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Tuesday, November 2, 2010
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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
9 comments:
$SPX right up against the weekly MA(200). It can't seem to break it.
Do or die for 3C tomorrow in my book. 3C has been shouting 'hard sell off' long enough...
After hours getting a serious goosing as usual, DOW over 12,000 again. What happened to those charts you posted above Brandt? They never seem to materialize into reality? Isn't that a problem?
BRANDT. IT may be time to ADMIT maybe this BIG SELL OFF thing is NOT happening? SPY AT 119 now. The market has been gone (DOWN/UP/SIDEWAYS) for at least 4 months now. ENOUGH ALREADY!
meeeee,
Well it's do or die time for 3C tomorrow in my book, it's been long enough and we've gone up and up in the markets despite Brandt's various 'the SPY had broke calls', 'or is this the top in gold posts'?
The only churning that seems to be going on is of WoW subscribers.
So far, it's been utter junk, 10%-20% 'success rate' if that. Would have been far better off ignoring it and doing the opposite of what it suggests.
I really don't see what we are paying for anymore, advice has a terrible track record and It appears this site has just turned into copying and pasting from zerohedge.com articles.
Tomorrow is do or die for 3C.
I would say give 3C a little longer to come through. It is showing major distribution and if this is the case, these tops take time. I would say we get one more pop up and then the drop. If within 2 weeks you don't see a major plunge, then I can say I don't blame you for no longer subscribing.
I've been trading for 15 years and I've always read volume is not a good indicator. This seems to hold true for 3c. Also I think a we see a huge bearish basis that hurt his market analysis. I've watched the evil speculator website do the same thing one and a half years ago. They make good calls in a bear market and when the market turns they get destroyed. Being a perma bear is all but impossible.
Alesund,
Sorry, i think 3C has had long enough, what you gonna do in 2 weeks time when the SPY is another 40 points higher? or the DOW another 400 points higher?
3C's success rate is terrible, as well as Brandt's calls.
It was only a couple of weeks ago that Brandt said the SPY broke when it dipped down to $160 and he said that the 'oversold' bounce that we saw the day after was nothing to worry about!... well, that was 40 SPY points ago now! Not too mention the SPY broke call Brandt made on Sept 23rd... that was nearly 80 points ago...
... seriously bad calls, certainly not worth paying $600 a year for! Not worth paying 60 cents for given the track record thus far.
Volume is always high at the open and just before the close. A lot of the "distributions" are normal volume increases at the open and close.
Checout the SPY's volume:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spy&sid=0&o_symb=spy&freq=6&time=2
Option Trading,
As i've said before, 3C has very little baring on reality.
Those charts Brandt posted above are a prime example. 3C says down, but market goes up (and even more so after hours). Same thing happens almost every day... and the one day (the 10%-20% chance day) that 3C happens to call it right (after all, can't expect the market to go up every day), Brandt proclaims that 3C saw it all coming... and yet he goes all quite when 3C gets it wrong (which is more often than not)...
... it would be funny, it we weren't collectively paying $thousands a year for this.
How's that 'high roller' of yours Brant that you've managed to talk out of closing their shorts time and time again as the market has gone higher? They can't be thanking you? Have they finally changed their position?
Do or die tomorrow for 3C.
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