I have listed the following as stock top detectors:
- trap-zone
- 50 MA
- 250MA
- Down bar strength
- Up bar strength
- Down wave strength
- Up wave strength
Other technical analysis tips can be found here.
Stock Top Detectors -1 (ETFC as an example)
Below is a chart for the top of ETFC. From it we can learn how a stock finds its top.
I have listed the following as stock top detectors:
I have listed the following as stock top detectors:
what I have learned from the high-frequency trading
what I have learned from the high-frequency trading
- powerful computers and algorithms to trade at lightning-fast speeds
- holds relatively few positions by the time market closes for the day
- never use leverage
- favors stocks that are the most heavily traded
- to minimize risk by trading quickly in and out of the market, as well as through hedging
- focuses on hiring top computer programmers, technicians, and traders, such as Getco
- understand how electronic markets work
Stock Bottom Detectors - 1 (TKO as an example)
Below is a chart for important bottom patterns:
- Relative strength and position of the UP and DOWN waves
- trap-zone transition and the 50MA
- 50 MA and 250 MA
- Volume spikes
- MACD
- Multiple bottoms
- Straight UP pole with descending triangle but without broken down
TKO shoots up 600% in one Month after found the bottom.
A list of other related technical analysis tips can be found here.
ETFC - a very nice gap up today
I have added ETFC to successful break out chart gallery and plan to follow it closely
For some previous analysis on ETFC, please refer to the link above or the list below:
For some previous analysis on ETFC, please refer to the link above or the list below:
Trap-zone moved in 2 dimensions now
Trap-zone moved in 2 dimensions now. Yesterday, it is only moving in the time dimension, but today it is also moving in the price dimension. Actually, it expanded the lower boundary !
Usually, this is not good for the bulls, especially when the Nasdaq market breaks down ~1990 again.
So stay alert !
Please review my previous forecast and prediction just one Month ago. When looking back, you will sure learn something !
Currently, the market is in the stage of the UP, and I am expecting a DOWN wave to come once this UP wave is completed !
It is exactly in the predicted order DOWN-UP-DOWN.
TYPE follow up
TYPE has been UP more than 430% since March's low. Very nice run up!
It is first added to the 10 bagger stock watch list on May 4, 2009.
Since then I have followed up it several times in the blog, especially when its EPS beats.
Other related stock breakout plays and chart development can be found here.
It is first added to the 10 bagger stock watch list on May 4, 2009.
Since then I have followed up it several times in the blog, especially when its EPS beats.
Other related stock breakout plays and chart development can be found here.
CLFD - follow up
CLFD has been in our 10 baggers' list for some time when it is around ~1.10. To date, it is up almost 250%, using today's high of ~ 2.74.
Even in a DOWN day like today, it is shooting up more than 10% without any news !
Some past analysis and predictions with regard to CLFD:
Even in a DOWN day like today, it is shooting up more than 10% without any news !
Some past analysis and predictions with regard to CLFD:
Yesterday's trap zone is moving today
Yesterday's trap zone is moving today, please refer to the chart below. The green box is the trap-zone, which is already drawn yesterday.
The moving is along the time dimension, just one kind of the common trap-zone dynamics.
After the trap-zone, again, there will be a money-making zone, which could happen as soon as tomorrow !
Two points to watch closely:
The moving is along the time dimension, just one kind of the common trap-zone dynamics.
After the trap-zone, again, there will be a money-making zone, which could happen as soon as tomorrow !
Two points to watch closely:
- ~2015
- ~2040
I still keep my previous predictions and outlooks, which have been posted here before.
A gambler's heart - 2
Trading is not gambling, so a trader is not a gambler !
Would you like to think yourself a gambler or a trader ? Look inside your heart, and think this question for a while ?
Humans thinking, emotion, and reaction to money losses and gains are very very complex and super hard to grasp and quantify. That's why there is a subject called "behavioral finance", many smart people and big investment banks have fully dedicated to this research area. Their goal is to take advantage of common people's mistakes, especially the stupid gamblers' hearts !
Therefore, we need to avoid such bad habits. You know, sometimes, we just can't notice we have bad habits. Sometimes, even we notice them, we just emotionally can not overcome it because it is so painful to overcome it.
For example, human nature makes us very very happy to take "paper"profits in each trade very quickly, but, procrastinate when it comes to realizing "paper" losses.
The big question is "WHY" ?
Because if we close the trade and realize the "paper" loss, we finally lose the hope to break even in that trade. So, it's so painful for human to cut loss quick ! Because they will lose the so called "hope" once the loss is cut !
But, in reality, the "HOPE" associated with a paper loss is, in general, a big trap to make you lose more and more !
On the other hand, the "happiness" associated with a quick paper gain realization is , generally speaking, a trap also.
So, we need to set up rules for selling and buying, and then acting according to the rules, not the emotions. But, the rules may be bad, may be good ! So, we need to learn more and to learn how to set up good rules.
Would you like to think yourself a gambler or a trader ? Look inside your heart, and think this question for a while ?
Humans thinking, emotion, and reaction to money losses and gains are very very complex and super hard to grasp and quantify. That's why there is a subject called "behavioral finance", many smart people and big investment banks have fully dedicated to this research area. Their goal is to take advantage of common people's mistakes, especially the stupid gamblers' hearts !
Therefore, we need to avoid such bad habits. You know, sometimes, we just can't notice we have bad habits. Sometimes, even we notice them, we just emotionally can not overcome it because it is so painful to overcome it.
For example, human nature makes us very very happy to take "paper"profits in each trade very quickly, but, procrastinate when it comes to realizing "paper" losses.
The big question is "WHY" ?
Because if we close the trade and realize the "paper" loss, we finally lose the hope to break even in that trade. So, it's so painful for human to cut loss quick ! Because they will lose the so called "hope" once the loss is cut !
But, in reality, the "HOPE" associated with a paper loss is, in general, a big trap to make you lose more and more !
On the other hand, the "happiness" associated with a quick paper gain realization is , generally speaking, a trap also.
So, we need to set up rules for selling and buying, and then acting according to the rules, not the emotions. But, the rules may be bad, may be good ! So, we need to learn more and to learn how to set up good rules.
Remember the big picture I talked last week ?
Remember the big picture I talked last week ? The link to the post is here.
Before doing any analysis, today, I want to review what I have fore casted before last week.
One key number I have mentioned there is ~2015, see below for the quoted words:
Before doing any analysis, today, I want to review what I have fore casted before last week.
One key number I have mentioned there is ~2015, see below for the quoted words:
- The upper boundary is ~2015
Now this number 2015 becomes very important for future market development !
Once it is breakout, retest it is a MUST, and 100% sure thing. You can see clearly the market has retested it yesterday and then bounced back !
Please try to understand such market movements because the KEY to make money even in short term market movement is to GRASP such SURE movements.
Will ~2015 hold the market or fail ? You may want to ask this question. If you do think about it, you are trapped by the market ! why ? Because only the market can make its own decision ! Don't have a maybe wrong or maybe right assumption ahead even though you have all analysis to support your assumption, that's basically a GAMBLING, not the right way to make money in this market !
What I can tell you is, Keep an eye on ~2015 now, once it is broken down, a market reaction will come, which is already predicted before after this UP wave. On the other hand, if 2015 holds well, looking forward to a new higher high about ~2065 first !
Cheers !
CBOU - follow up -1
Below is a follow up chart for CBOU.
A crazy bull never stops! It clearly show the power of the market trend !
It is heading to 10 now.
For previous analysis on CBOU, please follow the link.
A crazy bull never stops! It clearly show the power of the market trend !
It is heading to 10 now.
For previous analysis on CBOU, please follow the link.
what a great day for bulls so far
what a great day for bulls so far !
My predicted target for QID to 20 and FAZ to 2, ie. 20 after the wonderful reverse split, will soon be realized.
Although there are some fluctuations, but the price of QID and FAZ is gradually moving towards the target. That's the power of the market trend !
Market trend is very very powerful, even it is slow it can show the unique power through the time.
Feel it, learn it, and grasp it. That's the beautiful truth about trading !
My predicted target for QID to 20 and FAZ to 2, ie. 20 after the wonderful reverse split, will soon be realized.
Although there are some fluctuations, but the price of QID and FAZ is gradually moving towards the target. That's the power of the market trend !
Market trend is very very powerful, even it is slow it can show the unique power through the time.
Feel it, learn it, and grasp it. That's the beautiful truth about trading !
Time fames - a reply to a comment
I have a comment from a reader, quoted below, I think the question is good for all readers, so I plan to give my brief answers here:
Question: "Tiger, thank you for the good work, in terms of time frames, we have daily, hrly, 30m, 15m, 10m, 5m etc. Based on your experience, under which timeframe, your theory would work the best? "
Answer: My theory works good and great for all time frames. If you select a short time frame, you have to trade very often, you have to keep your eye on the market all the time because the market can change very quickly and very dramatically in short time frame. On the other hand, if you choose a longer time scale, no need to watch the market very often because the signal will change slowly.
It all depends on your trading style.
I personally using daily and 30 m chart to trade.
My strategy is:
Question: "Tiger, thank you for the good work, in terms of time frames, we have daily, hrly, 30m, 15m, 10m, 5m etc. Based on your experience, under which timeframe, your theory would work the best? "
Answer: My theory works good and great for all time frames. If you select a short time frame, you have to trade very often, you have to keep your eye on the market all the time because the market can change very quickly and very dramatically in short time frame. On the other hand, if you choose a longer time scale, no need to watch the market very often because the signal will change slowly.
It all depends on your trading style.
I personally using daily and 30 m chart to trade.
My strategy is:
- build up a position based on the daily chart signal
- trade frequently based on the 15 m chart in order to reduce the cost of the initial position to zero
- once the daily chart said a big correction is anticipated to happen, or even worse, a trend reversal is going to happen, then I will position myself to follow the coming trend and close longs and set up short-selling positions
A gambler's heart -1
Trading is not gambling, so a trader is not a gambler !
Most traders that I met never thought they are gambling. They really think they are trading, and trading with skills. However, after studying what they are thinking about a trade, including myself. I have found some very common yet misleading thoughts, usually, a typical gambler's heart !
The most common feature of such gambler's heart is never face the market itself, never treat the market very carefully. They just prejudge the market's movement and development and trade according to their assumptions, even though the market already already show them they are wrong.
They never follow the market's trend ! Instead, they just bet against it because they have prejudged the market and they are following their assumptions, even though the market already showed them clearly that they are wrong.
This is very very dangerous. Even they can win BIG previously, sooner or later, the market will teach them a hard lesson !
For example, some gamblers have hold the short positions from March with a BIG LOSS until now, and hope to gain back in one day later finally. Even if they win finally, this is not GOOD at all, because it is just gambling, not trading. Sooner or later, Mr. market will wipe out those gamblers.
Another example, some gamblers keep shorting the market from March until now, even though every time they have to CUT LOSS again and again. But the cutting loss seems can not change their gambler's mind !
In one sentence, it's a gambling if you are not follow the market !
Most traders that I met never thought they are gambling. They really think they are trading, and trading with skills. However, after studying what they are thinking about a trade, including myself. I have found some very common yet misleading thoughts, usually, a typical gambler's heart !
The most common feature of such gambler's heart is never face the market itself, never treat the market very carefully. They just prejudge the market's movement and development and trade according to their assumptions, even though the market already already show them they are wrong.
They never follow the market's trend ! Instead, they just bet against it because they have prejudged the market and they are following their assumptions, even though the market already showed them clearly that they are wrong.
This is very very dangerous. Even they can win BIG previously, sooner or later, the market will teach them a hard lesson !
For example, some gamblers have hold the short positions from March with a BIG LOSS until now, and hope to gain back in one day later finally. Even if they win finally, this is not GOOD at all, because it is just gambling, not trading. Sooner or later, Mr. market will wipe out those gamblers.
Another example, some gamblers keep shorting the market from March until now, even though every time they have to CUT LOSS again and again. But the cutting loss seems can not change their gambler's mind !
In one sentence, it's a gambling if you are not follow the market !
How to spot a trend reversal using my theory
As described before:
"Any price movement in any time frame can and only can be decomposed into one unique combination of trap-zones and money-making zones !"
So, if the trend continues with the momentum, then only two patterns are shown:
"Any price movement in any time frame can and only can be decomposed into one unique combination of trap-zones and money-making zones !"
So, if the trend continues with the momentum, then only two patterns are shown:
- the same kind of trap-zone will appear after the money-making zone
- the same kind of money-making zone will appear after the trap-zone
Otherwise, these will be viewed as some WARNING signs for a possible trend reversal.
In order to confirm a trend reversal, two conditions are necessary and are required as well:
- A transition between the trap-zones happens
- A transition between the money-making zones happens
Some replies to the questions
Below are some answers to the questions from the comments:
Q:"can you talk about more how to apply your theory to trading? can you give us some examples? Your theory sounds good, but I still have difficulties associating it with trading strategy. thanks. "
A: I will talk about how to apply my theory to trading more and more. I will give some examples later. Be patient. You know, I have learned these things over more than 10 years of trading, and is still learning it. Nobody can learn everything in one day! The main principle to apply the theory is to catch the MAJOR and BIG wave in a time frame. At the same time, try to catch every trad able corrections, so that the cost of the positions can be reduced to zero. Then the positions will be zero cost and risk free. That's the way to trade and trade with peace of mind.
Q: "I am interested if you could give some trading examples, mainly to see how this system is applied in real action."
A: Thanks first for enjoying my posts and the theory. Yes. I will talk about how to apply my theory to trading more and more. I will give some examples later. Be patient.
Q:"can you talk about more how to apply your theory to trading? can you give us some examples? Your theory sounds good, but I still have difficulties associating it with trading strategy. thanks. "
A: I will talk about how to apply my theory to trading more and more. I will give some examples later. Be patient. You know, I have learned these things over more than 10 years of trading, and is still learning it. Nobody can learn everything in one day! The main principle to apply the theory is to catch the MAJOR and BIG wave in a time frame. At the same time, try to catch every trad able corrections, so that the cost of the positions can be reduced to zero. Then the positions will be zero cost and risk free. That's the way to trade and trade with peace of mind.
Q: "I am interested if you could give some trading examples, mainly to see how this system is applied in real action."
A: Thanks first for enjoying my posts and the theory. Yes. I will talk about how to apply my theory to trading more and more. I will give some examples later. Be patient.
Big picture again
I want to review the NASDAQ daily chart again here. Please refer to the chart below:
- A new trap zone is in the shaping, as marked with the green box
- The lower boundary is ~1929
- The upper boundary is ~2015
- There will be the dynamical motion before the money-making zone is formed
Watch the trap-zone closely, and anticipate a money-making zone will come eventually ! Before that, I think once this UP wave is done, a second DOWN wave is coming. But I don't expect this second DOWN wave can break down the trap-zone, so bulls will win after the trap-zone again !
But, don't guess, just watch Mr. Market's decision and then go with it.
Breakout play - NGD
Today, NGD gets a nice run up after the breakout, here is a short review:
Other pattern breakout play and charts can be found here.
Other pattern breakout play and charts can be found here.
The difference between Money-making zone and trap-zones
This post is to answer questions of a reader, and also hope to help other readers to understand these two fundamental concepts as well.
Below is copied from the comment:
"but I am still confused on the difference between Money-making zone and trap-zones.
1. Can we have trap-zones inside a Money-making zone?
2. within a money-making zone, can the prices go against the trend temporarily? (eg. in a bull money making zone, there was a day or two the index went down?)
3. can I say that a price move (hight or lower) inside a trap-zone is a money making zone with a shorter time dimension? "
My answers are listed below:
1. No.
2. The money-making zone is a TREND in a time frame, say 30m chart as an example. For bull's money-making zone, the start point should be a bullish pivotal point, and the end point should be the bearish pivotal point. Namely, you can draw a line from the start point to the end point of the bull's money-making zone, and the line is pointing UP. It's a straight line, no zig-zags. Of course, the prices can go against the trend temporarily, but the key is no pivotal points are created. Other wise, the line will become zig-zaged.
3. Yes. The trended moves in one time frame's trap-zone can be viewed as a money-making zone in the scaled down time frames because the trap-zone can be decomposed to a combinations of trap-zones and money-making zones in shorter time scales. The motions are correlated across different time frames.
I suggest to read and try to understand the complete summary on the subject, which can be found here.
More important, applying them to the daily chart reading !
Below is copied from the comment:
"but I am still confused on the difference between Money-making zone and trap-zones.
1. Can we have trap-zones inside a Money-making zone?
2. within a money-making zone, can the prices go against the trend temporarily? (eg. in a bull money making zone, there was a day or two the index went down?)
3. can I say that a price move (hight or lower) inside a trap-zone is a money making zone with a shorter time dimension? "
My answers are listed below:
1. No.
2. The money-making zone is a TREND in a time frame, say 30m chart as an example. For bull's money-making zone, the start point should be a bullish pivotal point, and the end point should be the bearish pivotal point. Namely, you can draw a line from the start point to the end point of the bull's money-making zone, and the line is pointing UP. It's a straight line, no zig-zags. Of course, the prices can go against the trend temporarily, but the key is no pivotal points are created. Other wise, the line will become zig-zaged.
3. Yes. The trended moves in one time frame's trap-zone can be viewed as a money-making zone in the scaled down time frames because the trap-zone can be decomposed to a combinations of trap-zones and money-making zones in shorter time scales. The motions are correlated across different time frames.
I suggest to read and try to understand the complete summary on the subject, which can be found here.
More important, applying them to the daily chart reading !
Today's market action - a real example
Today's market action - a real example to demonstrate the power of the trap-zone and how to apply it to trading.
Before moving on, look at yesterday's chart first and spot the trap-zone.
By the way, I have set up the blog to send the comments automatically to my E-mail account. SO I won't miss them and I will answer those questions sometime later when I got my hands free. Too busy every day and all the time.
Before moving on, look at yesterday's chart first and spot the trap-zone.
- The zone's lower boundary should be able to be drawn in half hour after the market open
- The zone's upper boundary should be able to be drawn in half hour before the market close
As mentioned before, once the boundary is touched, the market motion will be bounced off from the boundary, especially for the first time touch, unless the trap-zone is broken.
So today, the market is bounced off from both the upper and the lower boundaries. A perfect real time example ! Then complete one of the trap-zone dynamics: expanded in the time dimension.
At the end of the trap-zone, there is a bull's money-making zone, which is already ended today. Now what's the market doing is to form another new bullish trap-zone. Once this is complete. The expected transition from a trap-zone to another trap-zone will be over, and will mark the end of the DOWN wave and the expected UP wave starts. As mentioned before, I expect three waves (DOWN-UP-DOWN) coming in the near future. More details with regard to this outlook, please refer to the old post here.By the way, I have set up the blog to send the comments automatically to my E-mail account. SO I won't miss them and I will answer those questions sometime later when I got my hands free. Too busy every day and all the time.
What happened after the breakout - VRTU
Let's look back at VRTU and see what happened after the breakout ?
- Initial chart set-up
- One of the follow-ups
Another trap-zone is forming now
Another trap-zone is forming now, in the chart below, which is marked in blue.
The power of the money-making zone has been fully demonstrated yesterday !
Today, a new trap-zone is forming now. This is exactly what I have defined before for the money-making zone and the trap-zone. One after one, again and again. The death of the money-making zone is the birth of the trap-zone. The death of the trap-zone is the birth of the money-making zone.
That's exactly what it means for my unique, perfect, yet powerful stock price development model. Later, I will post my mathematical formulation of this state-of-the-art price movement model. It can cover all kinds of price movements. That's the power and beauty of this theory. It can translate ANY complex and (seems) very random price motions into simple numbers.
OK, based on my theory, you should know what will be expected tomorrow, right ?
Here is the hint:
A reply to a comment
"In the short-term, on NASDAQ if we see a close above 1960 this week, then should we assume we are back on a bullish run? "
My simple answer is no. My theory needs the dynamics and transitions of the trap-zones to confirm money-making zones for both bulls and bears.
The power of the money-making zone has been fully demonstrated yesterday !
Today, a new trap-zone is forming now. This is exactly what I have defined before for the money-making zone and the trap-zone. One after one, again and again. The death of the money-making zone is the birth of the trap-zone. The death of the trap-zone is the birth of the money-making zone.
That's exactly what it means for my unique, perfect, yet powerful stock price development model. Later, I will post my mathematical formulation of this state-of-the-art price movement model. It can cover all kinds of price movements. That's the power and beauty of this theory. It can translate ANY complex and (seems) very random price motions into simple numbers.
OK, based on my theory, you should know what will be expected tomorrow, right ?
Here is the hint:
A reply to a comment
"In the short-term, on NASDAQ if we see a close above 1960 this week, then should we assume we are back on a bullish run? "
My simple answer is no. My theory needs the dynamics and transitions of the trap-zones to confirm money-making zones for both bulls and bears.
My unique, complete, and perfect description of the stock price development
I want to present my unique, complete, and perfect description of the stock price development in this post.
Why is it so important ? Just to name a few key points below:
Why is it so important ? Just to name a few key points below:
- To help us understand what the stock and the market is doing now
- To help us know what is expected for the stock price in the near future
- To help us be able to discover the profitable trading opportunities
- To help us catch the big picture of the stock price movement and the market condition
Sounds magic ? Indeed, it is.
The key is to really understand my unique, complete, and perfect description of the stock price development in this post, and be able to apply it to solve real trading problems. I don't think many people can understand it even I share them publicly in the blog. Why ? It's simple ! Learning & understanding something are quite different from applying them to solve real world problems.
For example, everybody can learn Newton's laws on the motions, but only few people can really apply it to solve COMPLEX motion problems such as turbulent flows.
Here is the description:
Any price movement in any time frame can and only can be decomposed into one unique combination of trap-zones and money-making zones !
Please note that:
- It is good for any price movement in the market including futures, commodities, currencies, etc.
- It is good for any time frame such as 5 minutes, 30 minutes, days, monthly, yearly
- combination of trap zones and money-making zones
The conclusions and the description can be easily proved ONLY based on the definition of the trap zones and the money-making zones.
Application of the life line
For example, one target of this market correction is ALWAYS to test the life line's support, namely
So, life line is really a life line for both bulls and bears !
Below is quoted from the comments on life line of the stock price development:
It's so important, and i surely hope everyone have read it. Sometimes, some comments and feedback's are very very insightful and helpful ! I really appreciate such beneficial comments ! Don't miss them.
"
I am focusing on more long term trend.
Once 250MA is broken out and heading up, it can not be very easily changed to down. This is the key for us to catch the BIG wave and clearly see the BIG picture. For example:
1. NOW the NASDAQ is up and above 250MA, if during the market correction, 250 MA can hold it well and continue to head up, we will see the BULL wave can run up for at least 1 year. Other wise, the BEAR market continues. SO you can have a BIG picture, regarding the stock market.
2. Look at the stock price development of GROW, it up more than 5000% in 4 years !! This is the way we should trade stocks. Follow the big WAVE.
That's another research topic I am doing now:
How to discover the long-term bull and ride it with a 10-bagger to 100-bagger gain via following the BIG wave correctly.
This is the only way we can make a BIG money in this market: Sit tight and win big while right; lose small when wrong.
Unfortunately, most people win very little when they are right ! But sit very tight and accumulate a BIG loss when they are wrong.
250MA surely gives me a good starting point on this topic ....
"
- SPX 925.13, at the close of today
- INDU 8722.44 at the close of today
- NASDAQ 1723.30 at the close of today
So, life line is really a life line for both bulls and bears !
Below is quoted from the comments on life line of the stock price development:
It's so important, and i surely hope everyone have read it. Sometimes, some comments and feedback's are very very insightful and helpful ! I really appreciate such beneficial comments ! Don't miss them.
"
I am focusing on more long term trend.
Once 250MA is broken out and heading up, it can not be very easily changed to down. This is the key for us to catch the BIG wave and clearly see the BIG picture. For example:
1. NOW the NASDAQ is up and above 250MA, if during the market correction, 250 MA can hold it well and continue to head up, we will see the BULL wave can run up for at least 1 year. Other wise, the BEAR market continues. SO you can have a BIG picture, regarding the stock market.
2. Look at the stock price development of GROW, it up more than 5000% in 4 years !! This is the way we should trade stocks. Follow the big WAVE.
That's another research topic I am doing now:
How to discover the long-term bull and ride it with a 10-bagger to 100-bagger gain via following the BIG wave correctly.
This is the only way we can make a BIG money in this market: Sit tight and win big while right; lose small when wrong.
Unfortunately, most people win very little when they are right ! But sit very tight and accumulate a BIG loss when they are wrong.
250MA surely gives me a good starting point on this topic ....
"
Life line of the stock price development
I define the life line of the stock price development as the 250 days moving average, namely 250MA.
In my opinion, position equals risk unless the position is making money for you ! it's easy to check if the position is making money for you, right ? In a week, or in a Month, or even in 2 Months, if the position market value is dropping, I think you are holding a wrong position! It's much better to hold cash than such money-losing positions.
Then how to avoid such mistakes and always hold a money-making position ?
My simple tip is:
In my opinion, position equals risk unless the position is making money for you ! it's easy to check if the position is making money for you, right ? In a week, or in a Month, or even in 2 Months, if the position market value is dropping, I think you are holding a wrong position! It's much better to hold cash than such money-losing positions.
Then how to avoid such mistakes and always hold a money-making position ?
My simple tip is:
- Hold the position only when the price is above 250MA
Always remember that any position could be a BOMB, especially for those positions whose price is below the 250 MA ! They could GAP DOWN any time and trap you in a deep HOLE very easily !
If a stock is heading up to 250 MA and has a chance to breakout 250 MA, that's a good sign for a bullish run up!
On the other hand, if a stock is heading down to 250 MA and has a chance to break down 250 MA, that's a good sign for a bearish run down!
Please keep these in mind when you make trading decisions, I bet it will surely help you ! I wish I could know this earlier ! But, actually, I learned this very hard over years of trading and investing.
For other technical analysis tips: please refer to here.
What a wonderful GAP DOWN
What a wonderful GAP DOWN !
It's so COOL ! The red trap-zone will be successfully broken down if NASDAQ 1960 can not be taken over by bulls in a few days.
My last week's prediction has been turned to be true today. Below is quoted from past post
"Another conclusion based on my theory: a money-making zone will be very expected for bears. Namely, breakdown 1960 is almost a certain thing so far. "
I sincerely hope you have read this post and have taken some actions to protect yourself by either hedging or a cash holding state !
The measurable TARGET for this expected DOWN wave is:
It's so COOL ! The red trap-zone will be successfully broken down if NASDAQ 1960 can not be taken over by bulls in a few days.
My last week's prediction has been turned to be true today. Below is quoted from past post
"Another conclusion based on my theory: a money-making zone will be very expected for bears. Namely, breakdown 1960 is almost a certain thing so far. "
I sincerely hope you have read this post and have taken some actions to protect yourself by either hedging or a cash holding state !
The measurable TARGET for this expected DOWN wave is:
- ~ 1880 area
Rethink the trap-zone again
Below is my definition for the trap zone:
The trap zone is a price range with high price and low price boundaries in a given time frame between two money-making zones:
- It starts at the end point of the previous money-making zone
- It ends at the start point of the next money-making zone
Many real time examples of a trap zone in the NASDAQ 30m chart have been shown here very frequently. Here is a link to a chart for your review.
Below is my classification of the trap zone:
- Bullish trap zone
- Bearish trap zone
The life span of a trap zone:
- Life starts at the end point of the previous money-making zone
- Life ends at the start point of the next money-making zone
The trap-zone is always dynamic, and its dynamics has been described before.
Use the Stop-Limit order to trade a short term trap-zone breakout
Use the Stop-Limit order to trade a short term trap-zone breakout pattern!
The Stop-Limit order means
If you want to watch the market, then you can exit when next trap-zone is formed.
You also can use the stop-limit order to sell and take the profits.
For shorting a DOWN trend stock, the same rules can be applied because there are bearish trap-zones as well.
KEY things to remember:
The Stop-Limit order means
- Once the stop price is reached it will become a limit order to buy or sell at the limit price
- It's good to catch the quick move momentum
- You can relax and let the market to fill your order according to your will
- Forming a UP pole from 10-12.50
- Forming a trap-zone with width of 2.00
- MACD is bullish up during the trap-zone
- 5ma and 10ma becomes bullish after a golden cross
- Apparently, two or multiple bottoms have been formed
- Once 12.01 is created in the market
- The order will buy ABCD Inc. at 12.01
If you want to watch the market, then you can exit when next trap-zone is formed.
You also can use the stop-limit order to sell and take the profits.
For shorting a DOWN trend stock, the same rules can be applied because there are bearish trap-zones as well.
KEY things to remember:
- Put the position open and position close orders when the market is closed so that the market fluctuations won't hurt your judge
- Never be emotional, stay cool ( greedy ? or fear ? too happy ? too sad ?)
- Just let the market carry out your orders as you planned (even you missed a big GAP)
- Each trade could be done in 1~3 days, sometimes, but very rare, may be 5 days (or even longer)
- Signals show up pretty often
- Profit margin not very high, but pretty reliable, so could be scaled to large principles
the trap-zone gets extended and becomes
tighten today as well.
One feature of the trap-zone is its dynamics, which has been discussed before. It will never be static, unless the trading of the stock is halted !
Usually, the dynamics of the trap-zone will indicate the direction of the next money-making zone once the trap-zone is completed.
As discussed recently, the bulls have tried to breakout the trap-zone for three times so far, will the 4th time test be real and broken out ? Very very possible. But, never guess ! You know, that's a good trader's habit and my trading philosophy! Never guess what the market is going to do ? Simply because it's the market that leads us ! Just let the market makes its own decision and follow it.
On the other hand, please notice that bears also tried to breakdown twice.
Another 10 bagger stock pick is almost doubled today ! Very nice. When I alert CLFD here on May 11, Its low is 1.16.
All of our 10 bagger stock list have been doubled since alerted here in May!
This simply tells us a truth, after the market established the trend in March and April, then follow it in May, we still can win ! Therefore, never try to follow the trend in a hurry ! The market has always given us and will continue to give us plenty of time to follow it! The KEY is to follow it in the right direction !
One feature of the trap-zone is its dynamics, which has been discussed before. It will never be static, unless the trading of the stock is halted !
Usually, the dynamics of the trap-zone will indicate the direction of the next money-making zone once the trap-zone is completed.
As discussed recently, the bulls have tried to breakout the trap-zone for three times so far, will the 4th time test be real and broken out ? Very very possible. But, never guess ! You know, that's a good trader's habit and my trading philosophy! Never guess what the market is going to do ? Simply because it's the market that leads us ! Just let the market makes its own decision and follow it.
On the other hand, please notice that bears also tried to breakdown twice.
Another 10 bagger stock pick is almost doubled today ! Very nice. When I alert CLFD here on May 11, Its low is 1.16.
All of our 10 bagger stock list have been doubled since alerted here in May!
This simply tells us a truth, after the market established the trend in March and April, then follow it in May, we still can win ! Therefore, never try to follow the trend in a hurry ! The market has always given us and will continue to give us plenty of time to follow it! The KEY is to follow it in the right direction !
The concept of the money-making zone
Below is my definition for the money-making zone:
The money-making zone is a trend in a given time frame between two trap-zones:
Below is my classification of the money-making zone:
The money-making zone is a trend in a given time frame between two trap-zones:
- It starts at the end point of the previous trap-zone
- It ends at the start point of the next trap-zone
Below is my classification of the money-making zone:
- Bull's money-making zone (Bull-MMZ)
- Bear's money-making zone (Bear-MMZ)
- the money-making zone with a UP trend is the Bull's money-making zone (Bull-MMZ).
- the money-making zone with a DOWN trend is the Bear's money-making zone (Bear-MMZ).
- Life starts at the end point of the previous trap-zone
- Life ends at the start point of the next trap-zone
The power of the trap-zone
Please refer to the chart below:
- 2 trap-zones have been marked
- one is bullish, the red one, which is already marked previously.
- one is bearish, the purple box, which is plotted last night.
- The possible transition of the bullish trap-zone to bearish trap-zone is broken because both become embedded relationship, which marks the end of the confirmed DOWN wave. This might be very quick for some people. But after a UP wave, there will be another DOWN wave. Remember my previous post regarding the coming three waves.
- The up-boundary of the bullish trap-zone, namely 2012, has always been a strong resistance for 3 times so far. That's why I call the market will hit 2000 again. In just two days, the prediction is fulfilled. No magic. Just based on the trap-zone, which is also powerful for trading.
- Each time the market hits about 2010, it will come down, the first time drop to 1970, the second time drop to ~1960, the third time ????, make your best shot or let the market tell us in several days. This is the way to trade the trap-zone, if you have to trade. Sell at the up boundary, buy at the lower boundary ....
- The market motion will be limited in the trap-zone area, unless the market makes the decision to break out or break down.
- So far, the market favors a breakout and run up higher again because it already tried three times, a pretty bullish sign. But again, never guess, the market will let you know at the right moment. Then just follow it then.
What a good lesson this morning for those
who want to be a bear in a hurry and worried about missing some profits. Below is quoted from one reader's comment:
"This down wave already fell 50 points from 2012 to 1962. Do you think it is still in trap zone and not allowed to trade until we reach the real bottom. If this is correct then we will miss 50 or 70 or 90 points possible gain."
Such thought is not good at all ! It will SURELY hurt your trading because it is thinking the wrong thing!!
Again, the only rule for this game is NEVER HAVE A LOSER TRADE.
IF you can continue to win 5% gain in a year for only 50 times, your total return will be more than 1100% !!! In 2 years, the total return will be 13100%! In 3 years, the total return will be 150700%! In only 4 years, the total return will be 1729200%! You can beat anyone in the market so far !
The question is: can you keep the winning rate very high and scale your principle up to at least 10M ?
The market is a POWERFUL slaughter machine instead of an ATM machine. Keep this in mind and think twice for each trade will help us increase our correct rate !
I suggest to read "good time and bad time to trade" again !
A good trader need to be patient, need to learn how to relax, and need to know how to watch the market very closely for real opportunities ....
No position is worth holding if it is not making money because the position equals the RISK.
Watch the amazing sniper shot and learn how to shot in the market as well:
"This down wave already fell 50 points from 2012 to 1962. Do you think it is still in trap zone and not allowed to trade until we reach the real bottom. If this is correct then we will miss 50 or 70 or 90 points possible gain."
Such thought is not good at all ! It will SURELY hurt your trading because it is thinking the wrong thing!!
Again, the only rule for this game is NEVER HAVE A LOSER TRADE.
IF you can continue to win 5% gain in a year for only 50 times, your total return will be more than 1100% !!! In 2 years, the total return will be 13100%! In 3 years, the total return will be 150700%! In only 4 years, the total return will be 1729200%! You can beat anyone in the market so far !
The question is: can you keep the winning rate very high and scale your principle up to at least 10M ?
The market is a POWERFUL slaughter machine instead of an ATM machine. Keep this in mind and think twice for each trade will help us increase our correct rate !
I suggest to read "good time and bad time to trade" again !
A good trader need to be patient, need to learn how to relax, and need to know how to watch the market very closely for real opportunities ....
No position is worth holding if it is not making money because the position equals the RISK.
Watch the amazing sniper shot and learn how to shot in the market as well:
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