Last night I made a pretty clear case about my bearishness on Gold, today and yesterday we saw the Judo concept in action again. Textbooks on Technical Analysis teach us that we should see a nice clean break down from an ascending wedge like the one shown here-it is a bearish formation despite rising prices. So most technicians are at a loss and consider a breakout to the upside like we saw yesterday as a failed pattern, shorts cover, longs jump in the trade. Another noose innocently propagated by authors of TA books is the concept of a failed trade means you should enter the trade in the other direction, in this case, (assuming I'm correct about this being a false breakout from the wedge), then the trader gets whacked twice.
Computers and online brokers revolutionized trading. I can remember when everything was about fundamentals and technical analysis was like witchcraft. Now it's mainstream, just like sentiment being so lopsided that the trade moves counter to sentiment, technical analysis is so predictable that Wall Street practices Judo on those traders. One of the worst things in technical analysis is the opinion many have come to, "if the trade failed, it wasn't because of technical analysis, it was because you did not adhere to the concepts of technical analysis". This thought pattern is an absolute gift to Wall Street, it means they can take technicians out almost every time. That's why what we do here at WOWS in a way, is revolutionary. 3C is the effect of thinking about technical analysis for myself and not following the books. Really I got lucky, I doubt it's more then that. I'm a good technician, I understand technical analysis. However, I've seen enough that I can now view technical analysis and the set-ups not like a technician, but like the crooks on Wall Street. I think to beat a crook, you have to be able to think like one.
My greatest ambition is to show you what I have learned and what we together continue to learn. Wall Street is not what our parents thought it was, it's not what we thought it was and truthfully it's probably a lot worse then we can even imagine, but we'll keep learning how they act and we'll use that for one, not to become a victim, to make money and at some point, we may (G-d willing) be able to turn the tables and take the crook's money. That's a day that I will sing from my roof top.
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Risk Management
Get the Most Out of Your Experience
- * Understanding the Head-Fake Move Part 1
- * Understanding the Head-Fake Move Part 2
- * The Holy Grail of Investing and Trading-MUST READ-MUST UNDERSTAND IF YOU WANT TO EVER MAKE CONSISTENT MONEY IN THE MARKETS
- * Member's Video-SWING TRADE ONE ENTRY SYSTEM
- * Placing Stops-What you should consider...
- * A Currency Crisis
- * A Currency Crisis Continued...
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My Charting Software
3C Quick Start
Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.
The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.
We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.
You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.
Welcome to Wolf on Wall Street.
The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.
The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.
Position Sizing
The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.
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Futures Update BR-EXIT Edition - So the conventional wisdom couldn't have been more wrong. Those chasing risk and closing hedges couldn't be in a worse place right now. I would still remin...7 years ago
2 comments:
Hi Brandt,
Did you see my specific query about gold? Appreciate it if you could take a look:
http://wolfonwallstreet.blogspot.com/2010/09/wall-street-is-never-as-it-seems-never.html#comments
I'm sorry, I missed it, but I see it now. Send me your email. I have to run out for a bit to get a few things for our interview tomorrow with immigration but when I get back I'll send you an email after I have looked at the ticker you supplied-I can use 3C on it.
My apologies for missing your comment.
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