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Proper Trading and XLT

Proper Trading and XLT. featuring Brandon Wendell, CMT Master Instructor Online Trading Academy. Successful Trading is Achievable…. That success will not come overnight and not without practice!. The Most Important Factor?. Discipline!!!!. What Else Do I Need? .

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Proper Trading and XLT

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  1. Proper Trading and XLT featuring Brandon Wendell, CMT Master Instructor Online Trading Academy

  2. Successful Trading is Achievable… That success will not come overnight and not without practice!

  3. The Most Important Factor? Discipline!!!!

  4. What Else Do I Need? • To know how to “see” the market properly • No security trades on its own • There are related securities and markets • The proper perspective • Would you run with your head down? • You need to see all the dangers you may face • The right rules to follow • This eliminates emotion and reduces the chances of bad trades

  5. Intermarket Analysis • Using the analysis of related asset classes to predict the probable movement of another • All assets are related • Some are substitutions • Others are compliments • Depends on environment • Inflationary • Deflationary • Recession • Expansion

  6. Overview of the Relationships • The SGX and S&P 500 have shared a 79% positive correlation over the last month • Commodities and Bond Prices • Trend inversely • Bond Prices and Stocks • Trend together! • If they move inversely, it is a warning

  7. Rotation and the Relationships The offset cycles cause the relationships to break down in turbulent times Bonds ($) Stocks Commodities

  8. Rotation and the Relationships

  9. Bond Warning ?

  10. Trade Choices • Suppose you believe the S&P is overbought and is ready for a price decline. How can you take advantage? • Short the ETF SPY? • Currently trading at approximately $130 • 100 shares would cost you $13,000 • A price drop to $123 (demand) would profit $7 a share or $700 • $700 / $13,000 = 5.4% Return

  11. Trade Choices • Suppose you believe the S&P is overbought and is ready for a price decline. How can you take advantage? • Trade Options! • 1300 Apr Puts currently trading at $47.30 • 1 Put would cost you $4,730 • S&P price drop to $123 (demand) would profit $7 or $700 • $700 / $4730 = 15% Return

  12. Trade Choices • We can make the return better! • Advanced Options! • 1300 Apr Puts currently trading at $47.30 – 1225 April Puts = $19.00 • Buy 1300 Put, sell 1225 Put • Cost is $2,830 • S&P price drop to $123 (demand) would profit $7 or $700 • $700 / $2830 = 25% Return

  13. Trade Choices • Suppose you believe the S&P is overbought and is ready for a price decline. How can you take advantage? • Sell the eMini Futures? • Currently trading at approximately 1300 • 1 contract shares would cost you $5625 • A price drop to 1225 would profit $3750 (75 points x $50/point) • $3750 / $5625 = 67% Return

  14. Trade Choices • Suppose you believe the S&P is overbought and is ready for a price decline. How can you take advantage? • Sell the AUDJPY • Currently trading at approximately 81.91 • 1 lot would cost you $1,000 • A price drop to $79.04 (demand) would profit 287 pips $3,444 • $1000 / $3,444 = 244% Return

  15. Time and Market Analysis

  16. Trading & The Ocean • Markets are similar to the Ocean • The ocean has: • Tides • Waves • Wind ripples • Markets and stocks have: • Long term trends • Intermediate trends • Short term trends

  17. Multiple Time Frame Analysis: The Logic • Trading with only one timeframe is like running with your head down: • You can only see the immediate dangers • You are unaware of larger forces affecting you • Changes in trend may come as a surprise

  18. Trend Relationships • You must first select the timeframe you wish to trade on • Use the largest timeframe you feel comfortable with • Larger timeframes mean larger profits but also larger risks! • You then need to select your additional timeframes for assistance in analysis • One larger for perspective • One smaller for entry timing

  19. Practical Application

  20. Practical Application 25 Min RIMM - Perspective

  21. Practical Application Broken Supply becomes future Demand 5 Min RIMM - Trading

  22. Practical Application 1 Min RIMM - Entry Higher Lows & Moving Average Set Up

  23. Practical Application 5 Min RIMM First Target Long Entry

  24. Rule Based Trading • A strategy with rules minimizes the emotions that cause errors • In the XLT we teach those strategies • We also build good habits in our students with repetition

  25. XLNX Daily Chart

  26. TEVA 30 Min. Chart

  27. RIMM 5 Minute Chart

  28. EURUSD Four Hour Chart

  29. S & P 500 eMini Futures 60 Min.

  30. WDC Daily Chart

  31. QCOM Daily Chart

  32. SNDK Daily Chart

  33. FSLR Daily Chart

  34. FSLR 5 Min Chart

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