Your Trading Career as a Private Investor

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Your Trading Career as a Private Investor - By Thomas Barmann

Promotion Time: December 24 - 28, 2013 

This book is for you, if you aim to produce constant income and long term wealth from trading or investing. The difference between trading and investing lies in the perspective of time: Investors usually take a longer-term perspective to buy and hold their investments, while traders focus on shorter-term results. If you learn how to participate in the up- and down moves of the financial markets, you will start to invest more frequently and turn yourself into a trader.

Trading is a professional business and it requires preparation: Those, who take the other side of your orders are prepared to make money. Are you?

Unfortunately, most of what we learned in life is rather a hindrance to progress in trading: Good work ethic for example – We start to work when the office day starts and work to the end – and feel good about what we have done. However, we better not start to trade when the market opens and trade to the end: We only trade when we have a signal and the odds are in our favor. Our account statement tells us if we can feel good about what we accomplished. Let this book guide you to a new perspective of trading or investing.

Prepare yourself for a part-time or full-time trading career; follow our step-by-step guide and insights, how to start and operate your trading business.

To connect you with real-trading-world of this decade, we introduce you to the principles, methods, and strategies of Spotting and Following Institutional Money Moves by Algorithmic Trading with Human Interaction.

If you want to learn more about NeverLossTrading in a personal consulting session: Call +1 866 455 4520 or contact@NeverLossTrading.com

Ping Your Trading Success

Active sonar creates a pulse of sound, often called a "ping", and then listens for reflections (echo) of the pulse. By measuring the relative amplitude of the reflective wave, objects, their shape and form, their distance from the sonar source can be detected. 

In the NeverLossTrading algorithms, we are using this knowledge in a multitude of studies to define key support and resistance levels, by pinging in advance where the amplitude of alternating prices has reflection points.

SPY Chart with Critical Wave Reflection Points

For today, December 20, 2013, we ran a ping to detect the depth of the stock market. We have, what is called triple a witching day, where three important stock market contracts are expiring:

1. Stock market index futures;
2. Stock market index options;
3. Stock options.

 There are two major forces, with different interest and they are actually the ones producing the key reflection points, we detected:

1. Market Makers, which have to fulfill the contracts. 
2. All other institutional investors, which want to close out the benefits of their investment. 

 Our preferred indicator asset to determine potential price reflection points for the stock market is SPY, an ETF of the S&P 500. We choose SPY as the key asset by the consequences for the option buyer and seller when settling the contracts for the physical assets by transferring stock.

After pining the depth of SPY, please mark the following critical price levels for today: 

Level-1 Low: $181 – To reach this price level, the market has to drop about 5-SPX points. Closing SPY below $181 will save the Market Makers from transferring stock in a substantial amount of money and thus, when the price comes close to $181, you will see a lot of fighting and you can use this price levels for day trading to and from this critical price point. 

Level-2 Low: $180 – In case the market shows weakness, closing SPY below $180 would be the market makers dream, sparing them the need to fulfill 3-times more contracts than they have to fill on the $181-level. However, the market has to move by 15-SPX points to reach this price level and only news  like today’s GDP data could be the triggering such a price move. 

Level-1 High: $182 – The upper target for today is 5-SPX points above yesterday’s closing and again, positive economic news can easily get us there, while the market maker will surely try to intervene, keeping the SPY price below to spare them the fulfillment of further contracts that they rather want to expire worthless. 

If you want to learn how to trade like a pro, check our offering and schedule for a personal consulting hour: Call +1 866 455 4520 or contact@NeverLossTrading.com

 

Good trading, 

Thomas 

NeverLossTrading

Trade Significant Changes in Stock Ownerships

The happening, we share with you in this educational newsletter is a situation where stocks in one-day find a strong change in ownership, mostly associated with news announcements. In the following charts, we highlight this happening by a Cyan Volume Bar, which highlights extraordinary high volumes associates with a big price move of the stock. 

Cyan Bar: Extraordinary High Volumes Exchanged for GOOG

Two types of happenings are differentiated:

Type-1: Strong upside price move associated with an extraordinary high exchange of stocks.

Type-2: Strong downside price move associated with an extraordinary high exchange of stocks. 

To identify this happening, we recommend developing a specific scan, which lets you know on a daily basis stocks with a strong volume and price move. Here are the scan results for December 13, 2013.

Stocks with Significant Change of Ownership

After recognizing the happening, what are potential trading strategies? 

Strategy-1: Trade with the Strong Upside Move

This is the easiest strategy to follow. A stock produces positive news, opens higher with extraordinary volume and the price move is followed through by other institutional investors. We then use our genius and trade along with the move.

The target for the trade shall be set at 2-SPU’s (two Speed Units = 2 x the expected daily price move at the cyan volume bar).

Another way to trade this situation is to trail the stop; however, after a 3-SPU-price-move, following the trade initiation candle, there is an 85% chance for a retracement where you might sacrifice already booked profits. Hence, profit taking is the right measure. 

Strategy-2: Trade with the Breakout

Even so the stock reported better earnings, the stock price broke down. Our Strategy:

• Mark the high and low of the breakdown candle.
• Trade along with the price-breakout from the price range defined by the high/low of the breakdown candle. 

In case the price breakdown gets followed through, we also trade along with the new price move for 1-SPU or 2-SPU’s. 

 Strategy-3: Trade Exhaustion on the Top

The price shows a strong upwards price move and produces what we call a trend exhaustion candle. This candle ends the uptrend, produces new owners, who quickly run away from the stock when prices fall. Our trade strategy again is easy: We trade along with the price move, when it breaks the low of the Cyan Bar Candle.

The Significant Change of Ownership is a wonderful

The Significant Change of Ownership is just a small trading strategy and scan, we provide for our students and members. 

If our publication triggered your interest in NeverLossTrading, check which type of trading system will suite you best and we are glad to provide you with a personal consultation: Call +1 866 455 4522 or contact@NeverLossTrading.com

What Makes You a Successful Trader or Investor in 2014?

Prior to answering this key question, let us clarify the difference between a trader and an investor:

 

From a top-down perspective, there are many elements where both do the same: Participating in the financial markets with assets like stocks, commodities, currencies, treasuries and their derivatives: Futures and options. However, there are behavior differences, where the action of the one is very different to the other: The investor usually takes a longer-term perspective and mostly only makes money when an asset bought, increases in market value. A trader focuses on participating in the short-term price moves of assets and mostly uses methods and trading instruments, which allow making money when prices move up or down.

Successful traders and investors manage the following challenges: 

Challenge-1: Finding assets with a future perspective price move.

Challenge-2: Applying a method of protecting profits.

Challenge-3: Managing risk. 

Given the circumstances that some assets have price developments: With-, separate from, or against the markets, makes Finding Assets with a price move potential a key challenge. When those are found, the second challenge is to define how far their price move will reach to realize profits or find forms of protection prior to a potential reversal price move. 

In general, there are two basic methods to identify trade- or investment potentials: 

Fundamental Analysis: Where you equate financial and other business factors of an observed asset to decide for its future perspective. This is the arena of smart people working for the big investment firms, constantly analyzing the world’s markets and finding assets to invest in. As a private investor; however, if we try to replicate the same; we are facing a hard time in keeping up with the information base and point of view of institutional investors. Their managers have contact to the world leaders of business and politics and use pre-information constantly to their benefit. 

Technical Analysis: If applied right, a sound chart analysis helps you to spot and follow the action of institutional money moves with a trading system which equates the happening in price, volume and volatility for identifying asset in supply or demand, for you to trade along with the referring price moves.

Given the magnitude of more than 40,000 investment instruments in the US-markets only, you might want to find a service, helping you to identify assets with institutional attention, fundamentally or technically. 

Take a look at NeverLossTrading Alerts and you see how we can help you to find assets on the move if you are a day trader, swing trader or long-term investor, reducing your effort from hours a day to minutes a day to know what you want to trade or invest in. 

Protecting Profits

The equation to consider is: Protecting Profits = Making Profits. A common saying is: “You trade with the trend until it comes to an end”. However, there are two fundamentally different ways of making and keeping profits: 

Way-1: You find a systematic to trail a critical price level along with the price move of an asset and when the price direction reverses to this level, you either exit your trade or you apply a method of profit protection against a potential counter price move. 

Way-2: You define positive trade exit price levels by equating the minimum and maximum expected price move from trade entry. When those critical price levels are reached, you either exit or you apply a form of protection to assure that the gains you made cannot disappear from your account. 

Both of those methods are applied in the systems of NeverLossTrading and TradeColors.com, where you either trade for momentum price moves or with developing price trends. Check the graphics below to further investigate which system would suit your trading style best.

Trail Your Stop (Way-1)

Approximate Min and Max Price Expansion (Way-2)

Managing Risk

Managing risk builds the foundation for successful trading or investing. Only when you are able to prevent major draw downs in your trading/investing account, you will be suited for staying long-term in the trading/investing business. If the foundation of your trading system/plan is not standing on solid ground, your temple of success will quickly fall: Always be aware that there is no risk-free trade and the higher you put your return expectation, the higher the risk will be to accept a trade or investment. At the end of the day, a million dollars is a million dollars; however, if you are able to build up a trading plan, where you keep a constant low risk, while producing constant returns from multiple trades, you are better on than aiming for a onetime high return with an associated high risk: 

Imagine a trader with a $20,000 account, if he aims for a onetime return $10,000 and an associated risk of $10,000. When he fails, 50% of the account holdings are gone and the trader needs a 100% return on the remaining capital to just breakeven. Instead, if he is striving for a $1,000 return/trade with an associated risk of $1,000, he has a much higher probability to being long-term successful, as long as he constantly finds and trades assets with high-probability trade setups. 

The key question arises: How to define an appropriate risk in relation to the considered return?

Our recommendation is to consider two risk levels: 

The minimum risk is the one you need to accept to allow for a price move in the desired direction, considering the natural price distribution of the asset to trade: Finding this price level prevents that you will be stopped out even so the price moves in your desired direction. If you continuously experience being stopped out and afterwards you see the price taking off, your risk tolerance was too narrow. Best is when a computer programs measure the statistical volatility of an asset at the time to trade, giving you a clear-cut approximation, where to put the stop- or trade adjustment level. Aside from this, you can surely pick a major support or resistance level where the price haltered in the past, at which your base hypothesis of the directional price move will no more have validation when it is surpassed. 

In addition to the minimum risk, you need to decide for a maximum risk to allow for accepting a trade, with the implication: When the maximum risk level is touched, a trade adjustment is necessary, which can be released or enforced, depending on the continuation of the price development. If your experience from the past was: Small gains, small gains and big losses, your risk tolerance was too wide and you face the danger to drain your account by either having no trade adjustment or stop level or an inappropriately wide risk tolerance, which is not in relation to the potential reward of the trade you entered. For any trader, if the relation from the maximum risk to the expected return is not in your favor, just do not accept the trade. Price levels, where the prices remained for a longer period in the past, can be used to define maximum risk levels. However, you can also help yourself finding those levels by letting your computer build the associated volume-price-relations, so you can see on the chart where the critical price levels are. 

Sounds more complicated than it is. With the right trading system, you can find the required risk levels right on the screen. 

-       NeverLossTrading Concepts: Red Lines, Box Lines, Horizontal Lines.

-       TradeColor.com Concepts: Above/Below the High/Low of the Trade Initiation Candle. 

For a personal consulting hour call: +1 866 455 4520 or contact@NeverLossTrading.com

 

Prepare for your trading success by installing the elements of asset selection, profit protection and risk management. The knowledge how to apply those instruments to your benefits is not widely accessible, however with the help of this article, you can check and balance where you stand today and how you can create your trading future by gaining the necessary knowledge and obtaining the referring instruments, helping you to develop yourself into the trader or investor you want to be.

7 Key Elements of Successful Trading or Investing for 2014

There are different interpretations of success, reaching form “participation is everything” to attainment of wealth and fame. Let us take the same range of interpretation for trading/investing then it would read as follows: “Success is making money” to “success is attaining wealth”. 

Trading is a professional business and professional attainment is measured on score cards. Fund managers performance for example is measured in how close the fund performs to the referring index. For funds, which relate to large caps or the overall stock market, the S&P 500 index is generally used as the base line.  If you want to do the same as a private investor, take SPY: The ETF of the S&P 500, which has a year-to-date-November-2013 performance of 27% growth. 

If your trading/investing account grew with the same rate of return, you met the index. In case you run on a lower return rate, you are in good company, because most of the fund managers: Mutual Funds, Exchange Traded Funds, Hedge Funds are not achieving the average fund performance either; only a small number of funds is beating the S&P 500, where the best in class run at double the return rate of the S&P 500 (We will report separately in giving you a detailed overview on Hedge- and Investment Fund performance). 

Let us take a look at the top 10 stocks of the S&P 500 and their year-to-date-November performance: 

1              Exxon Mobil Corporation Common (XOM): 8.0%

2              Apple Inc. (AAPL): -1.1%

3              Microsoft Corporation (MSFT): 42.6%

4              Johnson & Johnson Common Stock (JNJ): 32.2%

5              General Electric Company Common (GE): 25.8%

6              Google Inc. (GOOG): 43.7%

7              Chevron Corporation Common Stock (CVX): 10.8%

8              Procter & Gamble Company (PG): 21.6%

9              Berkshire Hathaway Inc. Class B                (BRK.B): 24.2%

10           Wells Fargo & Company Common Stock (WFC): 26.0%

The results show that we have a wide spread of developments, reaching from -1.1% (AAPL) to +43.7% (GOOG), with an average performance of the top 10 stock at a return rate of 23.4%.

Take a look at the Berkshire Hathaway Fund performance in relation to the S&P 500: -2.8%, which would be seen as an average good performance for fund managers. However, had you bought SPY-shares, you would have been better on. 

How can you do better than average and most important, how will you be able to produce wealth, when the markets might not give such a positive development in 2014? 

You need a trading or investing system, which shall give you the following: 

Seven Critical Elements of a Trading System 

1         Flexibility to trade/invest in various assets. Why various assets? In case stocks halter, institutional money might flow into assets like commodities, currencies, treasuries and you should be prepared to participate in institutional money moves when they happen.

2         A system, which lets you produce income if the markets move up, down or sideways. In average, markets drop with three to five times the speed they grow. Hence, you should be ready for applying short trading strategies applicable to all kind of account holdings: IRA, 401(k), Cash, Custodian, and Margin.

3         Clearly defined entries and exits: Institutional money is moving the markets and institutions leave their trace of directional intends. With the right trading system on hand, you can spot and trade along with those actions. Focus on spotting and trading along with institutional money moves, produce constant income and reinvestment. Such method makes you independent from picking the right stocks with long term growth.  Imagine, you were able to win two out of three trades, with an average trade duration of four days, aiming for a 1.5% return/trade, making income to the up- or downside; then you are striving for an annual return of 62%, regardless of the directions the market take. If you can apply this method successfully, you will beat the best hedge fund managers of the world by far.

4         Risk management: Professional traders have clear guidelines of how they act. As a private investor/trader, you need the same: Define the odds ratio for every trade and adjust the lot size of your investments to hedge and leverage your positions accordingly. Have trade repair strategies in place, helping you to turn potential losers into winners for all account types.

5         Have a method to spot key assets on the move. Never fall in love with a stock or asset. No stock has to grow. The performance of an asset is the result of supply and demand. Apply a system which helps you to visualize when changes in supply and demand occur in an asset and be part of the directional move.

6         Journal your performance to see where you do well and where you have needs for improvement. Pros of every genre: Sports, theater, movies, trading, do this and you need to do the same to strive for constant improvement and long-term trading success.

7         Clear cut documentation for every trade situation and asset, so you can always go back to the drawing board for revisions. 

NeverLossTrading systems cover all of those elements and more, helping you to turn yourself into the trader or investor, you want to be. Call +1 866 455 4520 or contact@NeverLossTrading.com

In mentorship classes you receive: 

-          Software: Multiple Indicators installed on your computer to spot and follow institutional action for all asset classes, visualizing high probability trade setups.

-          Documentation of every trade and signal (200 pages and video recordings).

-          Trade Alerts:  Free for three months, min. 3-5 times/week in a detailed report.

-          One-on-one or small group coaching, focusing on your individual wants and needs.

-          6-Month-Mentorship to support you on the way for being the trader, you want to be. 

For questions or a private consulting hour: Call +1 866 455 4520 or contact@NeverLossTrading.com