File PDF .it

Condividi facilmente i tuoi documenti PDF con i tuoi contatti, il Web e i Social network.

Inviare un file File manager Cassetta degli attrezzi Ricerca PDF Assistenza Contattaci



When Markets Attack, Lessons from 15 Traders .pdf



Nome del file originale: When Markets Attack, Lessons from 15 Traders.pdf
Titolo: When Markets Attack™ » Lessons From 15 Traders Who Beat The Markets √PDF √eBook ✔Download

Questo documento in formato PDF 1.4 è stato generato da Adobe InDesign CC 2014 (Windows) / Adobe PDF Library 11.0, ed è stato inviato su file-pdf.it il 24/01/2016 alle 07:27, dall'indirizzo IP 114.120.x.x. La pagina di download del file è stata vista 3288 volte.
Dimensione del file: 11 MB (228 pagine).
Privacy: file pubblico




Scarica il file PDF









Anteprima del documento


WHEN
markets
attack
Lessons From 15 Traders Who Beat The Markets

How to Get the Most Out of This Book
Cam White, TradingPub

Thank you for downloading “When Markets Attack: Lessons from 15 Traders Who Beat the
Markets”. This book is designed for beginning, intermediate and advanced traders.
The presenters in this book are leading experts in trading Stocks, Futures, Options, Forex and
Nadex. You will also be exposed to a chapter on Trading Psychology and how to set yourself up
as a trading entity to save a lot of money on taxes.
As you read this book, you will be exposed to multiple strategies that have high probabilities of
success and/or high profit. These strategies were selected by pouring over webinars that have
been hosted by TradingPub in the recent past. Each webinar was transcribed into a “game plan”
for executing the strategy. Every strategy in this book is divided into three sections:

The Game Plan
An introduction to the instrument being traded, whether it is Stocks, Futures, Options, Forex
or Nadex. The strategy is then thoroughly explained along with illustrations and examples.

The Movie
Once you have read the chapter, you can view the complete webinar on the strategy. You will
gain a better understanding of the strategy along with multiple examples not covered in the
chapter. In some cases, the presenter switches in to live trading to demonstrate the strategy in
action. In many of the webinars, the presenter also fields questions from attendees.

Special Offers
If you really like a strategy, you can follow the presenter and the strategy. There are thousands
of dollars’ worth of trading tools, indicators, training and mentoring services, books and videos
available at steeply discounted prices.

In short, you will have all of the information you need to trade your
new favorite strategy tomorrow.

Some of the things you will learn in this book are:
-How to buy Stop/Loss protection for pennies on the dollar (Nadex Spreads)
-How to Retire on $13,000 per month in 5 Years Tax-Free with Credit Spreads
-How to turn $156 into $1,000 trading Bond Futures, It only works 40% of the
time!
-The opening of the London session can consistently put $500 in your pocket.
-How to trade the markets with an account as small as $100 (Nadex)
-How to stay in control your emotions when you trade.
At TradingPub, it is our sincere hope that you take away several strategies that you can use
when you are done reading this book. You will also learn about markets that you currently don’t
trade, and you will find out if they are suited to your trading personality.
Finally, make sure take advantage of all the free resources from TradingPub. We host free
webinars every week for trading all of the markets. Our presenters are world-renowned industry
experts and our content is provided free of charge in a relaxed and friendly setting. Cheers to
your trading success!

TABLE OF CONTENTS
I.

Chapter 1- Trading Psychology



“Mastering Your Inner Game” - Rande Howell

II.

Chapter 2- Stocks





“Trading Tops and Bottoms” - Steve Primo
“High Profit Candlestick Signals and Patterns” - Stephen Bigalow
“2 Warning Signs to Keep you Out of Losing Trades” – Jared Wesley



8-22

24-36
37-52
53-65

III. Chapter 3- Futures




67-82
“Turn $156 into $1,000 Trading 30 Year Bonds” – Hubert Senters
83-94
“How to Use Market Profile to Trade Futures” – Greg Weitzman

95-107
“30 Trading Insights to Help Overcome Your Trading Fears” – Tom Busby

IV. Chapter 4- Options




109-119
“How to Add Weekly Options to Your Trading Arsenal” – Andrew Keene
“Using Math to Generate Fantastic Short-Term Trading Profits – Chris Verhaegh 120-129
“Creating the Ultimate Retirement Plan with Credit Spreads” – Peter Schultz
130-142

V.

Chapter 5- Forex






“The London Breakout Strategy” – Joshua Martinez
“Predicting Markets with Volume and Price” – Nigel Hawkes
“Why Your Entry Strategy [ALMOST] Doesn’t Matter” – Casey Stubbs





“Using the Power Crossover Method to Increase Probabilities” – Mark Hodge
“Trading Nadex Spreads as the Ultimate Hedge Strategy” – Darrell Martin
“Two High Probability Nadex Strategies” – Cam White

VI. Chapter 6- Nadex

VII. Chapter 7- Trading Necessities


“Trade as a Business and Save on Your Taxes” – Robert A. Green, CPA

144-160
161-169
170-175

177-183
184-197
198-212

214-227

CHAPTER I

Trading Psychology

When Markets Attack

Mastering Your Inner Game
Rande Howell, Med, LPC

As a trader, do you ever wonder why you can’t achieve the results that you want to achieve? Do
you find yourself constantly making the same mistakes? Are you controlled by your emotions?
These are mistakes that all traders make, but the successful traders have learned how to manage their inner game. In this section, we are going to learn how to overcome the eight road blocks
to successful trading.

To get started, let’s first look at the components that make up a successful trade:

Without integration of each component, you are an incomplete trader risk is stacked against you.

8

Chapter 1- Trading Psychology

When Markets Attack

First you need to have a trading platform, trading methodology and a trading state of mind. There
are multiple trading platforms and numerous trading methodologies you can use, so it’s important
that you choose risk management strategy and trading platform you’re most comfortable using.
But it’s also critically important to have the right trading psychology. If you don’t have the right
mindset, it really doesn’t matter about your trading platform or methodology. You need to have
balanced integration of these three critical trading components. It doesn’t matter how good you are
at knowing how to trade if you can’t hold your wits together.
Let’s face it, most traders early on are looking for the magical secret, or the “Holy Grail” of successful
trading. They chase the best charting software, newest indicators, data and news services,
mentoring programs, you name it. What they are looking for is the magic solution to trading, when
they don’t recognize that they themselves are the problem. There is no magical “Holy Grail” for
trading success “out there”. The secret to trading success lies within yourself, just waiting to be
discovered. Remember this adage: “80 percent of trading is in your head”.
What separates the elite golfers from the rest of the field? They all have the best equipment in the
industry. They have spent countless hours practicing and perfecting their craft. They know how to
drive, chip and putt. So what separates the elite golfers from the rest of the crowd? They know how
to do it in the clutch, when the money is on the line. This lesson is about learning how to develop
the mindset of a peak performance trader – to separate yourself from the sea of traders who are
inconsistent and bleed out their accounts.

Chapter 1- Trading Psychology

9

When Markets Attack

What the Untrained Brain Sees when the Untrained
Mind Experiences Uncertainty
Since the beginning of time, our brains have been trained to see uncertainty and fear as one in the
same thing. How many times have you had your finger on the trigger, but you just couldn’t bring
yourself to execute the trade? How many times have you bailed out early on a trade, only to watch
it run in the direction you thought it would? That is your brain perceiving psychological discomfort
as a biological threat. Unless you can untangle that association, and re-train your mind, you are
likely to repeat these behaviors over and over again.
The markets don’t care about you. You can trade them as long as you have capital, but sooner or
later, usually after drawing down your accounts, you come to the realization that you need to work
on yourself if you are going to be successful at trading.
Recognizing that we have been historically been wired to associate psychological discomfort (fear)
with a biological threat, let’s break down the components of emotions. An emotion is how the body/
brain/mind gets triggered to any disruption of a familiar status. It’s a common buzzword in trading
to talk about simply taking the emotion out of trading. The reality is that the only time humans can
do anything without emotion is if they’re dead. Emotions are biological and they take over our
psychology. We need to accept that we are emotional creatures and that our psychology is governed
by our emotions. So the key is - how do you manage your emotions? We don’t have freedom from
emotions, but we can have freedom of emotions. You can become the designer of the

emotions that you respond to.

10

Chapter 1- Trading Psychology

When Markets Attack

Emotions can be broken down into five major components:
1.- Arousal
That’s the revving-up of an emotion. Think about yourself when you are in the midst of engaging in a
trade. Your body starts tensing. You stop breathing, or your breathing may be “high” and “low”. Your
heart accelerates. Your eyes are fixated on the screen. That’s arousal, and it’s the first aspect of your
emotions that you must learn to manage. If you can’t, then you will lose control of your emotions.

2.- Feeling
This is where the biological chemistry creates a subjective experience of the emotion. If cortisol is
pulsing through your body, it can produce a sense of fear. If testosterone levels become elevated, it
produces a sense of grandeur. Both of these responses can lead to costly trading mistakes. You can
be afraid to pull the trigger on a trade, exit a trade early or double-down on a risky trade.

3.- Motivation
Once the chemistry is released into your system, your body will usually pointed into a “fight or flight”
response. You perceive a threat, and you are either going to attack it or avoid it. If you hesitate on
a trade, you are in avoidance. If you revenge-trade after a losing trade, you are in attack mode. It’s
important to have a trained mind to regulate these responses to a perceived threat. Developing a curious mind allows you to act with patience and discipline, keeping your long-term interests in mind.

4.- Meaning
These are the beliefs you have developed to manage uncertainty. We need to rationalize our behaviors so they make sense to us.

5.- Temperament
Quite simply, this is genetics. How is your body genetically predisposed to handling emotion?

Chapter 1- Trading Psychology

11

When Markets Attack

Separating Uncertainty, Worry and Fear
Understanding that we are emotional creatures, the first task in re-training your mind is to
separate uncertainty, worry and fear.

Uncertainty
You can’t control the markets. The markets do what they want to do. Nothing can be predicted
with absolute certainty, only varying degrees of probability. We have been trained as we grew up
not to make mistakes. We have conditioned ourselves and our brains are biased to predict with
certainty.

Worry
If you feel that you can’t control the outcome of a trade, then worry sets in. Your brain starts
to project into the future and it’s seeing bad things on the horizon. So your brain becomes a
negative assessment machine, and you continually traumatize yourself by worrying.

Fear
Fear is wear all thought becomes hijacked, and you panic or freeze.

12

Chapter 1- Trading Psychology

When Markets Attack

The mind that you bring into trading isn’t necessarily a mind that is conducive to successful
trading. Remember that the brain associates psychological discomfort with biological threat, and
we need to learn to avoid fight or flight behaviors. Ninety percent of traders lose money because
they are making fear-based trades or impulse-based trades. On the fear side, they are afraid to
pull the trigger at the right time, or they get out of trades too early. The impulse-based trader gets
involved in revenge trading, throwing good money after bad. What you’re looking for is mindful
trading where you make well-reasoned decisions with your emotions under control.

So the question then becomes,

“How do I organize my mind for higher function in trading?”

Chapter 1- Trading Psychology

13

When Markets Attack

The Impact of Emotions on Your Trading
Fear, until mastered, blocks the development of your potential. To develop as a trader, you need
to be able to confront fear to change your pattern of reacting to an uncertain world. Your brain is
a negative assessment machine that does not distinguish uncertainty from fear. It’s organized for
avoidance, and trying to keep you in your comfort zone, which is the familiar. It forms self-fulfilling
patterns based on the avoidance of fear and uncertainty. These patterns are set on “cruise-control”
and dominate your state of mind, forcing you to trade from avoidance and greed rather than calm
impartiality.

The best way to get started in gaining control of your emotions

is to label your fears:
1.

Fear of uncertainty (hesitation)

2.

Fear of loss (pulling the trigger at the wrong time)

3.

Fear of missing out (impulse trades and exits)

4.

Fear based urgency to make up for prior losses (revenge trading)

5.

Fear of not being right (making a mistake)

6.

Fear of inadequacy (not feeling that you’re good enough to trade)

7.

Fear of self-sabotage (blowing yourself up)

8.

Fear of success or failure

9.

Fear of growth and change (moving out of your comfort zone)

Which one of these fears drives your trading? If you’re honest with yourself,
you may have experienced most or all of these fears at some point in your trading career.

14

Chapter 1- Trading Psychology

When Markets Attack

In this flowchart, everything starts with your emotional state. That feeds your state of mind,
which forms a decision, and triggers a trade which ultimately has a profit or loss. The results
of that trade feed into your emotional state prior to your next trade. Trading without emotion is
not possible, but it is possible to design the mindset you need to trade with calm impartiality.
Your trading account is the scorecard if your emotions are under control.

Chapter 1- Trading Psychology

15

When Markets Attack

Manage the Biology of Your Emotions First
Emotions have biological components that you can control on your own to alter the emotion.
Once you realize that fear or anger affects your breathing, whether you stop breathing, or
breathe in “high” or “low” patterns, you can change that. If you regulate breathing with steady
diaphragmatic breathing, you lower your heart rate and alter the emotion. This in itself doesn’t
solve the problem you are experiencing, but it makes it much easier to prepare the mind when
you face uncertainty.

Becoming Mindful of Your Thoughts: Who is doing “YOUR” Trading?
There comes a time when you start noticing your thoughts, and you start thinking “Where are
these thoughts coming from?” Pink Floyd had a lyric “There’s someone in my head, but it’s
not me.” So who is this person in your head? Our thoughts and our beliefs are not us, we are
separate from them. Knowing that, you can step outside of yourself and question your thoughts
and beliefs. You can use powers of observation and curiosity, and dissect the voices in your
head that are governing your trading decisions.
Observation is a strong mindfulness tool. Once you observe your fear-based emotions, confront
them and question them, then you can start becoming mindful. If you ignore the voices and
patterns you have developed in your head, then a perfectly good trading plan can become
wasted. Since you can’t escape your internal dialog, you must learn to manage the fear-based
aspect of it. Once you do that, you can develop the foundation of a strong psychological trading
plan. You learn to become the author of your own story.

16

Chapter 1- Trading Psychology

When Markets Attack

Beneath our fears are beliefs.

Some of the self-limiting beliefs we need to master are:
1.-A sense of inadequacy

“I’ll never be good enough, smart enough. I can’t make mistakes. Mistakes are proof of my inadequacy.”

2.-A sense of not mattering

“I only matter based on what I do, not who I am.” Self-loathing or arrogance.

3.-A sense of being unworthy

“I have to prove myself by my performance to have value.”

4.-Powerlessness

“Nothing I do seems to make a difference.” Victimhood.
This fear-based thinking shows up in our minds as thoughts, and our avoidance of them is what
keeps us fused to them.

Other internal voices that can make up the “Trading Committee
of your Mind” include:
The Inner Critic

The Adapted Voice

The voice that judges you

The Doubter (I never win)
Chicken Little (negative appraisal)
Gambler (leave no money on the table)
Perfectionist (must win every time)
Entitled One (greed)
Con (lying to yourself)
Fraud (pretending to look good)
Orphan (missing out)
Saboteur (blowing things up)
Alpha (have to win to prove worth)

The voice that criticizes
Never measuring up
Never good enough
Tempts (You need more)
Predicts doom

You are born into self-limiting beliefs, but that’s no reason to stay stuck in them. It’s important to
identify and be aware our fears and self-limiting beliefs before we can become mindful.
Chapter 1- Trading Psychology

17

When Markets Attack

Developing the Mind to Become a Successful Trader
If the members at the “Trading Committee Table of Your Mind” are fear-based, self-limiting beliefs,
then you are doomed to repeat the same trading mistakes over and over again. What you need to
do is clean house and invite some new guests to the table.
Changing self-limiting beliefs requires recognizing what they are, and addressing them for long-term
re-organization of self. Compassion is the emotion that reorganizes the self for internal validation
rather than external validation. Think about this for a minute – whenever you “beat yourself up” after
making a mistake, does it every really do you any good? No it doesn’t. All it does is continue to feed
self-limiting beliefs of inadequacy or powerlessness. Re-building the “Committee of the Mind” will
help you create a new playing field for trading.
Just as we have built-in programs for fear, we also have programs for courage, patience and
impartiality. As a trader, you need to build a mind for the management of probability. There are four
major programs, hard-coded in your DNA that you need to invite to the “Trading Committee of the
Mind:

1.- The Courage of a Warrior

To be able to push through fear and face adversity head-on

2.- The Discipline of a Ruler

To keep your act together under pressure

3.- The Impartiality of a Sage

Once fears are put to rest, you can exercise impartiality

4.Self-Compassion of a Caregiver

Recognizing you are valuable and important

From time to time, each of these programs has been called into service, and you can remember
instances when you faced a challenge head-on, showed extraordinary discipline, exercised
impartiality and demonstrated compassion. These traits are inside you, and they need to be called
to the surface. They are your friends in the trading world.

18

Chapter 1- Trading Psychology

When Markets Attack

If you really want long-term change, you start with emotional regulation
Stage1. That gets you to mindfulness
Stage 2. Next you disrupt the self-limiting beliefs that have been developed without your
knowledge
Stage 3. Now you can engage the Warrior, the Ruler, the Caregiver and the Sage ‘
Stage 4. When you can trigger the emotions of courage, discipline, compassion, patience
and impartiality, then you have re-organized the trading mind
Stage 5. You are developing a calmer mind that thinks and processes information, rather
than knee-jerking to perceived threats. With an empowered mindset, you approach
uncertainty from a position of Discipline, Courage, Patience and Impartiality rather than
fear.
Chapter 1- Trading Psychology

19

When Markets Attack

The diagram above clearly illustrates why over 90 percent of traders don’t consistently make money. On the left side, you have traders that do not have control of
their emotions, and engage in impulsive or fear-based “mindless trading” They may
have the best trading platform and trading methodology, but they are controlled by
self-limiting or self-destructive emotions. On the right side, you have “mindful traders” who govern their trading activities with a calm, focused mindset. Their emotions
are under control and they face uncertainty with courage, discipline, patience and
impartiality.

20

Chapter 1- Trading Psychology

When Markets Attack

Conclusion
When you look at some of the top traders in the industry, or leaders of successful corporations,
you will notice that many of themselves carry themselves with a calm sense of confidence.
They are almost Zen-like. They seem to process information effortlessly, and make wellreasoned decisions. These people are not operating from a fear-based mind. None of that
noise is cluttering up their minds.
Successful trading requires a good trading platform, a good methodology and a trader’s state
of mind. You need to recognize and identify your fears, and the self-limiting belief systems
you have patterned based on fear. Find out who is sitting at the table in “Trading Committee
of You Mind”, and replace the fear-based members with members that represent Discipline,
Courage, Patience and Impartiality. When you get to this place, your trading account will look
much better.

More Information and Special Offer
Watch the Video of this Presentation compliments of TradingPub

Receive this compilation of all Rande’s articles eBook,
simply CLICK HERE!

Chapter 1- Trading Psychology

21

When Markets Attack

About the Presenter
Rande Howell has more than 15 years of practice as
a licensed therapist with a Masters in Counseling. In
addition to this, he has worked for many years as a
personal development coach teaching individuals how
to affect positive change, peak performance, personal
growth, and leadership potential.
His work centers on how to break the fear-based,
self-limiting patterns to which the brain adapts us for
survival and how to reorganize the self to a higher level
of functioning.
This is accomplished by learning how to manage biological fear (and its impact on thought)
and thus access much more empowered parts of the self that shift our capacity for positive
performance. (Most traders trade in a state of fear, so they never can open the possibility
of performing on a higher level.)
Rande’s work teaches you how to change the way you understand and work with your biology;
which allows you to succeed in regulating your emotions and breaking out of life-limiting
patterns (really important in trading success). His emotional regulation training has been used
to treat violent prisoners, break the cycle of domestic violence, and free people from the
limitations of fearful thinking.
His belief is that, until you understand the power of your biology and how to manage it, you
will be overwhelmed by it. Momentary success will be sucked down the drain of the patternmaking machinery of your brain. To break free of old limiting patterns, you must reorganize
the brain -- not the mind.
The mind follows the brain. What does this look like? Go to any standard motivational seminar
and feel the emotion -- it feels like you can change the world and it will last forever. Then
where are you 4 weeks later (or less) -- back to the same old place.
His work with traders began when one came to him seeking improvement in his trading
performances. Applying his emotional regulation and peak performance training to the trader’s
lack of performance produced a dramatic impact on the trader’s fortunes. More traders showed
up seeking training due to this success.

22

Chapter 1- Trading Psychology

CHAPTER I I

stocks

When Markets Attack

The Right Way to Trade Tops and Bottoms
Steven Primo, Specialist Trading

Have you ever wondered why most traders consistently lose money? There are several reasons
why this happens, but it’s usually because traders follow some outside system they picked up
somewhere, and followed it blindly. It may work for a while, until it ultimately fails. Some traders
can make five or six successful trades, and give all of their money back on the seventh trade.
Others try to time the market, and buy when the market is at its peak, while selling when the
markets are low.
In my 37 years of trading the markets, I have personally experienced all of the highs and lows
of trading and struggled to maintain consistency many times throughout my career, especially
early on. I have traded through bull markets and crashes, and there isn’t a trading system I
haven’t seen. One day, one of my mentors on the trading floor gave me a valuable piece of
advice – I was relying on way too much outside information to make trading decisions. He
told me that the key to success was to strip away all of the external systems I was using and
to simplify my approach to trading. He reminded me to keep it simple, and that successful
trading is not about making the most money, it’s about being consistent.
One of the best strategies I learned was a very simple way to trade tops and bottoms in the
markets. But first, it’s important to understand how most people trade tops and bottoms. By the
way, this is also the way I used to trade when I was struggling.

24

Chapter 2- Stocks

When Markets Attack

How we have been Trained to Trade Tops and Bottoms

In this diagram we have an older chart of Apple. Most people use some kind if indicator,
and in this case we are using a standard slow stochastic indicator to show overbought
or oversold conditions. When you go over the upper threshold at 80 you are in an
overbought condition, and you should prepare to short the stock. If you cross beneath
the 20 threshold, the market is oversold, and you should be prepared to buy.
Other indicators that are commonly used include fast stochastics and RSI to help identify
overbought or oversold conditions. To summarize, conventional wisdom suggests we
should be prepared to sell overbought stocks or buy oversold stocks.

Chapter 2- Stocks

25

When Markets Attack
In the Apple daily chart above, this system is working perfectly. The Slow stochastic
indicator is under 20 at the bottom of the market, indicating a buy signal. Once it cross
past the 80 threshold, and starts moving down a sell signal is triggered.
So you bought on a dip and sold at a peak. Now you have a “system” confirmed by
stochastics, and it should work like clockwork, right? Let’s keep the chart moving:

You’ve just had two nice wins and the stochastic indicator drops below 20. So it’s time
to buy again, right? But this time you decide to double-up and buy into the oversold
condition. Instead of the market going up, it goes down, erasing profits from the previous trades. The next time the stochastic drops below 20, you buy and it drops again.
The last time it drops below 20, you buy and it drops once again. You’ve given away
all of your profits from the first two trades, and you are now in the hole. But this is Apple. What about Forex or the E-mini S&P?

26

Chapter 2- Stocks

When Markets Attack
Once again, in this daily chart of the E-mini
S&P. the stochastic indicators cross the 80
threshold, indicating overbought conditions,
and presents a nice selling opportunity.
Next, the stochastic indicator bounces off the
20 threshold in oversold territory and presents
a buying opportunity.
Two nice trades are in the books, and it’s time
to look for the next overbought or oversold
condition.
Will the trend continue?

Let’s see how it plays out:

Chapter 2- Stocks

27

When Markets Attack

With two successful trades in the books, you decide to go short again. The market is
overbought and starting to trend down. You are above 80 and get a signal when the
stochastic lines crossover, so you decide to sell. And the market goes up. At the next
crossover signal, you decide to sell again. And the market goes up. If you keep doing
this, you are in jeopardy of wiping out your entire account. This is the point where
many traders start to hide their brokerage statements from their spouses.

So we’ve taken a look at a stock, and the E-Mini S&P, what about Forex?
In this chart of the USD/JPY
currency pair, the market is
chopping sideways until it starts to
go up. But the indicator starts to
move into overbought territory and
according to your rules, it’s time to
sell. We make a little profit on the
first trade, and you wait for the next
trigger. Since we are so ingrained in
the belief that we must sell when the
market is overbought, we look for
the right triggers and setups. Maybe
a Forex expert has also proclaimed that the market must fall. He’s never wrong in your
opinion, and the triggers are there for a sell opportunity. So you sell the USD/JPY when the
lines cross over, and the market rises again. All profits were erased and you are in losing
territory.
The problem with this approach to trading tops and bottoms is that short term gains are
usually wiped out over time. It’s almost like gambling. The casino gives you a taste of winning and then they wipe you out once you’ve taken the bait. Remember, as traders, we are
not looking for the big score, we are looking for consistency.

28

Chapter 2- Stocks

When Markets Attack

The Right Way to Trade Tops and Bottoms
First Rule
There is no such thing as OVERBOUGHT or OVERSOLD
You may want to write this rule down and tape it to your computer screen. One of my mentors
made me repeat this mantra to him until I drove it into my head. How many times have you
seen a market rise, and just keep rising? You tell yourself it has to fall, but it just keeps going
up. The same happens with markets that are oversold, and keep dropping for days or weeks.
You need to develop a mindset that there is no such thing as overbought or oversold markets.

Second Rule
The right way to trade Tops and Bottoms is to GO With Them!
My mentors taught me to stop trying to predict tops and bottoms, and to learn how to go with
them. What you are going to learn from this lesson is a very simple entry technique for trading
tops and bottoms. So let’s go back to the Apple chart.

Chapter 2- Stocks

29

When Markets Attack
When we started with the Apple example, we lost a lot of money trying to buy off the bottoms
of the market. One of my mentors told me that before trade anything, you must add a simple
tool, and that is the 50-day Simple Moving Average (SMA). It doesn’t matter if you are trading
a 5-minute chart of the E-mini, or a monthly chart of the British Pound. You must have the 50
day SMA plotted, and before you pull the trigger on a trade, you must ask yourself:

“Where is price in relation to the 50-day SMA?”

You will only come up with two scenarios:
1.

If price is BELOW the 50-day SMA, as shown above, you want to SELL the market

2.

If price is ABOVE the 50-day SMA, then you want to BUY the market.

30

Chapter 2- Stocks

When Markets Attack

With the 50-Day SMA plotted, there was no reason to buy Apple. It was clearly showing a
sell trend. So with this information, how do you trade Apple in this scenario?

What you want do, knowing that the 50-day SMA is indicating a bearish trend, is to first
circle all of the oversold areas. Since we’re going short, we are only concerned with the
oversold areas. Next we want to underline all of the short-term bottoms on the chart, and
they must be aligned with the oversold areas we have circled. Once a previous bottom
has been violated, that creates your entry point, indicated by the red arrows above. This
entry technique shows you how to be in synch with the market when you are going with the
market as opposed to trying to pick tops and bottoms. In this scenario, you would not have
lost money trading Apple, because you were in synch with its overall trend.

Chapter 2- Stocks

31

When Markets Attack

Let’s apply this technique to the E-mini S&P example:

In our E-Mini S&P example, we were previously interested in finding opportunities to short
the market, but once the 50-day SMA is plotted, the trend is clearly above the line, so we
are interested in following the market and going long.
First, we circle the overbought areas on the slow stochastic oscillator. Next we want to
draw a horizontal line at the high points on the charts that are in alignment with our circled
overbought areas on the stochastic indicator.
Once a previous high has been breached, it triggers a BUY entry signal, as indicated by the
arrows above.

32

Chapter 2- Stocks

When Markets Attack

Now for the Forex example:

In our original example, the stochastic indicator was in oversold territory, and we lost money
looking for triggers to short the USD/JPY currency pair. Once the 50-day SMA is applied, the
trend is obviously bullish. We start by circling the oversold areas.
Next, we draw horizontal lines at all of the peaks that are in alignment with our circled oversold
areas.
Our entry points, indicated by the arrows, occur after a previous high has been breached to the
upside

Chapter 2- Stocks

33

When Markets Attack

If I were stranded on a desert island and given one trading tool, I would choose the 50-day SMA.
To me, it’s the single most important tool you can use to make sure you are on the right side of a
trade. And it doesn’t matter whether you are using a 5-minute, hourly or daily chart. On the day
I first presented this webinar, I made a live trade using a 1,000 tick bar chart of the E-mini S&P.
Here’s how it played out:

There were two areas where the slow stochastic indicator was below 20. But the 50-day SMA
was not above the chart, so no trade is indicated. Once the 50-Day SMA travels below the
chart, an uptrend was established, creating six triggered buying opportunities within 1 ½ hours
going into the trading day.

34

Chapter 2- Stocks

When Markets Attack

Conclusion

If you take anything away from this discussion, please remember there are two key points:

There is no such thing as OVERBOUGHT or OVERSOLD.

There is no consistency in trying to pick tops and bottoms. It’s similar to a gambler’s mentality.
Never, Ever try to pick Tops and Bottoms.

Never, ever try to pick Tops and Bottoms.

Markets will go as high as they want, or as low as they want. Don’t try to stand in their way,
or they will run you over. Go with the markets.
If you’re interested in trading tops and bottoms, try out this method in simulation mode. Keep
it simple and plot the 50-day SMA along with a slow stochastic indicator and follow the steps
in this presentation. See if it doesn’t improve your trading consistency.

Special Offers
Watch the Full Video of this Presentation Here, compliments of TradingPub
During the class Steve offered this special packed with great information, knowledge,
and experience on the following topics:
















All About Trading Edges
The Wrong Indicators To Look At
What Steven Primo Learned From Other Traders On The Floor
How Simplicity Equals Consistency
Systems vs Strategy
Concepts #1 and #2
Edge #1
Edge #2
The #1 Chart Pattern
3 Ways For Identifying The Trend
Using Donchian Channels, Bollinger Bands, and The RSI In Your Trading
Learn How To Be On The Right Side Of The Trade
Learn When A Trend Has Changed Direction
Learn When To Stay Out Of A Trade
Learn all of the rules of Steven Primo’s Strategy #1

Get “Secrets of a Stock Exchange Specialist”
Video Seminar (3hours) for $37 (reg. $997)
Chapter 2- Stocks

35

When Markets Attack

About the Presenter
Steven Primo has been actively involved in
trading the markets for over 36 years. His trading
tenure began in 1977 when he was hired to work
as a Floor Reporter, or runner, on the floor
of the Pacific Stock Exchange. Primo reached
the pinnacle of his floor-trading career when
he became a Stock Exchange Specialist for
Donaldson, Lufkin, and Jennrette. As a Specialist
he was responsible for making markets in over
50 stocks, a position Primo held for 9 years.
Primo left the Stock Exchange floor in 1994 to
focus on managing money and to teach his own
unique approach to trading the markets. Scores
of students, from beginner to advanced levels, have gone on to become successful
traders after being introduced to Primo’s proprietary methods of trading

36

Chapter 2- Stocks

When Markets Attack

High Profit Candlestick Signals and Patterns
Stephen W. Bigalow

As long as buyers and sellers have been trading the markets, two predominant sentiments have
been in play: fear and greed. Centuries ago, Japanese rice traders developed the candlestick
method to graphically depict trader sentiment. It has worked successfully for hundreds of
years, and still works today.
Candlestick analysis can help you make better trading decisions about investor sentiment in
the markets.
The Japanese rice traders didn’t just become wealthy using candlesticks, they created
legendary wealth trading a basic commodity.
This method works for any trading instrument as long as the basic human emotions of fear and
greed are involved – which pretty much covers every market.
Candlestick analysis prepares you to be ready for big price moves based on historic results of
specific signals and patterns.
It’s simply a graphic depiction of investor sentiment. The Japanese rice traders gave us not
only the benefit of knowing what the signals look like, but they also described what the investor
sentiment was behind each signal There are 50-60 signals to learn, but eight of the most
successful candlestick signals will be discussed in this lesson.

Chapter 2- Stocks

37

When Markets Attack

The most beneficial thing about candlesticks
is that they help identify trends.

But first, to help identify trends, you need a few indicators.

Here’s what they are:
- Red Line: 200 day simple moving average (SMA)
- Blue Line: 50 day simple moving average
- Gray Line: 20 day simple moving average

38

Chapter 2- Stocks

When Markets Attack
These indicators are important because every money manager in the world uses these indicators
to help them make decisions when trading their portfolios.
The most important indicator is the T-Line, which is the 8 Exponential Moving Average (EMA).

The T-Line has some very simple rules:
- If you see a candlestick BUY signal ABOVE the T-Line, you are in an UPTREND
- If you see a candlestick SELL signal BELOW the T-Line, you are in a DOWNTREND
Stochastics are used to indicate overbought and oversold conditions. If you see a candlestick
BUY signal in an oversold condition, there is a strong probability that you are going to be going
into an uptrend.
Conversely, if you see a candlestick SELL signal in an overbought condition, you are likely heading into a downtrend. The settings that I use for stochastics are 12,3,3. These settings have
worked the best for what I do most of the time, which is swing trading.
Summing it up, if you plot the 200, 50, and 20-day Simple Moving Averages, along with the 8
Exponential Moving Average, and stochastics set at 12, 3, 3 – then you are good to go. Let’s see
how these indicators work with candlestick patterns:

Chapter 2- Stocks

39

When Markets Attack

In this daily chart, the stochastics are in an overbought condition with candlesticks above the
T-Line. Once they turn red and break through the T-Line, a downtrend is established until a
Morningstar pattern at the bottom triggers a reversal to the upside.
The rest of this chapter will be devoted to the top bullish candlestick power signals. If you
know them and can identify them you will have a much better handle on identifying trader
sentiment.

The Top Eight Bullish Power Signals
1.

Your Best Friend

2.

Left/Right Combo

3.

Series of Doji’s

4.

Candlestick Patterns followed by Gap Ups

5.

Kicker Signal

6.

Bullish Flutter Kicker

7.

Steady Eddie Trends

8.

Magnitude of a Signal

40

Chapter 2- Stocks

When Markets Attack

Doji Star:

Small price movement.

Long-legged Doji:

If the price movement is huge, but the bar closes where it opened.

Dragonfly Doji:

Where the price opens and closes at the top of the bar.

Gravestone Doji:

Where the price opens and closes at the bottom of the bar. It got its name from Japanese soldiers pressing on in battle only to retreat back to camp.

Chapter 2- Stocks

41

When Markets Attack

A derivative of the Doji is the Spinning Top. Spinning Tops are
characterized by short candle bodies with short wicks, similar to
the child’s toy. Spinning tops signal indecision between the bulls
and the bears in the marketplace. When you see a spinning top or
Doji at the top, you want to consider taking profits.
If you see them at the bottom, there’s likely to be an uptrend.

A Doji in an oversold area, followed by a gap-up, gives you a very strong probability that you
are about to enter a strong uptrend. The beauty of candlesticks again is that they capture investor sentiment. When you are at the bottom of the market in oversold territory, as indicated
by stochastics, and a Doji appears, it signals indecision. If it is followed by a strong gap-up,
closing above the T-Line, then a strong uptrend is building.
One caveat to this strategy is that when the candlesticks start moving well above the T-Line,
they are going to want to come back to the T-Line, so you want to be prepared to take profits
if necessary.

42

Chapter 2- Stocks

When Markets Attack

To summarize, here are the optimal criteria for the “Best Friend: scenario:
1.

Look for the signals

2.

Stochastics oversold

3.

Gap-up from the Doji signal. The bigger the Gap-up the stronger the uptrend

4.

Close above the T-Line

Note: At the end of this chapter, click on the YouTube presentation of this topic for
many more examples of the “Best Friend” bullish signals in action.

Chapter 2- Stocks

43

When Markets Attack

Left/Right Combo

The Left/Right Combo is a Doji followed by a bullish engulfing signal. The bullish
engulfing signal completely encapsulates the previous candle body. Since the Doji
body is small, it represents a moment of indecision followed by a clear bullish move.
The Left/Right Combo is like a boxer setting up a small left jab with a roundhouse
right punch. In this example we have a small Doji, followed by a bullish engulfing
signal and a strong upward move in the stochastics. Notice there is a series of
Dojis in this chart. If one Doji signals indecision, a series of Dojis indicates greater
indecision. If you see a strong candlestick buy signal, followed by a series of Dojis
and the next bar gaps-up significantly, a strong bullish move is in play, and you
want to be buying.

44

Chapter 2- Stocks

When Markets Attack

Series of Dojis

Remember that a Doji represents indecision. If you see a series of Dojis it represents
greater indecision. When you see a series of Dojis setting up, and stochastics start moving
up, with candlesticks closing above the T-Line, it signals a positive open the following day
and trigger to buy. Bear in mind, you still need to do your due diligence. Make sure to
check the pre-market futures the next day, and make sure there isn’t any economic or
geopolitical news that could adversely impact your decision to buy. But if the futures are
moving in the same direction as your trend, it’s a signal to proceed and buy.

Chapter 2- Stocks

45

When Markets Attack

Candlestick Patterns followed by Gap-Ups

Any signal followed by a gap-up is a signal to buy. In this case, we have a hammer signal,
followed by a bullish gap up. Once the candles close above the T-Line along with a corresponding
upward move in the stochastic, it signals a strong buying trend.
When we see a gap-down in an oversold condition it’s just telling you that most people panic
when the market is at the bottom. How can you tell if the market is at its bottom? With candlestick
patterns, once you see a gap-down in an oversold condition, start looking for signs of a reversal.
It could be a Doji, a series of Dojis or a gap-up reversal.

Bullish Kicker Signal
The strongest of all buy signals is the Bullish Kicker Signal.
This is when the market is in a downtrend, and the following bar
opens in a gap-up above the previous day’s high. This pattern signals that investor sentiment has been kicked the other way.

46

Chapter 2- Stocks

When Markets Attack

In this example, there is a significant gap-up above the previous day’s downtrend. The gapup is well above the T-Line and there’s a strong upward move in the stochastics. This signals
a very strong change in investor sentiment.
Some traders are afraid to buy after a significant gap-up. They are afraid that they are
buying at a high. Remember, if the stochastics are rising and the candlestick is above the
T-Line, then the upward trend is likely to continue. Bear in mind that the further the candles
drift north of the T-Line, the more likely they are to retrace and come back to it. Bullish kicker
Signals don’t require a gap-up as long as it is a significant move in the opposite direction of a
downtrend, and it’s moving above the T-Line with supporting stochastics. As a rule of thumb,
the bigger the Bullish Kicker Signal is, the more significant the move will be.

Chapter 2- Stocks

47

When Markets Attack

Bullish Flutter Kicker

A Bullish Flutter Kicker occurs when the market has a down day followed by an
indecisive gap-up. If you see a Doji gapping-up over the previous days open, it’s a
signal that the market is showing some strength. If the market moves up the next
day over the previous days close and starts moving above the T-Line, it’s a signal
that investor sentiment is moving the market into an uptrend. If you remove the
Doji from the picture, you would have a Bullish Kicker Signal with a strong gap-up.

48

Chapter 2- Stocks

When Markets Attack

Steady Eddie Trends

When you see a gap up through a resistance, in this case, the 200-day moving average,
it signals the start of a “Steady-Eddie” trend, and it’s a great place to be. The candlesticks will ride above the T-Line for an extended period of time signaling multiple opportunities to let profits ride. You can rest every night knowing that the market will continue to
rise until you see a close below the T-Line. Once again, the further the candlesticks drift
above the T-Line, the more likely they are to return to the T-Line. Once the Candlesticks
start crossing back below the T-Line is when you need to start thinking about making a
course correction.

Chapter 2- Stocks

49


Documenti correlati


Documento PDF when markets attack lessons from 15 traders
Documento PDF rachel anderson eczema free forever ebook
Documento PDF j christoph amberger hot trading secrets
Documento PDF traduzione testi 1
Documento PDF 2008
Documento PDF citi cb wklytech 21 11 14


Parole chiave correlate