Trading Techniques 5

 

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IMPORTANT NOTI CE: B y r e ading this m  maa t e rial and  / or o r th e u se of any of th e se r v i ce s  you agr ee  un  u n d e r stand and con se nt to th e fo  followin llowing: g: > > F utur es and Opt ions tr ading has large po  pott e ntial r e wards  but also large po  pott e ntial ris k  Y ou mus t b e awar e of th e r is k s and b e willing to a cc e pt the m in ord e r to inv es t in th e futur es and options mark e ts  Don't tr ad e with mon e y you c an't affor d to llo ose  Noth  Nothing ing in our w e bsi t e shall b e d ee m e d a soli ol i c itation  a n d / or o r options  No  N o r e p r ese ntation is b e ing mad e that or an off e r to Buy / Se ll futur es an any a cc ount will or is li  l i k e ly to a c hi e v e profit s or losses similar to th tho ose di  d isc usse d on our si t e   A lso  th  t h e pa  p ast p e rformance  of any tradi ng m e thodology is not n ec essarily indic ativ e of futur e r es ult ul t s  D A Y TR A D I N G iinv nvo olves high ri s k s an  and d Y OU c an LOSE a lot of mon e y   ,

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T H E SE S E R ES E S U L T S A R E B A SE SE D O N SI M U L A T E D O R H Y P O T H E T I C A L PERFORM ANCE RES SU ULTS TH AT H AV E CERT AIN INHERENT L I M I T A T I O N S  U N L I K E T H E R E S SU ULTS SHOW N IN AN AC TUA L P E R F O R M A N C E R E C O R D  T H E SE S E R E SU SU L T S D O N O T R E P R E S E N T A C T U A L T R A D I N G  A L S O  B E C A U SE SE T H E S SE E TRADES HA VE NOT A CTUA LL Y BEEN E X E C U T E D  T H E S E R E SU S U L T S M A Y H A V E U N D E R --O OR OV ERCO MPEN NS SATED FOR TH E IMP PA A C T  I F A N Y  O F C E R T A I N M A R K E T F A C T O R S  S U C H A S L A C K O F L I Q U I D I T Y  SI  SI M U L A T E D O R HYPO TH ET IC AL TRA DING PROGRA MS IN GE NERA L ARE ALS SO O SU B BJJ E C T T O T H E F A C T T H A T T H E Y A R E D E SI SI G N E D W I T H T H E B E N E F I T O F H I N D S I G H T  N O R E PR PR E S SE E N T A T I O N IIS S BEING M ADE TH AT AN Y AC CO UNT WI L L OR IS LI K EL Y TO AC HI E V E PROF ITS OR LOS SS SE ES S SIMIL AR TO T H E SE SE B E I N G S H O W N   .

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Any se r vi ce s h e r e inaft e r provid e d by Trading Advantag e shall b e gov e r n e d by and c on s t r u e d in a cc ordan ce  with th e  l  law aw s of th e Stat e of Illinoi Il linois  without r egar d to c onfli c t of of law pri n c i p l es   T h e provis ion s of th e Unit e d Nations Conv e ntion on the  I n t e rnational Sal e of Good s and th e Uniform Comput e r Information Information T ransa c tion s  A c t  how  h ow e v e r d esignat e d  ar  a r e e x c l ud e d and s hall not apply to any tran sa c tions  h e r e u nd e r  > > You agr ee  to submit to th e p e r sonal and e x c lu si v e jurisd i c tion of th e  s t at e   court s or  o r f e d e ral court s lo c a t e d within th e C ity of Chi c ago  Cook County   Illinois for th e purpose of litigati ng any and all c laims or disp ut es  r egarding or r e la t e d to this si t e or SO S O T  You agr ee  that SO T mak es and will p e rform all se r v i ce s  ,

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in Chi c ago  Illi no noiis   ,

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Sec tion 3 1 .

Chart K e y T hi s n e xt sec tion  Chapt e r s 15-22  provid e a compr e h e n siv e ov e r vi e w of th e c harts that ar e u se d in th e Virtual Trading Room  You will r ec e iv e a d e tail e d introdu c tion to th e  Algorithm Chart  Volum e  Chart  Candl esti c k Chart  Volum e A lg lgorithm orithm Chart  M A C D C h haa r t  30 Minut e Bar Chart  and th e  ,

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M ark e t Profil e Chart   T h ese c harts  w  wh h e n u se d toge th e r  will h e lp you id e ntify and su cc essfully tak e  .

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Chapt e r 16

T h e Algorithm Chart B a rs

M e a n ( Av Av e ra ge P  Pri ri ce )

Vertical Red and Blue Bars

Green Line

Don c hian hian Chan Chann nel

20 Ba r E xpone ntial Moving Av e a rg e ( E M A )

White Lines

Yellow Line  

 

T h e Algorithm Char t part 2 &'!()*+ ,(-!*.!+/01 3'$4')/.!'5 6.$4 7$11/1 Horizontal Red and Blue Lines

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T im e of  of D a y

C u r r e nt Pri ce

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The ti c k c ount e r (counts down the number of trades  before each new bar is formed).

Chapte r 17:

T h e Volum e Chart

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The number of c ontra c ts that were bought at the offer  price, and the number of contracts that were sold at the bid price (See Next Page)

The n e t r e sult of whether or not there were more buyers ( B L U E numbers) or sellers ( R E D numbers)

The pr i ce s of the E-Mini S&P 500

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T h e  Volume  Cha rt part 2

The number of contracts that were sold at the bid price.

The number of contracts that were bought at the offer price. Each bar (above), has two numbers, one o ne on the left and one on the right. The number on the left represents the traders that sold at the bid price. The number on the right represents the traders that bought at the offer price.

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Chapt e r 18

T h e Candl esti c k Chart

Buying Candl es  G r ee n Body

Candl es R e d Body

W i c ks

T im e of Day

Bottom and top tips of a Candle

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T h e Candl esti c k C hart part 2

Hamme r Buy Indi c ator Bl ue Square

Do ojj i Se ll Indi c ator R e d Diamond

Shooting Star Shooting Se ll Indi c ator R e d Star 

Engulfme nt Buy Indi c ator B lu e Triangle

Do oji ji Bu y Indi c ator B lu e Diamond

Curre nt Pri ce

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Chapte r 19 T h e Volume Alg  Algorithm orithm (V O L G O) Chart T hi s c hart  unlik e t h e r egu gular lar Algo Algo Chart  is u se d w h e n t h e mark e t ha s l ess volatility ,

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Don Do n c hian hian Chann Chann e l Whit e Lines

20 Bar Expon e ntial Moving Av e ra rag g e  Ye llow Line

M e a n ( A ve r ag e Pri  P ri ce ) G r ee n Line

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T h e Volume Algo  Algorithm rithm (V O L G O) Chart part 2

C u r r e nt Pri ce

B a rs Vertical R e d and B lu e Bars

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Chapt e r 20

T h e M A C D C h haa r t 

H istograms  Vertical G r e y   Bars 

F ast Moving Av e r ag e   B lu e   Line 

Slow Moving Av e ra rag ge  R e d   Line 

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Chapt e r 21

T h e 30  30 M inut e Bar Chart

Day Typ e T re nd Indi c ator s Days 1 & 2 are Trend Days

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T h e 30  30 M inut e Ba r Chart part 3

Curr e nt Pri ce  

Bl a c k Bars = no current trend

G ree n Bars = short term upward trends

R e d Bar s= short term downward trends

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Chapt e r 22

T h e M a r ke t Profil e Chart Time Price Opportunity Letters (Upper and Lower case) equal a time period = usually 30 minutes Initial Balance Red Vertic Vertical al L Line ine = Consists of the first two 30-minute periods of the pit session

Valu e A r e a B lu e Ve r ti c al Lin e = Where approximately 70% of the !"#$%% '()*+ "*,)-. )% !"#$ conducted M e an G r ee n L e tt e r s = The

Start of Day B lu e Triangle Volume G r e y Horizontal Bars

average price traded

Curr e nt Pri ce    / /   C C losing Pri ce   R e d Triangle

Point of of Control Ye llow L e tt e r s = Most volume Traded in a day

 

 

Sec tion 3 2 .

Advan c e d T rad es  &8)1 */9. 1/:.)$* 4'$-)(/1 !* /9./*1)-/ ;'/!1/( ;5 .8/ 1$ :!""/( ?C)+8 D'/E>/*:5 D'/E>/*:5 &'!()*+ D)'F1A $% .8/ =$'"(2

But unlik e t  tho ho se firms  who hav e th  t h e compute r s m  maa k e all th e d ec ision s  w e will u se Algorithm (or ,

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REV ERS SII O N T O T H E M E A N = R E T U R N T O T H E M I D D L E So in esse n ce  w e a r e looki  looki ng for a mar k e t that i s moving in a

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rtain dir ec tion and th e n r e turn s to

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Many tim es  a mar mar k e t that i s in th e b eginning or middl e a d e fi n e d uptr e nd or downtr e nd will hav e  ,

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M O M O t r aad de   .

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M om e ntu ntum m (M O M O) - L O N G  

R ul e 1: Market must be in a clearly defined U P T R E N D   .

R ul e 2: Go L O N G / B U Y  when the full algorithm bar opens and closes A B O V E  the Donchian channel with N O   overlap.

R ul e 3:

Your S E L L S ST T O P  is 1.25 points below your entry point.

CH ARTS U US S E D :   ALGO

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The market is in a clearly defined UPTREND   .

Ru l e 1: The market must be in a clearly defined U P T R E N D   .

70 Figure 39

 

Go L O N G / B U Y  when the full algorithm bar opens and closes A B O V E  the Donchian channel with N O   overlap.

Ru l e 2: Go L O N G / B U Y  when the full algorithm bar opens and closes A B O V E  the Donchian channel with N O  overlap.

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Figure 40

 

Your ENTRY POINT

Your S E L L S T O P  is 1.25 points below your entry point.

Ru l e 3: Your S E L L S T O P  is 1.25 points below your entry point. 72 Figure 41

 

M om e ntu ntum m (M O M O) - S H O R T     R ul e 1: Market must be in a clearly defined D O W N T R E N D .

R ul e 2: a nd closes B E L O W  the Donchian channel with Go S H O R T / S E L L  when the full algorithm bar opens and N O  overlap. R ul e 3: Your B U Y S T O P is 1.25 points above your entry point.

CH ARTS U US S E D :   ALGO

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The market is in a clearly defined DOWNTREND   .

Ru l market  1: The must be in a clearly defined D O W N T R E N D   e

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Figure  42

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Go S H O R T / S E L L  when the full algorithm bar opens and closes B E L O W  the Donchian channel with N O  overlap.

Ru l e 2: Go S H O R T / S E L L  when the full algorithm bar opens and closes B E L O W  the Donchian channel with N O  overlap. 75 Figure 43

 

Your B U Y S T O P is 1.25 points above your entry point.

Your ENTRY POINT

Ru l e 3: Your B U Y S T O P  is 1.25 points above your entry point. 76

Figure 44

   

Chapt e r 27

Slow Slo w M ome ntum (S (Slo-M lo-M O M O) M om e ntum: A prop e lling for ce  or st r e ngth   Introdu c tion: Th e Slow Mom e ntum (Slo-MOMO) Trad e i s simila r to th e M O M O ttrr aad d e  e x ce pt th e  a c tual mar mar k e t mom e ntum build s mo  morr e gradually b e for fo r e t  th h e qualifi c ation s of th e trad e a r e m e t   ,

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In ord e r to quali fy this trad e  you will n ee d to look look fo r a d e fi n e d uptr e nd or downtr e n d so you c a n b egin id e ntifying th e r est of th e indi c ator s w  whi hi c h will ind e ntify th e trad e   ,

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You will only n ee d to e xamin e th  t h e A lgorithm lgorithm C har t in in ord e r to tak e t  thi hi s trad e  In thi s c hapt e r  w e  =)"" ()1:>11 8$= .$ >1/ ! F!'