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Icoachtrader Consulting Servicewww.icoachtrader.weebly.com

WELCOME TO

Trading Boot CampDay 5

David Ha NgoTrading Coach

Phone: 1.650.899.1088Email: [email protected]

The information presented is for education purposes only.The coach does not give trade advice.

Copyright © 2010 Icoachtrader Consulting Service. All rights reserved.Icoachtrader reserves the right to change without notice

Trading Boot Camp

Seminar Agenda

Day 1� Section 1: IPC of Traders 8:00 AM – 11:00 AM� Section 2: A Complete Mechanical Trading System 2:00 PM – 5:00 PM

Day 2� Section 3: Swing Trading 8:00 AM – 11:00 AM� Section 4: Technical Trading 2:00 PM – 5:00 PM

Day 3� Section 5: Fundamental Factors 8:00 AM – 11:00 AM� Section 6: Truth of Day Trading 2:00 PM – 3:30 PM� Section 7: Trade for Life 3:30 PM – 5:00 PM

Day 4� Section 8: Trading Psychology 8:00 AM – 11:00 AM� Section 9: Team Trading 2:00 PM – 5:00 PM

Day 5� Section 10: Intraday Trading 8:00 AM – 11:00 AM

David’s Strategy

My Secret ONE Formula

One Lot

One Percent

One Product

One Direction

Section 10

Intra-day Trading

Table of Contents

� Candlesticks formation

� Introduction� Four Styles of Trading

� Day Trading Defined

� Psychological Requirements

� Foundation� Intra-day Trading Tools

� Intraday Charting

� Moving Average Interpretation

� Buy & Sell Setup

� The Battle Between Bulls and Bears

� Multiple Times Frames

� The Key Concepts� Time Frame (Multiple

Timeframes)

� Candlesticks Simplified

� Candlesticks

� Moving Averages

� Retracements

� Support & Resistance

� Market Timing

� Mastering� Combining Foundations and Key

Concepts for Mastering Intraday Trading

Candlesticks

Market Law #1: The Law of Motion

Candlestick

The Bar by Bar Battle

Candlestick

Winning Candles

Candlesticks

The 3 Non-Color Candles

One Bar

Absolute Control

One Bar

Full Control

One Bar

Good Control

One Bar

Weak Control

One Bar

Loss Control @55%

One Bar

Totally Over 100%

One Bar

Loss Control Forever?

Two Bars

Good Control

Two Bars

Weak Control

Two Bars

Loss Control >55%

There is NO DIFFERENCES

Two Bars

Totally Over 100%

Single Sell/Buy Triggers

Dual Sell/Buy Triggers

Candlesticks

Market Law #2: The Law of Continuous

� During NORMAL market environments, any tradable items cannot move in the same direction more than 3 to 5 bars in a row.

� Different ways to communicate the law:� After a 3 to 5 bar run (up or down) the market tends to sharply

reverse, creating a nice trading opportunity.

� Neither the bulls nor the bears can win more than 5 battles (bars) in a row. After a 3 to 5 bar rally, the bears usually quickly regain control. After a 3 to 5 bar decline, the bulls usually quickly regain control.

� Lastly, this law can be said this way: “After 3 to 5 green bars in a row, the Trader should look to take advantage of an upcoming series of red bars. After 3 to 5 red bars in a row, the Trader should look to take advantage of an upcoming series of green bars.”

Three Major Moving Average Locations

� 8-period Moving Average (8SMA): Best When Trending

� 20-period Moving Average (20SMA): Best When Trending

� 200-period Moving Average (200SMA): Best When Flat

Single Candle 55% Trigger

Dual Bar 55% Triggers

Single Candle 100% Triggers

3 to 5 Bar

Buy Rule

3 to 5 Bar

Buy Rule Example

3 to 5 Bar

Sell Rule

Sell Rule Example

The Powerful 20 SMA

� Trading with 20SMA: Most of your trades should be in sync with the 20ma. If the 20ma is rising in a smooth fashion, your focus should almost always be long. Conversely, if the 20ma is declining in smooth fashion, your focus should almost always be short. If the 20ma is flat, your focus should be to scalp.

The Powerful 20SMA

Riding the 20SMA Buy Long

The Powerful 20 SMA

Riding the 20SMA Buy Long

The Powerful 20 SMA

Riding the 20SMA Sell Short

The All Mighty 200 SMA

� The 200ma is so universally watched, in all time frames, that for all practical purposes: King as Flatness, Use as Support, Use as Resistance, Use as a Magnet.


Buying Below the 20SMA & 200SMA


King as Flatness: Resistance

IntroductionFour Styles of Trading

Two Broad Trading Categories

Four Major Impediments

� 4 Types of Trading

� Core

� Swing

� Guerilla

� Day

� Two Broad Trading Categories

� Wealth

� Income

� 4 Major Impediments

� Lack of Professional Training

� Lack of Trading Capital

� Lack of a Forced Discipline

� Fear of Loss

Introduction

Two Broad Trading Categories

� Wealth Trading Styles

� Core Trading

� Weekly Charts

� Weeks to Months

� Swing Trading

� 15 Min, 60Min

� Daily Charts

� Days to Weeks

� Income Trading Styles

� Guerrilla Trading

� 15, 30 & 60 Min

� Hours to Days

� Day Trading

� 5, 15 & 60 Min

� Minutes to Hours

Introduction

Intra-day Trading Defines

What is Intra-day (intraday) Trading?

1. A style that covers a holding period of several minutes to hours.

2. Three forms of Intraday Trading: Scalping, Momentum, and Day.

3. This style of trading has become widely accepted recently.

4. Day Traders use 5 – 15 Min charts to make entries and exits

5. Day Trading is best used on ACTIVE and highly LIQUID markets.

6. Day Traders try to capture smaller gains with minimal dollar risk.

7. Day Trading is a style of trading that MAY NOT BE SUITABE FOR ALL.

Introduction

Psychological Trading Requirements

Confidence Patience Discipline

HOW?

Subjective analysis must be reduced or eliminated.

A systematic objective Method of interpretation is needed.

This builds a thought process which builds Confidence.

Patience Discipline Becomes Your Job!

Foundation

Intra-day Trading Tools

� Charting Tools: 5-, 15- & 60-Min. Intra-day charts displayed in Candlestick form.

� Technical Tools: 20- & 200-period ‘simple’ moving averages.

� A Price Pattern: Buy & Sell Setup.

Foundation

Intraday Charting

Foundation

Buy and Sell Setup

� The setup can be traded in all time frames.

� This combination of bars is a segment or smaller part of the overall pattern.

� It is a set of bars that occurs in a detailed formation.

� It offers high probability with low risk.

Foundation

Price Pattern Recognition

Foundation

Moving Average Guidelines

� Long positions are favored when prices are Above their 20-MA on a 60-Min. chart. Entry points are found on 5-or 15-Min. charts.

� Long positions are considered when prices are extended Below the 20-MA on a 60-Min. chart, but Above their 20-MA on the 5-Min. chart.

� Short positions are favored when prices are Below their 20-MA on a 60-Min. chart. Entry points are found on 5-or 15-Min charts.

� Short positions are considered when prices are extended Above the 20-MA on a 60-Min. chart, but Below their 20-MA on the 5-Min. chart.

Foundation

Moving Average Guidelines

Foundation

The Battle between Bulls and Bears

Foundation

Buy and Sell Setup

Time Frames

� Stick with one set of TIME FRAMES of your methodology, take the signal and completely ignore the other time frame.

� Shorter time frames allow you to make better use of margin and have tighter stop losses.

� Larger time frames require bigger stops, thus a bigger account, so you can handle the market swings without facing a margin call.

Time Frames & Trading Types

�Transaction costs will be much higher (more spreads to pay)

�Mentally more difficult due to the need to change biases frequently

�Profits are limited by needing to exit at the end of the day.

�Lots of trading opportunities

�Less chance of losing months

�No overnight risk

�Long-term traders will usually refer to daily and weekly charts.

�Intraday traders use minute charts and hour chart.

�Traders are held intraday and exited by market close.

Intraday

�Transaction costs will be higher (more spreads to pay)

�Overnight risk becomes a facto

�More opportunities for trades

�Less chance of losing months

�Less reliance on one or two trades a year to make money

�Short-term traders use hourly time frames and hold trades for several hours to few days or a week.

Short Term

(Swing)

�Large swings

�Usually 1 or 2 two goods a year so PATIENCE is required.

�Bigger account needed to ride longer term swingsFrequent losing months

�Don’t have to watch the markets intraday

�Fewer transactions mean less times to pay the spread

�More time to think through each trade

�Long-term traders will usually refer to daily and weekly charts.

�The weekly charts will establish the longer term perspective and assist in placing entries in the shorter term daily.

�Trades usually from a few weeks to many months, sometimes years.

Long Term

DisadvantageAdvantageDescriptionTime Frame

Multiple Time Frames

� The largest time frame we consider our main trend -this shows us the big picture of the pair we wannatrade.

� The medium time frame down is what we normally look at, and it signals to us the medium term buy or selling bias.

� The smallest time frame shows the short term trend and helps us find really good entry and exit points.

Multiple Time Frames

XXXLong Term

XXXXMid Term

XXxXXXShort Term

(Swing)

XXXXXIntraday

XXXXXHit and Run

XXXScalping

WeekDay4 Hour1 Hour30 Min15 Min5 Min1 MinTime Frame

Methodology

Key Concepts

Simplified Candle Language

Six Candle Concepts

� Changing of the Guard – COG: all give traders the same message.

� Wire Range Body – WRB: Probability of the current trend changing.

� Narrow Range – NR: Probability of the current trend changing.

� Narrowing Range Bodies – NRB: Probability of the current trend changing.

� Topping Tail – TT: A high probability opportunity may exist to trade.

� Bottoming Tail – BT: A high probability opportunity may exist to trade.

Candlestick Concepts

� Ask yourself, “What does the current candle tell you about the prevailing trend?” Note: A trend = 3-5 bars moving in the same direction.

� Each candle will give us information that either confirms or contradicts that trend.

� Long or Expanding range candles tell us volatility is high or momentum is increasing.

� Short or Narrowing range candles tell us volatility is low or momentum is decreasing.


COG - Changing of the Guard Bar

� A Bullish COG is defined as three or more consecutive red bars followed by a green bar.

� A Bearish COG is defined as three or more consecutive green bars followed by a red bar.

� Tip: While there are different variations, the message is always the same ! A reversal in momentum has occurred!


NRB - Narrowing Range Bars

� A series of bars in which the difference between the highs and lows is Narrowing.

� Tip: While there are different variations, the message is always the same ! A slowing in momentum is occurring!


NR - Narrowing Range Bodies

� Bars in which the body of the candle is small relative to the overall length of the candle. They may have Tails on either sideof the body.

� While there are different variations, the message is always the same ! A slowing in momentum has occurred!


TT - Topping Tail Bars

� Bars in which prices had been higher, then supply forced prices lower into the lower part of the bars range.

� While there are different variations, the message is always the same ! Distribution has occurred!


BT – Bottoming Tail Bars

� Bars in which prices had been lower, then demand forced prices higher into the upper part of the bars range.

� While there are different variations, the message is always the same ! Accumulation has occurred!


WRB – Wide Range Bar

� A Bar in which the Candle Body is relatively wide compared to the most recent bars .

� A Wide Range Bar after a period low volatility ignites momentum in that direction.

� A Wide Range Bar after an extended advance or decline typically happens near the end of a move. An NR or NRB will signal the turn.


COG - Changing of the Guard Bar

Candlestick ConceptsNRB - Narrowing Range Bodies and NR - Narrowing Range

Moving Average Concepts

The relationship between MAs and/or the relationship between Price and MAs Serve as:

� An Overbought / Oversold Indicator

� A Bullish / Bearish Divergence Indicator

� A Guide to price Support & Resistance

� A Tool to help anticipate where a reversal may occur

� A Risk – Reward Indicator

� A Relative Strength Indicator


An Overbought/Oversold Indicator

Moving Average ConceptsA Momentum or Bullish/Bearish Divergence Indicator

COGNew Low Divergence


A Guide to Support & Resistance


Anticipate Entry/Exit and Risk/Reward

Anticipated Entry


A Relative Strength Indicator

Comparing the MAs of the above charts, which one will tell us stronger chart (?)

Retracement Concepts

� The retracement levels are used to measure the STRENGTHor WEAKNESS of a move counter to the prevailing trend.

� The retracement levels are a percentage measurement between significant highs and lows.

� The Retracement levels we are concerned with are 40, 50 and 60%.

� The retracement levels alone are not enough to consider entering a position. Our setup is also needed.

� Learn to see retracement levels without drawing them. When trading, analysis must be done quickly.


Levels and Interpretations: 40%


Levels and Interpretations: >60%


Levels and Interpretations: 80% - 100%


Levels and Interpretations: >100%

Retracements greaterthan 100% negate theprior trend.

They often set up a highprobability reversal point.

A move above a priorhigh signals Strengthbut is a High Risk Entry.

Buying shallow pullbacksof 40 to 50% after a COGis low risk, professionaltrading.

Support and Resistance Concepts

� Actual Support and Resistance “They are guides as to where traders may anticipate a reversal”:

� A series of price bars

� Prior highs / lows / bases

� An unfilled gap between price bars

� Subjective Support and Resistance “Also guides to anticipate reversal points without price points in the same area, these areless significant.”

� Moving Averages

� Retracements

� Time


Unfilled Gap Resistance


Prior High Resistance

Unfilled Gap Support


Resistance at Prior Base

Mastering

Putting It All Together

60 MIN Chart

Start with the longer time frame.

Prices test Support.

A WRB forms. Be Alert!

A COG signals. The decline is over.

Moving Avg. Divergence.

Check Market and look for entry.

Mastering

Putting It All Together

5 MIN ChartOversold MAs Wide.

Deep Retracement above the 20-MA: BUY

Target 200-MA Price Resistance.

Sell at Resistance.

Sellers in Control

Gold Trading

Trendlines, SMA200, SMA20, ADX, RSI

Sellers in Control

Gold Trading

Trendlines, SMA200, SMA20, ADX, RSI

Sellers in Control

Sellers in Control

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