Spot and Trade Institutional Money Moves

Algorithmic Trading with Human Interaction for:

Day Traders, Swing Traders, Long-Term Investors

Sunday, August 21, 2011

Stock Market: Hedge Your Positions with Apple Computer (AAPL)

On July 27, the stock market started its shift to the downside. The week of August 15 fueled the doubt in the economy and where we stand. Market prices tumbled and seem to be in a free fall. The gloom and doom prophets are back and the sky is falling.

The facts are: We just concluded a great earnings season with positive outlook of most of the major US companies. However, all of this seems to be forgotten. If the USA is rated AAA or AA+ does not make a difference in anything. It was just a political act and the world is shaking.

When will we come back to reality?

This is a key question. When fear takes over, a “chicken-little” mentality dominates and trading the markets day by day, holding few to no overnight positions is the best to do. Another alternative is to hedge current positions.

How can a private investor hedge their funds?

There are many ways and the easiest is to sell Emini S&P 500 Futures Contracts in relation to shares held. One of those contracts is in relation to about $56,000 account holdings in stocks. Therefore, if an account holder of $100,000 in stocks sells two Emini S&P 500 Futures, the account is entirely protected and even has 12% participation in favor of a downside move.

For this form of protection, the account holder needs to have about $12,000 of margin available, to sell two S&P 500 contracts.

What happens if the market goes up?

The money, which will be gained in the asset-account, will balance the losses of the hedging account, making the cross account balance equal.
More often than not, hedging can occur in the same account where the assets are held, which makes everything much more easy.

What happens if the markets continue to fall?

The account that holds the shares will lose money and the account that holds the two Emini S&P 500 contracts sold, will gain value, making the cross account balances equal again, without the need to sell all assets.

How can I liquidate the Futures contract?

Emini Futures contracts of the S&P 500 are traded around the clock (with little breaks) and so they can be initiated or liquidated at any time. Costs for buying and selling a futures contract range from $4 to $50, depending on how they are engaged: Online or with a broker.

How do know when the market turn back to the upside?

The golden rule is: When a higher high and a higher low is made.

Are there early market direction indicators?

At the moment, AAPL is the most powerful company in the Stock market. If the price of Apple Computer shares rises, the market follows and vice versa. Hence, the AAPL share development can be used as a hedge indicator.
How can a private investor make money when the markets fall without taking an uncontrollable risk?

There are many ways to participate on a downside move and it would go too far trying to explain those so we will just give a summary:

- Engaging into option positions that participate from a downside move.
- Selling Futures contracts.
- Buying ETF’s, which are inverse to the market (they gain value if markets drop).
- Shorting stocks.
Prior to applying those methods, we highly recommend a sound education to fully understand those trading methods and their implications. NeverLossTrading is a premier institution, teaching those methods in great detail and with fantastic documentation.

Sunday, July 24, 2011

Trading Silver: NeverLossTrading Style

A trader who wanted to make $5,000 quick on trading silver came to ask how to best do so and this is the way we would do it:

Silver is the wildest horse to trade and those who trade it have to bring a high risk tolerance. The margin requirement to enter the contract is currently around $12,000 and it was shortly even raised to $30,000 per contract. Silver is a big contract: 5000-Torry –Ounces x $40/oz. = $200,000 that one contract controls. Currently, the average daily move of Silver is 1.5 points, which relates to $7,500 move per contract. This sure underlines the point that $5,000 can be made quick, but also lost quick (one tick = 0.005 = $25). The silver market is totally overtraded: The amount of Silver Futures traded every day, is at about 900 times more than physical silver could be supplied. This in leads to spiky short term rallies in both directions: up and down, making silver a high risk contract, which I would recommend for the new trader to stay away from.

On the chart, it looks like Silver sets up for a potential breakout to the upside, but is not there yet. If I am bullish in silver, I would trade SLV (the iShares ETF for Silver) and buy the September 39/40 Call-Spread, for a debit around 44 Cents, which provides the possibility to make $0.56 per share controlled and has 50% likelihood to come in the money, while the downside is totally protected: If Silver again falls off the skies, the maximum that can be lost is $0.44 per share controlled. When silver moves above $40, this Call Spread comes in the money and makes $560 for every $440 invested per contract. This is a potential return of 127% on risk capital with a low capital requirement.

Why would we not buy a $39 call option?

The premium for the call option is $2.49 and totally overrated by the current volatility. The price of one SLV share had to move $2.40 for us to make money at expiration and the likelihood for making the same $560 per contract as in the prior example is 30%. So we would risk $2400 to potentially make $560 on a 30% probability, which make buying a single call option an unacceptable trade.

One of the trades educated by

Tuesday, April 12, 2011

The US Economy And Outlook Based On Stock Market Earnings Reports

On Monday, April 11, Alcoa Inc. (NYSE: AA) the aluminum producer started out the first quarter reporting with excellent results:

- A first quarter profit of $308 million, or $0.27 per share, from a loss of $201 million, or $0.20 per share, in the year-ago period.

- Income from continuing operations attributable to Alcoa, as adjusted, for the first quarter was $317 million or $0.28 per share.

- Revenue rose 20% to $5.96 billion from $4.89 billion.

- Analysts, on average, expected the company to report earnings of $0.27 per share on revenue of $6.32 billion.

"It was an excellent first quarter as we improved profitability across all business segments, set profit records in our midstream and downstream businesses and grew substantially," said Alcoa Chairman and CEO Klaus Kleinfeld.

The outlook Alcoa painted for 2011 and beyond remains very positive due to the world's growing population, increasing urbanization, and aluminum's advantages as a light, strong and recyclable material.

What was the reaction of the stock market?

We write this article on purpose prior to the market opening and can say: the market dropped 0.6% in value, measured by the S&P Futures.

Stock market futures are traded basically around the clock and the international markets and those participating, let the price drop rather than buying into it, which would result in higher prices.

We use as a key measure the S&P 500 Emini Futures Contract and postulate: If the overnight price of this futures contract drops by 0.6% the stock market in average will start 0.6% lower into the day.

The S&P 500 as an index represent the 500 biggest US-Shareholder-Companies based on market capitalization.

What is our trading tactic based on this:

- Short term we are rather trade to the downside if we break below a neuralgic price level of 1308 for the S&P Emini contract.

- Long term we are in cash, waiting to get long on a clear signal for a market turn around based on assumed high earnings reports.

What does this mean for the overall economy?

“We see clear signs of recovery and look into a stronger economy for 2011”

If you want to participate in our ongoing market reports and interpretations and take advantage of your knowledge as a financial market investor:

Thursday, March 24, 2011

Are Investments in Options or Stocks more Risky?

A typical situation for people who once put their name in a subscriber list, and now are identified as potential investors:

A call from a broker, mostly from a firm that I never heard about, and has the best program on earth, certainly making you rich in a short time and you just have to open an account.

Let u go through a short stereotypical outline of the phone conversation:

How are your stock market investments going?
Excellent (my answer)
The typical standard question of a phone sales person: What are you investing in?
Futures and Options – my answer.
The standard reply: Oh, you are taking on higher risks.
All broker telephone sales people are trained to say this sentence.
It is almost funny. When I reply: I don’t think so. That immediately separates pros from phone solicitors:
“Of course you do?”

Such ignorance usually brings those phone calls to a friendly end: “I do not spend time for that.”
Now let us bring means, background and facts into this case: Taking the telephone sales talk out, where the person on the other side is trained to play with our emotions of fear and excitement, we come to the following facts:

When I buy 100 shares of a stock with a value of $120/share, that moves about 1-2% a day, we want to calculate the risk or exit point, if the trade does not go our way. Capital preservation is a key essential for successful financial market investment. If prices break through a major support line or short term momentum line, this should define our maximum loss and exit point to the downside.
In our case, we assume support being 4% away from our point of entry. Then we know that we are risking: $480 on a $12,000 investment.

To control 100 shares one needs to buy 1 Call Option Contract, for: $1.20 x 100 = $120.

We now control for the duration of the call option contract the same amount of shares: 100 and what is the risk involved?
The maximum we can lose: $120.

Making things equal, we are going to risk the same $480 and buy 4 call option contracts.

With the same amount of risk, we are now controlling 400 shares for the duration of the options contract.

Talking about risk, always involves the worst case:

Overnight news make the stock drop to $90 at the next day open and we want to get out:
Stock holder loss: $3,000
Option holder Loss: $420 (there will still be some time value in the option).

But actually, the broker does not want us to do so many trades, we shall rather sit tight and wait until the share is going up again, but the next day prices drop: $79/share: $4,100 loss for the stock holder.

What will be the answer when we call your broker and ask what is going on:

“Hold on to it, it is gone get BETTER.”
Yes right, now the share has to climb 51% to get us back to break even.

We want people to take their financial freedom into their own hands and teach them techniques of how to invest in the markets, making money in all directions and rather having a buy and sell, than a buy and hold strategy.
With a buy and sell strategy we always have a target and at the target we either take the entire position off, or pull the stop tight, to not allow realized profits to slip away.

Let us assume we wanted the share price to go to $125 in the next 5 days and cash out. What would be the results:

Stock holder: Selling 100 shares at $ 125, gaining $500 - which equals a 4.2% return on capital.
Option Holder: Selling 4 option contracts - but what will be the value of the option?

To calculate the result of the future option value, we need to understand the impact of the option influencing parameters, that are made out of: The relation an option moves with the stock, time decay and volatility change. It all sounds more complicated than it is. We provide you with a model where you can do the calculation in seconds on the trading platform or on our member section of the website.

In our case the simulator lets the option price increase by $1.96. Calculating $0.02 slippage, we come to a value increase of the option of: $1.94 x 400 Shares controlled = $776, or 61% return on capital.

Based on those results, the option investor gained 55% more profit and in total risked about $400. While the risk of the shareholder can be substantial on defined amount of gains.

So finally, who is taking more risk: the option investor or the share holder?
Now that you know the answer, it is up to you to learn the mechanics to be able to apply such investment strategies. To be a successful financial market investor, skills and market details need to be learned and this is what NeverLossTrading is successfully teaching. We believe in hedging and leveraging any market investment: from Mutual Funds, Stocks to Options and Futures. You will leave our workshop fully setup to follow the NeverLossTrading concept.
Take your financial freedom into your own hands:
“If you do not care about your own money, nobody else will.”
Check us out at:

Monday, March 21, 2011

Is Technical or Fundamental Trading The Way to Make Money In the Stock Market?

Years ago when I learned trading, fundamental analysis was a big thing. It was impressive what all those people knew and how it was clear to them and the general public that certain shares had to rise and others had to drop.

Did it work out?

NO, of course not: In Reality the general public never would have known about those stocks unless the fundamental trade had already been made by Institutional Investors and people went in, buying when those who initiated the price move were selling.

Basically we proclaim: The fundamental analysis accessible to a private investor is worthless.

Institutional Investors have lined up cohorts of highly qualified stock market analysts in addition, they have their connections and relations, where a private investor can never reach.

So what do we do?

The answer is easy: We rely on the fundamental analysis of the “smart money.”

When institutional investors start buying into a share, our scanners and technical analysis tools indicate that program buying or selling is going on and we enter in the direction of the move, copying the action of the big money.

“The NeverLossTrading System can quickly identify when serious buying and selling is taking place, to participate in buying or selling.”

We know that it takes institutions time to enter their positions, and that stocks can double, triple, or more before the institutional fundamental investment is done and we start buying (or selling) alongside of the “Key Market Investors.”

With NeverLossTrading, people trade what they see on the screen and not what they assume that is coming.
Over the years of trading we developed our own set of indicators, integrating the knowledge and skills of the world best and successful traders, with focus to identify institutional moves. Our indicators are in house developments that measure the market pressure, like a voltage measurement in electrical engineering applied to the decision making signal wave of the financial markets:

• Pressure from the top, pushes prices down.
• Pressure from the bottom, pushes prices up.
• Pressure from both sides and the market will first consolidate but at one point, like an electrical field, break through and move strongly in one direction.
Each of our trade setups has an identified stop and target:
• One of our studies draws a stop line on the graph and allows for no interpretation.
• The target can be set by our trend calculation or trailed with the stop line that moves with the market.

For the private investor, regardless of the trading system they choose, these are the steps and techniques to make money in the financial markets:
• Have a system that allows you to spot key market action.
• Forget news and fundamentals, invest when institutions move in and out of share.
• Always hold yourself protected with stops and accept small losses, aiming for big wins or constant smaller gains.
• Learn techniques to be able to make money in up, down and sideways markets.
• Trade a set of shares that you understand with minim requirements on: Liquidity, Volatility, Daily-Price-Range.
• Apply a trading strategy that allows to leverage and protect your funds.
• Understand market correlations on time of the day, annual season, news related.
• Combine price and volume moves for entry and exit decision.
These are the skills we train and we encourage every new trader to get a solid education prior to risking money in the financial markets.
With the methods we teach, each and any market can be traded: Stocks, Commodities, Treasuries, Currencies and their derivatives like Options and Futures.

We often meet people who tell us:

“But we cannot go short in a retirement account.”

“I have no margin allowance in the custodian account of my children.”

For sure those are the official regulations, but if you possess the trading skills/mechanics of knowing how to initiate a 1:10 leverage to the up- or downside in any account, you will see the financial markets from a different angle.

Take a look at our program: http:\\ and for sure get a solid training and set of skills prior to investing your money in the financial markets.

Friday, March 11, 2011

Is Automatic Trading Software The Way to Make Money in the Stock Market?

Lately I am getting a lot of proposals for Auto-Trader-Software’s. Some of them even state that they work 89% off the time. In respect to the promise, the prices are pretty decent, ranging between $2,500 and $25,000 -  while 80% of the offering is between $2,500 and $5,000. All of those promotions surely have a little disclaimer that states: “Past history is not to be taken as attainable future performance,” and this is understood.

To get a good feeling for the offers received, I called the most expensive provider:  $25,000  on a 40% off promotion and got connected to a knowledgeable person. On my question if he trades the markets every day, his reply was: “I am the employed software developer” and I thanked him for his honest answer.

Let us make a financial appraisal to evaluate the payback for a possible investment into an auto-trading-program.

If we could gain $200/day with such software, in 250 trading days this would amount to: $50,000 of profit. Not a bad price/value relations: The investment would pay itself back in 2 weeks to 6 month and be an ATM after.
Consider compounding interest through reinvesting our profits: with $200 the first day, we make $400 the next, $800 after. This would make us a millionaire in 14 days. After 24 days a billionaire and in a  year after we start, we own the money of the word and the computer program even does the work for us while we are sleeping or being away from the computer, enjoying the good life of being rich.
This is more than anybody could ever ask for, I just wonder why those software programs are so inexpensive and like in real life, if I get something offered well below the real value, I am very suspicious of why that is.
“Why does one work as an employed programmer if he could be a billionaire?”
For everybody who wants to put their automatic trading program to work for them, good luck to you and please send  a card from the billionaires club that you surely join in 6 weeks from now.

We believe that you cannot successfully automate trading. If such would work we would find those programs run by:
Goldman Sachs, JP Morgan, Morgan Stanley, Fidelity, ING, Deutsch Bank, UBS, Barclays, BNP and others who would be able to afford purchasing it, but as a private investor: “Forget about it.”

Everybody who wants to learn to trade various financial markets needs  sound knowledge
of how to trade and why. NeverLossTrading is a primer institute to learn trading in all dimensions, ranging from the psychological aspects to position sizing, trade execution and documentation. We share with you a follower strategy that focuses on the market moves of institutional money and we trade along right with it, copying the actions of the market leaders.  You will learn how to make money applying the right instruments for all market directions: Up, down, sideways.
NeverLossTrading offers you a free trading platform and provides a set of indicators that focus on what just happened, instigate by institutional money and then it is time for us to trade: A wealth of knowledge and experience  that  supports you throughout your life as the a successful Financial Market Investor.
Check us out at:

Sunday, February 13, 2011

NeverLossTrading: Stock Market Outlook 2011


Our method of trading is applicable to various markets: Stock Market, Commodities, Currencies, Treasuries and their derivatives, like options and futures.In this publication we want to focus on the market with the most common interest: The stock market. But prior to telling which market sectors and stocks we favor, it is important to know that we only act if the overall market dynamic proves our analysis right. Let us share some of our imperatives:
  • We and nobody else knows where a share price will move to next.
  • We do not believe in great tips from people who portrait that they know.
  • The NeverLossTrading concept spots price action of institutional money on all time frames and reaps the benefits by following
    where the big money is going.
Even so we have a predefined and foundation based market interpretation, we will wait until we get it confirmed and enter into a trade when the movement starts. Over time we developed a variety of market indicators to spot the beginning and end of such movement.

This key question is often raised to us: Do you not lose time and profitability by entering late?
Find our answer: tab OUTLOOK 2011

So much to our core principles, now we want to share how we analyzed the stock market for 2011. Besides an overall appraisal we focus on sector development, knowing that institutional investors do the same and with that we want to be prepared if a move happens to jump in and when it ends to jump out. This spells out another of our core principles: We are not proposing long term buy and hold strategy but rather a buy and sell strategy where we act on an our entry signals for the underlying financial investment instruments and in the same way act on exit signals. Now to our 2011 analysis:

Stock Market Evaluation by NeverLossTrading

Situation Analysis: High corporate earnings are reflected in continues stock market growth. All sectors recovered while the major grows was initiated by a few companies with breakthrough consumer oriented information technologies and services.  Other markets followed and build a solid platform of earnings on modest revenue growth for 2011.

To define our preferred market focus areas, we are using a scoring model that rates growth achievements paired with sectors earnings  and combines this score with the market power potential of the examined segment. Besides overall growth strategies, the NeverLossTrading concept provides a trading plan for down-trending and sideways-trending markets.

In a short summary, here is our stock market preference list for 2011:

Harvesting Strategy
  1. Information Technologies:   We specifically focus on companies related to data, network services and innovations
  2. Financials: Our first focus are institutions that benefit from growth in the financial markets: GS, JPM, BRK.B,BEN. On a sign of recovery we will
    jump on BAC and C but else stay out of banking.
  3. Consumer Companies: We go with the world market leaders based on technology, service, unique product offering.
  4. Industry: Again, we pick world market leaders with innovation potential.
  5. Others: We are very selective in Energy with focus on new energies and resourceful nergy recovery or production and apply the same rinciple
    to the pharmaceutical sector and only invest in companies with innovations on he horizon.
Shorting Strategy
  1. Telecommunication: On a sign of weakness this is where we will short the market, expecting  troublesome year and years to come for all major telecommunication companies.
Download the detailed report at Tab OUTLOOK 2011