Icoachtrader Consulting Service www.icoachtrader.weebly.com WELCOME TO Trading Boot Camp Day 5 David Ha Ngo Trading Coach Phone: 1.650.899.1088 Email: icoachtrader@gmail.com The information presented is for education purposes only. The coach does not give trade advice. Copyright 2010 Icoachtrader Consulting Service. All rights reserved. Icoachtrader reserves the right to change without notice
Trading Boot Camp
Seminar Agenda Day 1 Section 1: IPC of Traders Section 2: A Complete Mechanical Trading System 8:00 AM 11:00 AM 2:00 PM 5:00 PM Section 3: Swing Trading Section 4: Technical Trading Section 5: Fundamental Factors Section 6: Truth of Day Trading Section 7: Trade for Life Section 8: Trading Psychology Section 9: Team Trading Section 10: Intraday Trading Day 2 Day 3 Day 4 Day 5 8:00 AM 11:00 AM 2:00 PM 5:00 PM 8:00 AM 11:00 AM 2:00 PM 3:30 PM 3:30 PM 5:00 PM 8:00 AM 11:00 AM 2:00 PM 5:00 PM 8:00 AM 11:00 AM
David s Strategy My Secret ONE Formula One Lot One Percent One Product One Direction
Section 10 Intra-day Trading
Table of Contents Candlesticks formation Introduction Four Styles of Trading Day Trading Defined Psychological Requirements Foundation Intra-day Trading Tools Intraday Charting Moving Average Interpretation Buy & Sell Setup The Battle Between Bulls and Bears Multiple Times Frames The Key Concepts Time Frame (Multiple Timeframes) Candlesticks Simplified Candlesticks Moving Averages Retracements Support & Resistance Market Timing Mastering Combining Foundations and Key Concepts for Mastering Intraday Trading
Candlesticks Market Law #1: The Law of Motion
Candlestick The Bar by Bar Battle
Candlestick Winning Candles
Candlesticks The 3 Non-Color Candles
One Bar Absolute Control
One Bar Full Control
One Bar Good Control
One Bar Weak Control
One Bar Loss Control @55%
One Bar Totally Over 100%
One Bar Loss Control Forever?
Two Bars Good Control
Two Bars Weak Control
Two Bars Loss Control >55%
There is NO DIFFERENCES
Two Bars Totally Over 100%
Single Sell/Buy Triggers
Dual Sell/Buy Triggers
Candlesticks Market Law #2: The Law of Continuous During NORMAL market environments, any tradable items cannot move in the same direction more than 3 to 5 bars in a row. Different ways to communicate the law: After a 3 to 5 bar run (up or down) the market tends to sharply reverse, creating a nice trading opportunity. Neither the bulls nor the bears can win more than 5 battles (bars) in a row. After a 3 to 5 bar rally, the bears usually quickly regain control. After a 3 to 5 bar decline, the bulls usually quickly regain control. Lastly, this law can be said this way: After 3 to 5 green bars in a row, the Trader should look to take advantage of an upcoming series of red bars. After 3 to 5 red bars in a row, the Trader should look to take advantage of an upcoming series of green bars.
Three Major Moving Average Locations 8-period Moving Average (8SMA): Best When Trending 20-period Moving Average (20SMA): Best When Trending 200-period Moving Average (200SMA): Best When Flat
Single Candle 55% Trigger
Dual Bar 55% Triggers
Dual Bar 55% Triggers
Single Candle 100% Triggers
3 to 5 Bar Buy Rule
3 to 5 Bar Buy Rule
3 to 5 Bar Buy Rule Example
3 to 5 Bar Sell Rule
3 to 5 Bar Sell Rule
Sell Rule Example
The Powerful 20 SMA Trading with 20SMA: Most of your trades should be in sync with the 20ma. If the 20ma is rising in a smooth fashion, your focus should almost always be long. Conversely, if the 20ma is declining in smooth fashion, your focus should almost always be short. If the 20ma is flat, your focus should be to scalp.
The Powerful 20SMA Riding the 20SMA Buy Long
The Powerful 20 SMA Riding the 20SMA Buy Long
The Powerful 20 SMA Riding the 20SMA Sell Short
The Powerful 20 SMA Riding the 20SMA Sell Short
The All Mighty 200 SMA The 200ma is so universally watched, in all time frames, that for all practical purposes: King as Flatness, Use as Support, Use as Resistance, Use as a Magnet.
The All Mighty 200 SMA Buying Below the 20SMA & 200SMA
The All Mighty 200 SMA King as Flatness: Resistance
Introduction Four Styles of Trading Two Broad Trading Categories Four Major Impediments 4 Types of Trading Core Swing Guerilla Day 4 Major Impediments Lack of Professional Training Lack of Trading Capital Lack of a Forced Discipline Fear of Loss Two Broad Trading Categories Wealth Income
Introduction Two Broad Trading Categories Wealth Trading Styles Income Trading Styles Core Trading Weekly Charts Weeks to Months Guerrilla Trading 15, 30 & 60 Min Hours to Days Swing Trading 15 Min, 60Min Daily Charts Days to Weeks Day Trading 5, 15 & 60 Min Minutes to Hours
Introduction Intra-day Trading Defines What is Intra-day (intraday) Trading? 1. A style that covers a holding period of several minutes to hours. 2. Three forms of Intraday Trading: Scalping, Momentum, and Day. 3. This style of trading has become widely accepted recently. 4. Day Traders use 5 15 Min charts to make entries and exits 5. Day Trading is best used on ACTIVE and highly LIQUID markets. 6. Day Traders try to capture smaller gains with minimal dollar risk. 7. Day Trading is a style of trading that MAY NOT BE SUITABE FOR ALL.
Introduction Psychological Trading Requirements Confidence Patience Discipline HOW? Subjective analysis must be reduced or eliminated. A systematic objective Method of interpretation is needed. This builds a thought process which builds Confidence. Patience Discipline Becomes Your Job!
Foundation Intra-day Trading Tools Charting Tools: 5-, 15- & 60-Min. Intra-day charts displayed in Candlestick form. Technical Tools: 20- & 200-period simple moving averages. A Price Pattern: Buy & Sell Setup.
Foundation Intraday Charting
Foundation Buy and Sell Setup The setup can be traded in all time frames. This combination of bars is a segment or smaller part of the overall pattern. It is a set of bars that occurs in a detailed formation. It offers high probability with low risk.
Foundation Price Pattern Recognition
Foundation Moving Average Guidelines Long positions are favored when prices are Above their 20-MA on a 60-Min. chart. Entry points are found on 5- or 15-Min. charts. Long positions are considered when prices are extended Below the 20-MA on a 60-Min. chart, but Above their 20-MA on the 5-Min. chart. Short positions are favored when prices are Below their 20-MA on a 60-Min. chart. Entry points are found on 5- or 15-Min charts. Short positions are considered when prices are extended Above the 20-MA on a 60-Min. chart, but Below their 20-MA on the 5-Min. chart.
Foundation Moving Average Guidelines
Foundation Moving Average Guidelines
Foundation The Battle between Bulls and Bears
Foundation Buy and Sell Setup
Foundation Buy and Sell Setup
Time Frames Stick with one set of TIME FRAMES of your methodology, take the signal and completely ignore the other time frame. Shorter time frames allow you to make better use of margin and have tighter stop losses. Larger time frames require bigger stops, thus a bigger account, so you can handle the market swings without facing a margin call.
Time Frames & Trading Types Time Frame Description Advantage Disadvantage Long Term Long-term traders will usually refer to daily and weekly charts. The weekly charts will establish the longer term perspective and assist in placing entries in the shorter term daily. Trades usually from a few weeks to many months, sometimes years. Don t have to watch the markets intraday Fewer transactions mean less times to pay the spread More time to think through each trade Large swings Usually 1 or 2 two goods a year so PATIENCE is required. Bigger account needed to ride longer term swings Frequent losing months Short Term (Swing) Short-term traders use hourly time frames and hold trades for several hours to few days or a week. More opportunities for trades Less chance of losing months Less reliance on one or two trades a year to make money Transaction costs will be higher (more spreads to pay) Overnight risk becomes a facto Intraday Long-term traders will usually refer to daily and weekly charts. Intraday traders use minute charts and hour chart. Traders are held intraday and exited by market close. Lots of trading opportunities Less chance of losing months No overnight risk Transaction costs will be much higher (more spreads to pay) Mentally more difficult due to the need to change biases frequently Profits are limited by needing to exit at the end of the day.
Multiple Time Frames The largest time frame we consider our main trend - this shows us the big picture of the pair we wanna trade. The medium time frame down is what we normally look at, and it signals to us the medium term buy or selling bias. The smallest time frame shows the short term trend and helps us find really good entry and exit points.
Multiple Time Frames Time Frame 1 Min 5 Min 15 Min 30 Min 1 Hour 4 Hour Day Week Methodology Scalping X X X Hit and Run X X X X X Intraday X X X X X Short Term (Swing) X X X x X X Mid Term X X X X Long Term X X X
Key Concepts Simplified Candle Language Six Candle Concepts Changing of the Guard COG: all give traders the same message. Wire Range Body WRB: Probability of the current trend changing. Narrow Range NR: Probability of the current trend changing. Narrowing Range Bodies NRB: Probability of the current trend changing. Topping Tail TT: A high probability opportunity may exist to trade. Bottoming Tail BT: A high probability opportunity may exist to trade.
Candlestick Concepts Ask yourself, What does the current candle tell you about the prevailing trend? Note: A trend = 3-5 bars moving in the same direction. Each candle will give us information that either confirms or contradicts that trend. Long or Expanding range candles tell us volatility is high or momentum is increasing. Short or Narrowing range candles tell us volatility is low or momentum is decreasing.
Candlestick Concepts COG - Changing of the Guard Bar A Bullish COG is defined as three or more consecutive red bars followed by a green bar. A Bearish COG is defined as three or more consecutive green bars followed by a red bar. Tip: While there are different variations, the message is always the same! A reversal in momentum has occurred!
Candlestick Concepts NRB - Narrowing Range Bars A series of bars in which the difference between the highs and lows is Narrowing. Tip: While there are different variations, the message is always the same! A slowing in momentum is occurring!
Candlestick Concepts NR - Narrowing Range Bodies Bars in which the body of the candle is small relative to the overall length of the candle. They may have Tails on either side of the body. While there are different variations, the message is always the same! A slowing in momentum has occurred!
Candlestick Concepts TT - Topping Tail Bars Bars in which prices had been higher, then supply forced prices lower into the lower part of the bars range. While there are different variations, the message is always the same! Distribution has occurred!
Candlestick Concepts BT Bottoming Tail Bars Bars in which prices had been lower, then demand forced prices higher into the upper part of the bars range. While there are different variations, the message is always the same! Accumulation has occurred!
Candlestick Concepts WRB Wide Range Bar A Bar in which the Candle Body is relatively wide compared to the most recent bars. A Wide Range Bar after a period low volatility ignites momentum in that direction. A Wide Range Bar after an extended advance or decline typically happens near the end of a move. An NR or NRB will signal the turn.
Candlestick Concepts COG - Changing of the Guard Bar
Candlestick Concepts NRB - Narrowing Range Bodies and NR - Narrowing Range
Moving Average Concepts The relationship between MAs and/or the relationship between Price and MAs Serve as: An Overbought / Oversold Indicator A Bullish / Bearish Divergence Indicator A Guide to price Support & Resistance A Tool to help anticipate where a reversal may occur A Risk Reward Indicator A Relative Strength Indicator
Moving Average Concepts An Overbought/Oversold Indicator
Moving Average Concepts A Momentum or Bullish/Bearish Divergence Indicator New Low Divergence COG
Moving Average Concepts A Guide to Support & Resistance
Moving Average Concepts Anticipate Entry/Exit and Risk/Reward Anticipated Entry
Moving Average Concepts A Relative Strength Indicator Comparing the MAs of the above charts, which one will tell us stronger chart (?)
Retracement Concepts The retracement levels are used to measure the STRENGTH or WEAKNESS of a move counter to the prevailing trend. The retracement levels are a percentage measurement between significant highs and lows. The Retracement levels we are concerned with are 40, 50 and 60%. The retracement levels alone are not enough to consider entering a position. Our setup is also needed. Learn to see retracement levels without drawing them. When trading, analysis must be done quickly.
Retracement Concepts Levels and Interpretations: 40%
Retracement Concepts Levels and Interpretations: 50%
Retracement Concepts Levels and Interpretations: 60%
Retracement Concepts Levels and Interpretations: >60%
Retracement Concepts Levels and Interpretations: 80% - 100%
Retracement Concepts Levels and Interpretations: >100% Retracements greater than 100% negate the prior trend. They often set up a high probability reversal point. A move above a prior high signals Strength but is a High Risk Entry. Buying shallow pullbacks of 40 to 50% after a COG is low risk, professional trading.
Support and Resistance Concepts Actual Support and Resistance They are guides as to where traders may anticipate a reversal : A series of price bars Prior highs / lows / bases An unfilled gap between price bars Subjective Support and Resistance Also guides to anticipate reversal points without price points in the same area, these are less significant. Moving Averages Retracements Time
Support and Resistance Concepts Unfilled Gap Resistance
Support and Resistance Concepts Prior High Resistance Unfilled Gap Support
Support and Resistance Concepts Resistance at Prior Base
Mastering Putting It All Together 60 MIN Chart Start with the longer time frame. Prices test Support. A WRB forms. Be Alert! A COG signals. The decline is over. Moving Avg. Divergence. Check Market and look for entry.
Mastering Putting It All Together 5 MIN Chart Oversold MAs Wide. Deep Retracement above the 20-MA: BUY Target 200-MA Price Resistance. Sell at Resistance. Sellers in Control
Gold Trading Trendlines, SMA200, SMA20, ADX, RSI Sellers in Control
Gold Trading Trendlines, SMA200, SMA20, ADX, RSI Sellers in Control Sellers in Control