in which I've been seeing Chinese based ETFs and other developing countries showing negative divergences.
http://www.zerohedge.com/article/chinas-growth-rate-destined-be-cut-half
5 years ago
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Risk Management
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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 $4,000-not risk money or 2% rule, but share price entry x shares.
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- PErhaps this is part of the reason
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- Knocking the Darlings off their Highs
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- On the Other Side of the FAZ Trade
- I hope you got some FAZ
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13 comments:
China is a bubble and the perception in the West is that they will lead and are invincible. This perception will be shattered soon.
Well, all in all, another end of a week where it's bad to be short.
After hours getting a good goosing again, nearly up to yesterdays close.
If it didn't roll-over today with all the data out and Ben Bernanke testimony bull why would it roll-over Monday or Tuesday.
Doesn't look good for shorts does it Brandt?
More POMO in the coming weeks and Bernanke has basically said QE2 is on the cards.
Doesn't look like the markets are going to head down anytime soon.
Good day for AAPL too. Up big on good volume. It's just gone up and up since the start of the start of 2009.
http://stockcharts.com/h-sc/ui?s=aapl
So, when is 3C going to be right on this 'market going down big' call Brandt? Because i'm just not seeing it, or any sign of it being soon...
... you didn't say that the SPY 'broke' on the 23rd of September right, well that's nearly a month ago now, still stand by that call?
Big volume on the DOW today:
http://stockcharts.com/h-sc/ui?s=$indu
Looks to be the biggest since May time.
What does that tell us?
... big volume, but we basically finished flat.
Being short is trying to swim upstream, go with the flow. I'm not sure why the obsession with being short.
Option Trading,
Trust me i would have gone long on stocks, gold and silver when we started this 'bounce'... unfortunately 3C advised me against it! Brandt said 'is this the top for gold' (that was $100 an ounce ago), said silver was looking 'sick' when it was just below $20 an ounce (now it's $24 an ounce!), and said 'he would feel comfortable starting to layer in market shorts when the DOW was 10,400 (that's 700 points ago!!)...
... SERIOUSLY BAD CALLS, AND IT DOESN'T LOOK TO BE CHANGING ANYTIME SOON.
I have little faith in 3C, and every day goes by, followed by every week, and it proves why i should have little faith in it.
Brandt,
You've gone quiet on your 'high-rollers' activities too.
I take it by your silence that their short position has changed? Reduced or closed completely? Have they switched to being long?
I'd appreciate an answer, as i'm sure others would too, as every day/week goes by and we really do look like the sheep and not the wolves.
Nope, he's in the same position he's been in, no changes.
Here's his email to me today,
"Well;
I am down but its not extremely ugly at this point because the banks are getting hammered. My question is whether i sell here or does the picture of the charts tell us to keep FAZ???
"
My answer was to keep FAZ and other shorts.
Brandt,
That sounds a little cryptic, what position would that be? Fully short on the indices?
So, he was ready to 'cover' his shorts when the DOW was around 10850, but you managed to convince him that the market was 'about to turn', and now the DOW has recently been as high as 11150 (a good 300 points higher) and he didn't cover his shorts or change his position?
Can you elaborate?
I thought you said he was a 'good emotional indicator' as to when the market was about to turn?
What if the DOW goes another 200 points higher from here?
We don't have market specific shorts and may of our shorts were started at SPY $118.
We added at lower levels. I don't think we have any market specific shorts, we stayed away from gold and oil as well.
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