Spot and Trade Institutional Money Moves

Algorithmic Trading with Human Interaction for:

Day Traders, Swing Traders, Long-Term Investors

Wednesday, May 19, 2021

Leveraged Trading Strategies

As a trader or investor, you have multiple ways to leverage your return on investments and still limit your risk, allowing you for above-market average returns: knowledge makes a difference!

Return on investment is the name of the financial market game. Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments. To calculate ROI, the benefit or return of an investment is divided by the investment cost. Read or watch our video…click.

On a simple term, it looks like ROI is just a relation of two factors; however, multiple influencing variables determine the final result; let me list those briefly:

  • Capital requirement builds the base or denominator of the formula and differs widely by asset and asset class.
  • The asset price move determines the first component of the numerator and specifies the potential return
  • The frequency of price change gives you an idea of how often you can expect to participate in price moves
  • The probability or predictability assumes the likelihood of determining a potential trade situation in your favor
  • Leverage indicates the amount of increased return expected by the movement of the underlying asset
  • Engagement rate specifies how much of your capital works for producing a return
  • Risk control defines if you and how far you can limit your trade risk or take an unbalance risk

The following graph lists the complexity to handle when striving for a return on investment in the financial markets.

Influencing Factors on ROI (Return on Investment)

Return on Investment (ROI) and influencing factors

We engage in trades from longer-term investments to day trading. Today and in this article, we want to focus on swing trading assets by holding positions between one and ten days.

  • As a short-term stock trader, your average return per trade ranges between 2% and 5%. If you obtain portfolio margin, you can leverage your return on risk or capital engaged between 20% and 60%. 
  • As an options trader, you can strive for an average return on capital of 65% up with the appropriate strategy on hand. On the other hand, you also take a 100% risk on most of your investments, and you need to consider that you invest in time-decaying assets, requiring you to be right in direction and time.
  • As a futures trader, you can trade highly leveraged instruments with stop-defined risks, producing between 15% and 50% return on maintenance margin, depending on the future you choose to trade.

The basis of producing constant returns from the financial markets is operating with a high probability system. Leveraged trading strategies are not commonly known but learnable, and we teach them in our mentorships.

Leveraged Trading Strategies Compared

Let us build a quantitative model and appraise the three leveraged-return, swing trading methods, comparing at an average expected high-risk procedure. To appraise the three choices, we evaluate the average expected Return on Investment or Return on Capital (ROC) for a 55% system and a 65% system. The average expectancy of the trading system used by many retail traders is 55% (standard indicators like Moving Averages, MACD…); high probability systems start at attainment rates of 65% and require a different appraising basis and algorithm.

Conservative Return Expectations of Trading Strategies

As expected, operating with a 55% system does not give you an edge as a private investor: Whatever you do, you are either trading water or even acting with a negative expectation. Yes, you can celebrate winners, but you will not make money long-term. The odds are staggered against you!

By our quantitative appraisal: Futures Trading is the winner, allowing for limited risk trading at an average expected weekly return rate of 14%, compared to an 11.5% expected return rate on trading stocks risk limited. Options trading also achieved a 14% potential weekly return rate potential; however, you have to be right in time and direction for achieving such return, which finally favors futures swing trading over options trading.

However, there is no king’s way: Futures have a limited choice of well-tradable contracts by volume and bid/ask spread, and if you want to keep your money constantly engaged in the financial markets, you might want to trade with more than one focus.

Why?

By focusing on multiple streams of income, your rate of money engaged will increase, so the returns you are striving for.

In our model, we included the following assumptions:

  • At a 1.2-times risk to reward, you have the highest probability to bring a trade to target without facing the threat of being stopped, and the trade still commences in your expected direction.
  • We assumed the worst-case scenario; it will not always be a 1.2-times risk to reward. You let the chart situation tell when to buy or sell.
  • For a positive expectation, you need a high probability trading system with an attainment rate at or above 65%; else, you are not fit for making money long-term.
  • Your system needs to produce hardcoded entry, exit, and stop signals: no room for interpretation.

If this is for you, we are here to work in our mentorships for extended periods to help you develop yourself into the trader/investor you want to be.

More than 85% of the transactions in the financial markets are institutionally based. Big money decides for the supply and demand side of the trading business. Our system and indicators observe underlying changes in supply and demand to extrapolate price move potentials with a high probability of  ≥ 65% for coming to target when initiated.

Based on broker-published data, 76% of retail traders are losing money. However, 24% are making money, and for you to be part of those, there are specific principles to follow.

Here are the top ten primary edges profitable traders have over their competition, separated by system and trade management.

System-Based Decisions

  1. Trading the price action as it plays out has better odds than operating with opinions and predictions.
  2. Backtested signals that worked in the past have better odds of success in the future than guessing which way the market will go.
  3. Operate with system-based entry, exit, and stop conditions that are hardcoded with no room for interpretation.

Trade Management

  • A trader with a trading plan will usually beat a trader with no plan. A trading plan guides the trader in making fact-based decisions rather than emotional ones.
  • Traders who are patient with their winning trades will have bigger wins than traders who take profits early.
  • Considering statistical volatility by putting your stop loss in a spot that is unlikely to be triggered gives your trades time to work out without being prematurely stopped out during average volatility.
  • Following repetitive patterns of the markets gives you an edge over the traders that do not know about those patterns.
  • Only accept trades where the reward/risk relation of your system provides a long-term income opportunity.
  • Define the position size of your trade percentage based, which prevents drawdowns.
  • Discipline: Be prepared to trade and follow your plan daily without exceptions.

We are tackling all those dimensions of trading in our mentorship programs, so you learn what to do and how to be part of the successful long-term traders.

Dimensions of Knowledge Building and Behavior

NeverLossTrading Mentorship Dimensions

Our charts and indicators build the basis, but there is more to learn and teach than just following price indications. Here are some examples of our latest developed risk-limiting trading concept based on NeverLossTrading Top-Line and Trend Catching:

GS Daily NLT Top-Line Chart, April 21 to May 10, 2021

GS on a Daily NLT Top-Line Chart

The chart shows two trade situations:

Situation-1:

Buy > $335.70, and the trade direction was confirmed in the price development of the next candle. On the current signal, the 2-SPU target was reached on 4/29. The system anticipated a max of ten days to get to the target.

Situation-2:

Buy > $359.14; which was confirmed in the price development of May 5, 2021. The system assumed the 2-SPU target (dot on the chart) to be reached in 1-10 bars. In the actual situation, the trade was closed on the third day by reaching its target.

You could follow the trade direction either by trading the stock or by choosing an options strategy. The system specified clearly defined trade entry, exit, and stop conditions for both situations: Stops at 2% of 1-SPU below the trade indicating candle.

In both situations, we see a pullback of the price development. By following NeverLossTrading Top-Line rules, you were able to exit the trade before the pullback and harvest on the directional price move.

The average expected return of a 2-SPU price move is 2 x 2.1% = 4.2% for a stock trade. In our mentorships, we share how to leverage those returns drastically by:

  • Stock trading in combination with options for 50% ROC
  • Trading Call options instead of the stock for 65% ROC

A drastically increased income expectation for the trader who knows and applies those methods.

On the top left of the price chart, you find the SPU definition, which bar-by-bar will help you to define your expected price move. In addition, the system spells out the target and stop placement to evaluate the trade setup. The reading of 0.9 tells you that you would expect a $0.90 return for a dollar of risk to take if you invested at the current candle. In this case, an acceptable setup rather than a favorable one; however, the last candle on the chart does not carry a signal to trade, and we never enter at an exit candle.

Euro Futures, March 22 to May 11, 2021

Euro Futures with NLT Timeless Concept

Situation-1:

End of price move ambiguity and NLT Trend Catching Signal: Sell < $1,1812. The direction was confirmed, and the trade came to target on 3/30/2021 for a 30% return on maintenance margin in one day.

Situation-2:

Buy > $1,1872: a confirmed signal by the price movement of the next candle, reaching its target on April 7, 2021, for a 30% return on maintenance margin in two days.

Situation-3 and 4:

Confirmed buy signals and the trade targets (dot on the chart) were reached to continue the following days.

Situation-5:

Two days after entry, we were stopped by the price development reaching the red crossbar of the trade initiation candle. Losing is part of winning, and in the observed time, the system produced four out of five winners: 80%. Currently, the /6E is in an NLT Purple Zone (a sign of directional price ambiguity), and such, we do not initiate new trades until this stage is over.

In the observed period, the following return on capital engaged, based on maintenance margin, was achieved:

  • Four, 30% return winners
  • One losing trade – 30% times 1.2 (max risk) = 36%
  • Return approximation: 30% x 4 – 36% = 84% ROC in 50 days

By the present maintenance margin of about $2,400 for one /6E contract, you see why we encourage you to look out for multiple income streams to engage your capital.

You see, we work with clear-cut traffic rules to prevent accidents when entering and following a price move. We share all of this in our training sessions and tune our programs for getting you fit to operate in the financial markets.

The /6E chart lets you trade multiple times in a developing price move, reducing decision making to a minimum and eliminating time as a deciding factor; thus, we call the new concept: NLT Timeless Trading. We use this chart setup for day and swing trading. Here a day trading example:

NLT Timeless Day Trading Chart for /ES on May 11, 2021

E-Mini S&P 500 Futures on the NLT Timeless Chart

The chart shows five confirmed trade situations in a matter of two hours during the trading day of May 11, 2021: all winners.

When working with brokers who offer reduced day trading margins, day traders leverage their return on capital for /ES trades and achieve about a 40% ROC per trade.

We teach our programs and strategies one-on-one, at your best available days and times, focused on your wants and needs. Experience live how our systems work and find out which one is best suited for you. When signing up for NLT Top-Line, NLT Trend Catching in May of 2021, or the combination of both, the NLT Timeless Concept is included for FREE: a $3,997 value.

contact@NeverLossTrading.com, Subj. Timeless Summer 21

For more of our free publications and webinars…sign up here.

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Tuesday, May 4, 2021

Swing Trading Gold Futures

In our effort to find trading opportunities and institutional price moves, we developed indicators and scanners that tell us the underlying happening of investments or investment changes in the financial markets.

At the end of the day, May 3, 2021, the NeverLossTrading market scanners picked up an additional demand for gold and gold mining companies.

Institutional Money Flow on May 3, 2021

Price developments of the commodity gold can be traded in multiple ways:

  • Futures Contracts (/GC, /MGC)
  • ETF (GLD)
  • Options on GLD

The usual way of trading for a price move of the underlying asset is to check a time-based development.

/GC on the NLT Daily Chart, March 19 to May 4, 2021

GOLD Futures on the NLT Daily Chart

Let us analyze the four trade situations highlighted, starting from the current situation and going back.

Situation-4: On May 3, 2021, the NLT Power Tower indicates a potential up move for the Gold Futures Contract with 1-SPU of $20.90, when the Price Threshold of Buy > $1,798.90 is surpassed in the price development of the next candle. Hence, we expect a value change of the underlying contract of $2,090 when coming to target. However, at the publication stage, the directional price move was not confirmed by May 4, 2021. Following our rules, we do not enter into a long directional trade until we receive confirmation.

Situation-3: 4/15/2021 the indication of Buy > $1,770.60 was confirmed in the price movement of the next candle and came to target on 4/21/2021. We disregard additional signals when being in a trade.

Situation-2: The buy signal was not confirmed, and we neglected the sell signal right after (an NLT no-trade rule, you learn in our mentorships).

Situation-2: Sell < $1.705.60 was surpassed in the price movement of the next candle and lead to a short trade to target (dot on the chart): $1,682.70.

Time-based setups might show unfavorable risk/reward correlations when the signal occurs on a highly expanded candle. To cope with this challenge, we developed the NLT Timeless Setups, and the chart for the same period looks as follows:

/GC on the NLT Daily Chart, March 19 to May 4, 2021

GOLD Futures on the NLT Timeless Chart

Situation-4: On April 13, 2021, the NLT Trend Catching Signal with a price threshold of Buy > $1,784.50 is surpassed in the price development of the next candle, and we expect a value change of the underlying contract of about  $2,000 when coming to target. The price move was confirmed, and the trade came to target. At the current stage of the price development, we have no trade indication.

Situation-3: No trade at candle #5, and no trade at intra-momentum pullbacks. Details, we teach in our mentorships.

Situation-2: The buy signal was confirmed and came to target in the price development of the next day.  

Situation-2: Sell < $1.714.5 was surpassed in the price movement of the next candle and lead to a short trade to target (dot on the chart)

Two different ways of approaching trade situations: both are suitable, valid and taught in our mentorship programs, where we teach one-on-one, with a focus on your specific goals, wants, and needs.

A Quick tip: buyers and sellers move the market; whoever has the upper hand moves the market in their direction. Hence, we developed the lower study: NeverLossTrading Balance of Power Indicator: It shows buyers in command when blue bars dominate and sellers in charge when red bars dominate. A confirming indicator for the action on the price chart. In any case, we want to simplify life for you, and the charts define:

  • Entry Conditions: Execute buy-stop or sell-stop orders at pre-defined price thresholds at assumed probability
  • Exit Condition: When is the target reached
  • Stop Condition: When are you wrong and exit
  • Risk Management: Risk limiting  and risk-adjusted by considering the Relation of (Entry – Exit) / (Entry – Stop)

Swing Trading Concepts express one strategy of many; we teach in the hours of working together.  Here a short overview of what you will all experience by operating with rule-based trading decisions as a day trader, swing trader or long-term investor in margin-, IRA, and even 401(k) accounts.

NLT Learning Program Overview

NLT Mentorship Topics to Cover

Let us be your guide to a consistent trader and investor and schedule a free consulting session, where you can see live what our systems can do for you:

contact@NeverLossTrading.com Subj: Consulting Hour

Working one-on-one spots are extremely limited: Do not miss out!

For more of our free publications and webinars…sign up here.

We are looking forward to hearing back from you.

www.NeverLossTrading.com

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Wednesday, April 28, 2021

Apple Trading Strategy over Earnings

 Summary: By the example of AAPL, we demonstrate how to follow a risk-limiting strategy to trade stocks over earnings.

There are multiple ways to decide for a trade:

  • Fundamental
  • Technical
  • News Based
Whatever you use as determining variable, news can change the demand for a share drastically; hence, we need to consider news in our trading.

Buy the Rumor, Sell the News, is a simple saying, but what do we do with it as a trader or investor?  

Apple inc. is reporting first-quarter earnings today, April 28, 2021, after the stock market close. It is always exciting to hear what Apple has to say; however, today, we will experience a leading impact on the stock markets overall. The focal point of attention will be the introduction of the new generation of 5G capable phones. By 2025, 5G networks are likely to cover one-third of the world’s population and trigger a demand for at least 1.2 billion new phones. The impact on the mobile industry and its customers will be profound. 5G is more than a new generation of technologies; it denotes a new era in which connectivity will become increasingly fluid and flexible. Compare it to going from dial-up internet to broadband or high-speed internet: a significant change in capabilities.

AAPL stopped reporting units of iPhones sold in 2018. The iPhone segment accounts for about 50% of Apple's revenue. We still were able to get some insights and into the market shares of units sold of the key players:

AAPL: 21 % market share, Samsung 16%, Xiaomi 11%, Oppo 9%, Huawei 9% and a wide variety of others covering the rest.

With the roll-out of 5G, communication companies, smartphone producers, and chip manufacturers are looking for profitable growth in the years to come.

All of this sounds just positive, but we still let the chart tell when to buy or sell:

AAPL Weekly Top-Line Chart, Nov. 2020 to April 2021

Chart Analysis:

Situation-1: After a time of ambiguity (NLT Purple Zone), where the price direction was uncertain, we had an end of purple zone signal with a buy-threshold > $134.40. The buy-stop order was filled in the price development of the next candle (week of 12/28/2020) and carried out to the target (dot on the chart), not considering further confirming signals. When the target price was reached, the share price pulled back, but we were out of the trade!

Situation-2: The NLT Top-Line signal of the week of 4/5/2021: Buy > $133.04 was confirmed in the price development of the week 4/12/2021, and such, we are long in AAPL with two potential targets: $139.89 (Target-1 to be reached on 1-5 candles) and $146.78 (Target-2 to be reached in max ten candles).

Trading over earnings has an uncontrollable risk; hence, we chose a limited-risk strategy, where we know at entry the max loss of the trade, regardless of the price development of AAPL. Most importantly, we will participate in potential upside opportunities and keep the ability to repair the trade if it goes wrong (the concept of never stop loss trading gave us our name, but we shortened it a little)

With the NLT concept, we simplify life for you and let the chart tell when to buy or sell, specifying all decision-making dimensions at once:

·       Entry Conditions: Execute buy-stop or sell-stop orders at pre-defined price thresholds at assumed probability

·       Exit Condition: When is the target reached

·       Stop Condition: By not controlling the stop in the AAPL trade over earnings, we work without a stop but with a risk-limiting options trading strategy.

·       Risk Management: Operating with limited-risk strategies only, we prevent drawdowns.

When you are familiar with options trading, you know that Vega, the volatility component in the options price, accelerates the cost of the option over news events like earnings. To not pay too much for the time we want to control the stock; we cover the potential time decay by combining risk-limiting options strategies on the stock options put- and call side: collecting premium and paying premium.

If trading was easy, nobody would ever go back to work. The good news: it is learnable.

The NLT trading concept over earnings announcement is only one strategy of many; we teach in the hours of working together.  Here a short overview of what you will all experience by operating with rule-based trading decisions as a day trader, swing trader or long-term investor in margin-, IRA, and even 401(k) accounts.

NLT Learning Program Overview


Let us be your guide to a consistent trader and investor and schedule a free consulting session, where you can see live what our systems can do for you:

contact@NeverLossTrading.com Subj: Consulting Hour

Working one-on-one spots are extremely limited: Do not miss out!

For more of our free publications and webinars…sign up here.

We are looking forward to hearing back from you.

www.NeverLossTrading.com

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Thursday, April 8, 2021

Timeless Day Trading

Summary: A new high probability day trading concept with clear-cut rules for entries, exits, and stops. Read on or watch the video…click.

There are multiple ways to decide on a trade. When using technical analysis, you have the following variables to determine a potential price move setup:

  • Price Change
  • Volume Change
  • Volatility Change
  • Or a combination of those

The majority of trades are determined by a change of one of those variables over time: Moving averages would be a typical example for tracking and deciding based on an asset’s price movement over time.

Our brand name derives from the concept of repairing trades instead of taking the stop loss (Never Stop Loss Trading was a bit lengthy). There are ways to integrate our trade repair concept into day trading; however, today, we want to keep it simple and focus on positive exits and stops based on OCO orders.

You most likely experienced that you predicted the future price move; however, on a counter-price-action, you got stopped, and you were out of a trade before it commenced in your predicted direction: Producing a loss instead of the desired win.

Like in a chess game: Acting with predictable moves is rarely a winning strategy.

If you use a dynamic, less predictable entry, exit, and stop definition, you certainly have the chance to increase your trading accuracy. Here an overview of the most commonly used trading decisions.  

Share of the Usage of Trading Decision Making Variables

Decision Making Variables

In the concept we introduce today, time is taken out of cohesion. This will make your decisions less predictable; however, the stronger argument of the idea is:

We are helping you to simplify your trading decisions by specifying conditions to execute bracket or OCO orders along with the price movement of underlying assets.

The system works for all asset classes: Stocks, Futures, and FOREX.

What we casually named variables are, in reality, results of an underlying change in supply and demand. In the base economic principle, price is a result of a change in supply and demand. Time is not considered as a determining factor. The model assumes that markets regulate themselves instantaneously by economic principles. Following this model, we predict price moves with high probability by the Timeless NLT Concept.

Excursion into the economic principle of an exchange:

Supply and Demand Correlations

Price, specified by a change in supply and demand

The above graph gives a relation of the quantity offered and the resulting price. In the current situation, additional demand for a stock at $100 occurs. If no additional supply occurs, the equilibrium will move up to match supply and demand at $110.

The typical problem for a trader is: In hindsight, you know what happened, and we want to help you predict the future price happening with high predictability and frequently by our systems and concepts.

Money flow accepts price as the resulting variable of a change in supply and demand and specifies potential price move setups with clearly defined:

  • Entries (price threshold)
  • Exits (targets)
  • Stops (wrong assumption)

With our systems and strategies, we want to help you to higher accuracy:

  • Only accepting a trade when the direction is confirmed
  • Exiting at a pre-defined target, prevening for the price to pull back and taking your profits away before you realize them
  • Choosing an adequate stop, so you are not taken out of a trade by a too-tight stop and keeping reward and risk in a meaningful balance.

A Quick tip: buyers and sellers move the market; whoever has the upper hand moves the market in their direction.

Today, we want to focus on day trading and refer to swing trading or longer-term investing in separate documentation.

By the NLT Timeless Concept, we simplify life for you and let the  chart tell when to buy or sell, specifying all decision making dimensions at once:

  • Entry Conditions: Execute buy-stop or sell-stop orders at pre-defined price thresholds at assumed probability
  • Exit Condition: When is the target reached
  • Stop Condition: When are you wrong and exit
  • Risk Management: Risk limiting  and risk-adjusted by considering the Relation of (Entry – Exit) / (Entry – Stop)

When day trading for pre-defined price moves, positions are kept open for a couple of bars/candles but always close the same day.

One of the NLT Timeless Concept clients just said: “Now I am feeling comfortable, walking away from the trade without feeling the need for controlling it.”

Let us show you why by a chart example, using a combination of NLT Top-Line and Trend Catching indicators in a short video…click.

Crude Oil Futures, April 4 to 6, 2021, NLT Timeless Chart

Crude Oil Futures on the NLT Timeless Day Trading Chart

Chart Analysis:

  • Five trade situations show on the chart. Situation-5 at the recording was still open but came to target, so did the other four. Our average accuracy with this system is above 65%.  
  • Entry condition: when the spelled out price threshold is surpassed in the price development of the next candle:

Example: Situation-1, Sell < $60.49 was fulfilled in the next candle and lead to a price move to the target: dots on the chart. Targets are also spelled out in the upper left NLT dashboard.

  • Stops at the red crossbars
  • Never enter a trade at the exit candle: stop or target.
  • The average trade produced a value change of the underlying contract of about $500.
  • The chart combines two systems: NLT Top-Line and NLT Trend Catching, while in the recorded days, all signals derived from NLT Trend Catching.

E-Mini S&P 500 Futures, April 5, 2021, NLT Timeless Chart

E-Mini S&P 500 Futures Contract on the NLT Timeless Day Trading Chart

Chart Analysis:

  • Three trade situations that all came to target.
  • Situation-1, Buy > $4039.50 had a combination of indicators: NLT End of Purple Zone and Trend Initiation, confirmed by the next candle’s price movement and the trade came to target.
  • We disregarded the following two signals: Crossing an NLT Lime Line and entering at the 3-SPU-Level from the trend initiation candle.
  • Situation-2: had a reversal setup in the continuation of the upside price move, and it came to target

The question is, how do you administer the trades?

You place buy-stop or sell stop bracket orders and do not administer the trade by following specific rules, shown in the video…click.

NLT Timeless Day Trading Concept Video

The NLT Timeless Day Trading Concept is only one strategy of many; we teach in the hours of working together.  Here a short overview of what you will all experience by operating with rule-based trading decisions as a day trader, swing trader or long-term investor in margin-, IRA, and even 401(k) accounts.

NLT Learning Program Overview

Let us be your guide to a consistent trader and investor and schedule a free consulting session, where you can see live what our systems can do for you:

contact@NeverLossTrading.com Subj: Consulting Hour

Working one-on-one spots are extremely limited: Do not miss out!

For more of our free publications and webinars…sign up here.

We are looking forward to hearing back from you.

www.NeverLossTrading.com

Disclaimer, Terms and ConditionsPrivacy | Customer Support