by NewWave Trader on September 6, 2011
In volatile markets there’s a tendency to keep throwing orders, hopefully, in the direction of the trend. However, when the trend reverses traders are often caught off guard. The charts start to resemble a staircase. Higher highs and higher lows. With today’s market 15 handles off the lows, this scenario is ever present. Let’s take a look:
- Look for expansive moves. It doesn’t matter what chart duration you use long bars make for better trades.
- Price action. When the retracement doesn’t take out a given price level that’s an indication the move is abating.
- Price action. When the bars become smaller stay away. It could portend to a bigger move later in the session.
- Price action. When traders can’t get their positions to come in, they’re forced to cover. Hence the stair effect.
- No breakout. A slow steady grind can last all day. It doesn’t have to breakout out to a new high or low.
Hope this helps.
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Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 27, 2011
There’s a real tendency to jump into these volatile markets we’ve had over the past couple of days. My advice is to wait for a retracement in the direction of the trend. You’ll be in a much better position than taking a chance on a continuation of a possibly over stretched market. Let’s take a look:
- Studies. What ever studies you use, have a price level in mind before pulling the trigger.
- Resting orders. Order placed at strategic levels, even if they’re far way, could get filled.
- Flush. Sometimes there’s a panic flush when prices are at there extremes. That’s usually a good time to enter the market.
- Stops. If you widen your stops because of volatility trade smaller size.
- Targets. Have an area where you’re willing to take some profits on portion of your position.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 24, 2011
When assessing the price action in moving markets, ask yourself is it orderly or violent. If it’s orderly and stepping up or down that’s requires a specific trade. Conversely, if theres a violent move that calls for a different trade. Let’s take a look:
- When traders are caught, they’ll do anything to get out. When this happens wild price swings will take place. Good traders will wait and pounce when the price is too extended.
- Trending markets that look like steps often continue in that direction. Buying pullbacks, at your price, is the appropriate trade.
- Control. Are the bulls or bears driving the market. If traders are fading the professional trend it will causse greater momentum. Being on the right side is paramount.
- Throw the towel. When there’s a squeeze traders will get out at any cost. They usually do this at tops and bottoms. Beware of these levels and use it to your advantage.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 21, 2011
Ask yourself as the day progresses, who’s in control the bulls or bears. By doing this you’ll get a better sense of the true trend for the day. It doesn’t matter what happened yesterday, only today. It will help you trade from the correct side. Let’s take a look:
- Leaders. Look and see which stocks are driving the market and key off them. AAPL today is strong. If it continues going up the market will follow.
- Economic data. How did the market react to key reports. Did it shrug off a bad number or selloff on a good one. The correct side of the trade should be apparent.
- Won’t do what it’s suppose to. If the market won’t go up or down. Nervous positions holders will bail.
- Retracements. Watch for the market to retrace. That’s the best trade. Go with the trend.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 20, 2011
Monday’s always seem to get me. I do my weekend homework and have a well thought out plan. However, for some reason I get burned. Today was no exception. I was bearish based on last week’s price action and the market rallied catching me and lot of other bears. There is a better approach. Let’s take a look:
- Ignore the pundits. The talking heads and Internet blogs are always touting their positions. Either ignore them entirely or do the opposite.
- Sit on your hands. As hard as it is, waiting until after the morning orders are filled makes the most sense. When everyone gets caught, that’s when you make the trade.
- Resting orders at the extremes. If you’re bold and know where you’d like to have a position, place resting orders above or below the market. Have a stop in place in case it keeps going.
- Setup for the rest of the week. Use Monday’s trade to get a sense of the momentum for the rest of the week.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 17, 2011
I heard a respected trader talking about Corn going much higher. Granted, he didn’t say what time frame but looking at the chart he’s completely wrong. The point; how much money will he lose before being right. I’ve known traders that have blown out because their opinions that don’t pan out. Yes, they might eventually work but is the pain worth it. Let’s take a look:
- Fundamentals. They don’t always make sense relative to the stock’s price. (Read, interest rates).
- Technicals. You’ll get a much better sense looking at a chart and then making a judgement on direction.
- Both of the above. If there’s a contradiction, wait for a confirmation. Don’t pit one against the other.
- The unexpected. Sometimes an unexpected move takes place. If you’re in and it goes your way, great. However, most of the time we’re on the wrong side or we’ve closed out the position right before the move.
- Be nimble. If you’ve missed the trade because the criterion didn’t make sense, there’s always time to get in when it does.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 16, 2011
After Wednesday’s drubbing the S&P’s are up 5 handles at 9:15 cst. IMO, not much of a rebound considering how bad the market looks. It’s usually a sign of a little pop when everyone turns bearish. However, I know traders that have been short since March 2009. The best trade is to let the market tell you what to do. Let’s take a look:
- Key support and resistance. Do your homework and find areas where you’re comfortable taking a trade.
- Sentiment. It’s easy to fade sentiment but it’s important to know what other traders are thinking. They’re often wrong.
- Leaders. AAPL, Oil and Gold to name a few. Look for a change of trend. A lot of money has been made in these stalwarts. Profits should be locked in.
- Dollar. For me this is the key. If the dollar holds and doesn’t take out it’s lows the market’s going lower.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 14, 2011
With the market moving nicely there’s a tendency to have have targets that are too aggressive. IMO, having realistic targets makes life much easier. Waiting for a level that’s unattainable is counter productive. Let’s take a look:
- Highs and lows. Don’t think there will be a move that takes out the highs or lows. Resting orders slightly below those prices is smart.
- Gone too far. Those are dangerous words. Be careful and be content to take a little less.
- Scale. It’s okay to scale out of a winning position. Leave a few units for a runner.
- Trade. Take advantage of the market’s volatility. Patience with good entries is the best approach.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 13, 2011
As the market flirts with the 12k level there are some interesting things to consider. The first is the AAPL effect. The most storied stock of all. It acts terrible and dropped 20 points since the Steve Job keynote. It’s certainly been impossible to short but markets constantly need to be evaluated. Other notables:
- The dollar. Strong dollar equals a weak market. Use it as an ancillary.
- Oil. It’s backed off which could help the economy but hurt stocks.
- Nasdaq. It’s not only AAPL. GOOG, AMZN, BIDU and host of others look like “death warmed over”.
- Gold. Also act lousy. Weaker gold doesn’t bode well for the market.
- Day Traders. They get caught easily and most trade from the long side. Fade them.
- Banks. They’ve popped a little but overall act terrible.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.
by NewWave Trader on June 10, 2011
The market is clearly in trouble. Without going into all the reasons, it’s plainly having trouble rallying. As traders, it’s too easy to get hooked into taking the other side of a one way market. Every time the S&P’s tick up everyone piles on thinking they’ve picked the bottom. Don’t fight the trend. Let’s take a look:
- Big to small. Look at longer term charts and work forward toward smaller time frames. This will keep you focused on the big picture.
- Use rallies as an opportunity to get short. Instead of buying into a weak market, short into the foolish bottom pickers.
- Analysis. The fundamentals are bad. Use your technical skills to come up with a trading plan. Create well thought out scenarios. If your criterion is met, take the trade.
- CNBC. It’s bullshit ignore the pundits.
- Stops. Obviously, have an area where you’ll bail.
- Targets. Don’t go for the home run. Base hits will make you rich.
Teaching and mentoring is available for all levels of experience. Please contact for details.
Additional posts can be read at the www.chicagotrading.org.
Disclaimer: All comments are strictly the opinion of NewWave. They are not recommendations of any kind.