all handouts for this seminar can be viewed at the end of ...steps+to... · seven steps in your...

All handouts for this seminar can be viewed at the end of this document.

If you would like to print the handouts, use the link below:

http://www.toniturner.com/sevensteps/handouts

Present…

S EVEN S TEPS

TO

SUCCESSFUL T RADING

This seminar, Seven Steps to Successful Trading, was prepared for

educational purposes only. Its contents do not recommend, advocate or

urge the buying, selling, or holding of any financial instruments.

The authors express personal opinions in the seminar contents, herein,

and will not assume any responsibility whatsoever for the actions of the

attendee or person reading these contents. The authors may or may not

hold positions in the financial instruments discussed in this seminar

content.

Trading and investing involve high levels of risk. Future results can be

dramatically different from the opinions expressed herein. Past

performance does not guarantee future performance.

Disclaimer

Disclaimer This presentation is provided for informational purposes only and does not

constitute an endorsement by RealTick of the information and views expressed by the presenter.

RealTick does not guarantee the accuracy of or warrant any representations made in this presentation.

RealTick shall not be held liable for any inaccurate or incomplete information or for any improper or incorrect use of the information contained in this presentation.

COURSE OBJECTIVES Review a seven-step methodology for trading stocks

and ETFs. Identify how to apply concepts from each of the

seven steps in your research, analysis, and trading decisions.

Support your goal of improving entry, exit and trade management activities in a way that leads you to become a successful trader.

Seven Steps to Successful

Trading

Topics Overview

Step One: Evaluate the Big Picture

Step Two: Target High-Potential Stocks & ETFs to Trade

Step Three: Pinpoint Pricing: the Best Entries, Stops and Exits

Step Four: Design and Refine Your Personal Trading Strategy


Trading

Topics Overview

Step Five: Train Your Brain!

Step Six: Enhance Gains with High-Powered

Trading Techniques

Step Seven: Boost your Market Knowledge:

Leap from “Just So” to Market Pro


Trading


TradingEvaluate the

Market

Target Stocks

Pinpoint Entry

Refine Strategy

Train Your Brain!

Enhance Your Gains

Boost Your Knowledge


TradingSUCCESS STEP ONE

Evaluate

the “Big Picture”

Easily and Accurately

What’s the Market’s Mood & Manner?

Pre-Market Analysis Checklist

Market Analysis: Tools that Help

Build Safety into Your Trades

Rapid-Fire Review

Evaluate the Market

Dow, SP-500 & Nasdaq 100

• Also watch Russell 2000 (IWM)

Evaluate current economic environment:

• Interest rates (rising or falling?)

• Inflationary or deflationary?

• Exogenous shocks?

Which sectors are leading, which are lagging?

What’s the Market’s Mood &

Manner?

Who is the current “Boss du Jour?”

• Bonds?

• Oil prices?

• U.S. dollar?

• Current tech “darling”?

• Fed?

• Global region or country?


Manner?

What effect does the “Boss” have on specific sectors?

• Energy prices rise, transportation (airlines) dive

• U$D falls, gold/metals rise

• Interest rates rise, broader market and real estate related stocks may slide south


Manner?

DATE Pre-Market Analysis Checklist Response Support Resistance

1. Global markets (Europe/Asia) positive or negative?

2. S&P 500 E-Mini futures contract positive or negative? (Financial network Pre-Market Open)

3. Dow Jones Industrial Average: uptrend/downtrend/consolidating?

4. S&P 500 Index trading in uptrend/downtrend/consolidating?

5. NASDAQ 100 in uptrend/downtrend/consolidating?

6. Russell 2000: uptrend, downtrend/consolidating?

7. VIX trading higher or lower?

8. Are key economic data or earnings reports issued today? Is it Options Expiration?

9. What is the current "Boss du Jour"? What does its movement indicate?

10. Are the sectors/industry groups related to my target stocks in uptrend/downtrend/or consolidating?

Pre-Market Analysis Checklist


Manner?

How to spot trend reversals before they happen…

o Clues from the Trend

o Clues from the Average True Range (ATR)

Market Analysis

Uptrend to Downtrend

Clue # 1: Lower Low?

• Break through of the trend line

• Break through of the former low

• No support means buyers have changed

their mind

Clues from the Trend

Clues from the Trend

Uptrend to Downtrend

Clue # 2: Rising ATR?

• Size of Disagreement Between Buyers

and Sellers

• Disagreement = Discomfort

• Sellers likely to take over

Clues from the ATR

Clues from the ATR

Downtrend to Uptrend

Clue # 1: Higher High

Clue # 2: Falling ATR

• Break out of a trend line or channel

• No resistance means sellers aren’t in a

hurry to get out any more.

Clues for an Uptrend

Clues for an Uptrend

Rapid-Fire Review Stay updated on key support/resistance levels

of major indices –especially S&P 500 Index

Remain aware of overall economic climate

Conduct Pre-Market Analysis before trading

Trend Clue # 1: Lower Lows (or Higher Highs)

Trend Clue # 2: Rising ATR (or Falling ATR)


TradingSUCCESS STEP TWO

Target High-Potential Stocks

and ETFs to Trade

Spot Opportunities across Different Markets

Use a Simple Watch List to Give You Key Directional Signals

Select the Best Sectors and ETFs to Trade in Bull or Bear Markets

Identify High Potential Stocks and ETFs to Trade

Rapid-Fire Review

Target High-Potential Stocks &

ETFs

Markets are Often Well Correlated

Diverging Correlations Imply Opportunity

Market Shifts Take Time

Early Adopters Benefit

Spot Opportunities Across

Markets

Take Notice of Significant Highs and Lows in Market Prices

Compare ETF Prices to Track Shifts in Market Behavior

Compare Sectors, Locations, and Asset Classes.

Spot Opportunities Across

Markets

Example

Look for Evidence of Trend Change

Begin Comparing from Start of the New Trend

ExampleLeading Sectors Tend to Stay Strong for 9 - 15 months

US SECTORS INTERNATIONAL COMMODITIES BONDS

XLB EWA GLD AGG

XLE EWC PALL SHY

XLF EWG DBB TLT

XLI EWJ KOL LQD

XLK EWP UCO CSJ

XLP EWT UGA SHM

XLV EWU DBA MUA

IYT EWZ MOO EMB

Watch List for Key Directional

Signals

Example: US Sectors March

through June 2009 Financial Sector Outpaced

in First Three Months of the 2009 Uptrend

Example: US Sectors June ‘09 to

March ‘10 Financials remained strong

for next 9 months.

You…The Sector Savvy Trader! For every market environment, certain sectors

thrive, others dive

Sector rotation occurs in both short and long-term time frames

Recognizing interplay between sectors is key to boosting profits.

Select Best Sectors and ETFs to

Trade

You… the Sector Savvy Trader!

Nine sectors represented in S&P 500 Index

Sectors embody nine diverse commercial

groups that drive the U.S. economy

Each Sector contains individual industry groups

Recognizing interplay among sectors assures a winning edge

Select Best Sectors & ETFs to

Trade

Basic Materials (XLB)

Consumer Discretionary (XLY)

Energy (XLE)

Financials (XLF)

Health Care (XLV)

Industrials (XLI)

Technology (XLK) – includes Telecom (IEZ)

Utilities (XLU)

S&P 500 Index Sectors

Select Best Sectors & ETFs to

Trade

Maintain a Watch List of the Sector SPDR ETFs

• Go to: Sectorspdrs.com

Add Watch List of Industry Group ETF Favorites

Check iShares.com for Comparable Sector ETFs

Note:

• iShares follow DJ Indexes

• DJ Indexes – more holdings than S&P Indexes

• ProShares ETFs follow DJ Indexes

Identify High-Potential Stocks

& ETFs

When Trading ETFs… Go to Fund Family Identify index & actual asset ETF follows

• Equity index? Commodity?

• If commodity, futures or physical price? One, or more?

• Commodity ETFs involve different tax structure

Check Equity ETF holdings

• Single sector? Multi-sector or industry groups?

• Note top three stock holdings for fund direction


& ETFs

Cherry-Pick Your Stocks & ETFs

The Stocks & ETFs you trade should:

• Trade 300,000 shares ADV, or more

• Move in orderly patterns

Growth stocks fall 1 ½ to 2 ½ x faster than value stocks

Price patterns of stocks/ETFs rising in uptrends more orderly / falling in downtrends can be very volatile


& ETFs


& ETFs

RealTick® graphics used with permission. 1986-2011


& ETFsDisorderly pattern



& ETFs


Most Dow stocks trade in orderly patterns

Go to ETF sector / industry group funds• Check top 5 holdings

Check major index components:

• S&P 500 Index

• S&P 400 (MDY) mid-caps

• Russell 2000 (IWM) small-caps

Where to Find Stocks to Trade

Spot opportunities across markets by noting highs, lows and diverging correlations

Use ETF watch list for key directional signals

Be a Sector Savvy Trader…

• Know which sectors thrive or dive in certain market environments

• Be thoroughly familiar with the ETFs you trade

Identify-high potential stocks & ETFs

• Cherry-pick the best orderly, high-volume stocks & ETFs

Rapid-Fire Review


TradingSUCCESS STEP THREE

Pinpoint the Best

Entries, Stops

and Exits

Sleeping Tiger, Crouching Cougar . . .

Two Proven Setups that work for Day,

Swing & Position Trades

Think Fast- Learn to Strategize Quickly

and Easily with our Setups

Your Turn to Trade:

“Buy, Sell, or Fugettaboudit”

Pinpoint Entries, Stops and Exits

Use this set-up for:

• Breakouts from bases

• Uptrend consolidations

Works for position / swing / intraday trades

Sleeping Tiger Set-Up

1. Stock/ETF trading in base or consolidating in uptrend on daily chart

2. Check weekly chart for agreement3. Related market indices are positive

• Dow, SP-500, Nasdaq 100, or sector index

4. Price trading above 8-day EMA, 13-day SMA, 50-day SMA, 200-day SMA • Note “Bottom Fishing” exceptions

Sleeping Tiger Set-UpTrading Criteria for Intraday & Swing Trade Entry Day

5. 8-day EMA is poised to, or just crossed above 13-day SMA

6. 9-day RSI below 70, hooked upward

7. Buy: stock/ETF moves 10-cents above closest resistance• Ideal: Strong volume accompanies move


8. Place Protective Stops…• Arbitrary: 1 ½ - 2% under entry price• Technical: 1 ½ - 2% under 8-day EMA• Technical: One ATR below entry or LOD• Technical: Beneath intraday support levels

of current (entry) day or prior day (day trade)

9. Once stock breaks out, trail stop beneath 8-day EMA


10. Stock should “walk up” 8-day EMA

11. Swing trade, take profits:

• At/near profit target (prior resistance)

• 2-3 days “lift off” above 8-day EMA

• Top reversal candle pattern

12. Final Stop: stock/ETF closes below 8-day EMA


Sleeping Tiger in Action

RealTick® graphics used with permission.

Spot Sleeping Tiger Set-Up on daily chart

Check weekly chart for confirmation

Flip to sector chart for corroboration

Two “C” Pre-Entry Process

Safety Steps

Sleeping Tiger in Action - Spot Set-Up

on Daily Chart

RealTick® graphics used with permission of Townsend Analytics, Ltd. © 1986-2011

Sleeping Tiger in Action - Check Weekly

Chart for Confirmation


Sleeping Tiger in Action - Flip to Sector

Chart for Corroboration


Sleeping Tiger in Action - Entry


Stop: 1 ATR

Sleeping Tiger in Action 15-

Minute Chart


Sleeping Tiger in Action Take

Profits!


Sleeping Tiger – Short Swing

Trade


Sleeping Tiger – Long Swing

Trade


Sleeping Tiger in Action


Use for breakouts from base,

or consolidation in uptrends

Works for position / swing / intraday trades

Monitor 8-day EMA/13 SMA as main drivers

Exit swing trades on close below 8-day EMA

Sleeping Tiger Set-Up – Review

Crouching Cougar Set-UpUse for:

o Quick pops (Long)

o Quick drops (Short)

o High-frequency, smaller-dollar wins

Timeframes:

o Swing (Daily chart)

o Intraday (Five-minute chart)

Crouching Cougar - Daily

Long: Stock in Uptrend

Price Above 50-day Moving Average

CCI (14) below 60

Crouching Cougar Indicator:

CCI CCI Stands for Commodity Channel Index

o Developed in the 1980s for Commodities

o Oscillating indicator

o Formula designed to identify above-average price moves

Over +100 = Unusually Bullish

Under – 100 =Unusually Bearish

Crouching Cougar Indicator:

CCI CCI Stands for Commodity Channel Index

o Developed in the 1980s for Commodities

o Oscillating indicator

o Formula designed to identify above-average price moves

Over +100, then under 60 = Crouching Cougar Long Entry

Crouching Cougar Entry region

Crouching Cougar: Setup

Example

Entry point

Do not enter early

Crouching Cougar – Entry/Exit Enter as price breaks a previous daily high

o Check the ATR valueo Calculate the number of shares using

two times the ATRo Set a buy-stop order for best execution

Exito Set Stop Loss order at Entry less two times the ATRo Set Profit Taking order (Sell Limit) at Entry plus ATR

Crouching Cougar: Trade Setup

Example

Entry point

ATR at setup day = $1

Crouching Cougar: Trade Setup

Example

Entry point

ATR at setup day = $1

Stop Loss = $2 lower

Profit Target = $1 Higher

Crouching Cougar: Trade

Example

Entry point

Above MA

CCI below 60

ATR = 1.50

Win = $1.50 higher

Loss = $3.00 lower

Crouching Cougar: Multiple-

Trade Example

Crouching Cougar: Trading

Example Why Trade This Way?

o Increases the number of times you win.o Decreases the time-frame you are in the tradeo Allows you to make “safe” trades in an up trendo Allows you to quickly adjust to market opportunities

Why Not Trade This Way?o If you prefer to optimize trend-following tradeso If you prefer fewer, long-lasting trades

Crouching Cougar - Intraday >30 minutes after openBuy Dip in uptrend

o Price above 50 MAo CCI(14) at 20 or below,

but above -100

Same Entry/Exit setup Typically 0 -3 trades each day

(per symbol)

Crouching Cougar: Intraday

Example 1


Example 2


Example 3 No! Do not enter in first 30 minutes!

Crouching Cougar – Short Daily Short: Stock in Downtrend

Price Below 50-day Moving Average

CCI (14) above 60

Entry/Exit rules same, but for short

Crouching Cougar: Short Trade

Setup Example Entry point

Crouching Cougar: Short Daily

Example 6 Wins, total = + $6.33

3 losses, total = -$5.86

Identify most correlated index (www.spdrs.com)

Identify trend of most correlated index

Choose direction (long or short)

Pre-Entry Process Safety Steps

Crouching Cougar – Intraday

Short >30 minutes after open Sell Rally in Downtrend

o Price below 50 MAo CCI(14) at -50 or above

Same Entry/Exit setupDaily Short


ShortNo! Do not enter in first 30 minutes!

Take small wins in strong trends

Set wide stops, but take quick profits

Follow prevailing trend of market

Crouching Cougar - Summary

Buy?

Sell?

or

“Fugettaboudit?”

Your Turn to Trade

Buy? Sell? Fugettaboudit?


Buy? Sell? Fugettaboudit?Weekly Chart-Confirmation


Buy? Sell? Fugettaboudit? Sector Chart - Corroboration


By? Sell? Fugettaboudit?



TradingSUCCESS STEP FOUR

Design Your Personal Trading Strategy

What are Your Trading Goals?

What is Your Preferred Trading Style?

Let’s Design Your Personal Trading Strategy

Personal Trade Strategy


• High percentage of trades are

winners

• Winners are consistent but small

• Losers are infrequent but larger

than winners

• Low percentage of trades are

winners

• Winners are not frequent but are

large

• Losers are frequent but

significantly smaller than winners

Win Percentage90% 80% 70 % 60% 50% 40% 30% 20% 10%

1-7 1-3 1-1.5 1-1 1.2-1 2-1 3-1 5-1 11-1Minimum target win-to-loss ratio


Win Percentage90% 80% 70 % 60% 50% 40% 30% 20% 10%

Trading Style Survey

Eight Questions, score each answer.

Calculate your total score

Judge whether the description matches your preferences or not

Modify the recommendations as necessary.



Stop to Target ratio

Win %

1:1 50%

1:2 33%

1:3 25%

1:4 20%

Stop to Target ratio

Win %

1:1 50%

2:1 66%

3:1 75%

4:1 80%

Trailing Stopto Target ratio

Win %

1:1 36%

1:2 29%

1:3 26%

1:4 23%

What kind of a loss are you trying to avoid?

(10, 20, 30, 40 percent?)

What kind of gains are reasonable

within that limit?

(Double your risked loss)

Trading Goals

How do you read the Markets you trade?

What indicates a bullish market? (Trend)

What indicates a bearish market? (Trend)

What indicates a sideways market? (Channel)

What indicates “good” for your trading plan?

Market Analysis

What are the rules of your setup and entry?

What is your initial stop loss?

What is your initial profit target?

Will you use stop, limit or market orders?

Entries and Exits

How much risk will you allow per trade?

o Allow for losing streakso Avoid maximum draw down

How many trades will you have?

o How many can you manage? (Less than nine)o What portfolio risk can you tolerate? (6%-12%)

How many different sectors? (three or more)

Risk Management Rules

How do you view the stock market?

• Place of apprehension?

• Market of opportunities?

Who’s in control – you or your trades?

If asked, “Why are you entering that trade?”. . . can you give an appropriate answer?

Have you cultivated the mental/emotional discipline to follow your trading plan?

Personal Trading Fitness

Research Activities How will you look for new trading opportunities?

o How much time will it take? (1-2 hours/week)o When will you schedule in this time?

Will you incorporate watch lists?

o How many? ( two to ten)

o How often will you review them? (weekly)

What minimum activity will you require of yourself

before trading with a new technique?

o Specific amount of research? (2 to 20 hours)

o Specific amount of back testing? (1-10 years data)

o Specific amount of simulated trades? (20 to 30)

Adding New Techniques

Once you have a trade put on, what will you do

to change the stops?

o Adjust based on recent support? (Trailing stops)

o Time-based stop? (2-3 x your intended trade)

o Market-based stop? (Most correlated index turns)

Under what circumstances will you adjust the profit targets?

Monitoring Activities

How often will you review your trading results?

(Monthly)

What statistics will you keep track of in

your trading journal? (risk-to-result ratio)

With whom will you share your insights?

Periodic Review

Rapid-Fire Review Develop a Trading Plan based on your system style preferences.

Establishing a plan for your trading activities helps you avoid

the effects of stressful trading

Trading according to a plan is more likely

to yield consistent results.

SUCCESS STEP FIVE

Train Your Brain


Trading

Spend Quality time with Yourself

Write down …

Who are you in the stock market?

What goals do intend to achieve?

How do you plan to accomplish your goals?

Train Your Brain

Who Are You in the Stock

Market? Knowing “who you are” assures

a strong foundation of confidence.

Example:

• “I am a successful short-term trader. I focus on the energy and retail sectors in order to profit from the stock market.”

When you establish written goals, you…

focus your attention and energy with clear direction

organize and gain control of your actions

grow past limiting beliefs & fears

“If it is to be . . . It’s up to me.”

What Goals Do You Intend to

Achieve?

My trading goals this month…

Specific: “Forty-percent of my trades will be winners.”

Measurable: “Eight-five percent of my trades will follow my established trading plans.

Achievable: “I have experienced weeks of 35%/70%, so I know I can now ‘raise the bar’.”

Relevant: I will move this month’s profits to my vacation account

I will attain this goal by the 30th of this month.


Achieve?

Design your trading goals to be SMART:

• Specific - Define what you want to achieve

• Measurable - Measured goals give feedback

• Achievable - Ambitious, yet attainable

• Relevant – Personally important to you

• Timeline – Deadlines = focus on fulfillment


Achieve?

I will: protect my capital at all times

trade to trade well, not to make money

conduct pre-market analysis before trading

specialize on 2-3 sectors / cherry-pick stocks, ETFs

avoid trading on choppy, whippy days

set hard stops with broker

How Do You Plan to

Accomplish Your Goals?

Successful Trading is an “Inside Job”

Approach

Attitude

Attainment

Power-up Your Trading --

Three-Step Process

Set Up Your Day

Ten minutes before you begin pre-market analysis

• Conduct self-directed imagery

• Used by Olympic athletes

• Quiet, comfortable, relaxed – imagine trading day ahead

• See yourself enter trades with calm confidence, following plan, trading well

• When trading day “ends”, see yourself content with your actions

What’s Your Approach?

With your day set-up, confirm your attitude:

• Positive, focused, nimble, ready to respond

• Physically alert, feeling good

• Affirm: “I am a strong, smart and successful trader.”

What’s Your Attitude?

The road to trading success is a journey, not a destination

Look for new ways to grow and expand trading knowledge

• Attend online class

• Read new books

• Visit different websites

Attain Success

Every day …

• Learn one new aspect of trading

• Learn one additional fact about the market.

Start pre-market analysis 15 minutes earlier

• Equals 2 hours, 15-minutes additional learning time each week

Keep a Success Trading Journal

• Record your trades. Show how they matched your goals!

Attain Success


Trading

SUCCESS STEP SIX

Enhance Gains with

These High-Powered Trading Techniques

How to use Multiple Time Frames

for Best Entries and Exits

Apply These Special Tactics

to Increase Trading Profit Opportunities

(scale in)

Apply New Tactics to your Trading Strategy

(evaluate and improve)

Enhance Trading Gains

Pinpoint set-up on primary trend--daily chart

Check weekly chart for confirmation

Drill down to 60-minute chart

• Label support and resistance levels

If desired, enter on 5-15 minute chart

Use Multiple Time Frames-Best

Entries & Exits

Use Multiple Time Frames for

Entries & ExitsRoom to 27



Entries and Exits

9-periodRSI

OBV



Entries and Exits


Scaling-in uses Multiple Entries when possible

Decreases Win Rate

Dramatically Increases Profits

Increases Opportunity without Increasing Risk

May be Emotionally Stressful if not Prepared

Special Tactic to Boost Profits:

Scale in

Scale-in Tactic: Example

1. Enter position with normal size and risk

2. As trade goes positive, move stop

3. Add a new position

4. As trade progresses, move stop

5. Add a third position

6. Exit using a manually adjusted trailing stop

1x ATR ($2)

stop loss

1. Enter position with normal size (100 shares) and risk


1x ATR

1. Enter position with normal size (100 shares) and risk


Entry: $50

Stop: $48

3. Move stop loss to break-even price

2. Add same size (100 Shares)


Stop: $48

Stop: $50

Entry 2: $52

5. Move stop loss to break-even price

4. Add third position(+100 shares more)


Stop: $50

Stop: $52

Entry 3: $54

6. Manually trail a stop-loss until exit.


300 sharesAverage Entry: $52

Measure Trade from Average Price of Entries.

…to final exit

@ $62


300 sharesAverage Entry: $52

Measure Trade from Average Price of Entries.

…to final exit

( + $10 per share )

Now compare to risk….( 1x ATR = $2 )


Remember to triple the count...Result = Risk $2 compared to

$10 x 300 shares Gain1-to-30 risk-reward

Understand the tactic fully

Back test the tactic in multiple markets

Make several paper trades using the tactic

Track and review the results. Look for what could go wrong and be prepared.

Ask others what you might be missing.

Apply New Tactics to Increase

Profits


Trading

SUCCESS STEP SEVEN

Boost Your Bottom Line:

From “Just So” to Market Pro

Discover how to Properly Trade:

Opening Price Gaps

Intermarket relationships

The News

Economic Reports

Rapid Fire Review

Tactics That Make a Difference

Fading the gap

• Expect the gap to fill

• Shorting an up-gap

• Buying a down-gap

Choose Carefully: big enough but not too big

• Guideline: 1 ATR > Gap > ¼ ATR

Opening Price Gaps

Gaps fill when order flow makes unnecessary overnight buildup that has no follow through

Gap Up: Go Short as gap begins to fill

Set Stop Loss at the same size as the gap

o Expect the gap to fill within first 30 minutes

o Exit if not filled or stopped out after 30 minutes

Selling the Up-Gaps

Gap – Fill Example (Short)

Previous Close

Next Day’s Open

Gap

Gap – Fill Example (Short)

Take Profit as Price Closes Gap.

Sell Short as GapBegins to Fill

Gap

Gap Down: Buy as a Gap Begins to Fill

Set Stop Loss at the same size as the gap

o 30 minute limit to trade

o Can hold on to trade if no resistance at the previous closing price.

Buying the Down-Gaps

Gap – Fill Example (Long)Previous Close

Next Day’s Open

Gap

Gap – Fill Example (Long)

Buy as gap begins to fill

Set Stop lower (same distance as gap)

Exit as gap fills

Fading the gap

• Expect the gap to fill

• Shorting an up-gap

• Buying a down-gap

Following the gap for a new trend

Opening Price Gaps

Compare FX pairs to the S&P 500 Index

Observe overnight activity

Use the information to prepare for trading opportunities in the next day’s session

Intermarket Relationships

Look for the possibility of gaps

Judge whether the market is strongly trending or is acting nervous.

Observe whether price action seems to be waiting for news

Intermarket Relationships

Intermarket RelationshipsEUR – Overnight chart – 15 min

AUD Overnight chart – 15 min IBM – Previous Close

SPX – Previous Close

Limit order

Quote

Trading the News Do not trade the news, itself

• Wait until the market absorbs the news

Trade the market’s reaction to the news

Watch:

• Stock Index E-mini futures (S&P 500)

• NYSE TICK

• S&P 500 SPDR (SPY

Check applicable industry group reaction

Trading the News“Buy the rumor, sell the news.”

When news is highly anticipated . . .

If the news is good, buyers may have already saturated the market.

Result: When the news comes out, few buyers remain

If the news is negative, sellers may have already squashed the market

Result: few sellers remain

Trading the News Market should go lower, but it doesn’t…

• Translation: it’s going higher

• Market may have discounted news

Market should go higher, but it doesn’t…• Translation: it’s going lower

• Example: Major company reports good earnings, yet stock falls

Trading the News When event contains opinion, or temp news

• The market gap down, then traders fade the gap

• Example: Econ Report: Housing Starts dive• SPDR Homebuilders ETF (XHB) shoots higher

• Example: S&P Ratings lowers U.S. economic outlook• Market gaps down, then rises to fill gap

When event is actual exogenous shock• Gap down may extend into multi-day move

• Example: New war, global or U.S. threat

Trading the News

Trading the News Market should go lower, but it doesn’t…

• Translation: it’s going higher

• Market may have discounted news

• Example: Econ Report: Housing Starts dive• SPDR Homebuilders ETF (XHB) shoots higher

Market should go higher, but it doesn’t…

• Translation: it’s going lower

• Example: Company reports good earnings, but stock falls

Bottom Line: Patience Grasshopper! Avoid betting on news results ahead of announcements.

We watch economic releases because…

Can act as catalysts for trading volatility

Traders watch them

They can reveal the market’s mood

Again, we focus on market’s reaction to report

Trading Economic Reports

Issued weekly, monthly, or quarterly

• Most reports issued 8:30 a.m. or 10 a.m. ET

Importance depends on current economy

Traders note how report affects interest rates

• “How will the Fed react to report?”

Example: Good economy, falling unemployment:

Traders: Fed may have to raise interest rates


Websites Featuring Economic Report Data

Briefing.com

MarketWatch.com

Yahoofinance.com

ToniTurner.com > Market Education> Economic Calendar


Consult multiple time frames to increase odds of winning trades

Consider scaling into trades to boost profits

Plan strategy carefully before entering gap open trades

Study intermarket relationships to establish trading bias

Trade the market’s reaction to the news-not news, itself

Stay updated on important economic reports

Rapid-Fire Review


TradingClass Finale:

“Buy, Sell, or Fugettaboudit”- The Sequel

Buy? Sell? Fugettaboudit? Weekly Chart-Confirmation


Buy? Sell? Fugettaboudit? 35

34

33

32

31

ATR = 1

+100

-100

CCI

Buy? Sell? Fugettaboudit? 58

56

54

52

50

ATR = 2

+100

-100

CCI


TradingEvaluate the

Market

Target Stocks

Pinpoint Entry

Refine Strategy

Train Your Brain!

Enhance your Gains

Boost your Knowledge

Thank you for attending . . .

Seven Steps to

Successful TradingYou’ll find additional

educational trading products atwww.ToniTurner.com

Handouts The pages that follow include handouts:

• Pre-Market Checklist

• ETF Watch List

• Personal Trading Strategy

• Trading Style Survey

If you would like to print the handouts, please go to: http://www.toniturner.com/sevensteps/handouts

all handouts for this seminar can be viewed at the end of ...steps+to... · seven steps in your...

Documents