Seasonal Trades Flashcards
5 Golden Rules
Rule 1:
Determin the trend on your daily swing chart and trade only with the trend
5 Golden Rules
Rule 2:
Buy onec the first higher swing bottom is confirmed
Sell once the first lower swing top is confirmed
DON’T TRADE until you can legitimately confirm a point C
* Strongest when B to C is 50% or less than A to B Range
* Strongest when the weekly and daily trends are in sympathy
5 Golden Rules
Rule 3:
In a strongly trending market buy when the swing tops are crossed. Sell when swing bottoms are broken.
The market is stronger when a number of tops at the same level are broken.
It is weaker when a number of bottoms at the same level are broken
5 Golden Rules
Rule 4:
Predetermin the exit point of your trade by means of a percentage of the previous range.
Remember the higher the percentage the larger the chance of a target not being reached.
5 Golden Rules
Rule 5:
Determin the proper and safe place for your initial stop.
In a bull market one point below point C.
In a bear market one point above point C.
* As the trade progresses move your stop IAW the roadmap / plan
5 Expansion rules for a long stock:
- Enter before 25% retracement of A to B range
- @ 50% retracement of A to B range on the C to D side move the stop to entry + commission
- Take profits @ 75%
- Can add to the position when old point B is crossed. This stop should be @ the low of the previous day. 33% is the limit for these additional contracts
Momentum Themometre:
This is use to diagnose …..
what is coming. It will show if the market is running out of steam or expanding.
Not to be used in isolation - used as an indicator for the position of the market
The momentum themometre is calculated by:
Looking at the close price and multiplying it by the number of contracts.
Next do the same calculation for the previous day.
Now compare the numbers and ask: Is the market expanding or contracting?
* Back test this at previous points of support and resistance
Additional ABC filters:
Price Ranges …..
Compare the last 4 price ranges in the direction of the swing including the A to B range and ask are they expanding or contracting?
Compare the last 4 B to C ranges and ask are they expanding or contracting?
Additional ABC filters:
Volume …..
Movements under high colume show the strength in a trend. Look for higher than average volume in the A to B range then also compare the volume in the B to C range.
Volume increasing at the 33% mark is an important confirmation of the change in trend back in the direction of A to B
Additional ABC filters:
Time …..
Measuring the duration in time of the A to B range and comparing it to the B to C range is another way of rating the strength.
We want A to B to be significantly longer than B to C
Additional ABC filters:
Over balance in price …..
If the last swing is 2.25 times the size of the previous swing in that direction Point B does not need to cross the previous swing top or bottom
As a trend gathers momentum the duration and size of the ranges …..
generally increases
Expanding ranges and size and duration are a sign of ….
a strong trend
Contracting ranges in size and duration are a sign of …..
weakness
Momements in a market under high volume show ….. in a trend?
strength
In relation to volume what is the most important thing to be looking for …..
That there is higher than average volume in the A to B range than in the B to C range.
This indicates that the move in the A to B range has strength behind it and the retracement does not.
In relation to time: To find a potential point D - what range do I place against Point C …..
The A to B time frame should give the estimated point D
Over balance in price - what must you look for and be careful of …..
a larger B to C retracement than the previous B to C retracement. If it is 2.25 times larger than the previous one there is said to be an overbalance of price
What happens in an overbalance in price if the swing is 2.25 or greater than the previous swing in that same direction …..
Point B does not need to cross the previous swing top or bottom
