Market Makers, Institutions and Indicators

When I went to university over 10 years ago now, I had a friend from New York and his dad always carried in his pocket, a big roll of 100 dollar bills in a rubber band.  Money never seemed to be an issue for him as he bought his son, my friend, a nice SUV.  The dad himself drove a nice car, he always took us out to eat at nice restaurants and tipped well.  He usually swiped off a Benjamin to give to his son to tell to buy some beer for himself and his buddies.  Cool guy.

Never really wondered at that time what he did for a living.  Even if I had known, it wouldn’t have really mattered.  Only recently did I get back in touch with my friend from our days in school and out of curiosity asked him what his dad did (I even thought maybe he was in the mob).  He wasn’t exactly sure and said he worked “doing stocks,” at the NY stock exchange and then switched over to JP Morgan and now is retired.

So of course, I had to talk to him.  I asked my friend for his number and gave him a call almost immediately.  After some small talk, I dove in.

“So…… I heard you used to work in Wall St.?”

“That’s right.  I was a market maker and later went over to JP Morgan as an institutional buyer.  We used to make most of our money on the spreads but you can’t really do that anymore.  We had to adapt and most of us went the way of the dinosaur.”

Wow.  Some great insight.  I had to go further.  I want to know it all.  Indicators, ratios, algos, whatever it is, I need to know.  Unfortunately, I was quite underwhelmed with how he said they operated.

“Well, VWAP is important.  Keep an eye on that.  I didn’t use it, but a lot of guys did.  A Fiba-wha?  I don’t know what that is.  Yeah pivot points (he actually had a different name for them, I can’t recall) are levels to look at as well.  Time frame?  Doesn’t matter.  I just go off the tape and feel.  I used to trade AAPL and didn’t need a chart.  You told me a price and I looked at the tape and knew when I wanted to buy.  I’ve been retired for 15 years now, so I’m not sure how those guys work these days.”

So after about 40 minutes of talk and questions, I learned a lot but also reinforced what all of us traders know already.  It’s all about experience, time in front of the screens and the “feel.”  There was no secret.  No formula.  No grail.  He had put in 6 years as an intern then an errand boy for a few more.  No formal education.  10 years in they put him on the floor and that’s that.

Interesting, as after our talk, I decided to add pivot points and VWAP onto my charts. Removed all EMA’s, prior day H/L/C.  I never used Fibo’s.

You’d be surprised at how, to the cent, you’ll find reversals, support and resistance at these levels.  More than an EMA, more than a fibonacci.  So some ways I’ve been trying lately to incorporate these levels into my trading is to use them as an added odds enhancer.  What you’ll notice is the charts that look ugly, don’t follow any rules.  VWAP, pivot points, your secret juice EMA crossover.  Won’t do shit.  That’s because price there is completely random.

IF, however, you find a nicely trending stock where you absolutely can tell institutional interest is happening (higher volume than normal), you’ll be amazed at where pullbacks will stop right at the VWAP, reverse back to the dominant trend and find profit taking at a pivot point, rinse and repeat to the end of the day.  The hard part of course is finding these stocks as they are happening throughout the day.  Only in hindsight do you wish you could’ve had that stock to trade during the day.

Here’s a stock I’ve enjoyed trading the past week.  Notice the VWAP reversals.  I usually look for a doji or low risk signal bar near VWAP (it can be above or below by a little) and take entry .01 above it with the stop .01 below it.  Targets are usually 1/2 at 1:1.  Then if it takes off, I will wait for the next pullback and stick the stop under that.  If it’s starting to get choppy, I’ll try my best to take the rest off at at least 2.5/3:1. If I sense exhaustion, I’ll take profit.

MOMO

MOMO 2

 

Here is JD, another trade I took with trigger near the VWAP.  Best trade I had all month.

JD

Same stock a day later.  Outstanding doji signal bar at about 10:15, entry is .01 break below.  I should’ve held my second half longer as I exited when I got a 3rd bounce off of the day’s low.

JD 2

A few days later.  Notice this time it was hard to find an entry at 10:30.  I don’t recommend taking a blind entry just because it is at the VWAP.  You need a signal bar or entry technique which this kind of provided, but with increased risk (entry under that green bar means large stop).  Just after 12:00 provided a good signal bar or even at 12:45 but I don’t usually take trades at lunch time.

JD 3

Last trade I took yesterday.  MU.  Entry was at 11:50.  Perfect signal bar, just look at that narrow range doji.  Took entry .01 below that.  1/2 off at 1:1.  Then I took the second half off right after that bounce at 12:35 for about a 2.5:1.

MU

 

 

Some more trades I’m in (6/1/2017)

Forgot to add these to my last post.  That one was running a bit long so I thought I’d just start a new post with a new watch list.

A – 3×3 method.  Looking good so far

A Swing

Bottom red line was my trigger.  Middle red line is +1.5% where I will move my stop loss to break even.  Top red line is +3% profit target.  Again, as always, if the price hits my 1st target without a pullback, I will take off the full position.  If it pulls back before my first target, I will take off 3/4 when it reaches it as usually after a pullback it sets up for another run up (not always, of course).

Same story.  3×3 on DRI.  Middle line is +1.5%.  Just about there, hoping for some strong continuation today before the weekend.

DRI Swing

 

Last trade I am in is VFC.  This is the pullback consolidation method.

VFC Swing

Looks like the recent uptrend has come to a halt and the first pullback after the confirmed down trend is occurring.  Triggered in at the top red line.  Price made one attempt to go lower about 6 days prior to my entry.  So this is the second time prices will attempt to go down so I like the odds.

Middle red line is my 1st target.  I’ll take off 1/2 my position here as that will cover my initial risk.  The bottom red line is my 2nd target where I may take off 1/4.  Like I said, I don’t trust the market to follow technical analysis books – this is a clear cut downtrend but expecting prices move down below the previous low is a lot to ask for.

Like I said, even if I’m wrong, I like profiting.  If I subscribed to the 4:1 rule with my full size, I’d be pulling my hair out at any bounce or movement against me.  Peel off some money as it moves down.  I like it.

Actually, no watch list stocks today as it is Friday and I don’t take swing trades on Friday.  So will manage these positions today and look for new picks over the weekend.

Holla.

 

 

I love quick hitters – Swing follow up

If you took a look at my previous swing trade posts and followed up, you’ll see that a few of them have hit their targets within a day or two.

That is the best part of trading breakouts with a reasonable target.  They are usually hit within a week, and if you are lucky, within a day or two.

Here’s the follow up to my swing trade posts with a few additions.

MU – target hit in 2 days.  Entry was at $30.01.  Using the 3×3 method, first target is +3% so, $30.90.  Hit on the second day and I actually took off the full position.  Usually you should take off 3/4 and let 1/4 ride to 6% or more if you can.  I didn’t want to sit through the pullback and actually my available margin was all used up so I wanted to concentrate on other trades.

MU June Swing

 

Next trade was AAN.  This method was the pullback-consolidation-breakout with my first target at 1.5x risk.  So the way I handle these are wherever my stop is, let’s say $1 away, my first target will be 1.5x risk (+$1.50) and I will take off 3/4 of my position there.  This means that my original risk of $1 @ 100 shares =$100 is now actually positive since my first target profit will net me $1.5 * 75 shares = $112.50.

AAN Swing

If you’ve studied anything about your expected R, it dives into your expected return.  If you are always risking $100 per trade and you make $150 on your winners and 50/50 win to loss your expected R stays positive.  By making a first target that exceeds your maximum loss and having a 50/50 win to loss, you’ll always make money.  And then leaving 1/2 or 1/4 position on to run will sometimes get you that home run trade with little to no stress as you’ve already banked a profit exceeding your original stop.

So if you use this method and your first target is the only one that is ever hit and you only win 50% of the time, you will still be profitable.

*One thing I’ve learned is to not chew off more than I can eat.  Most technical analysis books preach you need a 3:1, or 6:1 or whatever target.  And I used to subscribe to that. Only, my targets were rarely being hit, and the losses piled up.  Or a trade would go my way 2.5x my risk with target at 4x and start pulling back and I would panic and end up selling at .8x risk and my profit is less than my original risk.  Doing this while taking full losses will net you a losing trader.

In my experience, the 4:1 or more trades is a tough game to play.  Your winning percentage will be lower and your patience tested.  Are you confident and patient enough that if a trade went your way 2x your risk and is now pulling back to take you out for a full loss, that you aren’t just going to take that little bit of profit before it goes to your entry price?   You keep doing this and you’re screwed.  If you don’t mind striking out 4 or 5 times to hit 1 home run then great.  Me?  I like hitting singles and doubles every day with an occasional home run.  Keeps my confidence high and my draw downs light.

Also, taking off 1/2 or 3/4 position at a reasonable target that is below the recent swing high or swing low ensures that even if you were wrong about the trend, you’ll still profit. That is a very powerful thing – to profit even when your expectations were wrong.  Expecting price to exceed the previous high or low not only takes patience but a very confident mindset.

Enough rambling.  Great trade.  Took off 3/4 of my position at the middle red line which ended up being close to 2x my risk.  So moved the stop to break even and my next target for the remaining 1/4 is at the top red line.

 

CSX.  Another 3×3 breakout trade.  The middle red line is the +3% target.  Reached in one day.  Yesssir.  Love these quick hitters.  I actually took off the full position on this as well rather than leaving another 1/4 in play.  Reason is like MU, if my target is reached in a day or two, I’d rather just take it all off than sit through an impending pullback.   If the pullback happens before my first +3% target, then I know it has room to run again and I’ll take off 3/4 in that situation with the remaining 1/4 hopefully netting me +6% or more.

CSX swing trade

 

SBUX.  On a roll here.  Just about .10 from my first +3% target.  It is tough not to just take it now, but if you do that, you’re risking messing up your whole system.  So, stay diligent and only take profits when your targets are hit.

My stop loss is also up to break even ($61.99) since it surpassed the +1.5% mark (middle red line).  If it goes through a pullback before reaching the target, I will take off 3/4.  If the target is hit today or tomorrow, I’ll take off the full position.  Again, if it hits the target without a pullback first, I usually take the full position off.  Don’t like sitting through pull backs and risk it tapping the entry point to take my out.  Also frees up capital for other trades.

SBUX Swing

 

Next up is EXEL.  This was on my list back on the 15th to enter.  Luckily I wasn’t following it and it actually had a false break down at around $19.50.  Since I missed it (luckily, because I would’ve been stopped out) and it pulled back, I placed a small order of half my normal size at $21.99.  Price shot down the next day and re-tested the new break down point.  I had my normal size here at the break down (top red line) and was triggered and first target hit in one day.

EXEL Swing

Took only 1/2 off at the first target of -3% (middle red line) because I had bigger size on it than usual (since I used a front-running entry in addition to the break down).  The next day showed some weakness, so I took off another 1/4 position at the bottom red line.

The last 1/4 position I moved to break even.  Price eventually shot back up and took out the 1/4 position.  Great trade.

 

Last one in progress is DKS.  Posted this with trigger a few days ago.  The top red line was my first entry trigger.  This is using the pullback-consolidation-breakout method.  I was triggered in on that big red candle down.  Just missed my 1st target for this method, which is the middle red line.

The bottom red line is the break down point.  I am contemplating whether to just leave the full size on in anticipation of the break downor to take some size off at my first target to lock in some profits in case it bounces or to even add to my position at the break down point.

DKS swing.png

I think what I will do is just leave the full position on in anticipation of the break down and if it bounces, I will take off 3/4 of my position.  If it re-tests the break down point, I’ll add 1/2 of my normal size for the 3×3 break down play.

So you can combine the 3×3 method with the pullback-consolidation method for good results.  Just don’t get too greedy.

 

DUDE, YOU’RE SO FULL OF SHIT.  You only posted your winners.  Anybody can do that.  Yes, I know.  I called these trades out a few days back and am following up now – there was no editing or additions made to that post.

BUT, inevitably, I did take a few that I didn’t post and I will share those with you.  And yes there are losing trades.

SBGI.  Failed immediately.  Was triggered in and the day closed at kind of a doji.  The next day when I saw the momentum shoot up, I exited before my full stop was hit.  So I took about 75% of my full loss.  Lucky me as later in the day it shot up even more so it would’ve taken me out at my full loss anyway.

SBGI Swing

I think when you see this kind of momentum going against you and your play is a break out or break down, it’s better to get out early than to sit and hope and pray.  And keeping losers smaller than winners never hurt anyone.

 

And the last stinker I had was NWL.  Again, played the 3×3 break out on this and it pretty much failed immediately.  I exited after the day finished down a solid red.  So, again, I took less of a loss on this than the full -3%.

I think if you are triggered in and the trade kind of oscillates at that break out point, you want to stick with it.  These strong bounces off of the break out point is a good sign to get out with a smaller than usual loss.

NWL Swing

 

In Summary: 2 losers, 5 winners, 1 trade in profit.  Every winner’s first target was at least my full risk.   As I mentioned earlier, shooting for 3:1, 5:1 targets is, to me, a really really tough game to play.  Trust me, I’ve played it for the past 5 months.  My advice – keep your targets reasonable (1x, 1.5x) and take a partial.  If you think it’s a 4:1 trade, let the last 1/4 position go until your 4x target.  If you’re wrong, you still profit.  If you’re right, you profit even more.   Don’t trust the market to stick to technical analysis rules.  You’ll be disappointed A LOT.  Squeeze out what you can and don’t get greedy.

Long post.  I’m up about $1500 this past month on my swing trades on a $10k account. Not bad.  This is the second month in a row for profitable swing trades.  I think I’m starting to hit my stride.

Hope to keep this momentum going.  This is a good way to journal as well.  I hate journaling but I don’t mind posting my charts on here.  And I like bragging.  Just kidding.  I hope some of you can take what I’m journaling and put it to good use.

Cheers

 

Some more swing trades

Been seeing some good success with my swing trades lately so wanted to share some more charts with ya’ll.  We all love charts, don’t we?  I know I do.

I have been swing trading regularly for about 8 months now – about 5 of them taken a bit more seriously.  The first 3 months just kind of small sizes, risking about .5% of my account, fiddling around with some shit.  I started in about September of 2016 with around $8000 or so in a Scottrade account.  I took a handful of trades through the end of the year until about February that I realized I was just spinning my wheels.  Luckily, I had one monster trade in AMD take my account up to about $9600 or so.  The rest were small losers and a handful of bigger winners.

Switched over to IB and the commissions are so low that I am less gun-shy at making trades and taking partials since $2 round trip sure as hell beats $14 round trip.  Especially if you have 2 different targets.  Then you’re paying $21-$28 to scale out for Scottrade and $4 for IB.  BIG HUGE difference.  Anyway, since employing and sticking to a set of rules and criteria, I have seen some good results. My account as of May 29th, 2017 is at $11,030.

Basically the two strategies I use are pullback-consolidation-breakouts which I briefly explained in an earlier post and the breakouts/breakdown strategy using the 3×3 method.

Here are some more trades I am either in or waiting for entry.

AAN – red line was my trigger.  Pullback consolidation breakout method.  I am in long.  My stop is at $34.99 just below the whole number.  Taking off 1/2 off of my position at 1x my risk with my second half target slightly above the recent swing high at $38.

AAN Swing

 

DKS – has taken a beating lately.  Looking to enter on a break below the low of those 2 dojis.  Keeping a tight stop .01 above the doji high.  My first target will be 1x my risk, unless it moves down with strong momentum.  If it moves down strong I may even add to my position to play the breakdown of the double touch you see there.  If unsure, I’ll take off 1/2 at 1x my risk and let the other half ride with my stop at break even.

DKS swing

 

PCAR – This one I will enter using the 3×3 method.  Nice tight consolidation right at the breakdown level.  If it breaks below $62 I will have a stop limit order sitting at $61.98 with my first target at 3% or $60.14.

PCAR swing

 

MU – last trade I’m looking at this week for entry using the 3×3 method. I’ve made some money off of this stock twice now since January. The S&P is making new all time highs and just broke out so I like the support that MU will have behind it.  It has also been strong all year.  Looking for a break above the highs with entry at $29.88.  First target at +3% or $30.78.

MU Swing

 

That’s it for what I am keeping my eye out for this week.

3 x 3 method for swing trades

I would like to share with you guys another method I use for swing trades.  I use 2 methods, the other which I covered earlier.  This second one has been very successful for me as of late.  I think it works well in markets that are trending and either making new highs or new lows.  The biggest benefit of this method is that every situation is pretty much covered in the description below.  Nothing is really left to your discretion other than the second profit target (but if you get to that point, you won’t care about specifics).

I won’t go into details of the technical entry point as that’s a whole different post.  BUT, if you have an entry that you like to take, here is a great method to use to remove some emotions from the trade.  The entry I like to use for this method are breakouts and breakdowns.  (If you have questions on what those are, just e-mail me).

The method goes as follow (risk 1-2% of your account balance per trade):

Entry and profit taking:

  • Find your technical entry (I like to use breakouts and breakdowns for this method but you can also use pullback-continuations if you are experienced and good with your entries.  I like breakouts/downs because the entry is specific and not as subjective as when to enter on a pullback).
  • After it is triggered, place your first target for +3% of the entry price.  If you entered long at $62.50 the first target is $64.38.  If short, $60.62 for the 1st target.
  • Take 75% of the position off at the first target.
  • Move your stop loss to break even after the first target has been hit.
  • Second target will be at anywhere between 6% and 12%.  This is where your discretion comes in.  If it hits your target and made a pullback and now making the next leg up or down, just move your stop up/down to the recent swing and keep trailing it up under the previous day’s low.  Sometimes you’ll make just as much on the 1/4 position as you did on the first 3/4.
  • If you are not by the computer screen all day, just leave it at 6%.

Entry conditions:

  • If price gaps above or below your trigger by more than 1%, do not take the trade.

Profit Protection:

  • If price moves more than 50% above your trigger to the first target (1.5% of the price), move your stop for 1/2 of the position to the entry price.  If price reverses and goes back to your entry, you will close 1/2 of your position and leave your initial target and stop in place for the other 1/2.  Or if you want, you can close out the full position at break even and re-enter later if you want.
  • This strategy uses momentum for its main reason of profiting.  So if prices sharply reverse, that means that the odds are no longer on your side and (60-80%) of the time it isn’t going to follow through.

Drifting:

  • If you are triggered into a trade and the price of the trade ranges between your entry and the target for more than 9 days, exit the trade with whatever profit you have until that point.  If you still feel good about the trade, close out 1/2 – 3/4 of your position and move your stop to break even.  Free up your capital for other trades that are going to move.

OH SHIT situation:

  • Price has just gapped up or down on your position, past the 3% stop.  Do not panic and exit just yet.
  • Switch to the intraday 5 minute chart.  Wait for the first swing high or low to be made.  Your revised stop is now a few cents above or below this swing.  You’ll find that most of the time the price will move back in your favor.
  • Leave the new stop in place and close when you reach your 3% stop or close out a portion of your position if the move in your direction was sharp.

SUMMARY:

  • 1st target is at 3% of the price.  2nd target at 6-12%
  • After 1st target hit, move stop to break even
  • If the trade gets triggered, goes 50% of the way to your first target and reverses, close out 1/2 of all of your position at break even.
  • Close the drifting positions after 9 days as now you’re gambling with the move
  • The only time you’ll take a full loss is if you get triggered in and prices sharply go against you 3%.  In my experience it has been rare if you choose good entries.

Here are some examples of trades I am currently in using this strategy:

Starbucks.  Great follow through so far.  The red lines are entry, 1.5% to target (which indicates if it reverses back to entry, I will exit at break even) and the first target line of 3%.  Notice how prices sharply turned down after hitting the same exact price 3 separate times, to the cent.  That is a great sign or an odds enhancer that the next time prices reach it, it will break through with conviction.

SBUX swing

 

CSX – Almost identical to Starbucks.  Prices reached resistance 3 separate times.  It has reached 1/2 the way to my target, so my stop loss is now at break even.  Hoping for follow through to my first 3% target.

CSX swing trade

 

EXEL – Here you can see how to handle a trade that gets triggered and goes against you right away.  It reached 1/2 way to my target, so I moved my stop loss to break even.  The next day, I got taken out for a break even trade.  Prices retraced quite a bit and is now looking again to go to the downside.  I actually re-entered this trade short, hoping to see some continuation down.  My new stop is the high of the previous day.  Revised target is 1x my risk for 3/4 of my position.

EXEL swing trade

 

Lambos and bitches.  You follow the rules, you’ll get just that.  And so many gold watches, pimp ass Yeezy sneakers and instagram followers it’s gonna make your bipper jump.

ThinkorSwim (ToS) is closing accounts (and a work around).

Just a heads up for those of you who use ToS platform for charting or paper trading.  I had opened an account with them about a year ago but of course I didn’t make any deposit.  It was purely for the live data feed and their excellent charting platform.  Recently, I got an e-mail notifying me of a $0 zero balance and that they would soon be closing my TD Ameritrade account which would in turn make my ToS platform login no longer valid.  Went to login and lo and behold, the username was no longer valid.

TDClosed

Anyway, I gave them a call to see what was up and they mentioned that they would soon be sweeping and closing down account balances of $0.  Whether your account raises a flag or not, is pure chance.  So you may get by with no issues but it may just be a matter of time before your zero account raises a flag.  Also, the delayed data paper trade side of things would also be limited to 60 days use.  So after 60 days you could either sign up again and keep doing so every 60 days or use the work around.

So, what is the work around?  Well, if you shop around charting platforms, you’ll know that they aren’t cheap.  TC2000 is a good choice but runs about $45 a month with the data feeds.  ESignal runs over $100 a month with data and IB charts are trash.  Taking this into consideration, I’ve found that depositing the bare minimum into the TD Ameritrade account gives you the charting platform, paper money, live data, level 2, the whole package.  And the best part is that $50 is the account minimum.  And you can fund instantly with your bank routing and account number and start using the platform right away.  And it’s $50.  Ya cheap bastards.

If you compare the main charting platforms like that, ToS is by far the best bang for your buck.  And at a one time charge of $50, a steal.  Not to mention that you can always get your $50 back if you want to wire the money back out.  It’s more of a holding fee to use ToS than anything.

Hope that helps with those of you who run into any issues with them.  If you have any other work around please leave a comment.  Ya cheapo.

Cheers

Best music of the late 90’s early 2000’s

Warning: If you aren’t a hip hop / rap fan of the 90’s, you aren’t cool.  Just kidding…. you might be cool but you are so white.

Born in January of ’85, I grew up in the sticks of central Pennsylvania.  I played football, baseball, and shot BB guns.  I tried chewing tobacco when I was 12 and had my first beer when I was 15.  Bon Jovi, Journey, Guns n Roses and Metallica were on constant repeat in town.  I hated them.  Actually Guns n Roses is alright.  Metallica is alright too.  Bon Jovi and Journey are pretty awful to my ears, even to this day.  I just want to jump out into traffic every time I hear crowds of frat-boy type white folk half drunk sing “OHHHHHH, WE’RE HALFWAYYYY THEEERRRREE… OHHHHH OHHHHHHH, LIVINGGGGG ON A PRRAAAAAAYYYYER.”

Oh man, typing that was painful.  Fuck.

So my guilty pleasure….. rap music.  My dad hated it, my friends hated it and I probably would’ve been called names for listening to it.  But I loved it.  I remember saving up money to buy my first rap album and probably my favorite of all time.  DMX – It’s Dark and Hell is Hot.  Got damn, that was such a good album.  I’d rock that on my Sony Discman ESP with 10 second skip protection on repeat for months.  I’d tap the top of my CD player to see how long it would go until it started skipping.  And it took AA batteries. I’d go through those Duracell AA’s like a hot knife through butter. Oh man, some of the best times ever.

I remember listening to the DMX track “Intro,” before getting into my first fist fight.  It was one of those scheduled fights like “yo, meet me out back at 1:00PM tomorrow.”  I put on that DMX track, felt the adrenaline surge, the hype of motivation, rolled up and one punch later, I was standing over a body with a smirk on my face.  Alright, maybe it didn’t happen like that.  Not at all.  But Mike Tyson and Chuck Liddell both had it as their entrance song so that’s saying something, no?

And then I listen to this garbage they put out now.  Man, no wonder why so many people hate on hip hop and rap.  The stuff that’s on the airwaves now just makes me want to punch myself in the balls.  It’s so awful.

So to defend some good hip hop and bring back some nostalgia, I’m going to list some of my favorite artists and albums growing up:

Ludacris – Word of Mouf.  Oh man, I had 2 12 inch subwoofers in my Jeep at the time. This album bumped serious bass. “Move bitch! Get out the way, get out the way, bitch, get out the way!” sounds way better than “Take my haannnnnddddd…..we’ll make it…. I swear?” Oh god, I just gagged.

Busta Rhymes – Had a few good albums.  Loved Bussa bus.  Woo HA gotcha all in check!

Method Man and Redman – “Zeem Zeeema who got the keys to my beema?”  Hahahahaha.  Love it

Ja Rule?  Yeah he was corny, but we all enjoyed his jams whether you admit it or not.

2pac and Biggie – No need to say more.  Although I can’t say I prefer one over the other.  I enjoy both as much as the other.

Wu-Tang, Rakim, NWA.  Older but some of the best stuff out there.

Snoop and Dre before they went soft with the mainstream garbage they put out now. Same with Eminem.  Music industry has its way of making the greats bow down and s some d.  Poor Snoop.  Poor Dre.  Eminem.  *sob*  S’ing some D now.

Nas.  Rakim.  LL Cool J.  Mobb Deep.  Heavy hitting.  Loved it.

Remember Ski-lo?  I wish I was a little bit taller, I wish I was a baller…. haha.

Even the Beastie Boys.  Damn.  I really think the 90s were awesome for music.  But of course maybe it’s because I grew up in the 90s.  Anyway, just had a nostalgic moment.  I hope you guys enjoyed the music of that era as well.

If you got some more you’d like to add, please comment.  I think the next time I hear a Bon Jovi song I’m going to hit my head off of my fist.  Really hard.  Ugh.

 

 

 

 

 

Back to some forex action

If you have been reading some of my posts, you’ll know that I started off this blog trading forex on the 1 min chart EUR/USD.

I had been doing quite well for a few months but volatility went into the shitter as of late. Here is an article that goes into detail over the volatility as of late in the EUR/USD.  And for me and my strategies, has become a lot tougher to trade especially on the 1 min time frame.

https://vantagepointtrading.com/archives/21008

I also highly recommend Cory’s site – if you get a chance to browse his articles, they are all good reads.  He is one of the few guys that I really take seriously when it comes to trading the markets and advice.

So rather than act like a 6 year old who just had his favorite toy taken away and totally quitting forex, I took a look at the majors (EUR/USD; USD/JPY; GBP/USD; USD/CHF) on the 5 minute charts for some trades the past 2 weeks.  Followed them for a few days and noticed that a lot of good trades had been setting up on the 5 minute chart.  So I adapted.  Ditched only trading 1 minute on just the EUR/USD.  Now I hawk all the majors on the 5 minute chart.  And I realize you’re less likely to get stop hunted compared to the 1 min chart (kind of duh).

Decided to take a few low risk trades this week and so far 4 for 5 and my sole loser did not exceed any of my winners.  I also kind of hit a *light bulb* moment.  And that moment was to take a partial.  Nothing groundbreaking or earth shattering.  Just take a partial – it’s like that first shot of tequila and lime, it takes the edge off.

4.12.2017 USDJPYM5
Trade I took today in the USD/JPY 5 min chart.  I like it.  

I had normally only ever thrown on a lot or 5 mini lots and either it hit my target or it hit my stop.  Instead I put out two separate orders, half the usual quantity each.

Let’s say for example price has a big move down and is pulling back.  I will look for signs of a reversal back into the trend direction (short) like a consolidation breakout, a long pin bar, engulfing candle, etc.  Where I use to enter with just 1 order and have a target set at just above the previous low or sometimes slightly exceeding it, I would have those frustrating moments where my target would barely be missed and it would come back to stop me out at BE or small gain.  Or even worse, I’d start getting anxious and take profits before my target was hit and then watch is shock as prices continue rocketing in my intended direction.

Now that I am using 2 orders, I take my partial at 1x risk, no matter where it is.  If the stop is 2 pips above the previous high, making it a 5 pip risk, my first target is set at 5 pips.  Once that first target is hit, I’ll move my remaining order to BE.  Usually the next target is at a logical point (slightly beyond previous swing) or 2x risk or if price is really rocketing down I will just keep moving my target down and trail the stop with it.  Sometimes you get lucky and get 3x+ what you expected and sometimes you’ll only make out with your first target.  But that’s not really the main point.

The main point (for me) is that it keeps your emotions in check.  You got some money in the bank with the 1st target, no more risk on the second and it now it’s a waiting game.  You lose that anxious feeling that you need to take what you can get once you see green and it allows you to stay patient and squeeze as much out of the second order as you can.

And I think it smooths out the bottom line.  You won’t have as many wild swings into red or green and you will more than likely have lots of small losses, lots of small wins and that occasional big win.  I can live with that.

Boats and hoes soon.  With my boy Sykes.  Moet, Lambos and 50k+ Instagram followers.

Oh boy I can’t wait.

Al Brooks Price Ambiguous… err Action

I remember when I first started this blog that one of the things I’d cover are the methods or systems that I tried using in the beginning of my trading endeavor.

One of the first names I came across time after time with a firm backing was Al Brooks Price Action series.  He’s known as kind of the guru of modern price action trading on the 5 minute time frame of the ES futures.

I will try to keep this short and to the point and this is all my opinion.  So take it for what it’s worth and of course, as always, do your own research, draw your own conclusions and form your own opinions.

Ok here we go:

His stuff is ambiguous as shit.  If you read any of his books or listen to any of his videos you will almost definitely do one or more of the following:

  1. Fall asleep
  2. Daydream
  3. Wonder what in the whale shit he’s rambling about
  4. Fall asleep
  5. Wonder when he will ever get to definitive entries, exits, money management, risk, etc. (which I realize is only half of what’s needed to succeed, but c’mon give me something to get excited about!)
  6. Fall asleep

And the wallpaper in my apartment is really putrid.  I wonder who thought shiny purple wallpaper would look good with hard wood floors.  I used to drive this Jeep Cherokee too…. boy that thing was a tank.  Looooved that car.  Shitty gas mileage but back then gas was a buck fiddy a gallon so no biggie.  I mean I used to walk into a gas station with a twenty dollar bill and came out with a full gas tank and full stomach. Boy….

Oh, sorry.  Where was I?  Ahhh, right.  Al Brooks.

Yeah.

If you’ve ever read his stuff or watched his videos you’ll 100% come out of it thinking, “Wow, I need to study more, because I could barely pick up on what he was getting at and since he is this world renowned trader, he must know what he’s talking about.  And since I couldn’t really pick up on much, it means that my market knowledge is just crap.  Boy I better hit the books 8 hours a day for the next year before I can do anything.”

People always comment that his books are unparalleled.  His knowledge is just so vast. He knows the markets inside and out.  Yet each reviewer or follower of Brooks will agree on THE SAME THING – IT’S DIFFICULT TO FOLLOW OR YOU WILL NEED A FEW READINGS TO “GET IT.”  Do you really want to follow and build a strategy around a guy that can’t break something down in 300 pages? (I think he has 4 books now, all 300+ pages – I got through 1 and a half in detail and skimmed the last one before I said fuck it).  The book layouts are a disaster.  The graphs he includes suck.  You won’t have a clue what he is talking about.  You can only read 2 pages at a time before your eyes want to bleed.

His entries are ambiguous as dog shit like: “here we have a high 2 and the bears are fighting so take caution when entering.  In the next graph you’ll see 2 attempts to go lower then a false break higher.  You could take an entry on that low 3 but beware the bulls could take this into a further range.”  No shit, Al?  Once you get through his terminology you realize the basis of what he is saying.  “Market is trending up, you could take the first pullback that attempts to go higher but if selling is strong be careful with your entry and perhaps a quick exit… or it go into a range.”  Great.  Thanks.

al-brooks-photo
Handsome AF.

All this and he has no proven trading record.  No profit statements.  Nothing.  Just ambiguous entry and exit rules, videos that’ll put a coked-up hyena to sleep and for some reason a dedicated following I can’t seem to wrap my head around?  Maybe I am that stupid?  Maybe I didn’t give his books enough time (Trust me, it’ll take you at least 3 months to get through all of his books once and you will need a second reading, so you might go through half a year before you can juggle your way through his books and video series).

It’s a black hole with no end.  Picking up book after book.  Studying system after system. Thinking you don’t know enough.  And that’s what Al Brooks did to me early in my trading career.  Rather than forming my own strategies and methods based on support/resistance, trends, momentum, velocity and HOD/LOD, I got caught up with learning everything there was to know about a “high 2,” or a “low 3.”  So for 4 months I probably went through every price action book I could put my hands on.  And it always comes back to the same few points:

  1. Take trades with the trend
  2. Don’t get caught up in “noise”
  3. Don’t over trade (be selective)
  4. Look for entries around HOD/LOD depending on previous (day’s) and intraday price action
  5. Key S/R are important levels where you can expect some things to happen

And so forth…..Probably a few I’m missing there, but you guys get the point.

I will say that the people who do benefit from the book probably did so not solely from the teachings in his book but rather learning enough about taking trades with trend, following a certain methodology for entries and trading a demo while studying.  I mean you can get good stuff from it, you just gotta make it your own or spin it a bit to make sense of it.  And you can learn it all much most clearly and concisely by just searching the interwebs, playa.

Overall, I’d say stay clear.  It’ll get you caught up in a few months of frustrating, go-nowhere, I’m stupid-negative talk.  Then you enter this black hole of needing to learn everything out there and never really getting down to trading.

You can read all the books you want on how to golf.  Golfer A does just this.  Reads every book, watches every Youtube video and buys the best clubs.  But he never quite gets out to golf at a practice range and definitely not a real round yet.

Golfer B goes out on the practice range every day for an hour and figures out how to chip, putt and drive.  He reads no books, watches no videos but occasionally watches other golfers who are good and adjusts in practice accordingly.  He also has never gone out to golf a real round yet.

Who do you take to win?  All other things equal, I’d put my money with golfer B.  Apply this to anything in life.  A dentist.  A lawyer.  A basketball player.  A gamer.  I’ll take the guy with actual experience over the book worm every day of the week.  Get my point?

Ok, enough with my side rant.  Bottom line, stick to the basics, practice in sim or with small amounts of moola and go on from there. And stay away from that handsome guy, Al.

 

 

 

Recent Swing Trades

Here are some of my recent swing trades including the one that really stuck it to me.

The strategy isn’t rocket science.  Basically I look for a consolidation pullback in the direction of the trend.  Sometimes it’s as simple as a pullback that consolidates for one or two day, sometimes it’s resistance that is tested 2 or 3 times and looking ripe for a breakout.

MU – This one worked out great.  I entered intra-day anticipating the breakout of the 3 days of consolidation prior.  Although it did pull back to below my entry, I wasn’t too worried as it was still showing good strength.  Had a beautiful gap up after I took a partial and I took the rest off the day it gapped up.

MU Swing
Yellow line is the trigger.  1/2 Partials are indicated in white.

Next is Yelp.  Had about a month long consolidation and just looked like it had a lot of energy bottled up just ready to head south.  Was triggered in and had good follow through the first day and second only to hesitate just above my first target.  Hindsight I am kicking myself for not just taking my first partial quicker but hindsight makes us all Michael Jordan’s.  Wasn’t going to sit back and hope.  Took it off at around BE minus commissions.

YELP Swing
Waiting for a breakdown at the yellow down.  Had a reasonably strong spike down and just barely missed my first target by a few cents.  Out at BE.

Next up is a position I am still holding.  FNSR.  Similar to Yelp.  Had a big gap down, showed strong signs of selling and after seeing the first sign of the pullback ending (that big engulfing bar) and an inside candle the next day,  I wanted in if it broke below the previous day’s low.  Triggered in with a strong move south and took my first half off in a couple days.  I am still holding the rest hoping to see another break down past the recent 2 day consolidation.

This is why I like talking partials.  It allows me to stay patient and really get the most out of those trades that just take off.

FNSR Swing.png
Great trade.  Love set ups like this one.

Next up is the f*&^%*$.  You can see my trigger in the yellow line was juuuuuust barely triggered.  I liked the setup as the consolidation was very tight and looking to make a nice breakout to re-test the lows.  Unfortunately to my dismay, I woke up to find that it gapped up 3 times my initial risk.  I immediately took the position off at market open as I wasn’t going to let it completely blow my account.

Looking back it wasn’t such a bad trade and a good learning lesson.  This is why we keep our risk limited and never get too cocky.  I contemplated doubling my usual risk on this trade because the setup just looked so promising.  I’m glad I stuck to my original plan or I would’ve been in the red.  Luckily, I’m still net green and already put this trade past me.  No sweat.

AFSI Swing
Not taking it personal but F^*% you.  🙂

It seemed the last few trades were short biased so I took this trade as kind of a hedge that the market might continue up.  This is sort of a triangle formation that re-tested that resistance 3 times.  I was hoping for a quick breakout where I could take my full position off at 1x risk but after I was triggered in it took me out in the same day.  Oh well.

CBOE Swing.png
May offer another entry later on if it keeps re-testing those highs.

Last up is a stock I have been day trading and tracking for a good part of 3 months now.  I know this stock pretty well and I entered on feel more than anything else.  I guess that’s how veterans trade a lot when they have been watching the same stock move day in and day out for years.  I just knew it was a good opportunity at a swing.  Quick $3 per share profit and I am a happy man.

X Swing.png
This is a great stock to day trade.  Liquidity is awesome, movement most days is great and you don’t get erratic spikes so it won’t scare the novice away.

Well those are it for now.  If anyone has any questions on the strategy or how I decide to take profits/partials just ask.  It is no big secret and I have been using it successfully now for a good part of a year.