here's the 1-5 min charts, by the time I've captured and posted, the 1 min may have changed.
1-min on Q's negative
5-min Q'snegative
SPY 1 min slightly negative
Tuesday, September 21, 2010
Here are the current 1-5 min charts-you've seen the 10 min
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Risk Management
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- * Understanding the Head-Fake Move Part 1
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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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13 comments:
the divergences are negative, but the price is going up!
Andrea,
Yeah, that seems to be a daily occurance! 3C says down, market goes up! 3C says gold and silver dow, and they've gone up. 3C says dollar accumulation, and it's gone down!
We need a credibility check and fast!
This is possible the momentum move we have been looking for. All those traders that jumped in on the FED news are starting to feel the pinch.
Jack,
Seriously, after a 800+ up move on the DOW in a few weeks. Do they really need to pump it up another 50-70 to be able to get momentum to the downside? Seems like serious over kill to me.
Andrea-that's the point of a divergence, it suggests selling into higher prices. If you think prices are going higher, you would be buying and holding, not selling
Mr. Pink, obviously some people find them helpful-here's an email-two actually I just received...
"As soon as you sent that I went long SPY and doing well, looks like
they will take it up setting up for a nice short.
Thanks,"
and
"Brandt,
Thanks for the Cramer update, I am out of my SPY longs good quick profit."
Both trades were based on the 3C divergence alert. There are over 70 different kinds of traders here, some find information valuable for different reasons.
Brandt,
Don't worry when we are back down below 10,000 on the DOW then you'll get a big kiss from me also ;-)
And i have been long on indices short term (mainly to offset/manage losses on my long term indices shorts!)
Pink, think of it like throwing gas on a fire that just doesn't want to go or the drama queen that stirs up the pot by spreading false rumors. It gets the whole thing started.
Mr. Pink, Andrea and Jack....You might want to print this out and put it right at your trading computer....Along with risk managment.
It is helpful to put all the known information on the table, and to determine which conclusions fit all the data and which do not. In this manner, you can eliminate most possibilities, and discover through the process of deduction which scenarios remain. Of course, you should have a detailed plan of action even if the least-likely scenarios actually develop. While you can never know what the future will bring, you can always be fully prepared as to how you will deal with any possible contingency.
At 2.15 P.M I was not in the market because you made two differents, and opposite, forecasts.
To be out was a good thing, not a bad! Your vision was not wrong!
QS
"Of course, you should have a detailed plan of action even if the least-likely scenarios actually develop. While you can never know what the future will bring, you can always be fully prepared as to how you will deal with any possible contingency."
Are you a professional trader?
QS...thanks for the encouragement. I wasn't so worried about my risk management as I was about my entry point(s). Much has been learned over the last 4 months I have been watching this board and this latest round has taught me a couple of things I should of caught on to prior. Better entry points will bring better profits. Plus I could of rode the wave up longer. I don't care if the market goes up or down...you can make money both ways.
Not a professional trader but a life long student of the market. I will try to share more as we go.
- Once you have a general plan, then you have to become specific and decide exactly which funds you will buy, and at what prices. You have to have a comprehensive strategy so that if any given fund or funds move up or down after you buy them, then you'll always know what your next move.
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