bar (#3 bar), we would then have a confirmed 123 pattern. What I have explained above it a basic understanding of the 123 continuation pattern and used SNDK as an example to make the point that candlestick pattern names can be very misleading. That being said, there is a higher level of understanding for the use of the 123 pattern. For example, view the weekly chart of the stock EOG Resources Inc. Symbol (EOG). It's not a 123 pattern yet because the #2 bar has not formed yet, it may this week. However, you will see a large red candle breaking below a base. While SNDK broke below a base of MS, it started its move lower from a pivot high. See the difference? Both patterns signal lower prices, but these differences are what the PPT takes note of. Greg Capra President & CEO Pristine Capital Holdings, Inc.
-
Good Morning All; Last week I began discussing a definition of trading. Today we are going to discuss how newer traders often define trading, and the process they go through to get there. What is Trading? Part 2 of 2 Many people 'invest' in the market by placing a 'bet' on the future of the stock market as a whole (usually the bet is that the market is going up). For those who decide to make income by actively trading, they usually feel the market is easy. They have been inspired by a great (or not so great) book, free seminar, or 'infomercial'. They have heard of great success, been introduced to a strategy that worked one time, and feel that since they are clearly above average in both intellect and perseverance, this stock market game will just be another conquest. Their definition of trading is likely along the lines of 'buy low and sell high, over and over again to produce a profit'. Soon after trying the concept that they learned which had introduced them to the market, they become frustrated. It is not working. They have probably justified many reasons why it is not working, and have concluded that to truly master the markets, they need more information. Therefore, they go on the crusade to become experts at everything. They read Barron's, IBD, Fortune, and Money. They study all terms learned on CNBC. They become an expert on all news and economic numbers. Suddenly the party conversation becomes analyzing the last 'book to bill number' or how foolish Greenspan was or Bernanke is. The quest now becomes to find stocks that they have determined to be 'undervalued', based on the superior knowledge they now have. Their definition of trading is now likely along the lines of 'looking for obvious overvalued and undervalued situations to capitalize on'. Soon they discover that 'undervalued' does not mean the price has to rally. If it does rally, their timing may be so far off, being 'right' did not matter. They also find they are not 'right' very much. They also discover that 'undervalued' goes hand in hand with 'really weak' and they are now starting to think that they are still missing something. They are also getting frustrated. This was supposed to be easy. Most still view it as easy at this point. They simply have had some bad breaks, rotten timing, poor luck, and naturally needed to overcome some growing pains. Unfortunately, it is at this time that they become most susceptible to the prey of the 'Holy Grail' vendors. Those who are selling products that are 'guaranteed' to make you money by following a simple 'how to' manual. When this crosses that, buy; when this changes color, sell, etc. Their definition of trading is now becoming blurred, and they start to think about many in depth questions about 'fundamental versus technical', about using 'technical indicators'. Desperation and lack of confidence often sets in and the definition of trading is sounding more like 'buy whatever the newsletter or market guru says'. If this flow sounds shockingly familiar, do not be surprised. At some point, a few will wipe the slate clean and seek out an 'education'. To learn to think for themselves and evaluate what is happening, not what they are being told. They come to understand that trading is a complex ever-changing environment that requires understanding as only derived in a total learning process. Below is the definition we gave you for 'trading'. If you read over it lightly yesterday, take another look today. "Using technical analysis to find a moment in time when the odds are in your favor. Then it becomes a matter of entry and management. In other words, it is having the KNOWLEDGE to know when the odds are in your favor, having the PATIENCE to wait for that moment, then having the DISCIPLINE to handle the trade properly when it goes in your favor and properly when it goes against you." Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
Last week, the broader markets broke out above their current resistance areas and S&P 500 finally joined the all-time high list. With no area of prior price resistance above, it's safe to assume that the markets will be continuing their march to higher levels. Finally, mutual fund investors that bought into the market at the highs in 2000 or 2007 and suffered long through 50% decreases and slow recoveries will see a gain on their investment. Happy times are here again!!! Hold on a sec., it's not that easy. As students of the markets and educated investors, swing traders or day traders, we don't assume anything. Following the trend is the simplest approach there is, and it works. However, human nature being what it is, without an objective method of determining the underlining strength or weakness and sentiment of the markets. We are more likely to ignore or rationalize the warning signs of change or the actual trend change itself when it comes. Of course, this assumes you have a method of doing that. I have seen enough trending markets to know that they always go further than you think they will. They continue their move until they have rung out the last few doubters and I think the markets now will do that with this uptrend as well. An example of a trend that moved beyond what the majorities believe was possible is Apple (AAPL). It moved from 100 a share to 300, 400, 500, and then 600! The doubters were rung out. At 700 there were few that doubted it wasn't going higher. Then when the turning point came; well, it's a temporary stall. It will be back to new highs shortly. Maybe it will at some point, but AAPL is now down 40% from its all-time high and still showing relative weakness to the broader markets. The greed and fear that comes with being human cannot be stopped. AAPL investors are realizing this now, but with an online trading education you can empower yourself to overcome that human fault as it relates to investing your money in the markets. Here is what I am looking at now to guide me about the recent move higher in the broader markets. n the above chart, I've put together four market index ETFs. The S&P 500 ETF symbol SPY, the Nasdaq 100 symbol QQQ, the Transportation index symbol IYT and the Russell 2000 index symbol IWM. I also have two market internal gauges. The McClellan Oscillator, which is a measure of market breadth and a Put/Call ratio with a 5-period moving average of its closes. We have many markets that have made all-time highs (not shown other than SPY) or have broken out above resistance like the Nasdaq 100. However, IYT did not move to new all-time highs with the recent move higher and is under its resistance. IWN also could not move to all-time highs and is under its resistance area. Historically, these two indices not confirming have been warning signs of underling weakness that preceded a market correction. It's too early to say these two indices will not move higher above their respective resistance areas, but should they establish lower highs and move toward their recent prior lows, it will be a bearish signal. If they move above their resistance areas, it's happy days - onward and upward! The internal gauges shown here are neutral. The McClellan is near zero and the 5-MA of the put/call ratio is in the middle of the range, so no guidance there of a turning point. However, those typical "wrong-way" option traders immediately jumped to buying puts (bearish bets) Friday. This is a short-term bullish sign that supports the breakout last week in SPY and QQQ and a continuation of that strength last week. That strength was not confirmed by all indices, so we have divergences that are concern. However, with option traders that are historically wrong and betting that the markets will move lower, the divergences are offset by those excessive bearish bets. With this, I'll be neutral over the next few days, but siding with the breakout to continue higher. Greg Capra President & CEO Pristine Capital Holdings, Inc.
-
Market analysis is in important part of our everyday activity. Pristine Trained Traders (PTT's) are taught to use our renowned Pristine Market Analysis techniques, which advocate a macro-to-micro approach. This means analyzing the market and internals first, then doing the same with the diverse sectors contained in your universe, and ultimately performing the same analysis on individual stocks. This ensures that you're trading in the same direction of the markets, and not against them. One important part of this process is sector analysis. This analysis allows the PTT to quickly identify potential trading opportunities in an individual sector of the economy. It's a well-known fact that institutions move their funds from one sector to the next rather than from an individual stock to another. This is called Sector Rotation. Sometimes, this rotation occurs because money is moving from assets perceived to be more risky (e.g. Tech Stocks) to assets perceived to be less so (e.g. Gold) and vice versa. But this rotation isn't always intended to be protective in nature. Institutions tend to have a "flavor of the month" approach, where they lock on a sector of interest, and direct all their efforts to invest their funds and sell to their clients the idea of investing in such sectors. This creates an avalanche of funds getting into or out of any given sector, as most institutions will play the same game in order to avoid falling behind the "average" performance of its competitors. This rotation effect caused by funds being allocated to or from any specific sector will create price movements that oftentimes will be presented as a Stage 2 (Uptrend) or a Stage 4 (Downtrend) in those sectors, as measured by the different sector indexes that exist, allowing for tradable opportunities for the educated PTT. This is nothing new, as the "Sector Trading Tools and Tactics" we teach in our seminars let you trade in the same direction of most institutional traders and market makers. Here are just but a few different ways in which a PTT can use sector analysis: As a means to quickly search for trading opportunities in stocks within the sector. As a benchmark with which to measure Relative Strength and Weakness. As a trading opportunity by using sector following securities. Let's briefly delve into each of these categories. Sector Analysis as a means to quickly search for trading opportunities in stocks within the sector. One very simple and quick way in which the PTT looks for and finds tradable opportunities is by looking at the several sector indexes in his "universe". These indexes, being a basket of the different securities that conform to a given sector, will often show recognizable Pristine Setups (taught in our TPM and ATS seminars) that are formed because many stocks in that given sector have formed such patterns. Thus, a Pristine Buy Setup (PBS) in a daily chart of the $BTK.X (Biotechnology Index) should produce several stocks in that sector that show similar price patterns. In this way, the PTT can quickly focus on opportunity, by analyzing the macro list of sector indexes, and then finding the best setups within that sector. Sector Analysis as a benchmark with which to measure Relative Strength and Weakness. Within any given sector index, some securities will outperform the index and some will under-perform it. This is only natural, as you'll always have leaders and laggards in any sector. The PTT uses "Relative Strength Analysis", taught in our famed ATS Seminar, to evaluate the performance of individual securities within any given sector, vs. their sector index, in order to determine which patterns present the best odds of a successful trade. Sector Analysis as a trading opportunity by using sector following securities. As a trader, you have several options to try to benefit from a sector move. One that is becoming more widely used is trading "Index Tracking" Securities. These securities (Holdrs, ETF's and I-Shares), traded mainly in the American Stock Exchange (AMEX), are trusts that hold a basket of stocks that mimic the sector index composition. Some of them are liquid enough even for Micro-Trading, even though most are better suited for swing and core trading. Trading these securities is an efficient way to do Core Trading, as it allows you to participate in any sector's potential multi-week move, while reducing the risk of any individual stock in that sector gapping down or moving against your position. Jeff Yates Contributing Editor Intra-Day and Swing Trading Specialist Instructor and Traders Coach
-
Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. This series of articles discusses this issue, and are geared toward the 'intraday trader', not the swing trader. That was the opening paragraph the last two parts of this three part series. Last week we looked at the key morning reversal times, and began to discuss lunch. Today we will discuss lunch, and the afternoon reversals. When to Trade What, Part 3 of 3 Lunch: Lunch can be a little tricky to pin point on some days. At its broadest moments, lunch begins after the 11:15 reversal time (remember, all times are ET, market time) ends the move, and can last all the way until the 2:15 reversal time. This is what typically happens on sloppy, non-trending days. On nice trending days, lunch may be as short as 12:00 until the 1:30 reversal time. The most precise reversal times over the lunch period are 1:30, and 2:15 (2:15-2:30 range on most days). Below is a typical day. Notice a few things, and then look at the charts for yourself. These revelations will save you, and make you money, everyday. 1. Note the range (the fluctuations from the highs to the lows), or volatility, before lunch, after lunch, and during lunch. Note again, from last week, the power of the 10:00 and 10:30 reversals 2. Note the volume during lunch. 3. Note the last playable event was at 11:30, and the next one was at 2.15. 4. Note the narrow bodies and tails during lunch; you do not see the rest of the day. These are the reasons traders get frustrated at lunch, real moves rarely happen on the market or typical stocks. And After Lunch: After 1:30 comes the 2:15 time. If 1:30 does not begin the afternoon move, then 2:15 will. If 1:30 does produce a big move, then 2:15 is often the target. The last times of the day are 3:00, when the bond market closes and 3:30, which usually provides the high or low into the close to end trading for the day, as the last 30 minutes is often sloppy. Here is one more chart. Here we see another typical day. You will find, when you study this, there are only a small handful of patterns that happen over and over again. Here we have a retest at '1' that holds for the end of lunch. The first playable move is the 2.15 reversal, and finally the 3.30 reversal ends the pull back for a rally into close. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
You find a near perfect Pristine Buy Setup, meeting all the requirements of your trading plan, and devise a plan to trade it. Now the stock is at your established entry price, you click on the buy button, and it's done! You just bought yourself a position in XYZ. Whatever outcome is produced by this position should be considered your responsibility. Both a positive or negative one. But this isn't always the case. Our culture has suffered from a loss of the personal responsibility values that built it. These days, an individual walks into a McDonalds and after getting fat due to the excessive consumption of burgers, sues the company for making him fat. It's the old "the devil made me do it" rationale. But we have to understand that every action, even the decision not to-do something, is made by the individual out of free will. When an individual considers taking some course of action, he will compare the perceived positives and negatives of taking such action, and if the positives outweigh the negatives, he'll proceed with it. This same rationale can be applied to trading. When you take a position, it should be because the probable positives of taking such a position outweigh the potential negatives (High odds). A proper trading plan should see to this. Novice traders, never seriously considering the negative potential of any trade, will base their decisions on a constant bias towards the positives. When your stop loss price is hit, you and only you are responsible for the outcome of your trade. It's easy to blame specialists, market makers, or other dastardly subjects for your loss. But it was you in the first place that decided to buy/sell short that position. You should have considered all the probable positives and negatives of taking such a trade. Is this a NYSE stock? Learn about the execution conditions that exist in listed stocks before taking that trade. Is Bernanke speaking while you plan to hold on to your position? It's your responsibility to know all possible implications. At the end of the day, you take a position, and it either moves in your favor, or against you. If you're right, you'll make money; if wrong you'll lose some. In either case, you and only you will be responsible for the outcome. Understanding this is a step towards professionalism. KURT CAPRA Contributing Editor Interactive Trading Room Moderator Instructor and Traders Coach
-
Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today, is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. That is the point of this article. When to Trade What, Part 2 of 3 That was the opening paragraph last week in part one of this three part series. In the last letter we looked at some 'pre market' organization, and we discussed the first reversal time, 9:35 (all times are Eastern, New York, 'market' time). We then mentioned the next two reversal times, 10:00 and 10:30. This week, we will talk about those two key times, as well as the beginning of the 'lunch hour'. Next week we will conclude with part three. There are 9 micro reversal times. 4-5 of them are major and critical. Also, understanding HOW to use them and HOW they interact is imperative. Let's look at the morning reversals, 10:00 and 10:30: There is also a minor reversal time at 11:15. It is simply amazing how many traders do not use the reversal times to their advantage. This probably spawns from the fact that many traders do not even know or understand them. If you are one of those traders, you are going to learn something that will change your trading career in the next couple of paragraphs. A picture says a thousand words, so look at the charts below. These are the three five-minute charts of the QQQ from the last three days, period. We generally give the reversal times a window of 5-10 minutes on each side. The key is when the Pristine Buy or Sell setup occurs, at the approximate time. The yellow 'stars' show the two major reversal times we are discussing. They are all happening 'right on the money', though they do not need to in order to be effective. Note two things. First, the second chart is slightly off on the 10.30 reversal, but the 10.30 low was only pennies off the low of the day, and again, it is the buy setup that happens once in that area that matters. Second, these charts are simply that last three days. They are not the result of a special search. If you continue this exercise on your own, you will be astonished. Most other days are even more amazing. Note, that the 10:00 and 10:30 major reversal times form a reversal, every time, and one of them usually sets the high or low for the day, or at least for the morning. This is typical of what you will find every day. Again, no effort was used to find these charts for this article. The only time this is not 'amazing' is when we have 'power trend' days that do not really reverse at all, and that is because the very definition of a power trend day is that the market carries a trend one way all day. Sometimes these days don not begin until the 10:00 reversal time puts in the first reversal, but these power trend days are rare; usually one every other month. Don't believe it? No problem, go take a look for yourself. Go print out a bunch of five-minute charts. Print them from the market, the futures, or your favorite stocks. Print some from this week, some from a month ago, some from two months ago. It does not matter. Then go through and draw vertical lines at 10:00, and 10:30. You will be shocked and amazed that virtually every day, you have drawn lines though the high and low of the day, or at least the high, until much later in the day. And you thought trading was tough. The next time period to look at is the beginning and ending of lunch. These times can change a little depending on if the market is 'trending' or choppy. Generally, the last true move ends around 12:20. We often count lunch as starting at 12:00, but if there is a strong trend in place, it may follow through until 12:30. On strong trend days, the last reversal around 1:30 often sets the trend back in place. If it is a choppy market (80% of the time), lunch may stay choppy, until the 2:15 reversal time. This one is usually in stone, and the whole lunch concept, as well as the afternoon reversals, will be discussed next week. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
rading is one of the most fascinating, challenging and rewarding businesses on earth. Very simply, we are looking for price patterns that have high odds of follow through, then we look to the market internals to see if it makes sense to enter a bullish or bearish trade and, if acceptable, we calculate share size per our Trading Plan, enter the trade and then enter "management mode." When looking for stocks to trade in a particular sector, it is best to trade the cleanest patterns that are showing relative strength for longs (relative weakness for shorts). There are various ways to determine strength. Some include comparing the stock to the sector, comparing it to market internals, or comparing it to itself. For example, if the SMH (semi-conductor holders trust) has a bullish daily, gapped up, and is a Pristine Buy Setup™ (PBS) into the gap fill on the 5-Min. chart, but AMAT also has a bullish daily, also gapped up, but is basing at the high into the first reversal and did not pull back, it is showing relative strength to the market. Now assume the S&P Futures pulled into the gap fill on the 5-Min. chart (and the TICK fell and the TRIN rose), but both SMH and AMAT also have a bullish daily, also gapped up, but are basing at the high into the first reversal and did not pull back, they are showing relative strength to the market internals. Finally, many novice traders believe that a stock's Relative Strength Indicator (RSI) measures relative strength to the market. Remember, the RSI, like any oscillator, is a derivative of price and volume; therefore, all compare stock action to itself, not to a broader market index. So RSI measures the momentum of a stock's price action compared to its price "x" periods ago (default is 14 days), but to the Pristine Trained Trader, offers no benefit that is otherwise not readily ascertainable from price action. In addition to watching my long and short lists for possible entries, I watch two market minders looking for relative strength or weakness. If the market gaps down, and I am considering fading the open and looking long, I see what is showing relative strength compared to the broader market. Similarly, if the market gaps up and I am looking for a short, I will focus on the weak stocks, which are those down at the open that did not participate in the market's gap strength. (Note that this is a short-term counter trend strategy that is applied only when the market internals suggest it. In fact, we might actually be buying the stocks that gap up with the broader market, on pullbacks into the first reversal period, or over a 30-Min. high. Jeff Yates Contributing Editor Interactive Trading Room Moderator Gap and Intra-Day Trading Specialist Instructor and Traders Coach
-
Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. These next three articles will discuss this issue, and are geared toward the 'intraday trader', not the swing trader. When to Trade What, Part 1 of 3 The comment above said that trades can be done any time of the day, does that mean even lunch? Yes. While it is often much discussed 'not' to trade lunch, part of that statement is left off. Do not trade lunch, unless you know how to trade it. Lunch is the time when many traders get into trouble, because they do not realize that many things will not act the same during lunch as they do during 'non-lunch' times. The first issue to consider is the volatility and target expectations. If you could give a 'volatility rating' to the market, or stocks in general, it would look like this. If things move '1' during lunch, they move '3' between 2:15 and close, and move '5' between open and noon. If you do not realize this, targets will be unrealistic and lead to frustration. Before Open: So how do you focus your time? For many people, the time spent between 8:30 and 9:30 may be the most productive (all times are Eastern, New York, market time). Preparing your watchlist, forming a gap list, and starting a market bias can be key to how your day goes. Get ready for the open by picking the best of your favorite stocks, the best of your daily watchlist, and the best of your gapping stocks and know how you will play them, if at all, before the market opens. The First Five and Thirty Minutes: Very few traders realize the power of reversal times, or the power of having the knowledge of how to trade each part of the day. Most traders, who play trends and breakouts, should not even be playing the first thirty minutes of the day. Look at your records. The chances are that you have a very low batting average for trades taken during the first thirty minutes. The only trades that should be taken during the first thirty minutes are based on gaps or other very special strategies. The 9:35 reversal time is one of the most reliable, yet few traders realize its power. Many get stopped out of plays, rather than profiting from, the 9:35 reversal. The above chart shows an example of a price pattern that gapped bearishly, sold off hard for less than two minutes, and turned around so quickly, most traders who mistakenly tried to short the move down suffered losses. Knowing that this flurry move down offers a buying opportunity on a regular basis when played on the right stock can turn potential losers into big winners. Once the five-minute reversals are over, many stocks have solid moves into the 10:00 reversal time. This reversal time can run anywhere from 9:50 - 10:10, but the power move usually comes closer to 10:10. Trends between 9:35 and 10:00 are usually very reliable, if backed by a strategy. However, 10:00 or 10:30 are the reversal times that often set highs or lows for the day. Stocks that do not reverse at these key times may go on to be 'power trends'. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
In this Chart of the Week (COTW), I want to show why one trader who is focused on swing-trading would never consider buying and another that is focused on intra-day trading would. However, both traders would initially view the chart as bearish and both may have it on their watch list for a short sale the next day. In the above daily chart, we see a stock that has broken down under Major Support (MS), the 20-MA and the 200-MA. While the stock did form a Bottom Tail (BT) on the break lower, it never was able to trade above that high for several days. Over those days of basing, the stock formed two Topping Tails (TT) as buyers tried to get the stock above the 200-MA. With the formation of the last TT the price action did suggest that the stock would move lower and possibly the next trading day. For that reason, both the swing-trader and the intra-day trader would have a bearish view. Based on what had occurred at this point, the swing-trader would never consider buying stock with a chart like this the next day regardless of what it did at the open. However, the intraday trader having an understanding of gaps, multiple time frames as well as how bearish traders have become trapped would be willing to buy the stock in the short-term under the right conditions. Let's look at what it at the open and did happen. Rather than move lower at the open, the stock gapped up a small amount, rallied and closed above prior resistance and the daily TTs. To the intra-day trader this is a clear breakout with a Tradable Void above. It's a great long setup for that trader! The next step for the intra-day trader is to find an entry, which could be a Pristine Buy Setup (PBS) a Pristine Breakout (PBO) or any bullish pattern confirming the bullish breakout and signal of higher prices that should come. A textbook PBS formed at the 10 o'clock reversal period signaling that buyers did in fact step up on the pull back and prices were ready to move higher. While we cannot know for sure that prices would move as high as they did, there was the tradable void, so there was nothing to stop that from happening. Once the gap was filled, the odds increased that the stock would retrace then. Above is the completed daily chart of Altera Corp. (ALTR) as of the close on Friday February 1st. It's still not attractive for a swing trade, and at this point it's not of any interest to an intra-day trader either. It had a good day on Friday, but now the current pattern does not suggest good odds in either direction for either trader since the prior bearish daily price action has been neutralized and the gap filled. All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc.
-
Trading today is more popular than ever. Countless individuals flock each year to the markets, hoping to make large amounts of money, many attracted by misleading commercials promising simplicity and easy access to riches. Many of these aspiring traders fail. In as much as we would like to think that each individual commits different and very particular mistakes in his quest for success, my experience as both a trader and Pristine Certified Trainer (PCT) has shown me that most traders typically fall prey to the same problems and mistakes. The following are just but some of the typical ones: Lack of a Trading Plan. Most traders lack a well conceived plan to trade the markets, and most mistakes committed by them can be summed up in this category. The lack of a decent plan means that the trader won't know which "events" to focus on, the rules to trade those events, money management rules, etc. Typical mistakes such as not taking stops and overtrading can be attributed to this problem. Lack of Confidence in his Tactics. Traders will only execute effectively if they're confident about the odds of any particular tactic. Learning it in a seminar isn't enough. You have to test it yourself, and reach a level of comfort and confidence that will allow you to execute with precision. Trading Under Monetary Pressures. Since people think that this is an easy road to riches, many leave their jobs or expect to make an immediate living trading the markets. Nothing is more detrimental to your success as a trader than facing the pressure to perform. Now, traders are focused on money, instead of technique and this leads to "dollar counting" which is detrimental to a traders progress. Trading with Insufficient Capital. Undercapitalized traders face two typical problems. One is the fact that they'll tend to take positions that will utilize a big percentage of their accounts, which in turn might produce losses that will be more significant than they should be. This is another reason why traders don't take stops. Lack of Proper Technology or Too Much Reliance on Only Technology. Traders that lack the proper technology, either because of the fear of using advanced systems or lack of commitment to obtaining them as a necessary cost of doing business, face a debilitating disadvantage as they can't process information quickly enough, and as we all know, this is a business that deals with the rapid analysis of information. On the other hand, there are those that think that technology alone, without the proper training and method, can solve their problems. An aspiring trader with no method, who just relies only on technology, is operating at a huge disadvantage. KURT CAPRA Contributing Editor Instructor and Traders Coach
-
Good Morning All: In the last issue, I gave you part three of a four part series. This series is a set of exact steps that will help you tremendously if you have the technical knowledge, but cannot seem to turn the corner on making good profits. There are four things that you can do that I feel will 'dramatically change your trading career'. The results will be immediate, every week, and this will be item number four. It should be stated again, that if you do not have the technical expertise, you are not at the level that these comments will help. If you do not know how to look at a chart, no amount of refining will help you. Where do you get this expertise? There is no better place than our famous Trading the Pristine Method Seminar. After a long time of working with many traders, one discovers that there are certain truths that cannot be denied. There are four things that are done so consistently wrong by new, and even fairly experienced traders, that each of these mistakes results in bad trades 90% of the time for most traders. If traders would simply follow these four rules, they would eliminate most of their losing trades. The fourth rule does not really fall into this "90%" category, but is perhaps the most important, and is the subject of today's discussion. Four Things That Will Change Your Trading Career: Part Four of Four It is time for the fourth and final rule of this series. As we have mentioned in the introductory paragraph of each of these four lessons, this is not really a 'new' rule. However, the first three rules are ineffective and worthless if you do not know the fourth rule. The fourth rule is to simply follow up to make sure that you are doing each of the first three rules properly. Now, DO NOT stop reading this and say, 'yea, yea, follow up, I know'. There is an exact procedure that must be followed. When this is followed, traders are always shocked and amazed at the results. 1. Print out the chart for the relevant time frame(s) for the trade you took. If it was a five minute Pristine Buy Setup, print the five minute chart. 2. Write the name of the strategy you played on the top of the chart. 3. Take a 'green' marker, and mark in the correct entry, stop, targets, and management, based on your trading plan. 4. Now take a 'red' marker, and mark in the actual entry and exits you had based on your trading records. 5. Now decide if the play you did was substantially correct according to your trading plan. If it was, write a 'good' on the top of the page. 6. If the play was not correct according to your plan, write a 'bad' on the top. 7. If the play was bad, put the reason why on top. Save these until the end of the week. Over the weekend, take all the 'good trades' and start a binder of good trades, saving the best examples of each of your strategies. We are very visual people, and learn best by pictures. Take all the 'bad' trades and categorize them by the reason they were bad. Take the number one mistake you committed that week, and do whatever necessary to resolve that problem the next week. Eliminate ONE mistake every week. Please keep a couple of important rules in mind. First of all, this process MUST be done at least 30 minutes AFTER the market closes. Traders often do not think properly when the market is open, and you will 'rubber stamp' any trade you do if you look at it soon after you close out the trade. The best case is to wait until that evening. Second, it is BEST to hand write on the chart. Print the chart, then use your own hand to write on the chart. Many like to use Power Point or other software, but the best learning will come from having all of your senses involved. If you must, it is better to do this on the computer than not at all, but try doing these by hand, as shown in the example above. This concludes a very important series of four lessons. If you are serious about your trading, see how well you currently do at these, and vow to follow them religiously for a week. You may be surprised. Closing Comments Even if you have not been following these four 'secrets', take the time to do this one. Print up some charts, and go through the procedure, even if you do not have good plan, or don't feel you even know what to look for. You will be shocked, and you will have a whole new perspective on the four things that were discussed over the last four weeks. I hope you have enjoyed this series of articles. Until next week, good trading. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
-
Good Morning All: In the last issue, I gave you part two of a four part series. This series is a set of exact steps that will help you tremendously if you have the technical knowledge, but cannot seem to turn the corner on making good profits. There are four things that you can do that I feel will 'dramatically change your trading career'. The results will be immediate, every week, and this will be item number three. It should be stated again, that if you do not have the technical expertise, you are not at the level that these comments will help. If you don't know how to look at a chart, no amount of refining will help you. Where do you get this expertise? There is no better place than the Trading the Pristine Method Seminar. After a long time of working with many traders, one discovers that there are certain truths that cannot be denied. There are four things that are done so consistently wrong by new, and even fairly experienced traders, that each of these mistakes results in bad trades 90% of the time for most traders. If traders would simply follow these four rules, they would eliminate most of their losing trades. The fourth rule does not really fall into this "90%" category, but is perhaps the most important. Four Things That Will Change Your Trading Career: Part Three of Four Here is the third rule, and the subject of this lesson. Traders should always follow the power of the market (or an individual stock). When the market or stock is having a bullish day, the daily bar is green, and the intraday trends are up, buy pullbacks; do not play short. When the market or stock is having a bearish day, the daily bar is red, and the intraday trends are down, short the rallies; do not buy the pullbacks. This sounds simple, yet this rule actually addresses the number one mistake traders make in selecting plays. Most traders, especially newer traders, try to short strong stocks, or buy weak stocks. They try to 'short the top', or 'buy the bottom'. They may not even realize they have the problem. Most issues like this are not discovered unless the trader takes overt action to find the problem. Why would so many traders pick up such a bad habit? The answer is simple; it is the same problem that causes so many traders to not trade the way they want to trade. Psychological issues step in and cause the trader to trade improperly. Catching a bottom or a top in a stock makes a trader fell like a 'hero' when right. And, if they do get an occasional trade correct, that is all they remember. They forget the dozens of losses it took to get the one winner, and remember only the glory of 'shorting that one at its high'. There is a strategy for shorting a strong stock, or buying a weak stock, but it is only used when the stock goes 'climactic'. Unfortunately, this play seems to be difficult for most traders to recognize, and requires patience, something most new traders do not have. Below is an example. Would you short this pattern as a 'climactic sell setup' (CSS)? Many traders see patterns like this and feel that it just cannot go any higher. So they short the first red bar, at the '?'. Unfortunately, the usual result is shown below. As the stock advances, they realize that they were not just off, they were way off. They needed the patience to wait for this high at the new'?', above. Surely THIS, is a much better place to short; or is it? Well, maybe not. The stock did not drop at all, and after a little rest, it is back off to the races. As a matter of fact, it turns out that shortly after every 'short' attempt, the truly great play was to go long, even though it looked 'extended'. Bottom line, stay with the easy play. Look at all the money that could be made on the LONG side of this trade, yet so many traders are drawn to finding the top. It is often never found. This is not an unusual chart, I am sure you encounter this every day. Closing Comments The concept illustrated above refers to avoiding playing a stock against the power of a strong trend. It is also applicable to avoid shorting stocks in general, if the market is in a powerful trend (and the same for not going long on a 'red bar' day). While there are certain stocks that will drop on bullish days, they are much harder to find, and as a rule, drop much less. Next week we will look at the fourth 'secret' that will change your trading. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
