Monday, October 26, 2015

[VIdeo] How to Better Predict Prices with the LCI and the MetaStock FORECASTER


102315 MS Weekly - Differences Between the Uptrend and the Downtrend


Differences Between the Uptrend and the Downtrend
How Stop Losses Trigger High Frequency Trading
The Uptrend and Downtrend are not mirror images of each other, nor can you use the exact same indicators, indicator period settings, or subordinate indicators.
Many Retail Traders assume that if they learn the upside price action that when the trend turns down it is just the opposite price action. That is why so many traders struggle to exit stocks before the trend tops and runs down. In addition it is why many Retail Traders who try to Sell Short as well as Options Traders who buy Puts, take so many losses in their trading.
If you are a Position Trader, you will be trading the Uptrend and Sideways trend.  If you are a Swing or Day Trader you must trade the Uptrend and Downtrend, and adapt for the Sideways Trend. Swing and Day Traders must be able to take advantage of both the upside and downside price action to net profits, that are close to what a Position Trader can achieve. However the Position Trader will generally always have far higher returns.
The sell side or Downtrend is very different from the Uptrend or Sideways Trend because there are fewer Market Participant Groups.
List of Market Participant Groups that do not Sell Short:
  1. Giant Pension and Mutual Funds do not sell short. They may buy Option Puts or Ultra-Bear ETFs, as a hedging or mitigating strategy when the market goes down as they are longer term investors.
  2. Smaller lot investors
  3. Corporations
  4. Billionaires and other wealthy individuals
  5. Foreign Funds
List of Market Participant Groups that do Sell Short:
  1. High Frequency Trading Firms HFTs
  2. Professional Traders
  3. Some Retail Traders do, or use Options to make profits during a Downtrend
That is why the downside trend is so very different than the upside or sideways trend.  Here is a Here is a list of Downtrend characteristics:
  1. The Downtrend often has much steeper Angles of Descent™ immediately causing a severe drop in price and often gaps, as HFTs trigger on news events.  
  2. The Downside also has larger rebounds as it bounces off of Support.  
  3. How fast the price will fall is dependent on many factors, but the most important factor is always the number of HFTs that trigger the sell-off.
  4. The Downtrend can drop with low Volume, and can at times gap down through Technical Support levels. This is due to how and where the Retail crowd and the Smaller Funds set their Stop Loss.
A common mistake that many Independent Investors and Retail Traders make is to use a percentage Stop Loss. Since everyone in these groups all use the same percentage Stop Losses, there are many strategies used by HFTs and other professionals that cause these percentage stops to trigger. When this happens the stock usually hits the Stop Loss then rebounds back up.
It is the “Cluster Order Syndrome” which triggers HFTs and other algorithms, searching for orders that are clustered around a percentage.  As a stock drops, Stop Losses are triggered and the stock plummets.
Summary
The Downtrend behaves very differently than the Uptrend because not all of the 9 Market Participant Groups Sell Short. More than half of the Market Participant Groups hold stocks for the long term.  On the Downtrend, algorithms dominant and many search for anomalies in order flow called “Cluster Orders.”
When Independent Investors, Retail Traders, Small Funds, and other groups all use the same percentage such as an 8% or the more popular 10%, it creates a huge Cluster Order at that price range. Algorithms can search for these Cluster Orders that then cause huge sell downs, because of the combination of Selling Short AND Stop Losses firing off at the same time. A stock often plummets within seconds when Stop Losses trigger all at once.
Trade wisely,
Martha Stokes CMT
http://www.TechniTrader.com

Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

Copyright ©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.



Sunday, October 25, 2015

Market Snapshot by Mark Leibovit.

From the desk of Top Market Trader Mark Leibovit.

This week I am taking a quick snapshot of both Negative and Positive Leibovit Volume Reversals in high-flyers some that clearly went against the uptrend and others that helped make it happen. We are looking at Positive Leibovit Volume Reversals (VRs) in AAPL, GOOG, MSFT and Negative Leibovit Volume Reversals in IBM and TSLA.  Check out the video.




Tuesday, October 6, 2015

Why every Trader needs a P&L Cash Flow Model by Roy Swanson

Why Every Trader Needs a P&L AND Cash Flow Model
Roy Swanson, Founder, SteadyTrader.com


You’ve heard the advice before. Treat your trading like the business it is. Yet, every business manager has a P&L spreadsheet model to go by, while individual traders simply hope for the best most of the time.

At SteadyTrader, we’ve built a comprehensive Trading Strategy P&L -- a spreadsheet model that can be used by individual traders.  You can put all the parameters for ANY long trading strategy into the model within just a few seconds — and it instantly calculates your Annual P&L.  Plus, it rolls out the strategy’s Daily Cash Flow.  As you may have learned the hard way, “daily cash flow’ can be the hidden time bomb that sinks more trading accounts than anything else. 

We all tend to assume we know what metrics make one trading strategy better than another.  But once you see a real trading system P&L at work, you'll change your mind quickly.  Plugging various values for things like "avg. hold", "% winning trades", "avg.gain per trade" often yields results -- at the P&L level and Cash Flow level -- that are quite surprising, if not shocking to many trades.

Watch the demo here; then download your copy at SteadyTrader.com 

Monday, October 5, 2015

100515 MetaStock.com - Candlestick Patterns: Extraordinarily Indecision Day Candles

Candlestick Patterns: Extraordinarily Indecision Day Candles
List of Guidelines for Their Market Conditions
The Indecision Day Candle is a day where neither the sellers nor the buyers took total control of price, and moved it strongly in one direction. Indecision days are mostly very small bodied candles with small wicks and tails that are longer than the body. They often form in consolidations, or during periods of sideways action. However they also occur as a severe anomaly during extreme sell-offs that rebound in the same day, due to the new circuit breakers the SEC has installed in the automated market place that slow down selling during a fast paced selling spree.
The circuit breakers replaced the Uptick Rule a decade ago but still are under adjustments and modifications because severe one day sell-offs are a rare event in the market.
The stock chart below of Ameriprise Finance Inc. (NYSE: AMP) is marked with a red arrow on 8/24/15 to show an example of an extraordinarily large Indecision Day Candle.

Extraordinarily Indecision Day Candles can be problematic for Technical Traders to know how price will behave next. These create extreme patterns in Price and Time Indicators such as MACD, Stochastic, and Bollinger Bands® as well as other highly popular indicators making the interpretation skewed in reaction to the severe price pattern.
Here is a list of guidelines for dealing with severe sell down Market Conditions action that create numerous extraordinarily Indecision Day Candles, which distort price so much that Price and Time Indicators are not giving a proper signal:
  1. The extraordinarily indecision day is caused by a Market Event or Global Event, and therefore doesn’t represent the trend on that day.
  2. If the stock has already been Trending Down, the rebound within the indecision day can be huge on that day. However most of the time the following day will be a down day, continuing the original trend.
  3. If the stock is in an Uptrend, the extraordinarily indecision day will be followed most often by gap up that sells down creating a black candle. The following days the stock will slowly sort out the selling and return to the uptrend.
  4. If the stock was in a Topping Formation that had not completed prior to the severe indecision day candle, then the following day the stock may move down without a gap up at open. Then volatile action up and down with larger than normal candles tends to follow the topping completion, before a true Downtrend develops.
Summary
Extraordinarily Indecision Day Candles temporarily alter the trend, and it can take weeks to pattern out the price action and return the trend to its true direction. During that period of time the stock may run up on what appears to be a reversal pattern, only to hit mild resistance and fall steeply. When trading after an extraordinarily large indecision day caused by a major global event or shock to the market, it is important to not trust the Price and Time based indicators but to watch Volume, Volume Oscillators, Accumulation and Distribution Indicators, and Large Lot versus Small Lot Indicators to determine the short term direction the stock will take before the anomaly is patterned out of price.
Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of MetaStock.com

Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

Copyright©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

Wynn, VR Tutorial from Mark Leibovit.


From the desk of top market trader Mark Leibovit:

Two stories hit the tape Friday morning that impacted gaming stocks, in particular Wynn Resorts (WYNN) and Las Vegas Sands (LVS).Chinese government pledged support to Macau's economy which had been faltering due to previously imposed austerity measures. Li Gang, the head of the Chinese government's liaison office in Macau, said the central government is considering plans to "support Macau's economy in all aspects," according to the South China Morning Post. The government plans to help boost growth in Macau, including the potential approval of the region's maritime expansion plans by the end of the year. The Chinese government is also looking to help the region boost its tourism.  Technically, a Leibovit Positive Volume Reversal was formed and was identified INTRADAY and we purchased both WYNN and LVS.  Volume was clearly running a pace early in the session that strongly suggested a Leibovit Positive Volume Reversal would be formed.  We had been monitoring WYNN and LVS for weeks for any sign a trading bottom might be formed.  For example, WYNN had declined from $249 to $50 from March, 2014 to date and was ripe for a huge technical bounce.  Looking at resistance in the 50 day, 50 week and 50 month moving averages, upside potential is to 80, 124 and 139, respectively.  As a trader, I would be thrilled to get a pop to 70-75 which would represent at 20 to 25 point rally.  The bad news. Should the rally fail and using Volume Reversal theory, I would not want to see the October 1 low of 50.96 breached. That would have to be your stop.