5 years ago
Wednesday, December 1, 2010
DIA update
In the last post, the DIA looked the best, it is now deteriorating more in line with the SPY/QQQQ
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Risk Management
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- * Understanding the Head-Fake Move Part 1
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- * The Holy Grail of Investing and Trading-MUST READ-MUST UNDERSTAND IF YOU WANT TO EVER MAKE CONSISTENT MONEY IN THE MARKETS
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- * Placing Stops-What you should consider...
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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
24 comments:
Half an hour to go and the DIA still at highs... i tell ya Brandt, i'm not confident of seeing a self-off in to the close or tomorrow. 3C has done absolutely terribly today, god damn awful. Can't believe most of November's sell-off as been recouped in 1 day and 3C didn't see that coming.
20 minutes to go and the DIA is going higher.
Stop trying to short, you'll get it wrong more then right.
I'm getting destroyed on the contra ETF picks and other shorts posted a few days ago. OUCH!!
Option Trading,
But Wolf on Wall street is all about being bearish on the markets. That's what 3C is constantly pointing to, bearish on equities, bearish on precious metals, bearish on oil, etc...
... what's the point of me subscribing to WoW and then doing the opposite to what 3C says!!!!!!!!!
Option Trading...I'm 0 for 3 on shorting here with 3C.
Option Trading,
Brandt even said that it's starting to look like September 2008!
Brandt, Does 3C show the same distribution at the close?
Your betting against companies that have great earnings. Why would the companies that are making money have any kind of long term decline?
Option Trading,
Because the whole economy is build on mathematically unrepayable debt and fairy dust numbers. Logical wins out in the end, always does. Logic is truth.
It's a game of good vs. evil, it's a simple as that, and i know what side i'm on.
Then why are so many insiders selling at such an alarming rate? Most of the earning have come from cost cutting measures, not increase in sales. These cost cutting measures mean more job layoffs ahead as it affects other companies. More layoffs mean fewer consumers=more cost cutting measures which more layoffs=more cost cutting measures...see a cycle here? In additon, most local and state governments are on the brink of of collapse due to falling revenues and exploding obligations. What is that I hear, more layoffs to cut expenses. This has only begun as we are rounding the first corner of overlap.
Jack,
Given the huge 'bounce' we have seen today that 3C didn't see happening at all (and in fact had negative divergences going into the close yesterday). Does it really matter if 3C shows negative divergences going into the close today... would you act up in? Seriously?
Who's right you or the market?
I'm still sitting in my short positions taken in Sept., so today wipped out all the little gains I had scrapped back over the last two weeks. I am looking for confirmation of tomorrow's position about the EU press conference. I would like to know if I should exit tonight or get slaughtered in the moring.
Option Trading,
The answer to that question changes over time.
Jack,
But Brandt says 3C daily SPY chart is one of the worse leading negative divergences he's seen since 2007-2008. And you want to cut the shorts taken in September at a huge loss now? Are you basically saying that you don't believe 3C will come good?
By the way, does anyone find it odd that Wikileaks was taken down the same day the market makes a 2%+ jump? In addition, a leaked rumor that the US is in talks to help the IMF put into a place a backstop to bailout the EURO jumps the market a shitload, but when the same rumor is denounced by another journalist there is almost no retrace of the jump.
I think we can all agreed that an outside force (Brian Sachs) is basically running this market now. If he decides the market will rise, then so be it. I am starting to believe that we have very little participation by any other sources then the FED at this point. What we have seen is the possiblity of a manaufactured pullback to give the pundits something to talk about and then zoom to a new high of 2010.
Jack,
But Brandt has said that the correlation between the EUR/USD broke down (that's why the market hasn't gone down no where near the same depth as the USD has strengthen against the EUR), so why should the market have gone up at all if the EUR spiked on this 'news'?
Jack,
Well, if you believe the FED is in complete control of the markets, then 3C should be of no use what so ever. You going to continue to subscribe to WoW?
My view is that the FED is only there to keep the game going as long as it can while the fellow criminals on wall street bail in an organised fashion as possible, i don't know who will be left holding the bag...
... but i know the big plan by the ruling elite is to destroy the US from the inside, these ponzi schemes can only last so long by mathematical design, it's time to shut up shop on the western world ponzi scheme, and for the elite to take their enormous winnings and move their scams to the east.
The dollar was weak today...some correlations work when the market wants them to and don't when it is suppose to for my position. Don't worry, I will be selling soon if this continues and then all the shorts will make a shitload of money.
You are right, but to when does this come to an end. My silver in hand looks a lot better. Maybe I will go home and shine it up some, sell my positions and buy some more.
Jack,
Well, i have asked when Brandt expects this leading negative SPY 3C daily to come good, i have asked for previous examples of where such extreme leading negative divergences were shown on the SPY so we can gauge time scales... but i don't think Brandt has replied yet?
Jack,
Brandt has just answered my question with a new post. Take a look.
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