OLD TFMS

[Toni Hansen]

testing

[warren]

Hi Brandon...

Just wanted to stop buy and tell you that I enjoy reading your posts over on SI.

[Brandon]

Just wanted to drop a note to apologize for my extended leave from the boards. I have been out for the count with pneumonia. I will get a few things together to post tomorrow. Enjoy your weekend.

B

[dcsquires]

Bradon,

I really enjoyed your piece on TICKs. If you have anything else interesting to note about TICK I am all ears. I try to look for tick divergences with the SP. I have found this works but not that consistently. Have any thoughts on this? For example, would a double or triple tick divergence be the way to go instead of just a single.

Thanks
Dave

[Brandon]

The Drug sector looks particularly weak.

Brandon
http://www.teachmetotrade.com

[Brandon]

It is common that in a bear market you will see strong rallies such as we have over the last several weeks. When those rallies occur it is common for everyone to get excited and kissing perfect strangers...like we are seeing in the stock market now. Just be cautious who you kiss and definatly keep your cloths on. If this is the bottom, it might be, there will be plenty of opportunity to make money on the way back up. If its not you will be very happy you waited. Scanning the weekly charts this weekend, I am seeing more short setups than I have in a long time..and with many issues up over 100%, dont be shocked to see a retracement from here. News reations are still strong, as soon as that stops would be a great time to get short and probably cover longs.

B

[Brandon]

Looking forward to your participation.

B

[Brandon]

Most trading patterns are fractal, that is they appear in more than one time frame. What works on a daily chart should work on an intraday chart and a weekly etc. That said, there are a few very nice Wide Range Day short setups that I am finding on the weekly charts. Have a look at TROW and CHKP. Both could be great shorts when the market starts to cool off.

Remember that when you trade the weekly charts to make sure you are looking at the bigger picture...dont get caught up in the micro moves or you will get taken out of nice big picture patterns. Here are a few exaples of weekly patterns we have taken over the last several weeks in the Trading From Main Street Weekly Newsletter.


UTEK from the 4/28 newsletter, long above $26.75. Has produced over a 30% gain.

VSH from last weeks newsletter. Long above $22.

QQQ from the 4/1 newsletter. Long over $44.

Brandon

[Cader]

Good Heavens B! Your a posting maniac. Kepp up the good work i will try to add some of my limited knowledge in the next day or two.

Later,
Cader

[TAGA]

Gee Brandon, I come here every day hoping to read the latest. Enjoy your posts very much but there aren't enough of them.
Tom A.

[Mattu]

Hi Brandon,

Nice to see you posting here.

Glad you came over to visit. You will enjoy this place as it grows.

matt

[Brandon]

Be alert for a gap and crap type situation tomorrow. Everyone is sure they missed the boat and they are swimming just as fast as they can to get one. When too many people get on the boat, it can sink.

B

[Brandon]

Of new Bull Markets and Such </B>

There is a lot of talk out there that this time, we have seen "The Bottom". Only time will tell but people sure are swimming uptream trying to get on the boat...just be careful that when they all show up it doesnt sink that boat.

Over the Easter Holiday I am sure a good number of people will be together with family and they will talk about the market. If they all collectively deside that they need to catch the boat before it pulls out of port we could end up with a pretty strong day tomorrow, and maybe a very strong week.


A few things though that I do feel compelled to warn you of. First is that this has been for the most part more of a V bottom than a basing one. Remeber ZRAN which fell off the roof and needed to rest..the markets are the same. They need a period of cooling off and healing. That period occurs by basing action. Aside from not having built a strong base as a foundation for our rally, we are not seeing "new names" This is very important. The names of the last bull market (CSCO, CIEN, JNPR, JDSU, DELL..you know the names, I will spare you the long list) will not give life to a new Bull Market. And the old one will not come back..its dead. Look for companies with exciting new products that have superior earnings growth and are breaking out of solid bases..those will be the stocks which give life to the New Bull...Ive been looking all weekend and dont see much that makes me wet my pants. The VIX really sank on Thursday and is looking stretched. The Average Trin close over the last several days on the NYSE also suggests we are getting overbought and due for some selling...or at least a period of rest. Just keep in mind that like oversold, overbought can and does get more overbought. Finally, I just dont think this is "the bottom" and thats what really counts right <GG>. If you look at the longer term charts (say quarterly and yearly...WOW) we are still long term overbought. We could rally 30 to 40% from the lows and still be in a strong bear market. When I started trading it was in a bear market in Grain. Bear markets are subject to sharp rallies that make everyone hopefull, then they turn diabolical and head back down.

Brandon

[Brandon]

Yesterday I said I would give a list of a few of the stocks that look ready to break higher based upon the triple top break.

NOK (also a decent low level base on the weekly)
VSH (This also looks similar on the weekly chart to ZRAN from a previous post and swingtrade)
MERQ (I would have liked to have seen a bit more basing action on the weekly chart of this one)
SPY (Like MERQ, a bit more basing action on the weekly chart would have been nice)
JBL (again, more weekly basing would have been ideal, but still could get a nice trade out of it)

This is probably more than enough to keep anyone busy.

Brandon

[Brandon]

We have all heard the phrase "The third is the charm", well no place is that more true than in the stock market. When stocks come to a price area and pullback, rally to it and pullback, and then rally to it again, often there will be an explosive breakout, in fact this is one of the strongest breakout setups I know of. There are a number of stocks that have the potential to give us this sort of setup..I will post a list tomorrow.

B

[Brandon]

One of the most important things a trader can do to improve his odds of making it is keep a trading journal. You should record each trade you make in the journal, the entry and exit times and prices, why you took the trade and what you learned from that trade. You should also strive to find something you could have improved in each trade. You should then review this log weekly and notice any habits you have that are not serving you well and strive to get rid of them. Also take note of the things you are doing well at and keep doing that. Keeping a journal is not the holy grail, but it took me from being a struggling trader to one who is confident, competent and successful.

Brandon

[Brandon]

After a long and exhausting search, I think I have found it. I think I have found what traders and investors have been looking for since there was speculation. I looked far and wide...drum-roll please. I have found <gasp> the much touted "Holy Grail". That one secret formula which will lead to success. That one true thing in the market that can make all the bad good, all the ugly things pretty. Oh, I wish I could say that the Grail I found was a "Magic Setup", which I of course would give a fancy marketing name to get very famous from. Or, it would be nice to say the "Holy Grail" came in the form of an advisory service or chatroom which magiclly always gives out winners (that would be especially nice if I could say that service was TMTTs Trading From Main Street Newsletter or Real Time Trading Room <G>). But no, that is not the grail I found. Over the last several years as a professional trader the true "Holy Grail" for me has been hard work. Plain and simple. Each night, long after the market is closed and most market players are doing whatever they can to forget about the market, I am at work dillegently studying the market, its little quirks and patterns. Anything that I can exploit for a profit. I am tirelessly pouring over my trading records, seeking out mistakes which I am making and can destroy. I search the web for bits of information that I can use in the market tomorrow. I read and talk to traders better and more experianced than myself from whom I can learn. My success comes because each day after the market is closed, when most of Wall and Main Street are sleeping, I make it my duty to spend good quality time with the market. This is the Holy Grail for me. It is the only one out there and is available to anyone with the ambition to grasp it.

Brandon

[Brandon]

Im such a loud mouth..you really think I could hide <GG>

B

[Brandon]

Here is an example of a daytrading opportunity the market gave recently. Below is a nearly perfect example of a breakout from a base, which is one of the core tactics we use.

When the market or a stock gaps up, there is a strong tendancy for it to fill (unless its a large breakaway gap like we had today). In those cases a lot of times you will see sideways basing action. After the market burns off some of its excess, it can move higher. Heres a chart chart of TWTC, a trade I took today and gave in the Real Time Room.

http://www.swingtrader.net/lesson/twtc.jpg

Brandon
http://www.teachmetotrade.com

[Brandon]

I find the NYSE Tick indicator to be one of the most reliable weapons in my trading arsenal. The Tick is a simple measure of upticking vs downticking stocks on the NYSE. When used correctly it is very powerful.
Most people, when using Tick, simply apply it as an overbought, oversold indicator. The general idea is that anything over +1000 is overbought and anything under -1000 is said to be oversold. This however is an extremely broad application. In normal market conditions these numbers work well, but at certain times they will change. For example in a strongly downtrending market, we usually don't see oversold reactions until about -1200 Tick, and on the upside around +500 we start to see overbought reactions and bring in selling. The overbought/oversold application is valuable, but you must keep market conditions in mind.
A more consistent way to use Tick is by following intraday charts. I normally use a 2-minute and 5-minute chart. You can use this in much the same way you would follow a chart. Look for support, resistance and intraday trends. When Tick comes to an area of support or an area of resistance it is very helpful to time your entry accordingly. When we look at the trend our concern is which way is it going. Are we seeing higher highs and higher lows, lower lows and lower highs, or is it sideways, ranging broadly between areas of support and resistance. If it is uptrending we might be more aggressive with our positions on the long side of the market, and less aggressive in going after shorts, or visa versa in a downtrend. When the tick is sideways we would be in a scalping mindset, or setting on the sidelines waiting for a breakout in either direction as our confirmation to where the easiest money is to be found.

Brandon

[Brandon]

Wide Range Trading Days (WRD) can represent great opportunities for the trader who know how to take advantage of this event. A Wide Range Day is defined as a day in which the range is larger than is normal. These days often show extremes in the ever present human emotions of greed and fear, often panic. We have a variety of setups we use to take advantage of wide range days.
Wide Range Day Buy Set-up
1) An uptrending stock that has pulled back for 2 to 4 days.
2) We want to see a day in which the range is substantially larger then is "normal" for a particular stock.
3) We want a stock which essentially opens at he high, sells off all day and closes at or very near the low.

Wide Range Day Buy Set-up Actions

1)The first action assumes the stock opens lower then the prior days low. At this point we set an alert 1/8 above the prior days low. If price is broken we will look to go long. Our stop is placed 5/16 below the low of the current day.

2)The second action assumes the stock gaps up from the prior days closing price. If this occurs we wait 30 minutes and take note of the high achieved in this period. Should the stock trade above this high at some point during the day we will look to go long.

There are many other variations to this setup, and we use them and teach them in our trading room.

Brandon

[Brandon]

Imagine you are on the roof of your three story house...cleaning the gutters say. Now imagine that a stiff wind comes across and blows you off the roof, making you fall three stories to the ground. The next day you had planned on running the Boston Marathon...would you make it? I would guess the answer to that is no..you would need a period of rest. After resting you would need to train again to get back in shape in order to run the next marathon. Stocks are pretty similar..lets have a look.

http://www.swingtrader.net/zran.gif

The first chart is a daily, the second a weekly. You can see on the weekly chart that ZRAN fell from a high of over $70 a share down to a low nearly $10 a share before it stabilized. Stocks rest by trading in a sideways range for a long period of time. You can see that ZRAN has traded in a sideways, narrowing range all year. After its last low was made it made a higher low...telling us it was gaining strength. When it broke out on the 11 we took long positions in ZRAN as it traded above $16.65. As you can see the stock has been very kind to us over the last several days...producing gains of over $2.50 on a very low priced stock.

Brandon
http://www.teachmetotrade.com

[Mike_Nvrsettle]

B. Don't think just because you move boards we're not going to find you, To anyone new to this board
Brandon is a great trader and a great teacher. He has really been a great influence and mentor for me and has helped me to realize that you can be a good trader as long as you follow his three golden rules,,the "holy grail" of trading: ok are you ready here they are:
1.HARD WORK
2.HARD WORK
3.HARD WORK
I am really excited to see you have another message board up B. I love to follow your posts, learn something new everytime I read them. I hope that this message forum will be as good, probably better, as the old SI board.
B, Glad to see the board up and running and Good Luck!
Mike (NvRsEtTLe)

[Brandon]

I'd like to move onto TRENDS, because it is an important part of any trade that I take.
All freely traded markets are trending at all times. There are four major trend timelines in effect at all times. The first is the the long term time frame. It lasts from months to years and is the domain of the investor. The second is the intermediate term time frame, this exists in a period of weeks to months. The third time frame, the one I am primarily concerned with, is the short term time frame, the domain of swingtraders. The fourth, a very minor time frame is micro. This exists in a period of seconds to a day or two. Daytraders operate in this time frame. Each of these can be moving in different directions at any time.

It is important you know which way the trend you are dealing with, and the trend one order higher, is going. There are uptrends, downtrends and sideways trends. We concern ourselves with uptrends and downtrends for the most part as these present the easiest opportunity for us to make money.

An uptrend occurs when a stock is making a series of higher highs and higher lows. It will consist of rallies interrupted by short term sell-offs, generally profit taking, which should stop the down move at or near the area of the last low. In the strongest of uptrends however, this sell-off will stop at the area of the last minor high, that being visible as the last peak on the chart.

A downtrend occurs when a stock makes a series of lower lows and lower highs. It will consist of sell-offs interrupted by short term rallies. The rallies will occur over the span of up to several days. Then a sell-off will again occur and the cycle repeats itself until a fundamental event changes the trend.

A sideways trend occurs when a stock or market is making neither higher highs or lower lows. I think of this as a "resting period" for a stock or index that has already had a rather robust move. This time lets the market work off some steam and figure out what it wants to do.

Each trend has its own traits and is traded differently.
Brandon

[Brandon]

Proper Money Management and Risk Control means never putting yourself in a position that one bad trade, or even a series of 10, will put you out of business. Remember, your primary business objective must be to stay in business.
What is Money Management and Risk Control?

Money Management and Risk Control is the portion of ones business plan (trading system) that tells you how much you can risk on one trade. What amount of risk should you be willing to take? A proper Money Management component to your business plan not only assures your longevity simply by not allowing large positions, but also by removing significant psychological barriers in trading. Let us quickly quote Larry Hite from the book Market Wizards (which we would recommend you all read) by Jack Schwager. "Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical." Larry Hite. Mr. Hite manages futures, and the risk control modules used are slightly different, never-the-less the principles are much the same.

Incidently should you be thinking you can not make good returns taking such small risk you should know that when Market Wizards was written (1988) Larry Hites funds had a compounded average yearly return of 30%. This was done taking probably the lowest risk of any trader I have heard of. How many funds consistently do 30%, not many. If you can consistently make 30%, people will beat your door down begging you to manage money for them.

Brandon

[Brandon]

I feel it would not be proper for us to start without first looking at MONEY MANAGEMENT. It will be the single most important issue in a trading career success regardless of the method you finally decide to implement. I don't claim to have the worlds best method, what I do have is good money management. If you also have good money management you are far ahead of 90% of the guys out there in the chatrooms trying to trade.
One thing is more important then any method of trading anyone could ever teach you. That is money management. If you have poor money management skills, you could have the best trading system in the world, one that is right 90% of the time, and you will still lose all of your money. On the other hand, with good money management skills, you could have a fairly inaccurate system, and still get respectable returns. Money Management is so important that studies have shown that up to 90% of the variance in fund manager performance can be ttibuted to money managment.

My primary concern in trading is to be here tomorrow, and if every day I guarantee my tomorrow, I'm going to make a lot of money. I don't worry about making millions of dollars a year, I take small, well calculated trades, knowing that this will build my account slowly, with small. My concern to be here tomorrow will eventually ead to my "small" gains, basically if you think of this in baseball terms I am trying to win the game by hitting singles and doubles and stealing a few bases, be rather large. My risk model calls for never under any circumstance risking more then 2% of my accounts equity on any trade. This is my insurance policy for longevity. If I am only risking 2% on each trade, I can be wrong 10 times in a row, and still have over 80% of my capital available to trade with. If you combine this money management with the accurate set ups that will follow, you will be able to trade for as long as you wish to.

Now, what does this 2% risk model mean, how is it implemented? Let me say first what it does not mean: Say I have a $20,000 trading account. I can risk 2% of this account on a trade, so that means $400. I want to buy XYZ Inc at $25. $400/$25= 16 shares. Well, you could do that, but you would slowly bleed to death due to commissions. So, we must use something else. What my 2% risk rule means is this. I want to buy XYZ Inc at $25, and my stop is 23 7/8. I still have a $20,000 account so I am risking $400. What my risk model means is that should I be wrong, I will lose $400. I can trade up to 355 shares of XYZ Inc given my stop loss and risk management. I always round down to the nearest hundred, so in this case I would trade 300 shares. Even if the model says I can buy 399 7/8 shares of a stock, I will still only trade 300. It is better to error on the side of conservative.

Brandon

[Brandon]

My Name is Brandon Fredrickson. I have been on SI for sometime with my threads which were I shared with many people the art of Technical Analysis. I will not be on SI anymore but instead will be here @ Ihub.

I have been active in the stock market for over four years, having been active in the commercial hedging of grain before that. I continue to grow as a trader and fine tune the methods I use. I feel I have something that I can use to be profitable in any market condition.

My goal here will be to teach sound technical analysis to the readers of this thread. I feel that by focusing on a sound entry and risk control, anyone can, over time produce superior returns with minimal drawdowns to their account.

I hope everyone will join in this discussion sharing knowledge and asking questions.

Brandon
http://www.teachmetotrade.com

[Brandon]

The one and only. Toni will also be posting here as well...along with David Bush and Eric Patterson. Thanks for the Welcome.

B

[Bernard Ng]

Hi Brandon, are you "the brandon of ex mtrader head of the swingtrading room"?

If so, I would like to say I love your posts, if not, welcome to iHub

signed,
Bernard