Month: January 2020

Sometimes you get a gut feeling that you can’t explain. It hits you in the pit of your stomach, but you don’t know where it came from.

That happened to me Friday.

Check out my first trading from that morning:

Before my coffee cooled, my trade account heated up!

Then it hit me. A few hours later… I closed out most of my portfolio. 

I could be wrong and it may be nothing…

But, I’ve learned to trust my well-honed instincts.

And my instincts told me it’s time to lighten up.

Only time will tell if that was the right decision.

However, there are a few stocks that I’m targeting for potential trades come Monday…

You can find them right below…

3 Trades For A Volatile Market

Tilray (TLRY)

While I traded Canopy Growth (CGC) a few times last week, I never got a huge winner. But, as I started watching a similar stock  – Tilray – I realized it has a lot of long-term potential.

Let’s take a look at the 130-minute chart to start.

TLRY 130-minute Chart

I love the look of this stock. It almost fits right into my TPS setup. As a quick review, that means it contains three key elements:

Trend – While the stock had taken a larger decline last year, it pushed hard off the base it formed. That created a nice uptrend.

Pattern – Friday’s down move came close to breaking the pattern. However, I still like this consolidation flag.

Squeeze – So far, I haven’t seen the squeeze on the daily chart. However, there’s a nice one forming on the 130-minute chart. This occurs when the Bollinger Bands move inside the Keltner Channel. You can see it from the red dots in the bottom indicator.

Here’s the problem. Friday’s market action broke the chart pattern. The triangle formation broke with candle closes below the trendline.

However, I still think there’s a play. Let’s back out to the daily chart.

TLRY Daily Chart

The daily chart still has a pattern and trend. However, I need the squeeze to form before I want to hop on board.

So, this is one to keep an eye on. Once the Bollinger Bands start trading inside the Keltner Channel, then I’ll be looking at a potential entry.

What I do like about this stock is its independence. These marijuana stocks tend to trade on their own rather than with the broader market. That gives me the protection I want for a potential downturn.

Twilio (TWLO)

Twilio is a stock that I’m cautiously optimistic about. You can again find my classic TPS setup here as well… and this one looks primed to go.

TWLO 130-Minute Chart

Although this stock has run hard, it’s got a great look to it. There’s a nice uptrend, clean pattern, and a squeeze with momentum turning upwards.

However, there’s a catch with this one. Earnings come up on February 5th. I don’t like to necessarily trade through earnings. Given this is a 130-minute chart, there is a good chance it plays out before earnings.

That’s the trade-off here. It all comes down to timing.

20 Yr+ Bonds ETF (TLT)

This play is a great edition to protect against volatility. Bonds normally trade opposite of stocks. Investors like to park money in treasuries as a safety trade. So when stocks drop, bonds tend to rise. When stocks rise, bonds tend to drop.

Now, let’s look at the weekly chart for bonds here.

TLT Weekly Chart

Anything look familiar here? This is my TPS setup but on a weekly chart. That’s what I love about this system. It works on any time-frame.

Because this is a weekly chart, it can take months to play out. However, it fits within a bigger macroeconomic picture and acts as a great hedge against market fallout.

My only concern here is that the trade may have left the station. Last week’s market action may have been the breakout move. Right now, it’s not at a spot where I want to enter the trade necessarily. But, if I get a pullback to the 8-period or 21-period exponential moving average, then you can bet I’ll be sizing this up.

Want Even More Trades

Last week turned out to be a busy one for me. I found lots of great trades every day. Starting fresh this week, I see a lot of potential for even more.

So how do I find these people trades – TPS setups.

In my upcoming webinar, I talk about how I created my TPS system that turned my $38,000 account into over $2,000,000 in just two years, as well as finding these trades every day.

You can register for my free training event by clicking here.

Nothing is more frustrating than a single trade destroying weeks, if not months of work.

It’s a painful lesson I learned the hard way on multiple occasions.

During that stretch, I noticed I never stepped back to examine my trades as a whole.

I discovered periods where I had way too many bullish or bearish bets on in the market. My portfolio wasn’t balanced.

How do you maintain a balanced portfolio when you don’t want to give up on your existing positions?

In one word – Hedging.

For example, If you are long Google, you could short the Nasdaq 100 ETF.

You would do this if you believed that Google was set to outperform the broader market.

There are different ways to hedge your positions from basic strategies to complex ones.

The key is using one that works with your experience and style.

Today, we’re going to discuss various hedging techniques. And how you can start implementing them to protect your portfolio against any adverse reaction.

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The Unprofitable Trader

Problem – I only know how to buy puts and calls

Newer traders probably haven’t thought much about hedging their positions. They’re more concerned with trying to come up with a good strategy and hitting consistent wins.

By ignoring your bias, you expose yourself to excess risk. I can think of several times when I would keep adding trade after trade on the long side. Then a day like Friday would come around where the market nosedives and all my positions turn against me.

The trick is to balance your trading risk and market risk. If you have a good idea, stick with it. Just know that it might not always work out.

Solution – Use market ETFs to offset your stock positions

My favorite solution for hedging – use market ETF options. I usually have a long-bias in my TPS trading strategy. To offset that bias, I will buy puts on major market ETFs like the SPY, QQQ, IWM, or DIA. This goes directly to the example I provided earlier. If I like Google’s potential, I reduce my exposure to the downside by buying put contracts on the QQQ.

The Breakeven Trader

Problem – I want to optimize my hedges

Sometimes I find myself in trades on similar stocks without even realizing it. If I play too many stocks in the same category, I get sector-specific risk. That means if I hold a bunch of tech stocks that all sell-off at once, using the S&P 500 ETF as a hedge won’t be very effective.

Solution – Use sector-specific ETFs

When I find myself too heavily loaded with one particular market area, I’ll look to offset the positions with the ETF for the sector. For example, if I have a trade in Biogen and Abbot Labs, I can pair these trades with a healthcare ETF to reduce my exposure. This reduces my sector risk and allows the trades to work on their own merits.

However, if you want exposure to the sector, then it’s best to cut down the number of trades in a similar category. Quite often, you’ll see the same setup in related stocks. When this happens, try to pick the best of the bunch.

The Profitable Trader

Problem – I don’t want to worry about adjusting my hedges all the time

Not every trader likes to spend time in front of the computer. I know plenty of swing traders that set their orders at the beginning of the week and then walk away.

The problem they run into is they don’t know which will fill and which won’t as the week goes on. They can very quickly find themselves with too many bullish bets or bearish bets.

Solution – Try market neutral strategies like iron condors

Strategies like short iron condors are great low maintenance trades. Once you put these on, you just check on them periodically for adjustments. These trades involve selling a call and put credit spread on a stock.

With these trades, you want to try to collect 1/3rd the distance of the spreads. For example, if you did an iron condor on a stock with a put credit spread at the $100/$101 strikes and a call credit spread at the $110/$111 strikes, you should try to collect $0.33 for the trade.

Ideally, you want to put these trades on when implied volatility is high and about 45-60 days out from expiration. With stocks, I try to avoid taking trades that go through any earnings announcements.

Putting It All Together

I won’t lie to you and say it’s easy to learn how to hedge your positions effectively. It takes time and practice. That’s why a good trade journal is critical. Your journal tells you what works and what doesn’t.

It took me years of practice before I finally learned how to turn a profit consistently. Journaling was a huge part of how I turned it around.

In my upcoming webinar, I talk about how I moved from an unprofitable trader to finally taking my $38,000 account and turning it into over $2,000,000 in just two years.

You can register for my free training event by clicking here.

Source: Weeklymoneymultiplier.com | Original Link

Both of these indicators measure some aspect of volatility. They just go about it differently. I’m giving you the setups that I use. However, feel free to play around with your own.

In trading, timing is everything. Having the best idea at the wrong time is the same thing as losing.

So how did I make millions with my TPS system…the one that perfectly timed this trade in YETI?

What is the secret sauce that my Weekly Money Multiplier Members know?

Quite simply – The Squeeze.

The squeeze was one of the most significant discoveries of my career. It turned me from a breakeven trader into a consistently profitable one.

It identifies when a stock is building up energy through price compression. As the trading range narrows, the closer the stock gets to an explosive move.

Pairing this with options leverages my capital and increases my earnings potential. It’s the very key that helped me turn $38,000 into over $2,000,000 in two years.

This is something you can implement in your trading. It’s much easier than you might think.

Comparing Bollinger Bands and Keltner Channels

Before we begin, I want to briefly give an overview. Both of these indicators measure some aspect of volatility. They just go about it differently. I’m giving you the setups that I use. However, feel free to play around with your own.

Bollinger Bands

I previously wrote about Bollinger Bands in my weekly newsletter. They’ve become a staple to my trading strategy.

In case you didn’t get a chance to read the article (or as a quick refresher), Bollinger Bands measure two standard deviations of price movement based on a rolling period (most traders use the last 20 periods). Two standard deviations tell you the mathematical range price is expected to land in given the number of bars back selected.

This means that based on the last 20 closes of whatever time frame you’re looking at, there’s a 95% probability price will land within the Bollinger Bands.

It’s important to remember that this is only a probability calculation. Also, it only looks at the close and not the entire candle. You’ll often see price slip through the Bollinger Bands only to bounce back.

Now, as the price range narrows, so do the Bollinger Bands. This tells me price is tightening up relative to its history. But, I need something more to give me a clear sense of timing. That’s where the Keltner Channels come in.

Keltner Channel

Keltner Channels work similar to Bollinger Bands, but with some key differences. First, the centerline is an exponential moving average. The lookback period is the same as the Bollinger Band using the last 20 bars.

It then figures out what’s known as the Average True Range (ATR). This looks back over the same number of periods and for each bar figures out the following:

Maximum amongst:

1. Current day High – Low
2. The absolute value of the current day high minus the previous close
3. The absolute value of the current day low minus the previous close

Lastly, it multiplies it by some value (normally 1.5), then adds and subtracts it to the EMA.

For example, if the 20-period EMA is $100, and the ATR for the same period is $10, then the Keltner Channel would be $100 +/- ($10 x 1.5) = $85-$115.

Unlike Bolinger Bands, the Keltner channel uses an exponential moving average and looks more at the actual trading range history.

So, you’re getting a look at Bollinger Bands that use statistical outputs and Keltner Channels that measure actual trading ranges.

How to Interpret the Squeeze

Now for the good stuff. The squeeze occurs when the upper and lower Bollinger Bands trade inside the Keltner Channel. It would look something like this.

What we’re looking at is when statistical outputs say that the trading range is inside what is effectively the actual trading range. It’s like predicting the patriots to score two touchdowns every game when they’ve been consistently scoring 24.

We want to see price then ‘explode’ out of the trading range, where the Bollinger Bands expand outside of the Keltner Channel. This is what we call it when a squeeze ‘fires.’

Playing the Squeeze

The key I found with the squeeze is putting it together with other trading signals. For me, that includes a strong uptrend and a consolidation pattern – hence my TPS setup. I want to enter a trade where all three of these elements are present. Then, I wait for the squeeze to fire.

Most of the time I will play the long side of stocks. That means I look for trades near their highs that look ready to explode higher.

Here’s an example from Weekly Money Multiplier. My setup contained all three elements and a run into earnings.

The red dots at the bottom indicated that the Bollinger Bands were trading inside the Keltner Channel. This gave me confidence the trade would make an explosive move.

When the energy was finally released, it pushed out hard for a whopper of a profit.

Putting It All Together

The trick to becoming a successful trader is combining multiple signals that include timing, price levels, and chart trends. Once you learn these, you’ve got a winning ticket.

It took me a while to put the pieces together. Once I did, it wasn’t long before I turned my $38,000 account into over $2,000,000.

I explain how I accomplished this in my upcoming webinar. You get to learn how I went from losing money to trading for a living.

Click here to register.

Source: Weeklymoneymultiplier.com | Original Link