Stacking Indicators Getting a GREAT entry! TWEEZERS Tweezer top/bottom at the band The stock is trending up Gap down (against the trend) Any moving

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Annice Barber
5 years ago
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1 Dean Storholt

2 I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. I am not subject to trading restrictions. Myself and other instructors could have a position in a security or initiate a position in a security at any time.

4 Stacking Indicators Getting a GREAT entry! TWEEZERS Tweezer top/bottom at the band The stock is trending up Gap down (against the trend) Any moving average the longer the term, the stronger it is The gap takes it to a major moving avg sma More than one average in same area Gaps to the Bollinger band Rising/Falling 3 at a moving average Bullish or bearish engulfing candle

5 Stacking Indicators Day count / candle count Old levels of horizontal support/resistance Can include round numbers Retirement pattern at a moving average Repetitive retirement can = TWEEZER Break above the first 5 minute candle Pivot Points Bollinger Band Squeeze/Breakout Volume lower volume indicates its only retracing Blow off move? Fibonacci s Keltners

6 Stacking Indicators Double tops/bottoms Head and shoulders/neckline Old levels of horizontal support/resistance Can include round numbers Rectangles Ascending wicks / decending wicks Stochastics MACD RSI ADX DMI +, DMI-

7 Stacking Indicators Start by stacking indicators on the daily chart Like to have at least 4 Then move to the five minute chart and continue stacking Can even continue stacking on the one minute chart

8 Stacking Indicators Good CALL entry? The more the merrier

9 Trading Rules How many of you have a set of rules? Do they change as you grow? Some of my old ones: If you don t have the entry, don t take the trade Miss the if s You don t need exposure

10 Trading Rules 1. BELIEVE!! Trade from a position of faith, not fear 2. Check the angle of the bands (and moving avgs) 3. Avoid Calls at the top band 4. Avoid Puts at the bottom band 5. Trade in the direction of the trend 6. Don t be emotional 7. Use a stop 8. Buy at least 2 contracts 9. Let the winners run 10. Trust your instincts

11 Trading Rules 1. BELIEVE!! Trade from a position of faith, not fear 2. Check the angle of the bands (and moving avgs) 3. Avoid Calls at the top band 4. Avoid Puts at the bottom band 5. Trade in the direction of the trend 6. Don t be emotional 7. Use a stop 8. Let the winners run 9. Trust your instincts 10. FOLLOW YOUR RULES!

12 Trading Rules 1. BELIEVE!! Trade from a position of faith, not fear How do we do this? Practice Plan the trade BEFORE you execute it If we know our entry and our exit, we know what our risk will be. If our risk is acceptable, no fear Follow the plan

13 Trading Rules 2. Check the angle of the bands (and moving avgs) Why is this important? Horizontal bands are stronger Angled bands are slipperier Horizontal moving averages are weaker Angled moving averages are stronger

14 Trading Rules 2. Check the angle of the bands (and moving avgs)

15 Bollinger Bands If you don t have Bollinger bands on your chart, We cannot be friends!! Stocks behave 3 ways: Move band to band (horizontal) Move band to ma (horizontal) Move band to ma (angled) Money channel

16 Trading Rules 2. Check the angle of the bands (and moving avgs) Horizontal Bands Is the stock moving band to band?

17 Bollinger Band Angle Stack TWEEZER?!?!

18 Bollinger Band Angle SELL SOME?? WHY?? RELOAD?

19 Trading Rules 2. Check the angle of the bands (and moving avgs) Angled Bands The steeper the angle the slicker it is!!!

20 Bollinger Band Angle

21 Trading Rules 2. Check the angle of the bands (and moving avgs) The steeper the slope, the slippery they are Stocks are most likely to follow the steep band angle Moving Averages become more relevant why?

24 Trading Rules This is where they form the money channel Can be used to time premium selling or add ons Steep band angles need a reason to turn! News Previous support / resistance Bollinger band top or bottom What confirms that it has turned?

25 Bollinger Band Angled Stack

26 Bollinger Band Angled $100 Move +-

27 Bollinger Band Angled Sell calls Add Recognize $ chnl 5ema

28 Trading Rules 3. AVOID CALLS AT THE TOP BAND This and #4 are probably my most important rules! I assume that stocks move from band to band 1 min 5 min Daily This is typically true with horizontal bands If we go band to band, and we are at the top band, what direction are we likely to go?

29 Trading Rules 3. AVOID CALLS AT THE TOP BAND WOO XHOO ITS BREAKING OUT!!!

30 Trading Rules 3. AVOID CALLS AT THE TOP BAND WOO XHOO ITS BREAKING OUT!!!

31 Trading Rules 3. AVOID CALLS AT THE TOP BAND WOO XHOO ITS BREAKING OUT!!! NO MANS LAND

32 Trading Rules 3. AVOID CALLS AT THE TOP BAND WOO XHOO ITS BREAKING OUT!!! NO MANS LAND

33 Trading Rules 3. AVOID CALLS AT THE TOP BAND WOO XHOO ITS BREAKING OUT!!!

34 Trading Rules 4. Avoid Puts at the bottom band Same reasons as calls Stocks move from band to band If we go band to band, and we are at the bottom band, what direction are we likely to go?

35 Trading Rules 4. Avoid Puts at the bottom band OMG ITS BREAKING DOWN!!! Trending Up Gap against the trend Gap to the 200ema Gap to the 5ema off daily

36 Trading Rules The move from outside of a band to inside of a band can often be an EXCELLENT entry for a trade in the opposite direction!!! The distance to the moving average is the determining factor in whether or not to take the trade Is the distance worth playing?

37 Trading Rules 3. Avoid calls at the top band 4. Avoid puts at the bottom band Why do I say AVOID? Exceptions???

38 Bollinger Band Squeeze Bands get very close together Bands usually horizontal Can signal AWESOME breakouts / breakdowns Often give us the avoid calls exception!

39 Bollinger Band Squeeze

40 Bollinger Band Exceptions Outside band gives us the avoid calls exception! If stock outside the top band, go ahead and buy calls If stock outside bottom band, go ahead and buy puts REMEMBER The reason for the entry is the reason for the exit!!! Therefore when it gets inside the band, tighten stop or exit

41 Bollinger Band Exceptions Outside Bollinger Bands How long outside band? Daily chart vs 5 min chart Inside band can give us a nice entry in the opposite direction Steeply angled bands may only retrace to MA!!!!

42 Bollinger Band Exceptions

43 Bollinger Band See Saw What is a see saw?? A see saw occurs when a candlestick is approaching one of the Bollinger bands and we would expect a direction change

44 Bollinger Band See Saw What is a see saw?? A see saw occurs when a candlestick is approaching one of the Bollinger bands and we would expect a direction change The angle formed by the bands should be 130 degrees or less

45 Bollinger Band See Saw What is a see saw?? A see saw occurs when a candlestick is approaching one of the Bollinger bands and we would expect a direction change The angle formed by the bands should be 130 degrees or less The see saw means that the stock will NOT do what we want for 2-6 candles

46 Bollinger Band See Saw What does a see saw mean?? The see saw means that the stock will NOT do what we want for 2-6 candles If we are expecting a bounce off the bottom band, it wont (sideways to down) If we are expecting a failure at the top band, it wont (sideways or up) Often gets us outside the band (3-5 candles)

47 Bollinger Band See Saw PUT ENTRY?

48 Bollinger Band See Saw What happened to the band angle? What else? Stay in puts?

49 Bollinger Band See Saw Defend the gap Anyone want calls here? We re at the bottom band See saw means 2-6 days of not doing what we want

50 Bollinger Band See Saw Band angle? How about calls here? First candle inside the band day 5 of see saw Last time it took us from $200 - $175

51 Bollinger Band See Saw What if we drew this support line on our chart? When it hit the second time, could we enter? Is it too A G G R E S S I V E???.49 cents apart

52 Steep Band Angles Steep band angles need a reason to turn! News Previous support / resistance Bollinger band top or bottom What confirms that it has turned?

53 The Hook When we have steep band angles and we get a reason for the turn, be it old support or a reversal pattern, we need to pay attention to the band angle as the candlestick approaches the moving average

54 The Hook When we have steep band angles and we get a reason for the turn, be it old support or a reversal pattern, we need to pay attention to the band angle as the candlestick approaches the moving average If you don t get a hook by the time it reaches a relevant moving average, close part of your position or tighten your stop. Or both

55 The Hook

56 The Hook

57 The Hook

58 The Diving Board

59 Trade Entry Entry Rules 1- What direction is the stock going (DAILY CHART) Avoid calls on bearish stocks Avoid puts on bullish stocks Don t swim upstream, its harder Day trade exception 2- Where is the stock on the 5 min 3- Is it near a Bollinger band? Moving average? 4- Wait for a retracement to the 10ema or 20 simple ma You may miss a trade

60 Trade Entry Entry Rules 5- Know where your stop is. Below your entry If the band is your entry, can your stop move? Stay within your risk tolerance 6- Limit the number of positions you have until you set a hard stop or you have neutralized your risk in current trade. 7- Once you have your indicators stacked on the daily chart, go to the 5 minute chart and begin stacking them again. 8- Think ahead of the turn. Be the wick!

61 Option Selection Delta Buy as much delta as you can Use delta to calculate stop/determine risk I often use lower deltas Own set of risks What is our target? How much intrinsic value will we have at target? Protect with stop market orders Time How long did it take to make the move last time? Add 7-10 days

62 Where do you set stops? THE REASON FOR YOUR ENTRY IS THE REASON FOR YOUR EXIT! Stack indicators for stronger support/resistance The closer our entry is to our exit, the smaller the cost That s why Tweezers get so much love from me I like to be first to the party!!!!

63 Legging in and out

64 Legging in and out PROS: Excellent in choppy markets Allows you to pocket profit while maintaining exposure Helps control your emotions In a no lose trade Without taking profit slices the chop may only eat up your time value

65 Legging in and out CONS: You may be left with a tiny position if the stock never retraces

66 Legging in and out Many times stocks will FAIL or BOUNCE off of a moving average. Is the moving average flat or angled? The 20sma is the main one I focus on, UNLESS the stock is following a different one RESPECT THE 20 SIMPLE MOVING AVERAGE! Once the candlestick goes thru a moving average, that average can become the stop

67 Market Prep

68 Market Prep What are bands doing? Are they Horizontal or Angled? Horizontal: Is stock near the band? Reversal pattern near band? Angled: Is it near the band? Is it near the moving average? Is the stock in No Mans Land?

69 Market Prep Is the stock going band to band? What is the distance between the bands? Is it playable? What are the stochastics doing?

71 Market Prep 1. Prioritize candidates 2. Make checklist 3. Set alerts on platform 4. Snap lines on 5 min charts 1) HD 2) CLB 3) DE 4) LVS 5) NTES

72 Market Prep

73 Another Market Prep Class? Another 4 hour class Take to the next level Diving Board More about option selection, risk management

74 Weekly Market Prep Class? Get together EVERY Sunday For 2 hours Analyze charts Snap lines and set alerts

75 I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. I am not subject to trading restrictions. Myself and other instructors could have a position in a security or initiate a position in a security at any time.

76 Trading Log

Stacking Indicators Getting a GREAT entry! TWEEZERS Tweezer top/bottom at the band The stock is trending up Gap down (against the trend) Any moving

Stacking Indicators Getting a GREAT entry! TWEEZERS Tweezer top/bottom at the band The stock is trending up Gap down (against the trend) Any moving Dean Storholt I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing