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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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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.
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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...8 years ago
30 comments:
Is this all they can muster on QE2's announcement?
Well, it has held on the news after a 1200+ point DOW run and 160+ point move up on the SPY.
Where's this big sell off Brandt? and why are you telling us things after they happen these days, that's not much use.
You mean like the TLT distribution, the GLD bounce and reversal, the end of the LLNW correction, stuff like that?
You did a long post called 'is this the end for gold' (or similar) back in September, when gold was $1244 an ounce. It's now $1344.
You keep making the calls, and i'll keep a track of their performance. Majority good calls = credibility = reliability.
SPY hit 120 today. BIG SELL OFF???? Right?
Brandt,
In your 'pre-fed update' you posted this:
"The SPY still has a 1 min positive divergence, the 5 min has gone nowhere, it's just in-line. The 10 min has gone into a leading negative divergence."
- So, well, the SPY finished at the highs of the day (near SPY $120)... so, er that 10 minute leading negative divergence, let's discuss that please. I've seen enough 'trumpet blowing posts' when the 1 in 10 call you make comes good...
... i think we seriously need to start seeing some posts from you explaining what happened when the 9 out of 10 calls go bad.
With the SPY at over $120 are you seriously telling me that your 'high roller' hasn't closed any or all of their SPY shorts?
You were talking them out of closing when the SPY was around $170. They must be pleased as punch with that!!
Come on, let's have an update, otherwise silence and we'll just fear the worse. And it would be absolutely terrible if your high roller has reduced their short ;position while you tell us on here that being short (all the way into a 1200+ DOW move) is the wolf thing to do.
The market has been going SIDEWAYS and UP since the sell off in MAY. And now the SPY is back UP to (120), where the SPY was (BEFORE) the MAY sell off. BIG SELL OFF, right???????
SELL OFF like NOTHING we have never seen before? RIGHT?! UNBELIEVABLE Brandt!!
U.S. STOCKS CLOSE WITH GAINS AFTER FED MOVE ON BOND BUYS; DOW HIGHEST SINCE SEPTEMBER 2008
Anonymous,
As i said all the way up from SPY $130, when i questioned why they would stop ramping there, and not take it to $140, $150, $160, $170 etc... well, they have done just that.
I said we are not wolves, we are sheep and Brandt and this 3C nonsense he is peddling has led us to the slaughter. I think we should all get a sincere apology and a refund.
Maybe i should start my own site up, my calls are far better than Brandts/3C, i would have gone long on gold at $1244 and ounce, long on silver at sub $20 an ounce, short on the $dollar. and long and hard on equities at the start of September.
Well, we've now had the 'all important FED news' and the market has still gone up today...
... so what were you saying about 'the smart money' Brandt, and todays news already being known and 'baked in'???
You ask a lot of questions, but I don't think you really care about answers as I've answered most of your questions and you either don't get it or don't care to get it. It's more of antagonism then looking for an answer.
I don't think you are very interested in answers as much as attacking. When I give you answer such as the last one, you just change the subject and angle of personal attacks.
The issue is the discussion, for you the issue is me (usually vicariously through my indicators). That's why when you post a meaningful question I answer them and thank you for your involvement and when you go on with the other stuff I just ignore it. I spend 15 hours a day or more on this site and don't have time to argue with someone who has their mind set. It really doesn't matter what I say, not to you.
What I presented to you above is what it was, not an opinion. To answer your question on a 10 min divergence, it's not usually one that moves the equity that day, a one minute usually does although they can go on for a couple of days as they are typically in the realm of a market maker or the likes accumulating or distributing a position. Most turn rther quickly in the intraday ups and downs, but if they are accumulating/distributing a bigger position, it can go into the next day and as the market is dynamic, these are the easiest ones to change. A market maker/etc. is under no obligation to keep their intended position if facts or market circumstances change. 5 min divergences are along the same line, except longer, they rarely effect the market the same day although depending on the size of the position, they can. A 10 min is more serious and I usually would expect them to fulfill in several days, although again it is simply a reflection of what someone else is doing. When we get to daily, they are longer, they can take months, but they are very solid. The TLT charts were daily and they changed today apparently.
So as I have said numerous times, initial knee jerk reactions to Fed announcements are almost always reversed within a few days is quite in line with a 10 min divergence.
Those who bought last night after hours at very high prices -despite today's close, were more then likely stopped out today. Just as the reversal down in GLD today -despite it's close, offered a decent gain for a day and the bounce did as well, especially for those using leveraged positions.
why didn't you go long on gold? I'm not trading your account-you are.
and your high-roller's position Brandt? Please tell?
I don't attack you, i just assess and highlight your bad calls. It probably feels like i'm attacking you because you make so many bad calls.
So, come on your last 2 SPY 'broke calls' at $130 and $160 have failed miserably. Let's have your latest SPY broke call? Today?
As far as my "High Roller", besides his account being really none of your business, I will grant you your wish and paste the email I just got from him in full
"well that wasn't too bad huh?"
Brandt,
I didn't go long on gold at $1244 an ounce, because thought that it was the top. Same for silver at $20 an ounce.
What do you think we are all paying you $600 per annum for? For advice and highest probability outcomes that we then ignore and do the opposite of? Seriously.
Brandt,
So, can you confirm that he has not reduce or closed any of his SPY short positions (or hedged by going short term 'neutral')? You were quite willing to update us previously.
BRANDT. Maybe MR PINK is right. Then why don't you answer my question BELOW.
The market has been going SIDEWAYS and UP since the sell off in MAY. And now the SPY is back UP to (120), where the SPY was (BEFORE) the MAY sell off. BIG SELL OFF, right???????
SELL OFF like NOTHING we have never seen before? RIGHT?! UNBELIEVABLE Brandt!!
So, we've now got over 100 POMO operations for the next half and year, what do you think of that Brandt?
meant to say half a year (6 months).
I notice, there is NO answer to MY question.
BRANDT. Maybe MR PINK is right. Then why don't you answer my question BELOW.
The market has been going SIDEWAYS and UP since the sell off in MAY. And now the SPY is back UP to (120), where the SPY was (BEFORE) the MAY sell off. BIG SELL OFF, right???????
SELL OFF like NOTHING we have never seen before? RIGHT?! UNBELIEVABLE Brandt!!
I think we need a SOLID prediction from you Brandt with a timescale, enough is enough, it's judgement time.
Is this the top on the SPY and INDU? Or will the SPY/INDU go higher, if so, how much?
You've already put your neck on the line and said today's FED decision positive market finish will be reversed within the next couple of days (by Friday, right?).
This big sell-off you've all got up believing is long over due. You said this was a right-shoulder being formed and yet the $INDU is now higher than the 'head'... something you've said previously is not a good sign...
Well? Anybody else want to post their thoughts?
Having dinner with wifes family from out of the country will respond later
IMO - 2 solid months of distribution would seem like plenty of time to unload a very large position. Much longer If you consider how long we've been rallying (since March 09). Unless, the position is so large, that when it is finally disposed of, it takes the market down by 80% give or take.
The fundamentals tell us to be bearish. Obviously, technicals of all types aren't working. Perhaps the action in 3C is measuring something so big that we haven't thought of or taken seriously yet. If that's the case, then timing can be thrown out the window. Unfortunately, there's no way to know.
G,
But if the market has 'absorbed' all this distribution and is now at Sept 2008 highs on the DOW. Then what selling is going to take place to actually cause a downward move?
The market has absorbed all the selling that can be thrown at it:
http://www.zerohedge.com/article/26th-sequential-week-outflows-domestic-equity-mutual-funds
The market has actually flourished through all this selling. And there is NO volume, anyone who wants to sell has sold.
Like i said many moons ago, we are purely fighting FED printed free money. We've now got another $600b coming into the market over the next 8 months... and Brandt thinks that we're going to go down BIG in the face of that?
I hear ya Mr. Pink,
I shake my head at this market... extremely frustrating. We're all trying to gain an edge and nothing seems to work or make sense except for Uncle (Deep Pockets) Ben and his PD buddies buying everything in-sight. What happens when they own everything?
G,
Own everything? Well, i think that's the plan, the money they print is out of fresh air, not worked for, not backed by assets. They are basically buying everything with nothing... and giving the bill to future generations... and once they own everything then essentially they own everyone, and that's how you achieve global enslavement out of nothing. It's a scam, pure and simple.
... that's what happens when you have a private central banking system (owned by private families, such as the Rothchilds, Rockerfellers, etc). It's a scam played on the populous time and time again in history. Most are so ignorant as to not even know, or care, how the monetary system works.
The U.S. is going down big time, it's end game time, and it's all by design. These elite families, the true rulers of the world, work across decades and centuries and cause various parts of the world to rise and fall as it suits their agenda, and now it's the good old USAs time to fall, and the populous are so dumbed-down they won't even know it's happening, or realised it happened even after the event.
You think you can have an American sitting around all day, doing very little productively, living in a big house, big car, nice vacations, etc... and on the flip side of the coin, you have people in the far east working 18 hour days making the products americans buy, and they only earn enough to barely live on. You think that imbalance can go on forever... no chance, end game time. China is the next world leader that the Elite want to push to the forefront for X number of decades/centuries.
Further more:
http://endoftheamericandream.com/archives/the-television-commercial-about-the-national-debt-that-is-being-banned-by-major-networks
Mr. Pink-largely agree. Good post.
Anonymous, what exactly is your question?
If it is where is the sell-off, I'll tell you the sell off in April didn't happen overnight, there was distribution from March 18th to the top. This is how distribution works, they sell into higher prices and go short toward the end before the reversal, before that they accumulate. We saw the accumulation more then a week before this rally started, thus many members hedged themselves.
As far as claims I said the makret broke down here or there, it's simply not true. I may have said there's divergences consistient with a breakdown, etc, but I do not consider a break down or a reversal to be a reversal until it is confirmed by price as I have mentioned man times and recently with individual trades. However, to know that the April rally was being distributed into is very powerful information, lest you be the one to buy at the top the day before the reversal and continue to hold thinking it's just a pullback. Members back then knew the rally was bunk and if they were long, which is fine, they needed to be on top of risk management and not get greedy and recognize that the reversal is for real, not a pullback, which gave them the opportunity to short the market which we were short days before the flash crash.
If that does not answer your question, please be more specific.
Mr. Pink, my "High Roller" has no market correlated shorts, meaning no shorts on the S&P, Q's or Dow. Our biggest position short is FAZ and we have maintained that position.
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