Seasonal Trades

Question 1

5 Golden Rules

Rule 1:

Answer 1

Determin the trend on your daily swing chart and trade only with the trend

Question 2

5 Golden Rules

Rule 2:

Answer 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

Question 3

5 Golden Rules

Rule 3:

Answer 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

Question 4

5 Golden Rules

Rule 4:

Answer 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.

Question 5

5 Golden Rules

Rule 5:

Answer 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

Question 6

5 Expansion rules for a long stock:

Answer 6

1. Enter before 25% retracement of A to B range
2. @ 50% retracement of A to B range on the C to D side move the stop to entry + commission
3. Take profits @ 75%
4. 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

Question 7

Momentum Themometre:

This is use to diagnose …..

Answer 7

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

Question 8

The momentum themometre is calculated by:

Answer 8

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

Question 9

Additional ABC filters:

Price Ranges …..

Answer 9

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?

Question 10

Additional ABC filters:

Volume …..

Answer 10

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

Question 11

Additional ABC filters:

Time …..

Answer 11

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

Question 12

Additional ABC filters:

Over balance in price …..

Answer 12

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

Question 13

As a trend gathers momentum the duration and size of the ranges …..

Answer 13

generally increases

Question 14

Expanding ranges and size and duration are a sign of ….

Answer 14

a strong trend

Question 15

Contracting ranges in size and duration are a sign of …..

Answer 15

weakness

Question 16

Momements in a market under high volume show ….. in a trend?

Answer 16

strength

Question 17

In relation to volume what is the most important thing to be looking for …..

Answer 17

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.

Question 18

In relation to time: To find a potential point D - what range do I place against Point C …..

Answer 18

The A to B time frame should give the estimated point D

Question 19

Over balance in price - what must you look for and be careful of …..

Answer 19

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

Question 20

What happens in an overbalance in price if the swing is 2.25 or greater than the previous swing in that same direction …..

Answer 20

Point B does not need to cross the previous swing top or bottom