Strategy when the first trigger is Missed

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Lynn Norris
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1 Second Chance Entries Active Trend Trading: Dennis W. Wilborn Strategy when the first trigger is Missed Observe things how they are; See things how they can be!

2 Disclaimer U.S. Government Required Disclaimer Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don t trade with money you can t afford to lose. This is neither a solicitation nor an offer to Buy/Sell stocks, futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this training. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All Materials presented are for training purposes only. Traders should paper trade any new method prior to risk of personal capital. Copyright ATTS

3 Second Chance Entries Very few things are more frustrating than waiting for a trigger and missing the initial trade! Our first inclination is to give up on the stock/etf! How can traders objectively plan entries when it appears they have missed the first trigger? Apply ATTS Rules of the Pullback and design a strategically sound trade. Vision is the art of Seeing Things Invisible! ~~ Jonathan Swift People Only See What They are Prepared to See ~~ Ralph Waldo Emerson Observe things how they are; See things how they can be! ~~ DWW

4 The Set Up If the initial move is missed either up or down Prerequisites: A strong reversal 1. Target Pullbacks towards the 8/20/50 period moving average Identify a specific trigger range 2. Establish Stop Losses 3. Establish Profit Targets 4. Establish when to move Stops 5. Establish what happened before, what s happening now and what may happen soon!

5 Rules The initial Strong Reversal Defined by bounce from strong support/resistance 1. Optional wait for a 8-20 cross or go to intraday chart 2. Define value of 8 period EMA & Estimate where it will be 3. Place Conditional Order at defined level 4. Stop Loss 2% on Intraday Triggers; 4% on Daily Triggers o Once up by 2% Intraday or 4% Daily move stop to close below/above 8 period EMA or B.E. but choose one! 5. Profit Targets: T1 = Intraday 2-5%; Daily 5-15% o Options take profits at 30% & 50%; use close below/above 8 day as trailing stop on remaining contracts We do not know what s going to happen with any pullback

6 Use simple spreadsheet to calculate parameters DON T GUESS!

7 Examples Daily NTES NTES began the year as #1 on IBD 50 Run = 26% Run = 27% Second-Second Chance Breakout and bounces off the 8/20 cluster. Second Chance Entries Multiple Bounces off Support

8 Examples Daily NTES

9 Examples Weekly 6 Weeks to Pullback

10 Examples Intraday Intraday Charts show Range Range tells us if it s worth focusing on Intraday Charts First Pullback Daily Range = $4 - $5 50 period = 8 day EMA First Pullback

11 Examples Intraday 50 period = 8 day EMA First Pullback

12 Other Considerations To Lessen the need for 2 nd Chance Entry 1. Limit size of watch list more efficient use of review time 2. Wait for initial entry signals 3. If the initial opportunity is missed don t worry its time to wait

Active Trend Trading Rules Review

Active Trend Trading Rules Review Active Trend Trader: Dennis W. Wilborn A Trend Should Be Assumed to Continue in Effect Until Such Time as Its Reversal Has Been Definitely Signaled Edwards & Magee Disclaimer