Feb 13, 2012 | Uncategorized
Steve Palmquist.
Author of ‘The Timely Trades Letter’.
‘How to Take Money from the Markets’,
and Money-Making Candlestick Patterns.
When the market breaks out of a basing pattern, as it did last week, it makes it easier for strong stocks to run. When the market is basing, most stocks tend to run a bit, then reverse. When the market breaks out more stocks tend to move above their trigger points and they tend to run longer. I always want to be adapting my position sizing, and the number of trading positions I am using, to the current market conditions. When the market is in a basing pattern I use smaller than normal position sizes and trade fewer positions. After the market breaks out of a base I am willing to use larger position sizes and trade more of them. Using smaller position sizes during more risky market environments helps preserve previous profits.
We saw nice moves in a number of the swing trading setups from the last Letter including AAPL, AAP, TSCO, ULTA, PVX, VOXX, and AWK. Most of the setups rose above their trigger points and kept moving up into their next resistance areas, thus providing nice profitable moves. I followed the standard prioritization process outlined in previous Letters for selecting the trades I wanted to enter. I took profits on trades as they approached their upper Bollinger Band. The market is moving and so are our setups, nice week.
As noted in previous Letters one of the the sweet spots for holding swing trades is three to five days. A number of systems show interesting results just using a time stop and exiting after three to five days. The rule I use is to have a good reason to hold after three days. When the market is bullish there are often good reasons to hold such as more room to run to the next resistance area, not very extended above the fifty day moving average, moving on strong volume, etc. If its is not clear that there is a good reason to hold, then I happily take profits and move on to the next pattern that is breaking out and just starting its run. I am not trying to hold on for the last dime in every position, there is no way to do that consistently. I am trading patterns, not stocks. When a setup moves and becomes extended I would rather ride a fresh horse than one that has been running for awhile and may be tired.
AAPL moved above its trigger point during Monday’s session and ran up every day last week, gaining thirty five points. I picked up the AAPL trade on Monday and let it run during the sessions on Monday, Tuesday, and Wednesday. On Thursday AAPL moved above the upper Bollinger Band which is generally a sell signal. The reason for this can be found in the research outlined in ‘How to Take Money From the Markets’. My research indicates that one can develop an interesting system for shorting strong moves above the upper Bollinger Band. This also implies that if I am long and a position moves above the upper Band I should consider taking profits. I have extensively tested several trading systems, the results of this testing on specific trading trading tools are outlined in ‘How to Take Money from the Markets’, and Money-Making Candlestick Patterns. The testing process helps us understand how stocks usually behave after forming a specific pattern such as being outside the Bollinger Bands, showing strong distribution or accumulation, or pulling back or retracing during a trend.
Feb 8, 2012 | Uncategorized
Steve Palmquist.
Author of ‘The Timely Trades Letter’.
‘How to Take Money from the Markets’,
and Money-Making Candlestick Patterns.
A number of traders use chart indicators to determine when to enter and exit trades. Most charting programs include dozens of different indicators that can be displayed on the charts. Popular indicators such as the Stochastic, and MACD, are frequently discussed when traders get together. I have listened to a number of these discussions, the interesting thing is that people typically explain why they use a particular indicator by citing an number of examples of when it has worked for them. When they do, another trader will typically say something like, ‘well it did not work for me, so I use the XYZ indicator which is much more reliable’. When I ask the second trader why his XYZ indicator is more reliable, the explanation usually involves a few more examples of good trades.
Examples do not prove anything. It is possible to flip a coin and have it come up heads five times in a row. Few traders would observe this and then think that when you flip a coin it always comes up heads. Yet for some reason people will read an article about an indicator that shows four or five examples of good trades it produced, and then they will go and risk their money trading the technique. They typically trade the new technique until it produces several losses in a row, and then they start looking for another article that describes a ‘better’ technique, and the process repeats itself in an endless search for a better trading system.
Adopting a trading technique because it was recommended by someone, or written about in an article that showed a few working examples, is a high risk endeavor. Trading is a statistical business. Traders need to understand how a potential system has performed over hundreds, or thousands, of trades. If you flip a coin three times there is a one in eight chance of it coming up heads three times in a row. If you observed this example and drew conclusions about the probability of heads coming up you would be wrong, just like seeing three examples of when an indicator produced favorable results could also be wrong.
Trading should be data driven, not based on emotion, whishful thinking, or hot tips from TV hosts. To be data driven one needs to test and analyze trading tools and find out what really works, and when each tool should be used. Traders must understand which tool to use for a specific task, and have a clear understanding of how the tool works, and what can and cannot be done with it. I have extensively tested several trading systems, the results of this testing on specific trading trading tools are outlined in ‘How to Take Money from the Markets’, and Money-Making Candlestick Patterns. The testing process helps us understand how stocks usually behave after forming a specific pattern such as being outside the Bollinger Bands, showing strong distribution or accumulation, or pulling back or retracing during a trend. Understanding what a stock is most likely to do forms the beginning of a trading strategy. Trading without this information is taking unknown risks.
Jan 25, 2012 | Uncategorized
In this live hour long recording from a live seminar, Steve Hil, President of AIQ Systems explains how to tell when an up move in a stock is over and it’s time to exit poisitions or go short. Steve discusses exhaustion gaps, rising channel breakdowns, doji candlestick, volatility fade, volume exhaustion and more
View recording
Jan 25, 2012 | Uncategorized
In this live hour long recording from a live seminar, Steve Hil, President of AIQ Systems explains how to tell when an up move in a stock is over and it’s time to exit poisitions or go short. Steve discusses exhaustion gaps, rising channel breakdowns, doji candlestick, volatility fade, volume exhaustion and more
View recording
Jan 25, 2012 | Uncategorized
A Series Of Indicators Used As One
Making good trading decisions involves finding indicators that cut through the market noise. But how do you do it without collapsing under the weight of information?
Chart analysis is a multidimensional affair; no single indicator can tell the entire story. After spending years cluttering my screen with multiple indicators, I discovered that more is not necessarily better because they sometimes present conflicting information. Often, it takes longer to analyze the information needed to make decisions.
The goal is to integrate the knowledge that indicators provide in order to evaluate the situation that leads to making good trading decisions. That means each trader needs to find those indicators that cut through the market news (and noise) in a way that makes most sense to him or her without collapsing from information overload. Here’s a method I have found useful.
The first step is to determine the categories from which to draw the indicators. For me, that includes trend, momentum, volatility, and volume (TMV). These present a multi-dimensional view of price behavior to supply a more complete picture…..excerpt of Barbara Star’s article in Stocks & Commodities, “
Trade Breakouts And Retracements With TMV,”
AIQ SYSTEMS, KELTNER CHANNELS, CCI, AND COLOR-CODED PRICE BARS. Here’s a sample chart of Noble Energy with the TMV indicators.
The AIQ code and EDS file based on is provided at www.TradersEdgeSystems.com/traderstips.htm. The code is also shown below
!TRADE BREAKOUTS AND RETRACEMENTS WITH TMV
!Author: Barbara Star,PhD, TASC February 2012
!Coded by: Richard Denning 12/9/2011
!www.TradersEdgeSystems.com
!CODING ABREVIATIONS:
C is [close].
C1 is valresult(C,1).
O is [open].
H is [high].
L is [low].
H1 is valresult(H,1).
L1 is valresult(L,1).
V is [volume].
!KELTNER CHANNEL
!INPUT:
keltLen is 20.
!KELTNER CHANNEL UDFs:
typ is (H+L+C)/3.
rangeAvg is simpleavg(H-L,keltLen).
!Plot the following three functions on price chart
!as three separte indicators:
midKelt is simpleavg(typ,keltLen).
upperKelt is midKelt + rangeAvg.
lowerKelt is midKelt – rangeAvg.
!ADX
!INPUT:
WilderLen is 10.
!NOTE: Wilder to expontential averaging the formula is:
!Wilder length * 2 -1 = exponential averaging length
!USED FOR DMI, ATR, ADX, ADX RATE
avgLen is WilderLen * 2 – 1.
!AVERAGE TRUE RANGE:
TR is Max(H-L,max(abs(C1-L),abs(C1-H))).
ATR is expAvg(TR,avgLen).
ATRpct is expavg(TR / C,avgLen) * 100.
!+DM -DM CODE:
rhigh is (H-H1).
rlow is (L1-L).
DMplus is iff(rhigh > 0 and rhigh > rlow, rhigh, 0).
DMminus is iff(rlow > 0 and rlow >= rhigh, rlow, 0).
AvgPlusDM is expAvg(DMplus,avgLen).
AvgMinusDM is expavg(DMminus,avgLen).
!DMI CODE:
PlusDMI is (AvgPlusDM/ATR)*100. !PLOT (2 lines)
MinusDMI is AvgMinusDM/ATR*100. !PLOT (2 lines).
DirMov is PlusDMI – MinusDMI.
DirMovAIQ is [dirMov].
!ADX INDICATOR as defined by Wells Wilder
!PLOT DIdiff as historigram is same as DirMov (AIQ built in indicator):
DIdiff is PlusDMI-MinusDMI.
ZERO if PlusDMI = 0 and MinusDMI =0.
DIsum is PlusDMI+MinusDMI.
DX is iff(ZERO,100,abs(DIdiff)/DIsum*100).
!PLOT ADX as single line indicator with support at 24:
ADX is expavg(DX,avgLen).
!VOLUME OSCILLATOR:
!INPUTS:
volLen1 is 1.
volLen2 is 20.
pctChgLvl is 50.
!VOLUME OSCILLATOR UDFs:
volAvg1 is simpleavg(V,volLen1).
volAvg2 is simpleavg(V,volLen2).
pctChgV is (volAvg1 / volAvg2 -1) * 100.
volOsc is iff(abs(pctChgV)>pctChgLvl,1,0). !PLOT
!CCI INDICATOR:
!INPUTS:
cciLen is 13.
!CCI UDFs:
typAvg is simpleavg(typ,cciLen).
absdiff is abs(typ-typAvg).
sumD is sum(absdiff,cciLen)/ cciLen.
CCI is (typ – typAvg) / (0.015 * sumD). !PLOT WITH +100 -100 LINES
!COLOR BAR RULES:
!INPUT:
trndLen is 8.
Green if ADX > valresult(ADX,1) and C > simpleavg(C,trndLen).
Red if ADX > valresult(ADX,1) and C < simpleavg(C,trndLen).
—Richard Denning
info@TradersEdgeSystems.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
for AIQ Systems
Jan 16, 2012 | Uncategorized
Steve Palmquist.
Author of ‘The Timely Trades Letter’.
‘How to Take Money from the Markets’,
and Money-Making Candlestick Patterns.
Analyzing trading patterns is vitally important to trading. Trading without understanding the statistics of a trading pattern is just taking unknown risks, and makes little sense. The trading patterns tested and analyzed in my first two books provide the beginnings of a trading toolbox, and the knowledge of when to use each tool. Without a clear understanding of how and when different trading patterns work, it’s easy to get caught up in fear, greed, group think, etc. However these emotional and non-data driven approaches often lead to losses. Traders need to be first and foremost focused on what the market is doing, and then selecting the most appropriate trading patterns, or remaining in cash, to address the current market conditions. Without previous testing and analysis of trading tools, and how they perform in differrent market conditions, traders are just randomly using tools that may or may not be appropriate for the current market.
It is also very important to have a clear exit strategy before entering any trade. If I don’t know where I want to exit a trade then I don’t take the trade in 1st place. In trading range markets most stocks tend to pop and drop, if they didn’t the market (which is the summation the large number of stocks ) would be trending. So a trading range environment tells us that stocks are not going to run very far, by definition. I use this information to drive my exit strategy which is more short term in a trading range market then it is a trending market as outlined below. In a trending market, individual stocks tend to pop and then move for a while. The market, the summation of a large number of stocks, is moving or trending because a lot of individual stocks are moving or trending. Once again observing the market conditions tells us how individual stocks are likely to behave, and that tells us how to manage our exit strategies.
Trading should be data driven, not based on emotion, whishful thinking, or hot tips from TV hosts. To be data driven one needs to test and analyze trading tools and find out what really works, and when each tool should be used. Traders must understand which tool to use for a specific task, and have a clear understanding of how the tool works, and what can and cannot be done with it. I have extensively tested several trading systems, the results of this testing on specific trading trading tools are outlined in ‘How to Take Money from the Markets’, and Money-Making Candlestick Patterns. The testing process helps us understand how stocks usually behave after forming a specific pattern such as being outside the Bollinger Bands, showing strong distribution or accumulation, or pulling back or retracing during a trend. Understanding what a stock is most likely to do forms the beginning of a trading strategy. Trading without this information is taking unknown risks.
Jan 12, 2012 | Uncategorized
Today’s webinar by Richard Muller, Reuters Equity Analyst, senior instructor at The Trading Prism, and long time AIQ TradingExpert Pro user has been recorded. Richard covered the Expert Ratings on the US markets before moving onto group/sector rotation using AIQ Reports. His stock selection process was geared toward possible options trades. You can view this video at
http://aiqsystems.com/prismjan12.html
Jan 10, 2012 | Uncategorized
Join Richard Muller, for a live webinar on the current market and a look at some interesting stocks setting up technically.
Wednesday 11th January at 7.00pm London time, 2.00 pm eastern
Richard’s investment trading career started out in emerging markets in 1995, up to 2000, where he did extensive equity fundamental analysis, as well as macro market analysis while based in South Africa.
Over the last 10 years, while based in the UK, he has built up extensive global equity research and macro market analysis as both a buy side equity analyst, as well as a global equities proprietary trader. Previous positions included sell side equity research analyst with JP Morgan Chase and HSBC. Buy side analyst with Reabourne, part of Close Brothers, and as proprietary trader with Van Der Moolen Securities ltd. Richard also held a position as CEO of ETI Investment, an investment management firm.
Currently Richard Muller is a global equities analyst with Thomson Reuters, where he delivers investment ideas on the Reuters Insider financial TV channel.
Richard qualified as a Chartered Management Accountant, and holds a Masters of Science degree in investments, MSc ISIB.
Richard’s Reuters TV shows offer detailed analysis of the equity markets. Richard is a long time user of AIQ TradingExpert Pro.
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