5 years ago
Translate
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...
Email Me
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.
Blog Archive
- ► 2014 (2868)
- ► 2013 (5102)
- ► 2012 (5120)
- ► 2011 (4731)
-
▼
2010
(1722)
-
▼
September
(338)
-
▼
Sep 28
(18)
- NEW TRADES ARE UP
- Reality Is NEVER As It Seems in the Stock Market
- There's Definitely More to This Story
- KFN
- Correlation Between the SPY and SMH
- Interesting Dollar chart
- SMH
- 3C's Update
- Another Reason For Stops on the Close
- Dollar Update
- Keep an eye on SMH
- TLT-Head Fake or Breakout
- Maybe another round
- Semis Getting Hit Too...
- Who's the Frontrunner?
- First Negative Divergence of the Bounce
- You Never Know When the Music Stops.
- It's Precisely WhenYour Charts Don't Make Any Sens...
-
▼
Sep 28
(18)
-
▼
September
(338)
Useful Links
My Blog List
-
Is interest rates about to start going up? - Yes, I know - it does not make any sense - FED is about to cut rates...but....real world interest rates are not always what FED wants it to be.
-
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...8 years ago
12 comments:
seems like once they get the short squeeze going they step aside and let it run on its own!
Did someone say something about high level consolidation? Going into sector rotation now?
turn around today on very bad news just doesn't feel real bearish to me but what do i know!
Well, we've had a 130 point turnaround on the DOW. from -80 to +50. on some really bad figures.
Looks like another 3C says down, but market does up day.
Gold shot up through $1300 also.
And the dollar is looking as weak as a kitten again.
Free money from the FED, how can you fight free freshly printed money? This isn't a market, there is no price discovery at all now, the FED just decides at what price it was the DOW/SPY and takes it there. The FED doesn't care if it loses money by buying overpriced stocks, because they can just print some more.
What's the expected "lag time" on the 3c indicator?
john9o9,
'lag time'? Well, that's the problem, 3C has been predicting a down move in the markets since the start of September and we're still at highs.
As well as a down move in gold, which is at all time highs today.
As well as a bounce in the $dollar, which gets weaker every day.
This market is nothing but FED free money intervention.
Another load of POMO thursday too.
We need 3C to come good.
Fed free money and intervention is nothing new!
john9o9,
No it's not. But it looks like we are approaching an end game here and goodness knows what the FED will do as the death throws approach. Why stop printing now when they've done so much to keep the markets up?
Don't know about the "end game". The doom and gloomers keep calling for that but.....
Always difficult to keep open mind when dealing with the markets, trading, etc.
So easy to get one sided!
Especially if I take a directional position!!!!!
lag time all has to do with how big of a position is being distributed, volume the the aggressiveness of buyers. A 1 minute divergence usually moves that day.
Post a Comment