SUCCESS BLUEPRINTS
Savvy strategies for profitable traders.
LETTER FROM THE DEVELOPER
Imagine having a Trading
Team at your fingertips.
What if you could consult
with a Forex, Futures,
Stock or Options Expert at
any time?
Trading is a solitary endeavor but having
a team can make you far more successful.
Having mentors is pivotal to succeeding
in something as challenging as trading.
In your hands here (or on your screen),
you now have that Trading Team. Our
NetPicks Coaches are pros in trading,
educating and mentoring.
Here you have some of their very best
training, tutorials, tips, guides and
blueprints to making it as a trader.
Benjamin Franklin said, “Tell me and I
forget, teach me, and I may remember,
involve me and I learn.”
By working through these trading
tutorials and training, you will become
involved in your trading. You will learn,
and you will master.
Our Coaching Team is sharing decades
of collective wisdom here. Ron, Mike,
Troy, Shane, James, Will and others
have walked in your shoes. They have
struggled, they have persevered, they
have faced challenges and obstacles along
the way. Ultimately each has succeeded
and survived the path you are currently
embarking.
Special Collection
That guy Ben said, “An investment in A $97 Value
knowledge always pays the best interest.”
Even better for you the knowledge in (800) 515-0335
these pages is simply an investment in (949) 481-2396
time. info@netpicks.com
I’m convinced that experiencing what lies
ahead in this document are more pearls of CONTENTS
trading wisdom than you’ll need. Think
about it, if you get just one golden idea, Take What the Market
just one idea or concept that sparks an Gives You ..................... 2
improvement in your trading what would
that be worth to you? The Gap Between Trade
Planning and
In particular, with trading you can Execution ................... 3
replicate the same solution over and over
again profiting each time. 2 Simple Trade Setups
Using Trapped Traders .. 4
Talk about a great way to build a business.
After all, Mr. Franklin also said a penny Need to Boost your
saved is a penny earned. He definitely Profits? Try this Easy
could have been one helluva trading Options Trade. .............. 6
educator!
Seen any Good Trade
Rooms Lately? ............. 7
My advice? It’s simple. Do. Not. Put.
This. Down.
Simple Chop Indicators –
Part 1 .......................... 8
If you do, you won’t get back to it. If
you start now and make it a goal to get The CrazZy Otto Chop
through 2-3 tutorials each day you will Indicator ...................9
have a completely new outlook. Your
bottom-line will thank you. Trading Binary Options
on Nadex ................10
Great Trading!
Charting the Right
Session Times in
Futures ...................... 13
Mark Soberman
CONTINUED ON
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 CONTENTS
CONTINUED
Wisdom of a Trading
Legend ...................14
Algorithmic Trading
is the Best Only Way
to Get a Grip on Your
Emotions ................16
How to Know When to
Stop Trading ..........17
All Traders Need a
Break ....................18
Is Mediocre your
Modus Operandi ......18
Custom PaintBars in
TradeStation ...........19
Head and Shoulders
above the Rest ........20
5 things you need to
do to “Live Through
Drawdowns”............21
Trading School ........23
How to Cut Down on
Screen Time using
Market Internals .....24
Is the Pursuit of
Perfection Slowing you
Down? ....................25
Trading with
Mindfulness ............26
Becoming an
Algorithm ...............27
3 FX Trading Tips to
Improve your
Trading ...................28
The Essentials to
Successful eMini
Futures Trading .......30
The Single Most
Important Indicator 31
Take Targets the
Market Gives You ....33
The 100 Year Storm
and the Power of One
and Done ................34
Another Free
Indicator? ...............36
The Teacher Appears
when the Student is
Ready .....................37
Excel with
TradeStation ...........37
Is Profitable Trading
Closer than you Might
Think? ....................39
What Exactly is an
Algo? .....................40
Garbage In – Garbage
Out! ........................41
How Other Markets
can Influence your
Trading Decisions ....43
Are you Ready for
Binary Options? ......43
The Existential
Pleasures of
Programming Trading
Systems ..................45
Learn to Profit from
Choppy Markets with
Options Trading .......46
Patience with a
Trending Market .....47
Are Global Events
Changing the Trading
World?....................49
Caught in a Blizzard;
The Story of Two
Traders ...................50
How to Pick the Right
Trading System .......51
We Like to Give you
Free Stuff ...............50

TAKE WHAT THE MARKET GIVES YOU By James Kessick

If you’re an active day trader, the chances are high that you’ll trade a
small number of products or you’ll exclusively trade a single product.
By doing so you’ll have the benefit of learning product specific
characteristics and becoming more in tune with market context. But
there’s a possible downside to this too – sometimes markets move
about a lot and sometimes they are painfully slow. Whilst in itself
this shouldn’t be an issue, for many aspiring traders it seems like a
Catch-22 situation. When markets are particularly slow it seems like
there aren’t enough opportunities available for them to learn and
develop their skills, but if they try to find trades where there are none
they will often find themselves taking losses and more importantly,
having negative learning experiences such as fighting the market.
Learning to take what the market is willing to give is a skill in itself.
A Cocktail of Issues
Both the urge to trade and the assumption that there won’t be many
opportunities can give rise to a number of struggles that can define a
trader if they’re not careful. At the most basic level, your p/l is likely
to be adversely affected. Losing money or missing out on profits in
a way that is contrary to your plan can have a negative psychological
impact on a trader. Particularly with over-trading, emotional energy
can quickly become depleted. This is stressful, demotivating and can
cause a trader to take the wrong lessons away from their losses –
and this has the potential to create major obstacles over an extended
period of time. But also missing opportunities that should have been
taken in accordance with your plan, either by not being focused on
trading or because the other trades you’ve already taken have pushed

HYPOTHETICAL PERFORMANCE RESULTS
HAVE MANY INHERENT LIMITATIONS, SOME
OF WHICH ARE DESCRIBED BELOW. NO REP-
RESENTATION IS BEING MADE THAT ANY
TRADING ACCOUNT WILL OR IS LIKELY TO
ACHIEVE PROFITS OR LOSSES SIMILAR TO
THOSE SHOWN, IN FACT, THERE ARE FRE-
QUENTLY SHARP DIFFERENCES BETWEEN
HYPOTHETICAL TRADING PERFORMANCE
RESULTS AND THE ACTUAL RESULTS SUB-
SEQUENTLY ACHIEVED BY ANY PARTICULAR
TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL
TRADING PERFORMANCE RESULTS IS THAT
THEY ARE GENERALLY PREPARED THE BEN-
EFIT OF HINDSIGHT. IN ADDITION, HYPOTHET-
ICAL TRADING DOES NOT INVOLVE FINANCIAL
RISK, AND NO HYPOTHETICAL TRADING RE-
CORD CAN COMPLETELY ACCOUNT FOR THE
IMPACT OF FINANCIAL RISK IN ACTUAL TRAD-
ING. FOR EXAMPLE, THE ABILITY TO WITH-
STAND LOSSES OR TO ADHERE TO A PARTICU-
LAR TRADING PROGRAM IN SPITE OF TRADING
LOSSES ARE MATERIAL POINTS WHICH CAN
ALSO ADVERSELY AFFECT ACTUAL TRADING
RESULTS. THERE ARE NUMEROUS OTHER
FACTORS RELATED TO THE MARKETS IN
GENERAL OR TO THE IMPLEMENTATION OF
ANY SPECIFIC TRADING PROGRAM WHICH
CAN NOT BE FULLY ACCOUNTED FOR IN THE
PREPARATION OF HYPOTHETICAL TRADING
PERFORMANCE RESULTS, AND ALL OF WHICH
CAN ADVERSELY AFFECT ACTUAL TRADING
RESULTS.
PAST RESULTS OF NETPICKS ARE NOT IN-
DICATIVE OF FUTURE PERFORMANCE. THE
MONTHLY AND COMPOSITE ANNUAL RESULTS
SHOULD BE VIEWED AS HYPOTHETICAL. IN
REALITY, THE RESULTS DO NOT REPRESENT
THE TRACK RECORD OF THE METHODOLOGY
ORIGINATOR OR SUBSCRIBERS. THIS ALSO
MEANS THERE IS NO GUARANTEE THAT ONE
APPLYING THESE METHODOLOGIES WOULD
HAVE THE SAME RESULTS AS POSTED. SINCE
TRADING SUCCESSFULLY DEPENDS ON MANY
ELEMENTS INCLUDING BUT NOT LIMITED TO A
TRADING METHODOLOGY AND TRADER’S OWN
PSYCHOLOGY, WE DO NOT MAKE ANY REPRE-
SENTATION WHATSOEVER THAT THE ABOVE
MENTIONED TRADING SYSTEMS MIGHT BE OR
ARE SUITABLE OR PROFITABLE FOR YOU.

2 www.netpicks.com www.premiertraderuniversity.com
you to your daily loss limit, can be mightily frustrating. Fear of
missing out can then cause you to second guess the market.
In addition to p/l and psychological issues, a hugely important issue
that people often forget about is very simply about understanding
the efficacy of a strategy. Taking trades outside your plan “muddy
the water” and make it harder to assess the efficacy of a particular
strategy. Of course it is possible to manually tag each trade you take
with the strategy it’s using in your trade journal/log, but many don’t
do this. Having the chance to assess a strategy on its own merits is
crucial to being able to develop it and your own trading skills. Even
if you do have a way to differentiate trade types, you’ll find it harder
to pick apart over-trading or keep a log of trades you didn’t take.
THE GAP BETWEEN TRADE PLANNING AND EXECUTION
by James Kessick
One of the biggest problems a trader faces is  bridging the gap
between trade planning and execution. Think about it for a
minute. How many times do hear a trader asked if they did what
they said  they were going to do? How many times is the answer
“No”? Getting from a strategy looking good on paper to real-world
trading performance is what it’s really all about.
Why is it so common that traders struggle with this issue?
Have I got issues Doc?
The first idea that many people will consider is that it must
be a psychological issue. But there’s  a big difference between
psychological problems that come out during trading and
natural emotional responses caused certain types of situation.
Sure, different individuals might have varying degrees of tolerance,
but frustration after a series of losses for example is a reasonable
emotion to experience.
So if it’s not about some kind of psychological malfunction, then
what?
Do you know what you’re doing?
The issue that I often see is that people aren’t particularly confident
in what they’re doing and this can be rectified with a little guidance.
Understanding what it is that you are trying to achieve and what
constitutes reasonable results can go a long way towards settling
nerves and allowing a trader to simply execute how they have
planned to do so. Clarity of mind and consistency of approach
will help you to start to realize the potential of your strategy.
The idea behind a strategy
Let’s say that you have some day trading strategy – you’ve seen the
stats and you know that it’s performed well in the past. But when
you trade it, it seems like you can barely turn a profit.
The idea behind a strategy often gets lost when you’re executing
it. So a strategy that’s really great for trending markets for example, is
clearly not going to be especially effective when markets are trading
in the middle of a range. Now this might seem fairly obvious, but it’s
the higher time frame to your own that will drive your setups and it’s
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Que Sera, Sera…
The solution to this issue like many others in trading is a change of
mindset. When you sit down to trade, you must believe that markets
provide an endless stream of opportunities and you cannot always
predict when the next one is likely to be. So you must allow the
market to determine the frequency of opportunities that it advertises
to you. Not forcing trades and trying to find ones where there are
none, but also staying focused enough to catch the ones which do
occur even in quiet markets, will allow you to remain in tune with
the markets and on track with your trade plan. Accept that the
market will give what it wants to on any given day and is rarely the
same from one day to the next. Finally, if you are learning and are
hungry for trading experience, make sure you focus on the trades
that you do take in order to learn all you can from them.
not always easy to extricate yourself from the bs when you’re in the
thick of a volatile trading session.
And here’s where  market preparation  comes in. As part of your
pre-trading preparation, taking the time each day to look at a daily
chart and assess what the overall market conditions have been
and are therefore likely to be, can really help you to align your
strategy with what the market wants to do – you should always try
to apply your day trading strategy when it’s likely to be at its most
effective.
Confidence in a plan
Just in case anyone is in any doubt about the importance of back-
testing, let me make things clear – if you don’t back-test your strategy,
you won’t know how it has performed over time and you will be left
with doubts about how effective it is. If you are left with doubts, you
won’t execute flawlessly every time a setup presents itself to you.
But there are at least a couple of other really important benefits to
back-testing. The first is that it helps you to think in trade sets and
this is essential to making sure you stick to your plan even if it looks
like you might take a loss. A trading edge plays out not over a single
trade but over many trades.
The second benefit is that if you back-test in a particular way (which
I’ll come to in just a moment) it can really help you to  iron out
any ambiguity in the rules of your trade plan because you see so
many trades in such a short space of time. Diligence in covering
trade plan ambiguity can help you to master the hard right edge
of your charts.
Entries/Targets/Stops
One of the simplest things you can start to do in order to remove any
trade plan ambiguity is to employ a mechanical trade management
scheme. If you know where your entries/targets/stops are before you
take your trade, there can be no mistake as to where you should
have executed.
The  Trend Jumper  system uses just such a method. But the really
great thing is that it dynamically adjusts the size of the trade based
on the conditions when the setup formed.
continued on next page
www.premiertraderuniversity.com 3

But what do I do?!
The trouble with back-testing is that people frequently don’t know
how to do it. They have a set of rules and assume that unless you’re a
programming or math wiz, they’ll not be able to back-test properly.
But this just isn’t the case. Of course there are a number of great
pieces of back-testing software about, but all you really need is  a
way to record your theoretical trades. This could be done simply
in an Excel spreadsheet or even better using the  Ultimate Trade
Analyzer  (UTA) Excel spreadsheet – and the standard version is
absolutely free.
2 SIMPLE TRADE SETUPS USING TRAPPED TRADERS
by Shane Daly
The concept of trapped traders is a simple one to understand.
While there are two forms of trapped traders, I only want to focus
on one.
The trader who is trapped in a losing position.
These traders, by virtue of being on the wrong side of the market,
can help propel your trade when they hit the exits.
I want to show you how you can profit from these traders.
ISSUES OF TRAPPED TRADERS
The fear and panic by those who enter a trade only to find the market
going against them can cause a sudden burst of price movement. This
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But the key to this and going back to the idea of ironing out trade
plan ambiguity, is manually advancing your charts bar by bar and
paper trading the setups as they appear. You’ll be making lots of
decisions in a short space of time and you’ll see where the holes in
your plan are before you attempt to trade it for real.
Frustration and a loss of discipline
Back to the natural emotional responses to difficult situations. Being
frustrated by a series of unfortunate losses is perfectly normal. But
our subsequent actions do not need to be defined by the emotions
themselves. You wouldn’t go around hitting people every time
someone annoyed you. So you need not retaliate when the market
makes you frustrated either.
If you have problems with how you deal with trading frustrations,
there are a few ways you can rebalance things: –
• Mental conditioning and rehearsal  – go through tough
trading scenarios many times in order to dampen the emotional
response with practice.
• Limit your self-destruct response with risk limits  – this
means having a daily loss limit at your broker to at least disrupt
any costly trading outside of your plan.
• Be physically and mentally balanced  – when you’re out of
balance, frustration can get to you much more quickly and you
can end up boiling over.
Get into the habit of circuit-breaking your frustration – e.g. by
using slow deep breathing, mantras, getting up from your trading
desk and taking a walk, physical exertion.
Trade Planning and Execution
Bringing trade planning and execution together sounds like an
easy task but as anyone who has traded for even a short time will
recognize, it’s not always such an easy task. Make sure that you
know exactly how you will trade before you do, be confident in your
strategy’s ability to perform and disassociate your actions from any
frustration you might feel and you will be well on your way towards
bridging the gap between trade planning and execution.
movement in price is caused by these traders exiting their positions
and creating order flow in the opposite direction from which they
entered the trade.
Whenever you look at the high of a green candle, picture someone
hitting their buy button and entering the trade.  Flash forward to
the next candle being a red momentum candle and that trader who
bought the high, is trapped.
To exit, they have to sell.
Now imagine many traders or many contracts being sold as these
traders exit.
That is what we want to jump on.
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TRAPPED TRADER SETUPS
I want to show  two trading setups that are designed to capitalize
on the plight of these traders and take advantage of their mistakes.
We’ve all been there and know what it’s like to find ourselves on the
wrong side of the colored candles.
Now, let’s find a way that we can profit from those that find
themselves in the same position.
These concepts apply to both long and short positions.
FAILURE TESTS OF HIGH/LOWS
Some will call these false breakouts but what is usually happening
is the market is probing levels above certain areas for some sort
of market action.   These probes are designed to grab stops above
key levels as well as entice buyers or sellers to jump on the break
out.  They are also used to gauge interest at prices they are testing.
This is a daily chart and I have extended a weekly resistance line (since
2013) over to the displayed chart position.
Price is consolidating around the zone and this can often indicate
a potential for a move in the same direction.  I personally look for
strong pushes and then price to consolidate at the highs of the move.  
Often times this can result in a further move up.
But here, context is key.  Many traders take too small a view of the
market and in doing so, miss out on important information.
This is not a short term price resistance zone.
It goes back over two years, it’s a weekly zone, and the dashed line is
not the top end of the zone.  It is from a consolidation of price just
under the extreme high of the zone.
Traders see the large green candle, the consolidation, probes, and
finally a strong push up.   Remember,  that failure candle was
actually a strong green candle at one point.
Traders pile into the long side and that high of the reversal candle
runs right into the extreme high of the zone!
On the same daily candle, price falls back into the consolidation
zone and those long are trapped.
They must exit.
The next day, the red candle tells the story of trapped traders exiting
and new shorts entering the market.
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HOW TO PLAY THIS MOVE?
Once you have noted the reversal candle, you can enter at the break
of the low or go short when price revisits inside the consolidation
area.
Stop placement is simply above the extreme of the candle.  If this is a
true failure, we don’t expect price to exceed that high.
We also don’t expect price to stay in the consolidation area.  We
want to see strong movement after those that are trapped exit the
trade.
Failure to see price move in your favor soon after entry, you can use
the “3 period rule” to exit your trade.
3 Period Rule:  If price does not do what you expected within 3
bars/candles after entry, exit the position.
TRAPPED PULLBACK TRADERS
Markets move in waves with impulsive and corrective moves.  A very
popular trading method is trading the corrective move and entering
a trade in the direction of the trend once the corrective move signals
completion.
The issue is that many traders are impatient and don’t want to
risk not being in the move.
So they enter trades too early at the first sign of completion.  When
stopped out, they still don’t want to miss the move so they re-enter.
Complex pullbacks are a little tricky in that they can be hiding inside
a higher time frame structure.   What may appear to be a simple
pullback will actually be a two-legged (complex) pullback on a lower
time frame.
Before this complex pullback, we had what appeared to be simple
pullbacks on this time frame.  Remember, simple pullbacks can be
complex pullbacks on smaller time frames.  Price advanced off the
simple but when this complex completed, price went on an extended
up move.
The first black line indicates the first leg of this pullback and
the pinbar looks like it could indicate a resumption of the up
trend.  Traders enter and place their stop below the candle.
BUT YOU ARE LOOKING FOR A COMPLEX PULLBACK AND
YOU SIT ON YOUR HANDS.
Price advances then turns around and turns the longs into trapped
continued on next page
www.premiertraderuniversity.com 5
 traders and takes out stops.  This could also entice short players who
will end up being trapped if/when price turns back in the direction
of the trend.
Seeing that large green momentum candle, what could be taking
place?
• Traders playing complex corrections take the long
• Trapped traders who exited longs earlier, re-enter
• Break out traders who got trapped short exit their position
Entering these types of trades is not always straightforward and
neither is the stop placement.
1. You could drill down to a lower time frame and look for a
pattern such as a short breakout failure on that chart.
2. You could buy stop a break of the highs once price breaches the
low of the first correction and scale buy stop down until invalid.
3. Use a momentum indicator turn such as Stochastic.
Stops can be placed a distance from the low of the correction but
NEED TO BOOST YOUR PROFITS? TRY THIS EASY OPTIONS TRADE.
by Mike Rykse
“Options are too expensive.”
“I don’t have time to trade options.”
“Options are way too complex for me.”
These are all comments that I hear on a weekly basis from traders
that are intimidated by the options space. It’s a big goal of mine to
disprove all of these statements and get more people interested in
trading options. When we poll the attendees of our webinars, we
often ask whether attendees are profitable or not. We typically see
a success rate 2-3 times higher with people trading options when
compared to forex or futures markets. What baffles me is when I
talk to many traders throughout the week; one of the biggest issues
that is brought up is a frustration with the lack of trading success. In
many cases, this is because people are looking at the wrong markets
and are attempting to trade without a system in place. If the success
rates market wide are highest with options traders, why not focus on
those areas first? As you will see below, it takes only minutes a day to
identify and place options trades, can be done with as little as a few
hundred dollars, and can be done with some very basic strategies.
To show how powerful and easy options trading really can be we
are going to take a look at our last trade that was closed out on
QQQ, which is an ETF that tracks the Nasdaq. If the lack of time
to look at charts throughout the day is an issue, then the ETF’s can
be a lifesaver. Instead of looking at a few individual stocks, you can
look at one ETF like QQQ and have exposure to a whole basket of
stocks. You are getting instant diversification by looking at one ETF
like QQQ. In my opinion, you can make some really nice returns
just by looking at a handful of ETF’s on a daily basis.
One of the big reasons I love trading options is the flexibility that
they offer. We can play the upside and the downside in the markets
easier with options than any other market. Our last QQQ trade that
we will look at took advantage of the market moving higher. We
looked at our Active Swing Trader charts and saw that our custom
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not right under the pivot.  You can still have price retest the area
and execute the test that was mentioned earlier thereby taking out
your stop.
POWER OF TRAPPED TRADERS
It’s very hard to see your position on the wrong side of the market
and the execution of your stop not only saves your account, but feed
the account of others who understand trapped traders.
Standard technical analysis always tells traders to place stops around
the pivot areas or just above support/resistance in a range.  How can
you tell traders do that?
Look around your charts and on every time frame, you will see price
enter a zone beyond the traditional stop zones and suddenly reverse.
Being on the right side of those moves can propel your positions
into profit very quickly.  The key is to see where trapped traders may
be and get yourself positioned to take advantage of them when they
have to execute.
trade calculator was giving us an entry point at 107.32. Instead of
buying shares of stock, which would tie up too much capital, we
decided to take advantage of the leverage that the options offer by
buying a call option.
Before we get into the details of the trade, it is important to point
out that the sole reason for me taking this trade was that my system
was printing a clear setup for me in real time. If you don’t have a
system in place that you can stay disciplined to, then that should be
your next step. Trading off a hunch or an opinion on what you think
the market might do next is very dangerous and is a big reason why
most retail traders fail. Having a clear system in place will be the key
to any trader’s long-term success.
As you can see on the chart above, the Active Swing Trader calculator
was printing an exact entry at 107.32, a stop at 105.44, target 1 at
108.44 and target 2 at 110.17. I knew there to get in and out before
I ever entered the trade. So now 90% of the hard work is done for
me, which allows me to stay active in the markets in only minutes
each day. Once the 107.32 entry point was hit, I decided to go in
and buy the November 107 Call option for $2.20. For $220 per
contract, I had the right to buy 100 shares at 107 until November
expiration.
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What I have done here is put on a bullish trade for just over $200
per contract. The most I can lose on the trade is the $220 that was
required to put the trade on. This trade also gives me unlimited
profit potential as long as QQQ moves higher. Fortunately for me,
QQQ did move higher and we hit our full target of 110.17 about
a week later. Once my target was hit on the chart, I sold out of my
call option for $6.20. This gave me a $400 profit or a 182% return
in 1 weeks time. That is a huge return for only holding a trade for
a week and only checking on the charts for a few minutes each day.
I was able to get the trade on and then move on with the rest of my
day without having to stare at the charts all day long.
Was this trade expensive? No, we only tied up $220 per contract.
Did this trade take hours to identify and manage from start to
finish? No, we spend less than 5 min a day managing this trade. Was
this trade complex? No, all we did was trust our Active Swing Trader
system, which was giving us a long trade. We took the long trade by
SEEN ANY GOOD TRADE ROOMS LATELY?
How many emails do you get each week offering you a trial or a visit
to a trade room? There are oil trade rooms, forex trade rooms and
then Emini Futures trade rooms. How many trials have you done?
Have you stayed with any of them or found them useful?
If you are like me, I have been to a few to check them out and see
what they do and I can say I have never gone past any free trial. Of
course, I am spoiled. I help run one of the best trade rooms on the
Net, if I may say so myself. What makes the Netpicks Trend Jumper
and Counter Punch Trade rooms so great and stands out from all the
rest. This screen shot from the live room will tell all.
Figure 1
What you see here is actual chat from the live room. Traders can
talk to each other, without their comments going through the
moderator. So, what you get is a group of traders, coming together
each morning to trade the same markets and encourage each other
and give advice or info. Plus, you see that the traders in the room
made good money very quickly today. Now every day is not so
perfect, but $430 in $15 Jim said, and all the other traders trading
Oil with 2 contracts did very well.
Now let me show you a screen shot of the actual chart (see figure 2)
that called the trade and see if you don’t think it would be an easy
system to follow.
We start trading Oil at 0850 AM NY time and you see the white
trade at about 0855 AM, well, the moderator Will told everyone
the trade, exact entry at the plus sign and a money management dot
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buying a simple call option. So we just disproved all of the issues that
I hear from traders that are scared away from the options markets.
Don’t get me wrong; are there potential gains from trading futures or
forex? Sure, but it’s more difficult to see long term and the statistics
back that up. It’s my opinion that every trader should have access to
the options market in some way. Whether it is the only trading you
do, or just a part of your overall trade plan the results will make it
well worth your while.
If you are struggling to see the results that you want out of your
trading, take a step back to make sure you are involved in the right
areas. It very well could be that you are struggling because you aren’t
looking at the best products. The QQQ trade is an example of the
type of trade that we take all the time with the Options Academy
trading program. If you are looking to improve your trading results
then maybe it’s time to consider taking advantage of these powerful
moves with options.
by Ron Weiland
Figure 2
(first white dot) the Full target was the larger white dot. Once price
hit the entry and moved to the money management dot, we moved
our stop down to breakeven and it followed the market all the way
down to 46.22 on the Trailer. This one trade made $500 depending
upon your broker or some slippage. Not a bad way to spend 15
minutes of your trading day.
So, what did the Oil traders do after that trade? Some of them quit
trading and turned off the computer and when on with their day
or did anything they wanted to. This is what we call the Power of
Quitting and it is very unique to Netpicks. Some traders just don’t
get it; they feel like they must be in the market all the time, or that
they will miss some nice big trades. Yes, that is true, the next trade
might have won, but it could have lost and then you would have
been giving back your profit on the first trade. Then do you take the
third trade to make back that money? What if it loses and now you
are only up say $100 and you were up $500. Why did you not just
quit while you were ahead. This is the choice traders make, make
your money and run or stay around all day trying to trade more and
not necessarily make more, but you sure do have to work harder
that way.
We like to work smart not longer. If you want to make more money,
then trade more contracts. You can also trade a second or third
continued on next page
www.premiertraderuniversity.com 7
 market, if you have some sort of a daily goal. We trade several
different markets in the trade room.
Figure 3
Here is a screen shot of the same day in the trade room. We trade
the Forex EJ 5 minute chart, also at 0932 NY time we will start
trading the YM or Dow Emini. We also trade the ES and Heating
Oil Futures. So, there are plenty of markets you can trade if you
want to trade.
Some other super nice features about the trade room form others I
have visited. Our charts are very clear with exact entries stops and
targets. I have been to rooms in the past that are like, ok I have a
feeling, let’s go long on the ES the Moderator says. Then maybe a
few minutes later, ok not looking good, go ahead and exit the trade.
What on earth was he looking at to make those trade calls? Is this a
gut feeling trade room or something based upon a system?
With our charts and the indicators you put on your charts, you
always know what to do. You have everything you need, the exact
entry stops and targets and money management and how to trail the
market for large moves.
SIMPLE CHOP INDICATORS – PART 1 by Will Feibel
All markets trend in three different directions: up, down and sideways.
If you use a trading system based on breakouts and directional moves
then you will do well when your market is trending up or down,
however you will most likely suffer trading losses while the market
is trending sideways. This sideways trend is also referred to as chop,
perhaps because price is chopping up and down or perhaps because
it chops your trading gains into little pieces.
Some systems perform well in sideways markets, selling tops and
buying bottoms, and these are termed fading systems. By their
nature however their gains on individual trades can be small while
trending systems can have large, home run winning trades. You
could of course trade both systems; the trick however is in knowing
when you are in an up/down trend and when the market is going
sideways. Unfortunately though by the time you decide that the
market is in chop it may already be too late. However, the earlier
you can determine this, the less will be the number of losing trades.
In this series of articles we’ll look at two simple indicators that will
reduce the time you spend trading in choppy markets. First we’ll
cover a standard indicator available in all major charting platforms
and in our next article we’ll introduce you to the Crazzy Otto chop
indicator, based on an insight from the eponymous long time trader
and member.
8 www.netpicks.com
I just finished calling the live room today. It is 10:00 AM NY. So,
in just over an hour we had 2 trades on Oil, one loss and one win,
we only made $50 on one contract, so we were done for the day on
that market. Then we moved to the Dow and got one nice trade for
$200 with 2 contracts. The ES also delivered 4 points in 2 trades
and again we were done in about 30 minutes on that market.
It is always so nice to see the traders in the room, share their
experiences and sign out, saying done for the day, made money, have
to run, see you tomorrow. We also had a lot of new folks in the
room or folks checking out the system on a trial. This is the best
type of training you can have. Ask your questions in real time; see
everything on the charts as I walk you through the entire system and
how to trade it. You can learn it in less than 30 minutes. It is really
that easy.
Not every day traded like today. Some days we might start out with
a few losses, but we are in a trading club. Everyone is taking these
trades, so we all feel the pain or take the heat on a trade when it
moves against us. The good news is, you are being guided by us
and the system. Lean on it. You have your stop, no need to worry,
the trade will win or lose. You will not get cold feet and bail out
early, you have a whole trade room sticking with the plan and the
trade. Trust it and you can be one of those traders in the room for
6 months or years and can show your trade history of winning most
every week and reaching those new equity highs all the time.
I know there are a ton of garbage out there and so many offers, but I
can assure you this is unique. We have traded it for over 4 years and
trained thousands of folks on it. You can be one of those successful
traders as well. You own it to yourself to check out this system.
Click on the link below and come to our one week preview of the
room. Hope to see you there.
http://netpickssignalservice.kajabi.com/sp/15335-ptu-training-
room-1-week-trial#
Average Directional Index (ADX)
The ADX is found on most major charting platforms. This index
measures the strength of a trend; however it does not know anything
about the direction of the trend. If your market is in a strong up
or down trend the ADX will be high, but if it’s in a sideways trend
the ADX will be low. An increasing ADX indicates a trend that is
Figure 1 – ADX
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getting stronger; a decreasing ADX indicates a weakening trend.
Most commonly an ADX of 20 is considered as the threshold for
determining a strong or weak trend. Figure 1 shows a daily chart
of the Dow Jones Industrials futures and below it the ADX with a
horizontal line at the 20 level. Notice how during the choppy period
from early February through early June the ADX was well below 20.
As stronger trends started to develop the ADX moved above that
level.
The same ADX indicator and the same threshold value of 20 can be
used on any time frame and can also be applied to day trading charts
as shown if Figure 2. This is a five minute chart of the same futures
Figure 2 – ADX Day Trading
THE CRAZZY OTTO CHOP INDICATOR by Will Feibel
In our last article we looked at a commonly available chop indicator,
the ADX. The ADX is technically a measure of trend strength so low
trend strength implies a directionless, choppy market. This week we
will look at the Crazzy Otto chop indicator. This is not an indicator
that you place on your chart; rather it’s a price pattern that I’m sure
you’re all painfully familiar with.
Figure 1 – Continuation
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market. I’ve added the rectangles to illustrate the periods where the
ADX was below 20. Again this simple approach to using the ADX
would have kept you from trading a trending system during periods
of slow, sideways price movement but would have seen you place
trades in time for the large move down.
Of course like all indicators the ADX lags price action and by the
time it drops below 20 the choppy price action will most likely have
already started, and the first strong trending move will already have
begun before the ADX pops above 20. That’s why you should never
use ADX alone in your trading but instead use it in combination
with other breakout indicators, or simply apply it as a filter for your
trending system signals.
We haven’t really talked about how the ADX is calculated and
won’t go into details here but you can easily find out from your
charting platform’s help system or by searching the internet. It was
developed by Welles Wilder and is one of three elements comprising
the Directional Movement Indicator (DMI), the other two being
the Plus Direction Indicator (DI+) and the Minus Direction
Indicator (DI-). In combination they define both the strength and
the direction of the trend and we will cover the DMI in more detail
in a future article.
For now remember that if ADX is below 20 you’re in a sideways
market and if above you’re in an up or down trend and use that
information to help determine whether or not you should take the
next trade.
In our next article we’ll cover the Crazzy Otto chop indicator.
Crazzy Otto is a long time owner of NetPicks systems and he
identified a simple trade model that we’ve named after him. In this
model you get ticked into a trade, price reverses soon after and goes
on to hit your stop at which point you’re ticked out and the net
result is that you’re now ticked off: ticked in/ticked out/ticked off,
that’s the basic Crazzy Otto trade.
The Crazzy Otto chop indicator is a pattern of consecutive and
opposing Crazzy Otto trades. Let’s take a look at why this is such a
powerful, albeit painful chop indicator.
In a trending market we often see small price retracements followed
by a continuation of the trend. Figure 1 shows this pattern:
We get the retracement when price pulls back from point 1 to point
2 and the continuation of the trend when price breaks the earlier
swing level at point 3. A basic strategy has us going short on a break
of the swing; a more aggressive strategy may have us go short when
price resumes the direction of the original trend by bouncing off
point 2.
Let us assume that we go short somewhere between point 2 and
point 3 in anticipation of a continued move down and based on
a valid signal and confirmation from out trading system. If the
continuation pattern plays out we can anticipate a move similar in
size to the move leading into point 1 and book a nice gain. But this
isn’t always the case unfortunately. Instead what we often see is that
price does not break the swing low at point 1 but instead bounces
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 off it and point 1 now becomes a support/resistance level. Figure 2
shows this scenario:
Figure 2 – Consolidation
We now have the makings of our first Crazzy Otto trade. We went
short somewhere between points 2 and 3 expecting price to continue
down but instead price reversed and stopped us out somewhere
between points 3 and 4. We got ticked in, ticked out and ticked off.
What happens next will determine if we complete the Crazzy Otto
pattern. Our trading system may have decided that we are now
faced with a reversal in price action and gets us long, so somewhere
between points 3 and 4 we go long. If price breaks through point 4
TRADING BINARY OPTIONS ON NADEX by Ron Weiland
Last month I wrote an article about trading binary options. I gave
you some great tips on how to select a broker and what Binary
Options are. So, if you missed that you should go and read that
article, then come back here.
Today we are going to look at the Nadex. The Nadex, is a Binary
Options Exchange and is located in the US. Nadex stands for North
American Derivatives Exchange. There are a number of compelling
reasons to use the Nadex for your Binary Options trading.
First, it is located in the US and not some remote Foreign island
(no offense intended). It is regulated by the CFTC (Commodities
Futures Trading Commission) and funds are held in US Banks, so
quite safe.
Second, they are not a broker, they are just an exchange. So, you
don’t have them trying to manipulate or force the market one way
or another, they just bring buyers and sellers together. There is no
middleman.
Let’s review how price works on the exchange and the offers to buy
and sell. This is also referred to as the Bid/Ask price. Just like stocks,
the Bid is the price that the stock is selling for and the Ask is the
price that you can buy it for. The price between the Bid and the Ask
is the spread.
Now as you know, Binary Trades are simple True/False Predictions
or Yes/No Guesses as to what will happen in a market at a certain
time. For Example, this is what the Option on September Crude
Oil is today. You will see from the Picture below that we are going
to place a bet on the fact that Oil will be above 48.00 at 2:30 PM
10 www.netpicks.com
and continues going up then we will have a winning reversal trade,
but if price bounces off point 4 and heads back down we will end up
with a second Crazzy Otto trade and that will complete the Crazzy
Otto pattern: a short Crazzy Otto trade followed by a long Crazzy
Otto trade (or vice versa).
We never know when a price consolidation will begin; there is no
leading chop indicator. The best we can do is attempt to identify
the consolidation as soon as possible. At a minimum we need
three price reversals to define a consolidation pattern (points 1, 2
and 3 in Figure 2) and a fourth reversal to confirm it (point 4 in
Figure 2). The Crazzy Otto pattern results from this price action,
we get triggered in one direction and stopped out and immediately
follow this with a trade in the opposite direction and also get
stopped out. It is therefore the earliest confirmation that we have
entered consolidation or choppy price action. We don’t know if the
consolidation will continue but we know that it has been established.
Once a consolidation is established we assume that it will continue
until we get a confirmed break out of the consolidation and the
establishment of a new up or down trend. The conservative approach
is to stay out of the market until this happens. The implication is
that we will have taken two losing trades (our Crazzy Otto pattern)
to confirm that we are in a price consolidation but by staying out we
will avoid any more losses. Of course this also means that we will
miss the trending move that breaks out of the consolidation. It’s up
to you to decide whether to stay out or continue trading.
Are you feeling lucky?
today. If you think it
will then you BUY
the contract. If you
think it will not,
then you sell the
contract.
The buyers thinks
that there is a 72% chance that it will (thus the offer price of 72 and
the sellers think that there is a 66.5% chance that it will not close
above 48 by 2:30 PM. You will also note that current price on Oil is
48.27 and there is 2 hours and 33 minutes till the Option expires.
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Now let me show you the prices about 15 minutes later as the price
of oil has moved down to 47.96.
You can see that the Probability has changed quite a bit. Now you
can buy that same Option for 50.25 that you think it will expire in
the money (Price of Oil above 48 by 2:30. If this happens you will
make $100 and you only paid either $72 or $50.25 depending upon
when you bought it. Now, if Oil does go down and closes below 48,
then you will lose your entire bet, either $72 or $50.25.
One of the nice things about the Nadex and the exchange is that you
can close your position early. So, if you had purchased the option
at $50.25 and then Oil went up to say $48.30 your Option would
be more valuable and you could sell it before your expiration time.
This was the Oil trade I made.
I bet that Oil would close above 48 and price has not moved in my
favor, it is currently 47.94 and my position has lost value.
You can see I paid an average price of $59.09 and right now if I
wanted to cut my losses I could sell it at the Current market rate
of $38.50. You will see that as you get closer to the expire time,
the value that you can sell it for will go down if you are out of the
money, as I am in this case. I am going to hold my position and hope
that Oil does close above 48 in the next hour at 2:30 PM, and then
I will win the bet.
TO AUTOMATE OR NOT. THAT IS THE QUESTION by TJ Noonan
I receive a lot of emails and inquiries asking how to put some
of our longest lasting, most successful tradeplans into
automation so that they can be traded by the computer,
and not by the trader. What a dream that would be.
Unfortunately, it doesn’t work quite like that, and for
several key reasons. That is not to say that we can’t
use automation for trading because we can. It doesn’t
necessarily make it easier to trade though, which is a
big misconception by many inexperienced traders. It
actually adds layers of complexity. What if the broker
doesn’t fill your order but the automation thinks you are in
or out of a trade, for example? What about getting in sync with
earlier setups that are still viable? These are just two main issues that
can make automation more complicated than just manual trading.
The way I look at it, at least with my two latest strategies, the Trend
Jumper and the Counter Punch Trader, there are THREE types of
tradeplans. In response to many of the inquiries I have received, I
decided to publish my response for this month’s Netpicks Informer
Issue. This article refers to Trend Jumper but it equally applies to
the Counter Punch Trader as well. Hopefully it will clarify the
differences between some of our most successful legacy plans that
were created by hand vs other custom plans created with the Trade
Assist (automation).
Here it is in its entirety:
www.netpicks.com
How does Nadex make money? They charge .90 cents per contract
that you buy or sell. You are charged on each trade, both when you
buy and when you sell. However, if you let your contract expire you
are not charge a commission on that.
That is really all you need to know to get started with a Demo
account with the Nadex. They have many training videos on the
site that show you how to place orders and how to look at various
markets. There are many different markets to trade, Forex, Energy,
Metals, Agriculture, and Indexes like the Dow or the FTSE100.
There are also many different time frames to pick your options.
Some Options expire every 5 minutes, to 20 minutes, to daily and
even weekly. So, you have many different trading options available.
Also, the Exchange hours for the Nadex are from 6 PM Sunday
night till 4:15 PM Friday afternoon. The markets are also closed for
1 hour from 5 to 6 PM NY time when they rebalance the exchange.
In review, I think there are many advantages with trading on the
Nadex. The Key is you have Safety of your funds. It is a real, regulated
exchange! You have the flexibility of trading many different markets
and timeframes and you are also able to sell your position before
the expiration time. In fact, Oil has moved up to 48.22 and I think
I should sell early and take my profit, or should I make full profit
and let it ride? What do you think…take profit and run or risk it,
your call!
If you want more info on what is new in Binary Options, stay tuned
to the Newsletter or email info@netpicks.com. Great Trading.
Classic/Original TJ Tradeplans
Some of our most successful ongoing tradeplans were
created long before the TJ Pro Plus.   In fact, they
were created before the TJ was even developed.  The
tradeplans were created with long, tedious manual
effort over many, many months of research.  These
tradeplans continue to stand the test of time and
work the same way today as they did years ago.  
The TJ Pro Plus Calc can be setup to show these
trades.   Many of the maneuvers we do with these tradeplans
cannot be completely programmed into the Calc or TA and for that
matter; we still have to master the rules of the tradeplan and know
when to get away from the dots.  We cannot get the TA to replicate
these plans.  Again, think of what it is you want to do.  The bottom
line, and the theme I always adhere to is that ‘we trade to make
money,’ one of the early and most important steps of the Success
Guide.  Also, ‘if it ain’t broke, don’t fix it.’  I am not motivated by
getting all the dots to line up perfectly with these plans because they
already work the way they are.  Don’t try to shove a round peg into
a square hole by trying to force the TJ Pro Plus into something that
it can’t do or is not designed for.
We can use the calc to assist us so long as we have a greater
understanding of the actual plan, itself. Here are five main examples
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 (I probably forgot about a few minor ones too) why the pro plus calc
or TA cannot be shoved into this peg:
1. Getting in sync with the tradeplan’s first trade of the day
(ftod).   I typically choose the setup that is closest to the
market at the time of our start time. This is how we do it in
the traderoom, too.  The calc however, is often tracking a prior
trade, a trade that is not as close to the market at our start time
and therefore, one we are not interested in.   It will show us
what we call ‘addons’ but it won’t track them.  Sorry!  That is
way too complicated of a programming job and would drive
the cost up thousands of dollars so we made the strategic
decision to NOT try to build trackable ‘addon’ or ‘extra’ trades
into the code.  That’s why we always begin by introducing the
TJ Standard so we can get everyone trained up on the basics of
the TJ.   through.  The proof is in the continued success we have with
2. Making small, tactical adjustments with our stops and
entries around nearby chart/swing/pivot levels and/or nearby
indicators like the JL, or EMA.  Remember, we are allowed to
make 1 and 2 tick adjustments, sometimes 3 and rarely 4.  This is
part of the 5% art to trading and these tradeplans were designed
with those maneuvers.  The Calc and TA were not. That’s one of
the advantages of being an actual trader and paying attention to
price action and your charts. Automation can’t really do that to
the degree that we can and do.
3. Standing down for news events.  We can program pause times
into the TA but keep in mind, news events don’t happen every
day.  We have to know our stand down rules when these events
happen.
4. Different PoQ (Power of Quitting) rules.   For the same
reason as #1, there are some poq things that we do with these
tradeplans that are not programmed into the TA.  The TA has
other, very powerful poq abilities that you can use, just not with
these tradeplans.
5. Getting in sync with a current ‘addon’ trade after we get
stopped out of a trade, usually due to money mgt moves.
Some traders don’t do this but I do and the tradeplan allows for
it. We can take a ‘trade in progress’ if it is still viable; hasn’t hit
money mgt or hasn’t stopped out and we still have a chance to
get in at the entry price. The TA definitely cannot do this.
6. Other things I just thought of; avoiding certain setups like
floating crossovers, getting in sync with the same floaters after a
pullback, ignoring targets on very small setups which can result
in huge running moves with low risk, making stop and reverse
adjustments, etc. Each one of these things we do as traders and
if we try to force these plans into automation we will NOT be
able to get the same great results that we have been getting for
such a long time.
We do the above things all the time and practice them in live trading
conditions.   The only way to master these maneuvers is through
doing them; repetition and practice.   We backtest manually with
these rules so that they do become mostly mechanical but it takes the
human mind to identify them and execute them properly.  Trying to
put all those things into code is probably more difficult than sending
someone to Mars.   It is far easier to just learn the skills and then
enjoy the results for the rest of your trading career.   Putting this
stuff into code, or at least trying to, always ends up with unintended
consequences.
The Pro Plus Calc and TA are very powerful in their own
12 www.netpicks.com
right.  They can do countless things to develop and identify great
trade opportunities.  Just don’t try to make it something that it is
NOT.  We can create (and I have) brand new tradeplans that DO
utilize what these tools CAN do.  The thing to remember and not
mix up is the difference between NEW plans and the Original
Plans.  Understanding the powers of the Pro Plus toolset and equally
important, understanding its limitations.
Basically, there are THREE approaches to
tradeplanning with the TJ Pro Plus and/or the
Counter Punch Trader tools (including the TA):
1.   Manual Tradeplans; these have proven to stand the test of
time and recover from rough periods, that all tradeplans go
our proven plans.  I just talked about this in great detail above.
2.  Plans developed purely with the TA; This requires optimization
and lots of bactesting as well as forward testing.   Some of
these plans prove to be very successful over time.  Others need
maintenance.  Others still end up breaking down.  
This is a great tool to create automated tradeplans.  Understand
that each market, forex, futures and stocks have their unique
challenges with automation but it can be done.
• Futures; contracts expire.  It is difficult to backtest with
automation futures because IF you want to use ‘Key Lev-
el Adjustments’ (KLAs), you need to test each contract
separately.  This is very hard to do.  Manual backtesting
is easier, believe it or not.  You can, however, test using
continuous charts IF you turn off KLAs.  Remember
though, you also have to account for news events.  You
can set pause times with the TA but they will pause even
if there isn’t a news event.  You can’t change this!  It’s the
way the futures markets work.
• Forex; It is very difficult to account for spread because
brokers are always changing the spread.  Also, you still
have to account for news events.
• Stocks; You can’t automate options trading.  You have to
be careful of gap opens when it comes to placing trades as
well as the results that the automation will return.
All three need to be guarded against the risk of curve fitting by
over optimization.  That is why it is critical to learn your skills
and master the tools and techniques required for success.
3.   Plans developed with the TA and then fine tuned with
manual testing.  These tend to last and stand the test of time
as well.  Two great examples of this are the two great 5 minute
chart plans we have: EURJPY and YM.
• The TA is INCREDIBLE for testing things that would
take an eternity to test manually like:
1. the relationship between JL and CL
2. the relationship between the EMAs
3. best trailing techniques
4. best time to activate the various trade mgt techniques;
aka money mgt, mm
5. ATR studies
6. Etc, Etc..
Once basic tests are run, then apply manual backtesting with the
discoveries made which leads to a greater understanding of your
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chart/tradeplan.  That is exactly how I came up with the EURJPY
tradeplan and the targeting scheme we use.  TA gave me the JL6 and
CL2 along with the EMA14.  My eyeballs and actually diving into
the charts click by click, showed me how and why we needed to go
to 15 and 25 pip targets in small trade situations, along with adding
spread. This TJ tradeplan has stood the test of time and continues to
work as intended, running for nearly 3 years now.
There are those of you who will be discouraged by all of this.   I
understand.  There are those of you who don’t want to be bothered
and just want to be told what to do.  All you want to do is trade.  I
don’t blame you and please understand, I get it!  That is not lost on
me.  There is a fact about trading that no matter how much any of
us try, we cannot undo that fact.  Success in trading comes from a
certain degree of surrender.  The fact is that we are all human beings
and were not inherently born or equipped with the necessary skills
and required attributes of what it takes to be successful traders.  That
is a FACT and you all would be best served by acknowledging it
and then surrendering to it.   We have to BECOME traders and
that requires work. Just remember, if it wasn’t so, there would be
no trading because it would be illegal.  Think it through and you’ll
get it.
I am just one person.   I will continue to share with the Owner’s
Club(s) new plans as I discover them, develop them, etc.  But if I
were you, I would do my best to MASTER the tools and learn how
to use them to their fullest.  The best tradeplans for YOU will be
the plans that YOU create for YOURSELF.  The reason for this, like
it or not, has nothing to do with me or Netpicks.    It has more to
do with the prior paragraph.  It has to do with the FACT that most
traders fail and they fail because of THEMSELVES.  As soon as a
plan that I create goes through some short term hardship, nearly
everyone will quit the plan because they do not fully understand it,
nor its midterm to long term rhythm and cadence in the market. As
soon as traders quit and run away from it will be when it goes on a
huge profit run to new equity highs.
ALL tradeplans go through hardship.  If I created the plan, and you
did not go through the Steps to Success Guide to take full ownership
CHARTING THE RIGHT SESSION TIMES IN FUTURES by James Kessick
One big issue that I’ve found frequently
comes up when talking to traders,
is when they are tracking market
behavior they fail to differentiate
between primary sessions and
overnight sessions for futures
products. Now of course, it can
be useful to chart a 24-hour or full
electronic exchange session. However,
charting the right session times in futures
for the primary session of the market you are trading
can go a long way towards figuring out what it’s trying to do.
Why non-primary hours are different
Non-primary or “electronic” trading hours have two major
differences to the main session for an instrument. The first is that
because a futures product is a contract traded on an underlying
market (for example a stock index future on a basket of stocks), any
trading going on in the future when the underlying market is not
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of the plan, internally, you will not understand it and will end up
quitting right before it moves to new equity highs. The tendency is to
chase performance and to move onto something else.  The cycle will
repeat and the end result is losses, losses and more losses. People are
not immuned to this.  Good traders are. Good traders only become
good traders by hard work.   You are not born that way.   IN fact,
most people are born to be horrible traders because it is so counter
intuitive to what we have learned in order to survive.
If YOU however, create the plan on your own, based on your own
self analysis, you will inherently acquire the foundation of belief
and understanding you will need to succeed and work through
the short term setbacks.   You will begin to run your trading as a
business and ascend to the higher level perspective that is necessary
for success.   Trust me on this.   You cannot just talk yourself into
believing a tradeplan.   You have to take ownership internally and
that requires the work it requires.   Whether you’re trading Trend
Jumper, Counter Punch or any other strategy, this is a TRUTH
that 99.9% of everyone cannot avoid or hide from because you
are human. (That is not a scientific number; it might be off a few
ticks.)  But you get the point.
If you are one of those people who want everything done for them,
you just want to trade and nothing else, well, I believe I have you
covered.   Stick with the tried and true ongoing successful Classic
Plans.  I am still skeptical that YOU will succeed, even though the
plans DO succeed.  You will probably still fall prey to the trappings
of being human and chasing performance, the first signs of short
term trouble.  
If on the other hand, you are one of those people who has a driving
desire to succeed in a universe where most do not, then I hope you
will understand that you have to recalibrate your internals and evolve
into being a different kind of species altogether; a trader.   This
happens with hard work, just like anything else that is worthwhile
in life.  The Steps to Success Guide is ONE way.  Perhaps there are
others.  These Pro tools empower you IF you learn how to use them
and how not to.  You still have to become a trader though.  
fully open is going to be a proxy to the real market. In other words,
the trading that goes on in futures outside of primary hours, isn’t
always going to be an accurate reflection of what the underlying
market wants to do.
The second point is that the volume traded is generally much lower
in the electronic session than it is in the primary session. This
tends to result in either far tighter trading ranges when interest is
lower or accentuated moves due to the thinner book when there’s
something that needs to be priced in. Another really great example
of this is in sessions where the market is open but there’s a major
holiday somewhere in the world. Many times there’s very little
movement, but sometimes the thinner market leads to significant
directional movement.
Masking the important activity
As a result of these differences, what you see on a full session chart
has the potential to mask important technical features of a market.
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 Which moves have happened as a result of changes in the price to the When looking at Forex futures it’s not quite as straight forward. You
underlying market for example, are likely to be far more indicative of could chart sessions based on the hours of the major Forex centers
future movement and yet it might not be immediately clear which globally (from forexmarkethours.com):
these are on a full session chart.

The actual volume traded is also likely to have an impact on your

charts. If you use volume profiles, although the additional less
important data is far smaller in comparison to the primary RTH
data, it will still have an impact on the overall distribution calculated
by your platform. But equally if you were to do a volume analysis on a product (I’ve
used the British Pound futures here) you might see that there’s a
But perhaps of greater impact is felt by traders who use either more relevant time window to use that spans across several of these.
tick or volume-based charts for their timeframe which in turn
is used to generate setups. Many trade plans used in  Trend
Jumper and Counterpunch use tick charts for example. The result of
using overnight data is that setups have the potential to be artificially
large due to the fact that markets can move directionally on far fewer
trades/less volume outside of their primary sessions.

Additionally, it’s easier to identify session derived extremes in price,

which  markets are likely to retest and respect  in the future.
Although it is possible to find indicators on some platforms that
allow you to specify the times for the open/high/low/close you wish
to have automatically drawn based on, it’s far more common to only
have the option to show this for the current session. Fortunately
however, most platforms do allow you to change the session
displayed.

Selecting your session

Selecting the correct primary session is usually fairly straight forward.
You can look at the product’s exchange webpage where it often gives
the pit or open outcry session. You could also find the information
for the primary session by doing a web search on the primary market
hours for the underlying market. For example, the E-mini S&P 500
(ES) is a US stock index product. The primary market hours for the
NYSE are 9:30 am-4:00 pm EST and so this is the primary session
for the ES (although 9:30 am-4:15 pm EST are frequently used).
Charting the Right Session Times in Futures
Many traders still don’t differentiate between primary and non-
primary market sessions in futures trading and it’s my belief that
they are missing a trick with this. If you don’t already do so, why not
at least take a look at primary session only futures charts as a way to
compliment your technical analysis.

WISDOM OF A TRADING LEGEND by Shane Daly

I personally find the stories of traders such as those found in the
Market Wizards books such an enjoyable read. Even better are the
stories from those that were in the trading trenches long before we
had the technology that we do today.
Even many of the popular trading indicators of today were not in
use back when many traders were making serious bank trading. The
popular MACD made it’s appearance in the 70’s while Bollinger
bands saw the light in the 80’s.
A lot of what these indicators show was seen by these traders just
by looking at a price chart.
This is a far cry from traders of today who often times have charts
with so many indicators that price bars are impossible to see.
I find the “old timers” quite inspiring and the trading wisdom they
pass along is unmatched.
Which brings me to Richard Donchian.

14 www.netpicks.com www.premiertraderuniversity.com
Wisdom Of A Trading Legend
Donchian started dabbling in trading during the late 20’s and he lost
money during the crash of 1929 just like many other traders.  The
difference was that he didn’t just quit. He went onto the study of
technical analysis where he eventually developed an approach that is
in use today, trend following.
His system was based on moving averages but unlike many who
dabble in trading today, he had trading rules and guidelines that
dictated how he traded.
Over the next several trading posts, I am going to highlight some
of guidelines and thoughts that Richard Donchian had that I have
found immense guidance from over the years and as I continue
to develop as a trader. Some of them you have probably heard of,
perhaps tried and discarded (jumping from concept to concept is a
plague in this business), and others that may be new to you.
Trading wisdoms from Richard Donchian were published in the
early 30’s and have stood the test of time.
1. Breaks of trend lines
When trend lines that run counter to the major trend break, these
are often great signals to take a position and are also often used to
exit positions for those that trade counter to the major trend.
This chart shows the major trend using a trend line that is to the
downside. During a trending move, we can expect pullbacks against
the major direction and trading these pullbacks is a very popular
method of trading. These pullbacks can be classified as mini-trends
inside of the bigger trend. The issue becomes when is the time to
enter?
Using trend lines that highlight the move back can show when
price violates the smaller term move in an effort to resume the major
move. Traders may place positions when the trend line break occurs
or, by using a smaller time frame, they wait for a pause and a small
range in the price action and enter their position inside of that. Stops
are usually placed just outside the extreme of the pullback and just
outside of the noise of the market.
2. Trend line crawl
I didn’t have a better way to describe this guideline and it expands
upon the trend line breaks that were just covered. This time we
are getting a heads up that the trend may be about to turn. This
is applicable to micro trends all the way to the long term position
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trading trends.
Price pulls back to the trend line and to see the trend stay intact, we
would expect to see price bounce away from the trend line. In
the one hour chart below, what happens tells a very important story.
• Pullback
• No strong bullish interest
• Price is hugging the trend line
It takes about 3 days and price is not showing much momentum to
the upside as price simply trails up the trend line. Price breaks the
trend line with what appears to be momentum and after a valiant
fight, the bulls lose the battle and what you can’t see on this chart,
price plummets.
Often times what can happen especially on the longer term trend
lines is there are so many stops set under every low/high, that stops
can cascade when the trend line breaks.  When that happens,
many people are caught on the wrong side and their exiting their
trading position just adds fuel to the already gassed up price move.
The astute trader can make some huge gains in a short span of time
when this occurs.
3. Let the profits run and cut the losses
This one is not new for anybody but many traders do the exact
opposite.
Being in a profitable trade can be exciting but often times traders
will take the profits without having a planned exit strategy. Perhaps
it’s the fear of losing. Perhaps it is the excitement of turning paper
profits into realized gains. Whatever the reason, taking profits
outside of a risk reduction strategy or a set exit is a big reason why
many traders never make a fraction of what the market is willing to
give.
Adding to the problem is having a trade go against you and instead
of taking action to limit losses, traders hope the price will return.
Sometimes it does and you can exit for scratch. Often times it does
not and your predetermined stop loss is forgotten as you hold on
only to see your loss become a multiple of what you intended.
We know letting winners run is important and the question is when
do you take profits? There are a multitude of ways including patterns
and trailing stops but you have to find one that fits you as a trader.
continued on next page
www.premiertraderuniversity.com 15
 The trading systems the Netpicks offers actually come with
predetermined profit exits (plus stop losses) so it does take the
guesswork out of the all important question…“when to exit”.
ALGORITHMIC TRADING IS THE BEST ONLY WAY TO GET A GRIP ON
YOUR EMOTIONS by Jane Fox
As all traders know, it is extremely difficult to be consistently
profitable trading. The #1 reason we fail as traders is because we
struggle with our emotions and end up trading with the general
market sentiment. While the herd mentality/feeling can and most
of the time feels like the proper (logical) way to look at the market,
trading with the “herd mentality” is the silent killer.
In his book Thinking, Fast and Slow, author
Daniel Kahneman explains that the human
mind employs two distinctly different
methods of thinking at the same time.
When it comes to trading, these different
ways of thinking often oppose each other,
and ignorance of their existence can explain
why humans are not good traders.
Kahneman refers to these two types of
thinking as System 1 and System 2. System
1 thinking is described as “fast, automatic, frequent, emotional,
stereotypical, subconscious” and System 2 as “slow, effortful,
infrequent, logical, calculating, and conscious.”
When people create a cognitive bias, they develop a tendency to
only believe supporting arguments while ignoring valid points to
the contrary. Traders can then refuse to cut their losses by simply not
acknowledging evidence that could have saved them a lot of money.
When a position does not move in an expected way, people must be
disciplined enough to stick to predefined rules because of the natural
human tendency to operate under the overconfidence of System 1.
“Experts are uniformly
inferior to algorithms
in every domain that
has a significant
degree of uncertainty
or unpredictability,
ranging from deciding
winners in football
games to predicting longevity of cancer patients. One
has to accept financial markets are no exception to the
rule.” Daniel Kahneman
Quant traders use a fixed set of rules to determine trade timing and
direction in a systematic way. On the other hand, discretionary
trading is not confined to the same scientific parameters; instead,
the discretionary trader utilizes intuition and “market feel” in
order to make technical decisions. The human mind, however, is
continuously bombarded with outside emotional influences and
16 www.netpicks.com
This is just some of the trading wisdom that I have found useful
from Donchian and in the future, I will expand on a few more that
you may find of interest.
when discretionary traders want a certain outcome, situational
influences can result in the exact opposite. It is called mind sabotage.
The discretionary trader does not always make the same interpretation
of a market indicator (chart, technical study, fundamental
information, etc.) or use it in the same way each time it’s applied.
This trader uses personal judgment to determine the value of that
indicator at any given point in time.
“The universe of trading
systems is divided into
two – having confidence
and having faith. If
you want quantifiable
confidence, the kind of
confidence that tells you
whether or not to hit soft 17 at blackjack, whether or
not to hit the blot in your inner table in backgammon,
or whether or not to buy a new 52 week high – use
quantitative analysis. Everything else is faith.” Howard
Bandy
Algorithms don’t have emotions.  A trading  program doesn’t get
depressed if it loses. It doesn’t have a mortgage to think about or kids
that might go hungry if daddy blows out in a convergence trade.
QiT models the price, volume and other technical analyses in a way
that gives a huge edge over discretionary trading. An edge we can
quantify with back testing. An edge you can see with your own eyes.
Each night the entire US stock market is scanned for patterns. The
stocks that meet our criteria are called signals because they signal
a trade with the highest probability of winning. But we don’t stop
there. We then use another filter to rank all the signals and only
trade the best of the best. Once again, we don’t stop there! Each
signal we trade then uses a limit order to turn a very good trade into
a great trade.
These patterns are expressed in a formula our trading system
development software, Amibroker, can read so they are reproducible
and can then be evaluated statistically.
The metrics QiT uses to evaluate backtest  results are called
the evaluators and model development is done through Amibroker
with Norgate Premium Data providing our data.
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HOW TO KNOW WHEN TO STOP TRADING
by Troy “TJ” Noonan
Let’s face it. We would all be better traders if we only knew when
to stop trading each session. Before I discovered Netpicks, (and
even quite a bit longer, because I stubbornly held onto old, wrong
ideas) I wound up giving back a lot of my trade profits. It felt worse
giving back hard won profits than it did just losing outright. The
real problem was that I had no intelligent or effective way to actually
know when to stop trading. If I quit too soon, I would miss a bunch
of good winners. If I traded too much, I gave away my profits.
When I first started with Netpicks as a customer, one of their most
important concepts, ‘The Power of Quitting,’ didn’t really make
sense to me. If the strategy was so good, then why would I want
to quit trading? It is such a counter intuitive concept and later, as I
learned more and actually began to turn my trading around, much
of the new found success was largely a result of actually empowering
myself to stop trading. Yet, to this day it remains one of the least
understood necessities to ongoing success.
In short, the Power of Quitting (POQ) is a dynamic goal setting
strategy that allows you to take what the market wants to give you,
while allowing you to quit with positive results on ‘most’ sessions.
In its most basic form, you need to get a winning trade AND have
a positive result. This can be accomplished with the very first trade
sometimes. Other times it requires more trading. There are also
different formulas that you could use. POQ 2 means that you need
to have TWO winners and a positive result. The PTU Trend Jumper
actually needs a full target winner for one of its winning trades to
qualify for POQ.
One issue that gives many traders problems is knowing when to
stop on a hard session. There will be sessions with ALL strategies
that just will not get positive. How long should a trader continue
trying to get positive? What’s a good circuit breaker? This is one of
the most difficult questions to answer. So much of it depends on
the trader. How long can he or she trade? How much capital do
they have? How much stamina and attention span do they have?
How much skill? Etc.. The only way to really know that answer
is to actually conduct your own backtests so that you can come to
the best answers based on actual research and understanding. Each
strategy is different. Each market is different.
Some traders love finishing a session, one and done; that is, winning
on the first trade to satisfy the basic POQ 1. Count me in as one
of those traders. My own backtesting has shown me that the actual
average profit per trade (the avg net of all trades in the backtest) is
actually higher with fewer trades. POQ 2 might yield more net
profits but it is actually less profitable and a lot harder, day in and
day out. Why work harder? I prefer smarter? If I can increase my
average profit per trade, all I have to do is increase my position size
as my account grows. I do not need to trade more. Less is more,
actually.
Some traders want to trade more. They also see the benefit of a
POQ concept. Diversification is certainly a smart thing to work
into your trading too. How does one satisfy all three while still
remaining consistently profitable? Here are two ideas that have a
lot of merit.
1. Diversification is one answer. You could begin trading one
market and as the session progresses, stagger in other markets.
Crude Oil or a forex pair could start at a certain time in the
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premarket. Then when the
US market opens, you could
trade an e-Mini or a grain
futures, for example. You
could also include some swing
trading.
2. Another idea that I really like, is the whole idea of the ‘mini
session.’ In the PTU for example, we learn how to use tools
that help us isolate the most productive times of day to trade
a specific market. Some markets have various pockets of time
that are more productive than others. Taking that idea to the
next level, I like treating each ‘pocket of time’ as a unique
session, each with its own start time, stop time and POQ goals,
typically, POQ 1, with a full winner being necessary to qualify.
That means I have to have a full winner and be positive before I
could quit the mini session. I also combine it with a maximum
number of trades, a maximum number of losses and a hard
stopping time, which would end the mini session.
Then I just wait for the 2nd mini session to begin. The second
mini session has its own unique trade plan and POQ, just as I
described with the first. Here are a couple examples.
Using the new Trend Jumper Pro Plus Calculator and
Automation, I was able to determine a two hour and 40 minute
window to trade Crude Oil Futures early in the morning. The
trade plan allows me to take a maximum of six trades or two
losses, with a POQ 1, whichever happens first. The second
session begins later in the am and uses a completely different
chart and trade plan. It goes for two hours and its own POQ.
Both plans operate at their own cadence and have their own
personalities. As separate plans, they are each profitable.
Combining the two, adds more chances to grow my account
while sticking to the ‘less is more’ concept. I get to have my
cake and eat it too, in other words.
For the Dow e-Mini, I actually have three different windows of
time to trade three separate trade plans. Each one is profitable
in its own right but combining the three, adds a lot of fire
power and juice to the bottom line. It’s also very flexible. If
I am not available for one, I might be available for one of the
others. It’s a great way to go.
The important thing is to not overtrade. Combining a smart and
dynamic goal setting strategy to your overall trade plan is essential to
success. Anyone can make a winning trade. The hard part is hanging
on to your hard earned gains on a steady basis and consistently
growing your account. That’s why we trade. Remember, it’s not the
quantity of trades that we take. It’s the quality! It’s also being able
to keep our profits. Controlling one’s risk exposure to the market is
critical to success and the Power of Quitting is the perfect solution.
But if it’s not enough for you, don’t throw the baby out with the bath
water. Consider the idea of the mini session and learn to focus in on
the most productive times of day to trade while still controlling your
exposure and keeping your profits.
www.premiertraderuniversity.com 17
 ALL TRADERS NEED A BREAK
by Ron Weiland
I am not talking about….you’re in a trade and you yell at the
computer screen, “Come on, Give me a Break”. We have all been
there, wondering why we seem to lose trades that looked perfect.
Why does the market always have to move away from our entry and
not shoot right to target. Or why is it the day you go live, you can
count on a down day or a string of losses. That is Murphy’s Law!
The break I talking about is taking some down time and not trading
period. This can be very hard for most traders. We all like to be in
the market and not missing the action or the next big trade. So, the
thought of not trading for a few days or a week is hard for some to
take. Well let me give you some words of wisdom. Sometimes it is
better not to trade and forcing trades can hurt your account.
We teach at Netpicks the Power of Quitting, which means, you stop
trading after “x” number of wins or once you have hit your circuit
breaker on losses. That is very important, because without a plan
you can’t win in the long run and you can’t trade all day. Don’t you
think it would be a little bit of a relief to turn off your monitor and
computer after just a few hours of trading, rather than sitting there
all day waiting for more and more trades? We think so!
IS MEDIOCRE YOUR MODUS OPERANDI
Change. Lazy. Excuses.
The hard truth is that people are prone to mediocrity.  They are
prone to talk and not much else.  At times, I have to actually make
an effort to take action and though not 100% perfect at it, I am
aware of my downfall.  That gives me a chance to fix it.
You probably know people who say “I am going to…..” but in the
end, they never do what they said they were going to do.
The next time you are stuck in traffic, take a look at the car next to
18 www.netpicks.com
Now let me talk about taking more than just a few hours off!
This was me just a few days ago in Iceland. We went there for a
vacation and all I can tell you are that all the pictures I have; don’t
capture the true beauty of the country. The people were some of the
friendliest of all the countries I have ever visited. I can’t wait to go
back, in Summer.
I did not think about trading, phones, news or emails. I was off the
grid for about 4 days and it felt great. I used the time to reflect on
what is important in life and to let go of all of the stress that can
build up as a trader. This way I can come back next week and get
back into the markets with renewed focus on the Big Picture. It is
not about the trade you are in and fretting over, it is about the group
of trades. The weeks and month and finally where you are at the end
of the year. I trade to make money and with the money I make to
travel with family and friends!
Now we all know that we can trade from anywhere. I could have
fired up my computer and traded the European session or placed
some swing trades, but then I might have been thinking about that
swing trade while I was on a tour and away from any internet. Or
missed coffee in the morning, because the coffee shop did not have
internet. I think it is good to give your mind a complete break and
restore your balance as a trader.
So, take this chance to think about your goals as a trader and how
you are trying to get there. Are you trading the Netpicks way, with
a few hours a day and moving on? Or are you spending way too
much time trying to get more out of the market that it might give
you easily. Try and do your job easier, rather than harder. Reflect
upon the glacier stream below, the quiet peace all around you. Why
do you trade?
by Shane Daly
you.  Ask yourself if they are living the life they planned or ever really
moved forward to achieve it.  After looking at them, check your
mirror and ask yourself that same question.
Good Intentions + Consistency
With good intentions, people pick up trading books and crack open
charts with the main intention of being a professional trader.  They
are ready for trade plans and understand that emotions can either
make or break their chances of success.  Money management is
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understood; they know their risk tolerance and are ready to enter characteristics.  Three really stand out for me and I want to share
the game. them with you.

The reality that trading is actually “work” sets in and suddenly
juggling a full time job and a trading career is becoming a challenge.
The images of instant success or at least something to build on, takes
a backseat to the reality of string of losing trades.  This causes trading
rules to become trading suggestions and to make back losses, they
increase their risk profile.
“What’s the point” sets in and their trading schedule is reduced to
whims and what started out like a laser beam, becomes the dull
flicker of a dying light bulb.  With a shrug, they let their natural
state of mediocrity set in and return to being a dreamer without a
road map to any place.
This reality is pretty harsh and according to a friend of mine who is
a “success coach”, this is how it plays out.
Be Aware Of Your Company
What speeds up this process is the energy of those they surround
themselves with.  Misery loves company, right?  Chris Segrin, a
professor of psychology and communications at the University of
Arizona at Tucson stated:
• They surround themselves with people of excellence.  Success
breeds success so it makes sense that the people you associate
with have the same fortitude that you think you have.  When
striving for better than mediocre, you need energy that supports
that.  Trading can be lonely…just you and your computer…so
many head to forums for their daily dose of connection.  Since
most people on forums are too busy on forums to actually make
money, I don’t know how great this is.  Perhaps you would be
better served in a trading room or training seminars with those
looking to improve…like you are.  As well, a reputable trading
education business will have successful moderators who can
help you on your journey.
• They are decisive in making decisions and waste no time in
moving forward with their plans.  When it comes to their
trading, once the setup is in place, the trade is executed with
neither bias nor remorse.  Taking action is THE KEY to finding
success in anything and even more so in trading.  No action
= no trade.  Your trade plan is designed to keep you on track
and to act when required without asking yourself if it is the
right choice.  With some trades, hesitation increases your risk,
reduces your profit and allows the hesitation habit to grow.

“Happy people seek out happy people, and those who are down • They are conscientious in their chosen task.  Disciplined to
and out seek the same” execute the trade plan, self-control and being consistent in all
aspects of trading can keep you on the road that may lead to
In my late teens and into my twenties, I had a few friends who could success.  Like a well-oiled machine, they stick to the routine
always find the cloud in the sunny sky.  They were, for a lack of a and reap the rewards of doing so.  Too many potential traders
better term, crap magnets.  You could feel your energy being sucked have a problem sticking to one trading method with a track
out of you when they would bemoan their lot and potential in life. record.  If they can’t do that, how can they expect to stick to
proper risk profiles?  They can’t and the number of decimated
I know if I would have remained accounts proves that.
in their company, I would not
have succeeded in many things
“ If you want to achieve
success, all you need You don’t have to reinvent the wheel to find some level of success in
I have tried.  I would have had to do is find a way to anything.  Those who have gone before you have left you a trail that
“support” in giving up and you can follow.
I would have been in great
model those who have
already succeeded.
company.

Those that succeed in anything,

– Tony Robbins ” The question for you is….how hard is change and will you be able
to look back years from now and be happy with your failure to move
forward when you had the impulse?
including trading, share certain

CUSTOM PAINTBARS IN TRADESTATION By Will Feibel

In the last article we learned how to quickly create custom indicators
using the TradeStation Custom 1 Line through Custom 4 Lines
indicators. Using these tools we were able to build oscillators and
histograms to test out our trading ideas. Sometimes though we
simply want to know if the conditions are in place that favor a long
or short trade based on our criteria, and we don’t want to have to
look at a lot of lines on the chart to figure that out. This is where the
Custom PaintBar studies come in.

Custom PaintBars are similar to the Custom Line indicators with the
difference that the former only tell us if a condition is true or false.
Let’s say that you’re trying to design a new trading system. You’ve
been placing the 9 and 18 period moving averages on your chart
and you think that a good system would be to go long whenever the
faster moving is above the slower one, and vice versa for shorts, as
shown in Figure 1. Figure 1- Two Moving Averages continued on next page

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 For the most part it’s fairly easy to tell when the fast moving average
is above the slow one, but to identify the exact bar where the cross
first takes place we might need to click on the chart and read the
actual values of the two lines. Fortunately the Custom PaintBar
can do this work for us. All we have to do is tell it to paint each
bar where the fast average is above the slow average in green. In our
last article we learned some basic EasyLanguage vocabulary so we
know that the expression for this condition is: Average(Close,9)
> Average(Close,18). This expression will always be either true or
false.
To visualize this we’ll add a Custom PaintBar to our chart. Use
the Insert/PaintBar menu and scroll down and select the Custom
PaintBar study. In the Style tab set the desired bar thickness for your
highlighted bars, and in the Colors tab set their color. We’ll pick
green for this condition. The inputs tab is where you’ll enter your
custom condition expression. You can also add a second Custom
PaintBar to highlight all those bars where the fast moving average is
below the slow one. We’ll color these bars red. In the figure below
you can see how the Custom PaintBars make the long and short
conditions jump out at you. You don’t even need to place the actual
moving averages on the chart anymore.
Figure 2 – Two Moving Averages PaintBar
You might decide that the two moving average cross is too delayed
in signaling longs or shorts. Not a problem. Another approach
to try is using an oscillator like the RSI. We can easily see what a
system would look like that goes long when RSI is above the 50 level
and goes short when below. Just add another couple of Custom
PaintBars and use these formulas:
HEAD AND SHOULDERS ABOVE THE REST by Will Feibel
One of the best known chart patterns is the head and shoulders
pattern. The pattern is formed at the end of a trend and signals a
reversal in direction. Its name is based on its resemblance to the
outline of a head and shoulders, three peaks with the middle one
being the highest, as seen in Figure 1.
As you can see the tall peak in the middle (the head) is flanked
by two smaller peaks (the shoulders). Extending the comparison
we have the fourth feature of the pattern, the neckline, formed by
drawing a line between the two depressions between the shoulders
and the head.
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RSI(Close,14) >50
RSI(Close,14) < 50
The results can be seen in Figure 3.
Figure 3 – RSI PaintBar
Already at a glance it’s apparent that this condition spots trend
changes sooner, and we were able to test this quickly using the
built in Custom PaintBar study. We did not have to painstakingly
measure the indicator and annotate the chart bar by bar, nor did
we have to hire a programmer to code it for us. We just had to
spend a few minutes setting up the PaintBar to visually gauge the
effectiveness of our strategy.
As an exercise set up a pair of Custom PaintBars to visualize a
strategy where we go long if the two most recent bars closed above
the 9 period exponential moving average and go short when the two
most recent bars closed below it. To get you started here’s the long
condition:
Close > XAverage(Close,9) and Close[1] > XAverage(Close,9)[1]
The [1] means one bar ago, so Close[1] is the close from one bar ago.
The first step in developing new strategy ideas is visualization.
Custom PaintBars are the perfect tools to bring this visualization to
your charts. Go ahead and experiment, see how your trading ideas
look in green or red (or whatever color combination you like). You
may be the one that discovers the holy grail of trading.
Classical technical analysis defines an uptrend as a series of higher
highs and higher lows. This is what we see in Figure 1, a clear
uptrend culminating in the head of the pattern. The right shoulder
suggests a weakening of this uptrend because it is the first lower high
in the chart. This weakening is further indicated by a new low at the
right neckline that is just barely higher, or the same, as the prior low.
The pattern of higher highs and higher lows is breaking down and
suggests that the uptrend is coming to an end. When a trend ends
it will inevitably be followed by either a sideways price consolidation
or by a trend reversal. In the case of a head and shoulders pattern the
reversal is signaled by price breaking through the neckline.
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Figure 1
The neckline of the pattern represents a level of resistance to a
downward move in price. Think of it as a resistance level formed by
the double bottom inside the head and shoulders formation. Once
this resistance level is broken to the downside it becomes support for
the downtrend and you will often see price retrace to the neckline
before resuming the downtrend. The neckline also helps us project
the size of the move down. This is done by measuring the distance
from the top of the head to the neckline. This distance is then
subtracted from the neckline where price breaks through it to give
us a minimum target for the move down. In Figure 1 the distance
between the head and neckline is denoted as A and this is projected
down as B which you’ll see was easily reached in the reversing move.
The head and shoulders pattern is often further confirmed by volume.
The left shoulder will typically have strong volume, while the volume
at the head will be lower because the uptrend is weakening. The
volume at the right shoulder will be weaker still signaling an end to
the trend while the break through the neckline will come on strong
volume. This volume pattern is a secondary confirmation however
and will not always be there. Rely on the formation of the pattern
and the breaking of the neckline to indicate the reversal.
So far we have only discussed the head and shoulders pattern as
indicating a reversal from an uptrend to a downtrend. There is also an
opposing pattern, the inverse head and shoulders pattern that signals
a reversal from a downtrend to an uptrend, and you could even see
alternating patterns within a larger time frame consolidation. Figure
2 shows an example of this.
In Figure 2 we have a head and shoulders pattern that is broken to
the downside and gives us a target A once the neckline is broken.
5 THINGS YOU NEED TO DO TO “LIVE THROUGH DRAWDOWNS”
by Jane Fox
Many talk about the psychology of trading and how important it is
to develop a mindset that is conducive to trading. However, there
seems to very little written about how to live through the daily
riggers of trading. How to live through the daily, weekly or monthly
drawdowns that plague us … well daily, weekly, monthly. Hopefully
this article will help you to do just that.
Notice the title of this article is not live through “a” drawdown but
live through drawdowns - plural. And I’m not talking about the
MAX drawdown, I’m talking about the drawdowns you will be in
most of your trading career.
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Figure 2
Price actually retraces to retest the neckline before resuming its
downtrend. The downtrend doesn’t last long before an inverse head
and shoulders is formed. This is broken to the upside and measuring
the distance from the head to the neckline gives us a target of B,
which again is reached after a few tests of the neckline.
Like all technical analysis patterns the head and shoulder will not
always precede a reversal. The pattern can also fail and we typically
consider it failed if price breaks above the right shoulder. When that
happens we will most likely have entered a consolidation or resumed
the uptrend. The latter would be confirmed by a price break above
the top of the head, similarly for the inverse head and shoulders.
It can be difficult at times to spot head and shoulders patterns on a
chart, usually because we look for them in the wrong places. You
will only find these patterns at the end of a trend so don’t bother
looking for them during a price consolidation or in very choppy
markets, make sure that there was a clear pattern of higher highs
and higher lows first. Also, don’t force it, don’t squint too hard or
try to finesse it too much. When the pattern is there it will be very
clear, as in Figures 1 and 2. Reversals can also be indicated by other
technical patterns so don’t assume you’ll find a head and shoulders
at every reversal.
Exercise your eyes and mind and start looking for head and shoulder
patterns on your charts. Once you spot them make your target
projections and see how often they are hit. You may find that this
pattern can be a profitable addition to your trading toolkit or at least
provide a strong confirmation for reversals signaled by your current
system. Good luck in your trading.
First of all lets revisit, what is a drawdown? A drawdown is the dip
between new equity highs in your equity curve, it’s as simple as that.
So, by definition, you can see a trader will spend most of his/her
time in drawdowns. Some traders think drawdowns as an extremely
rare event, or at most, a once a year or quarter event - but the fact
of the matter is that traders will spend more than 75% of their time
in a drawdown.
The Green boxes are new equity highs (see figure 2). This is when
continued on next page
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 Figure 1
your account is making more than it’s ever made trading this system.
These are your feel good times. Now look at the red line when it’s not
in one of the green boxes, for this is “the rest of the story.” The red
line is you living in a drawdown. I’m thinking 75% of your time in a
drawdown may be a little too conservative and that it may be more.
So if you’re going to spend more than ¾ of your time in this quagmire
called a drawdown, you need to learn how to live through them.
Here’s a list of 5 things I think you should do to help you live
through the drawdowns.
1. Know the drawdown numbers of every system you trade as
well as you know your birthday. This is not meant to be funny. Your
ability to handle drawdowns, hands down, is dependent completely
upon how mentally prepared you are for them. This means it’s crucial
you know your system’s past Max Drawdown as well as you know
your own birthday. However, just like that birthday, you should
expect to visit a drawdown of equivalent size once a year then, an
even bigger one sometime in the future – we’ll talk about this later.
If you’re trading, and consider yourself a trader, you need to be very
aware of what will happen to your account during that drawdown.
If you do, you will be mentally prepared and have the intestinal
fortitude to stick with the program through these tough times.
If you’re not prepared mentally for the drawdown, you will make
emotionally driven decisions at the worst possible time in the worst
possible place. These emotional decisions lead to that trait all bad
traders share - getting out at the lows. How many of us have done
that?
One of the main benefits of trading with an algorithm is to eliminate
those counterproductive emotional decisions. Please don’t offset that
advantage by acting emotionally when in DD.
2. Measure your drawdown. Don’t we all look at the drawdown
stats from the evaluator sheets and say, ya I can live with that,
seemingly giving them their due. Then we see those drawdowns in
OUR account and, lo and behold, we react like deer in the headlights
and say, “What is happening? I didn’t expect this.”
It’s completely unreasonable to expect a trading system to make
money each and every day of each and every month. Things simply
don’t go UP, nor DOWN, forever. They peak and valley, go through
up cycles and down cycles.
Here’s the same equity curve (see figure 2). This system has a MAX
Drawdown of 21%. If you started trading this algorithm with
$25,000 on January 30, 2013 by July 25, 2013 your account grew to
$30,573. It was a pretty good steady growth with a few drawdowns
22 www.netpicks.com
Figure 2
thrown in. Anyone trading this would be sitting back on July 25th
feeling pretty darn good because the portfolio grew 22% in just a
few short months. How prepared do you think you were for the next
few months? A new equity high was not seen until November 18th.
As well, on October 3rd the account had fallen 10%. Do you think
you would’ve bailed around October 4th? Good chance!
By January 13th, 2014 the account was back up to $33,600 and you
are now kicking yourself.
But, hold on, another drawdown is just about to start. However, this
one was on 9.7% and a new equity high was seen by March.
My point is the MAX drawdown was 21% and the drawdowns
experienced so far have been 10% and 9.7% both completely in the
realm of possibility.
You’ve looked at the equity curve of the system and know this kind
of up and down is very typical.
So measure each of your drawdowns and use the MAX drawdown to
see if the one you’re currently in, is in the realm of possibilities. But
most importantly, don’t be dejected by a drawdown, especially if it is
well within the historical parameters you’ve evaluated.
I believe this simple exercise will get you used to what a drawdown
is and will help you to live through them, since most of your time
will be spent in them.
3. Assume the worst drawdown the system will ever encounter is
in the future. Just like death and taxes - you can’t escape them. 
The only way you can avoid death is not being born – silly but true.
The only way you can avoid taxes is never making, or spending, any
money – silly but true. The only way you will never encounter a
drawdown is by never trading. These all seem silly but they are true,
aren’t they?
So if you want to trade you need to accept drawdowns but more
than that you also need to expect a new max DD will always take
place in the future - after you’ve invested, of course. If you approach
your trading accepting DD and have an expectation of a new MAX
DD somewhere in the future, you’ll never be a nervous wreck who
can’t think straight when it happens. You will take it in stride, step
back, and asses the system rationally.
4. Accept the fact there’s no such thing as risk free returns, the
larger the returns, the larger the risk. The larger the returns, the
more volatility in your equity curve.   You can easily get no risk by
investing in US saving bonds, but will you be happy with gains of
just 2% per year. Probably not, and for that reason traders are on the
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lookout for larger returns. But how many are prepared for the higher
risk and volatility that accompanies that higher return?
Our natural tendency is to stop that which is causing us pain (losses),
and so a human’s natural inclination is to quit a system when it’s in a
drawdown because it “just doesn’t feel right.” You have to overcome
this very basic human instinct by making it all about the statistics
and being prepared.
Set a realistic line in the sand, a line based on your tolerance for
losses and the stats of your trading system. If you do this BEFORE
you start trading and make a pact with yourself to not flinch until
that line is crossed. If you do, your daily mental battle of whether
you should stick with the program or dump it, has been won. You’ll
have what very few traders have, intestinal fortitude.
Part of the problem with trading with systems like QiT is that it’s
too easy to quit. All you do is stop trading. Heck you don’t even have
to pick up the phone. All you do is stop. An investment in real estate
or a hedge fund for example, often takes more time to liquidate,
giving traders time to let the emotion run its course and evaluate
from a place of rationality.
It is important to note the corollary to things don’t go UP forever:
things don’t go DOWN forever either. Trading systems are very
cyclical, they make money, then they lose money, then they make
TRADING SCHOOL by Ron Weiland
I recently got over a medical condition that put me on Disability and
kept me away from a job that I loved ever since I was a kid, Flying! I
was grounded for several years and so in that time I was able to focus
on my trading. Now that I am back at School, learning the Aircraft
again and flying the simulator, I realize just how similar learning
aircraft systems and trading are. Yes, after flying the simulator last
night, it is just like riding a bike. It came right back to me.
So, I wanted to focus the article on several aspects of trading and
training. Let’s throw you into ground school.
1. You need to learn each system on the aircraft and each indicator
on your chart. You will learn the interaction between these
systems and how they relate to one another. A good example of
this is with the Trend Jumper system. We use the two moving
averages to show us special measuring stick trades that have a
very high win rate.
2. You need to learn what buttons to push and in the correct
order to get the plane working. With trading, you need to
understand how to place orders on your trading platform and
execute the signals that your system gives you.
3. Pick your plane. I am flying a large Boeing 767 and I picked
that because it fly’s to places I want to go and is fun to fly. You
should look at the various markets that you might want to trade
and pick the one that suites you best. It might be dependent
upon your account size or the time that you are able to trade.
There are many markets out there from Futures, to Options or
Forex that can satisfy most every trader.
4. On my aircraft, we have a computer called the Flight
Management Computer. This will calculate takeoff and landing
speeds as well as navigation, based upon the inputs you put into
it. Well, roll that into trading and you have your Trend Jumper
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money etc. It pays to stick with a system in its downturn, because
their cyclical nature means they will come out of it.
5. Quit once the system has fallen below its circuit breaker. You
know your drawdown numbers, you measure your drawdowns,
you’ve accepted drawdowns, and you expect to have another large
drawdown in the future. But there is one more very important
question to answer. What if the drawdown I’m in is more than a
drawdown and the system has broken?
You need to have a mechanism to help you answer this question. You
need to have a mechanism to know when to move to cash. You need
to have a line in the sand.
Fortunately QiT’s line is the circuit breaker. A moving average
on the equity curve that we use to move to cash once its violated.
Without this line, you could go crazy wondering whether the current
drawdown equates to a “broken system.”
Conclusion:
Drawdowns, like taxes and death are unavoidable, are real and will
occur as long as you trade. They are that terrible feeling in the pit of
your stomach. Drawdowns happen. Drawdowns will happen again
and again and again. These are the facts. Successful traders know this
so they prepare for it.
calculator. We give you settings to put into
it and then it will give you exact entry,
stops and targets for each trade. So,
it will give you everything you need
to get your trading off the ground.
5. You can’t fly a big plane by yourself, you need a
copilot. He is there to back you up and guild you in case you
miss something. Welcome to our live trade room. This is one
of the most unique and powerful aspects of trading. Here you
can watch us, learn from us on each trade as we call them live
and guild you through your own trades. In addition, there are
hundreds of other traders there to also guild and share their
experience and trades that they are taking.
6. Time to go into the Simulator. Last night we must have done
10 approaches, 10 landings and several go-arounds. So, what
do you think, repetition makes you better. You hone your skills
and become a better trader. You learn from your mistakes,
which is why you practice in the simulator and not on your live
account. After you have become error free, you go live and I go
out on the line and fly people J
Let’s recap. You start with a solid system and really study it. Learn
how it works, and understand why it gives you the trades that it
does. Look for patterns, you might discover that certain trades win
quite a bit more than others and so you refine how you trade. You
have made the system your own. From there you, test it out and
practice. You build up your skills as a trader and your execution,
so that you are making 25 mistake free trades. Then, you should
be ready to go live. I hope to see you in the trade room or on an
airplane flying somewhere around the world. Good Trading!
Capt Ron
www.premiertraderuniversity.com 23
 HOW TO CUT DOWN ON SCREEN TIME USING MARKET INTERNALS
by Mike Ryske
One of the biggest transitions a trader can make is to go from a day
trading approach to becoming a longer term swing trader. This is an
issue that I have had to deal with over the years in my own trading.
When you are actively trading the markets from opening to closing
bell it’s not difficult to have a pulse on the market. However, when
you stretch things out to a swing trading approach it becomes more
difficult to get a feel for how strong or weak the market is. As a swing
trader, I typically come in to check the charts 2-3 times per day
for a total of about 20 minutes per day.
As a swing While this is great for me as I can get on
to other things throughout the day and
trader...I now use
still stay active in the markets, it can be
a market snapshot tricky to keep a good feel for what the
approach using a market is doing. To remedy this, I now
few simple tools. use a market snapshot approach using a
few simple tools.
When logging into my trading computer I have a few different
workspaces loaded up. The first workspace has the charts of all the
names on my current watch list of products that I trade on a regular
basis. These charts have all of the PTU Options Mastery indicators
loaded up, which tell me where to get in and out of trades. The
second workspace is what I call my Market Internals workspace.
If you have been trading the markets for any length of time you
know that it is not enough to just look at the values of the big index
products to see if the market is up or down. Often times, there is
more going on under the hood than those numbers indicate. To
further gauge the strength of the market, I use 5 tools that can be
found in most charting platforms. *You will find a link to a pre
loaded shared Thinkorswim workspace below that you can
click on and take a look at these tools.
Before I get into the details, I will point out that I do not place or
manage trades based on these tools. They are simply there for me to
stay up to speed with what is going on in the overall market without
being glued to the computer screen all day long.
The first tool that I use is a chart that plots the amount of volume
going into stocks that are positive on the day versus the amount
of volume going into stocks that are negative on the day. In
Thinkorswim this can be looked at by using symbol $UVOL-
$DVOL (see chart below). This gives me a ratio that helps me
gauge how strong the move is for that day. For a strong trending
day to the upside I want to see this ratio at least 2:1 positive. This
means we have 2x the amount of volume going into names moving
higher on the session when compared to volume going into names
moving lower. The opposite is true for a weak session moving lower.
In that case I want to see at least a -2:1 volume ratio meaning 2x the
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amount of volume is going into stocks moving lower on the session
versus volume going into stocks moving higher. This ratio helps lay
the groundwork for me to see how strong the move higher or lower
has been that day. Typically if we see a volume ratio of +/- 2:1 that
means we are in a strong trending day where it’s going to be difficult
to get a big reversal.
The second market internal that I look at is called the Advanced
- Decline line. In Thinkorswim this can be looked at by using
symbol $ADVN-$DECN. This chart shows me how many names
are moving higher and lower on the session on the NYSE (see
chart below). This value is shown on a price chart and is constantly
updated throughout the day. When this number is +/- 1000 that
means the market is in a strong trend for the day and is going to
be difficult to get a reversal in the market. For example, if I come
in for my lunch time update and see the S&P 500 down 15 points,
that immediately has me thinking the market is getting beat up that
day. Is that really the case? By taking a quick look at the Advance -
Decline line I can get a better view of how strong the selling is. If this
ADVN-DECN value is at -1500 then that tells me there is strong
selling across the board. If that value was only -500 then that tells
me the market is lower but it’s more of a mixed market at the current
time. If the value is only +/- 500 then it’s not going to take much to
get the market to reverse in the other direction.
The third market internal that I look at is the NYSE Tick chart.
In Thinkorswim this can be looked at by using symbol $TICK.
This is a tool that tells me at the current moment in time how
many stocks are trading on an uptick versus how many stocks
are trading on a downtick (see chart below). I track this on a 15
minute chart throughout the day. This is a very short term indicator
that is handy for day traders but it can also be a powerful tool for
someone like me who is trying to quickly see if we have hit any
extremes throughout the day. What makes an extreme on the NYSE
Tick chart? I have a few price levels market on the chart to easily
read where we have been that day. I mark the 0, +400, +800, +1000
levels on the upside and -400, -800, -1000 on the downside. If we
reach +1000 on the upside that means 1000 stocks on the NYSE are
trading on an uptick at that moment. A -1000 reading tells us 1000
stocks are trading on a downtick at that moment. When +/- 1000
is hit that indicates a near term market extreme. When we hit these
overbought or oversold extremes we will often times see the market
pause or pullback slightly. When you get multiple extremes of +/-
1000 that indicates a very active market. On a day when we are stuck
between +/- 400 that indicates a very slow indecisive market.
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The fourth tool that I use is a 5 minute chart of the SPY with a
few indicators on it (see chart below). I load up a very basic pivot
point indicator that can be found in most charting platforms. There
are no custom settings being used for the pivot points. I also load
up what is called the VWAP. This looks very much like a regular
moving average but it’s much more than that. The VWAP is the
Volume Weighted Average Price. It is calculated by dividing the
dollar value of transactions by the average volume. The VWAP can
often time act like a magnet attracting price towards it. When we get
extended away from this level often times we will see a retracement
back towards it. On a slow moving day you will often times see price
action hug this level throughout the day. The 5 min SPY chart helps
me take a quick snapshot to see where the market has been that day
and also help me form an opinion on where it is going. The pivot
points and VWAP level give me an idea of support and resistance
levels that might influence things going forward.
The final tool that I use is the VIX which is a gauge of the overall
volatility in the market. We look at volatility quite a bit as options
traders because we want to know if options are cheap or expensive.
A VIX in the 11-13 range is an extreme on the downside, meaning
there is very little fear in the market and as a result the options are
very cheap. In this case we will be buyers of options premium. A VIX
reading in the 20-25 range is an extreme on the upside, meaning
there is a lot of uncertainty in the market and as a result options are
more expensive. In this case we will be sellers of options premium.
IS THE PURSUIT OF PERFECTION SLOWING YOU DOWN? by Mike Rykse
There aren’t many activities that I love more than trading. Being a
sports fan is something that ranks right up there though. It’s amazing
how many similarities there are between the two. I was reminded of
this while working with one of my Options Mastery students over
the last few weeks. One of his biggest struggles was feeling the need
to be perfect before committing any capital to work. Often time’s
retail traders are working with smaller accounts which can lead to
trading with scared money. They try and wait for the guaranteed
winner before pulling the trigger, when in reality there is no such
thing as a guaranteed winner. The most successful traders are the
ones that can recognize a system that puts the odds in their favor on
every trade and then take each trade as they come. So how does this
relate to sports? Let’s take a look.
The summer months in the U.S. for sports fans are all about baseball.
As a baseball fan I’m always amazed by how much players are paid,
when in reality they fail more often than they are successful. Let’s take
a look at batting average, which is one of the most tracked statistics
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The VIX helps me form an opinion on how long I expect to be in
trades for. A high VIX will typically mean very short term trades
with holding times of 1-3 days. A low VIX reading will in many
cases lead to longer term trades of 2-3 weeks.
These tools, when used together, help me quickly take a look at the
overall strength or weakness in the market. I can take a look at these
charts and in 60 seconds have a feel for what I have missed that day
by being busy with other things. Like I mentioned earlier, I am not
looking to trade based off any values or trends off of these charts.
They are strictly used for me to get a quick pulse on the markets.
They help free up my schedule so I don’t feel pressured to be in
front of the screen all day. Swing trading is hugely beneficial for me
because I’m in and out in 20 minutes a day but I also have to realize
that I’m going up against traders that are looking at the markets all
day. So it’s important for me to use tools like the Market Internals
workspace to dig in and see what’s really going on in the markets
instead of just looking at the overall Index values. . Start using these
simple tools in your own trading and I think you will be surprised
how much better your understanding of market strength will be.
If you are a Thinkorswim user I have included a copy of my fully setup
Market Internals workspace here: http://bitly.com/TOSInternals
Type this link into your browser and it will allow you to load up the
workspace with the settings that I mentioned above. If you have any
questions on this feel free to send me an email. Mike@netpicks.com.
for baseball players. The player with the highest batting average as
I write this article is Troy Tulowitzki of the Colorado Rockies with
an average of .350. This means the best hitter in baseball this year is
successful between 3 and 4 times out of 10. Tulowitzki makes $10
million a year to play to be right 30-40% of the time. Arguably
one of the best hitters of all time is Miguel Cabrera who plays for
the Detroit Tigers. Cabrera year in and year out has one of Major
League Baseball’s highest batting averages. At the time of this article
Cabrera is batting .315 for the season. This means he is getting a hit
just over 3 times out of 10. Cabrera signed a $292 million contract
last year to play for the Tigers. The point of this whole example is to
show how much money these players can make with only a 30-40%
success rate. In fact out of the hundreds of MLB players there are
only 20 or so players that have a batting average over .300. If teams
waited for the player that could get a hit every time they came up
to bat they would be stuck with an empty team. Perfection is not
even a consideration but yet players are making millions of dollars
each season.
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www.premiertraderuniversity.com 25

In trading, it’s important to understand that like baseball we can
make a lot of money without being perfect. I trade certain stocks
and ETF’s that only win 55-60% of the time but yet they produce
massive profits over time. The traders that are waiting for the perfect
setup or the perfect system are the ones that will be caught in the
never ending cycle of using new products. The key in my trading is
staying consistent. I know I have a system that puts the odds in my
favor. I know unlike baseball players that only get a hit 3 times out of
10 I can be successful 60-70% of the time. However, the only way I
can take advantage of those odds is to take every trade as they come.
I can’t wait for the perfect setup. There is no such thing.
It’s also important to point out that even with a system that wins
60% of the time, I will have losing streaks. Let’s take a look at the
chart below. A system that has a 60% win rate will have a 100%
probability of experiencing a 5 trade losing streak at some point
in time. I have a 10% probability of losing 9 trades in a row.
Understanding these probabilities shows how important it is to keep
TRADING WITH MINDFULNESS by James Kessick
Up until more recently, meditation was seen
as a little non-mainstream. However, the fact
that there have been many scientific studies on
the benefits of meditation and numerous high
profile figures who have extoled the virtues
of the practice, has meant that where people
were once skeptical, they are now embracing
meditation in their droves. Trading with
mindfulness is certainly an appealing prospect. Ray Dalio, founder
of one of the largest hedge funds about, Bridgewater Associates,
credits meditation as one of the key factors to his success.
“Meditation, more than any other factor, has been
the reason for what success I’ve had”
–  Ray Dalio
Now that’s some endorsement.
In the Moment
Mindfulness is a form of meditation. It’s all about being in the
moment and totally aware of what’s going on around you. Even
if you were to take away all of the supposed health benefits to
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your size small. I would rather take trades with a small percentage
of my overall account rather than taking large trades which many
retail traders do. Keeping my risk small let’s me stay in the game
long enough to let the odds play out in my favor even through the
losing streaks.
While there are no guaranteed contracts in trading like there are in
professional baseball it’s easy to see that we can make a lot of money
without the need for perfection. In fact the pursuit of perfection
can be detrimental to traders if you are not careful. Understanding
that being right 100% of the time in trading is not possible is the
first step towards becoming a successful trader. You need to commit
to a system that puts the odds in your favor and as long as you are
using small risk it doesn’t matter if a losing streak comes along. I
mentioned earlier that I trade products that only have 55% win rates
but yet they are producing thousands of dollars each year. I keep the
big picture in mind and know that in the end I will make money.
This allows me to focus on executing my trades correctly instead of
looking for the next great new system that hits the market. Trading
is not a game of perfect but a game of managing risk. Understanding
your odds and then letting those odds work in your favor is what
separates the great traders from the average retail trader struggling
to get by. While most of us do not have superior athletic ability that
allows us to make millions of dollars playing sports, we can make
a great living through trading as long as we ditch the pursuit of
perfection and focus on making sure the odds are in our favor.
meditation, being able to focus on something, without bias, is surely
a skill that any trader would wish to have. Getting good at it isn’t as
complicated as you might think and really just requires deliberate
practice of the trading skills that you probably already have.
Putting out Fires
Being able to take in, prioritize and interpret the endless stream of
information available to you as a trader, is no mean feat. It’s definitely
very doable though. It may not always be 100% perfect, but then we
are still human and we can improve our skill level with some effort.
But trying to remain totally focused while you trade is just not going
to cut it on its own. If you fail to prepare and have no idea of what
to expect given a certain set of market scenarios, you’ll always be
“putting out fires” as you trade – you’ll be caught off guard and
have to figure out what certain things imply as they happen. This is a
tiring and emotionally draining way of working and one where you
will find that you’ll struggle to remain fully focused over the course
of a session.
Practicing Trading with Mindfulness
There are three basic principles to remaining totally focused and
trading with mindfulness: -
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1)      Trading Preparation.
2)      Trading Observation.
3)      Trading Calmness.
Preparation
This isn’t just about getting ready for each trading session. It’s also
about having a framework that you can lean on as information
comes on to your radar. Having an expectation of what is likely to
happen given a certain scenario gives you a point of reference to
refer to when that scenario occurs. It means that you’re ready to
observe what happens and don’t need to interpret the meaning of the
information as it presents itself to you.
Observation
Of course any trader will be making observations about the market,
regardless of their level of skill. But the quality of these observations
will be dependent on a number of key factors. First of all, a trader
needs to be prepared. A single market provides an endless stream
of information and knowing what you’re looking for allows you to
ready your mind for when specifically important market instances
occur. These observations must also be made without bias. Having
decided that you want to see certain things happen in the market
can lead the mind to looking for supportive information and ignoring
information that is detrimental to an idea. It is absolutely critical that
observation is made without bias. Finally, it is vital that a trader is
able to remain focused on the task at hand. As a trader becomes
more adept at mindfulness, distractions are less of an issue. However,
a trader must do what is necessary in order to shut out potential
BECOMING AN ALGORITHM by Jane Fox
Matt gets up from the couch and ambles over to the computer, time
to put on his nightly trades. OXBT is a buy for tomorrow at 4.74.
Matt’s first thought is I’ll bring up Yahoo Finances to see what kind
of news I can find about OXBT. He doesn’t find too much so goes
ahead and puts on the trade. Lo and behold, the next day he gets an
email from his broker that OXBT buy order filled. The first thing
he does is fire up his broker’s application and check the trade. Opps
its going down. Ah gee. He watches it all day and its going down
and down. He starts to wonder if he should get out or stick with the
system. He decides to stay in.
That night he logs on to netpicksquantitrader.com to get the signals
and OXBT is a HOLD. The whole next day he watches it go down
even further and, at one point, his position is down over 11%. He is
beside himself. What do I do? Should I stay in or get out? Eventually
he bails, he can’t take it anymore.
That night he checks the signals and it is a HOLD again and he
smugly thinks, I’m a lot smarter than the system, I lost some money
but not as much as the “system” is going to.
The next morning OXBT opens at 4.35 and rallies the whole day
closing at 5.05. The position is closed out at 5.02 the following day
for a 5.9% profit.
John gets home from work late and decides to put on his trades before
he settles in for the night. He sees OXBT is a buy for tomorrow.
He doesn’t know anything about the stock but is too tired to go
look for information and just puts the buy order on. He is filled the
next day so logs on to his brokers application and, as does Matt,
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distractions and interruptions to a great extent.
Calmness
Being calm as a trader is not always easy – that’s for sure. Many
a keyboard has bitten the dust at the fist of a furious trader! But
taking trades from an emotional state of mind tends to lead to losses.
The aforementioned furious trader might take a revenge trade for
example. A trader jubilant from a number of winners however,
might take trades from a cocky frame of mind. Emotions not only
have the potential to make us trade in an unwise manner, but they
also have great potential to cloud our minds and prevent proper
interpretation of useful information.
So remaining calm, centered and ready to act is what every serious
trader should be striving for – and a big part of this is being okay
with trading outcomes. Learning that a losing trade taken for the
right reasons is not a threat and is part of a much larger set of trades
(as taught by Mark Douglas in Trading in the Zone) is the first half
to this. Practicing your response to losing trades is the other – even
if you know that you shouldn’t get frustrated and annoyed, it might
not be something that you can control in the event unless you
practice and rehearse taking your losing trades.
So there you have it – practicing all the things that you probably
are already aware of as being useful to your trading might actually
constitute the bones of trading with mindfulness already. Put them
together and you’ll likely see a positive impact on your P/L and
just maybe you’ll also experience some of the broader benefits that
meditators claim to receive too.
starts to fret that it
is going down. He
is totally dejected as
he watches it all day
and when it closes at
4.26 the second day he is
even more dejected, what a
dog he is thinking. He has the
same anxiety that Matt has but he
decides to stay in.
The next day OXBT rallies to a high of 5.85 and John is no
longer dejected but elated. Wow a winner. Unfortunately OXBT
closes at 5.02 not 5.85 and John is dejected again. Gee this baby was
up to 5.85 and it closes at 5.02. Ah gee.
On the same day Matt and John put on their OXBT buy orders,
Mary gets home from the gym and puts on her trades as well. The
next day she also gets an email from her broker that OXBT is filled.
She doesn’t watch her trades throughout the day and goes about her
business. That night she places her trades and leaves OXBT alone
because it is a hold. She is not feeling good about the fact that he is
down but the system has a 63/37 win/loss ratio so 37% of her trades
will be losers. This may be one of them.
The next night Mary logs on her broker application to place her
trades. Oh my gosh OXBT closed at 5.02, wow! Mary goes to bed
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 feeling wonderful that a loser has turned into a winner. The position
closes out at a profit.
Which trader do you think will be successful with this system?
As a trader, we all have preconceived ideas of what we need to do
to become a successful trader, a trader who can make long term
consistent profits. You’ve all probably read numerous books, taken
multiple seminars, maybe even attended a few seminars in person to
meet other traders.
Maybe you’ve learned different types of strategies, maybe developed
an indicator that is excellent at reading the market, or learned how
to glean nuggets of information about a company from its balance
sheets. All of this is good, all of it has value and I don’t want you to
think I’m telling it doesn’t.
However, and you all knew there was a big however coming didn’t
you, if you enter the world of quant trading, you have to put all this
behind you, at least while you’re in a trade.
If you trade with an algorithm you have give yourself up to it. You
have to trade as if you were the algorithm. This doesn’t mean you
have to give up any particular indicator you like but if you want
to trade with an algorithm and use this particular indicator, you
develop your algorithm around it. If you have a particular strategy
you always trade, develop your algorithm around it. Then test and
test and retest that algorithm to see if it was successful during bullish
years, bearish years, low volatility, high volatility, and market crashes
(like we had in 2008). Test it every kind of trading environment you
can think of and see how well it works. If it holds up then do what
is called sensitively testing to ensure you haven’t over optimized – a
topic I don’t want to address right now but will be writing a blog
on later.
3 FX TRADING TIPS TO IMPROVE YOUR TRADING by Shane Daly
When  Forex trading  became open to the average retail trader, it
brought out the sharks just looking to part the dreamers of a better
life from their money. Trading currencies was made to look easy
and many people lost their money by following Forex trading tips
and tricks that were simply thrown together in pricey e-books and
courses.
The sad part was those people that truly wanted to learn Forex trading,
became disillusioned and never really gave themselves the chance to
see if they have what it takes to make it.
You can certainly make money Forex trading but you need an edge.
In simple terms, a trading edge is where, over time, you will end up
making more money than you lose. Sounds simple enough. Well,
I’m here to say that what it takes to get to that stage is simple. It is
just not easy.
There are 3 categories that make up “what it takes” and these are
something that successful forex traders have not only understood,
but aimed to excel at. These 3 items when combined make up your
edge:
1. A Forex trading strategy
2. Excellent money management skills
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Once you’ve put in the hours and the dollars to develop your
algorithm you enter the world of trading like a Quant and you
become the algorithm when you trade. All the planning has been
done and is behind you, so all you need to do is follow the signals
given to you by your planning and work you’ve put into developing
this algorithm.
One of the comments I had from a member is that he wanted to
Trust but verify. Funny but that was exactly what I said back in
2012 when I first started down this path. Little did I realize just how
much it takes to do the verification. So here is where Quantitrader
comes in, we’ve already done the verification for you. We’ve put in
the hours, the dollars, the learning and have verified a set of rules so
all you have to do is trade it.
But you need to trade it as if you were the algorithm, not as if
were a trader. Does the algorithm take heed of the news? Does the
algorithm worry about economic events that take place during the
day? Does the algorithm watch price action during the day?
The answer to all those above questions is no.
Take off the trader’s hat and put on the quant hat. The more often
you do this the better that hat will fit. The easier it will become to
not heed news, not watch your trade intraday and just give yourself
to the algorithm.
Now am I advocating to trade this system blindly. HMMMM NO!
Not at all.
What I am advocating is that you first of all dig into the rules, and
see if they fit you as a trader? Dig into the performance and see
if the metrics of this algorithm fits you as a trader? Dig into the
methodology. Does it fit you as a trader. If the answer to those
questions are yes and you decide to proceed, become the algorithm.
3. An understanding of psychology as it relates to trading
All successful traders have taken these top 3 categories and mastered
them to the extent that they are second nature. Most articles and
courses on how to trade Forex cover the basics such as choosing the
best forex broker for your needs, paper trading, and what trading
platform you should use.
In this article though, I want to touch on the type of Forex
information I feel has a direct impact on the type of success you
may have.
Forex Trading Tip #1
Strategy. First off, understand that there is nothing that fits the bill
as the best forex trading system regardless of how many times you
hear any system described as such.
Your strategy for trading is generally comprised of two parts:
Setup  – What constitutes a valid trading opportunity?
Trigger  – Once the setup occurs, how are you triggered into the
trade?
You want to find something that you understand, can replicate, and
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has the  probability  of making more points/pips than it loses over
time. One of the simplest types of trading system is using support
and resistance and trading any violation of either one of them.
Keeping things simple in trading makes it much easier to be able
to replicate it over many trading opportunities. Too many moving
parts can often time give contradictory information which will do
nothing but confuse you.
This is a quick example of the type of trading using simply market
structure and price action.
This chart was not cherry picked and was the first chart I brought
up for this example.
1. You can see where price had historical significance as a support
level that was then broken.
2. Price revisits the area right to the pip and you can see price was
rejected from a move higher.
3. Price smashes through the level with thrusting price action.
4. After a healthy rally, price returns to our original level and is
rejected again.
These areas all represented a setup condition: price challenged a
historical structure level
We still need the trigger. Due to space limitations I am showing the
price action on a lower time frame at the number two arrow.
You can clearly see a muted rally into the resistance zone, a higher
swing low marked by the red line. You could use a break of that level
as your trigger or wait for a break and pullback as seen by the blue
arrow.
There are other trading techniques that can be used using strictly
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structure levels and price action for your trading. An understanding
of market mechanics and structure can open up an entire world of
trading methods for you.
The bottom line is this Forex tip is all about keeping things simple.
Don’t get bogged down in confusion.
The main drawback of this type of trading though is at times, people
have an issue quantifying the setups and triggers. For those people, a
trading system such as Trend Jumper may be preferable.
All the setups are mechanical which means when certain variables
are met, you are informed of a trading opportunity. All targets, stops
and entries are printed for you and that helps keep you consistent
in your trading.
Forex Trading Tip #2
Money management  is not the most glamorous Forex topics but
without a full understanding of risk and leverage, you run the risk
of account ruin.
Nobody is able to tell you what risk to use per trade but the standard
quote is usually 1-2% of your account balance. I will add two things
to that.
• .5% is conservative and allows new traders to take the losses
without too much account damage.
• Consider using the balance +/- the p/l of any open trades.
This can be an in-depth subject with examples and “what ifs”
however following two basic  account management  tips  can go a
long way in protecting your account from a string of losses.
1. What you are thinking of risking, cut it in half.
2. Ensure your stops are not just a suggestion….but a demand.
While the majority of traders simply use their account balance as
a sign of success or failure, it does not go far enough pointing out
where you can improve. It also doesn’t show you where the bleeding
is happening with your trading.
A free software application is available called the Ultimate Trade
Analyzer. Not only will it keep a log of all your trades but also give
you scenarios surrounding risk per trade and contract sizing. This
information is imperative to enable you to maximize your trading
efforts. It will also show you how increasing/decreasing risk can have
a measurable impact on your trading success.
Forex Trading Tip #3
If we were robots, trading psychology would not be an issue, we
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 would have no issue sticking to any type of trading whether it is
trend trading or any of the numerous mean reversion systems. Our
trades would execute and either our targets or stops would be hit.
We would risk the appropriate amount for our account size and
trading system expectations.
Stating the obvious – We are human.
We are all subject to emotions and ignoring things that we know are
not good for us. We make excuses why we do things. For instance,
taking a few losing trades and then seeing price bounce back, we
decide to ignore the stop the next time we trade. This one doesn’t
come back and your account is drained.
This happens all the time!
Again, this is such a vast subject and there is no way to do it justice
in a blog. However, what I am about to say was one of  the most
important forex tips I ever received.
Why?
Because it encompasses so many things such as:
• Follow the trade plan
• Take your stops when they come.
• Stick to your risk per trade.
• Don’t over-leverage.
Here it is: Embrace the fact that wins and loses come in random
distribution.
This means that we don’t know if the next trade is a winner or a loser.
In fact, we don’t know if the next five trades will win or lose. What
THE ESSENTIALS TO SUCCESSFUL EMINI FUTURES TRADING
(or any other market you like to daytrade)
by Troy Noonan
The eMini futures markets are both seductive and treacherous yet in
my opinion, they offer the best and most consistent opportunities
for day traders. On any given session a trader can find numerous
profitable trades. But along with the opportunities come many
hazards. Like the ancient Greek Sirens of old, it is critical to not
let yourself be seduced by the enchantments of untold profits. The
futures markets can be a cash register but more often than not, it is
putting your money into the drawer and ringing up other people’s
profits. In fact, navigating your way through an eMini session,
without crashing into the rocks and losing your hard earned capital
can be very difficult, but it doesn’t have to be so. Whether you’re
trading the Russell eMini, the S&P, the Nasdaq or the Dow, here are
some basic key pointers that you will want to pay attention to if you
are serious about succeeding as a profitable day trader.
1. Focus on a strategy with a proven track record. As you get
better, you can diversify by using additional strategies, but this
is something to aspire to later. You may decide to just keep
things simple and we all know that simple is usually the best
approach.
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we do know is that it will win OR lose.
Can you see how understanding that basic fact makes it crazy to risk
too much on the next trade?
How it makes moving your stop further from price is not a smart
thing to do?
How skipping the next setup even though it is a perfect trade plan
setup is senseless?
You have to give yourself a fighting chance with every trade…with
every opportunity.  Embrace not knowing and do everything that
makes up smart trading on every single play.
• You don’t know if the next trade will return the recent dollar
losses back into your account.  It makes no sense to skip it.
• You don’t know if price will bounce back so it makes no sense
to not honor your stop.
• You don’t know if the next trade will be a loser (with slippage)
giving yourself a larger pip loss.  Makes no sense to increase
risk.
In my opinion, how to  trade Forex  successfully  means doing
everything you are supposed to do on every trade.
Don’t improv.  Improve.
Every trade, give yourself the goal to improve on every aspect of the
three categories mentioned above.  It is my hope that this assembly
of Forex trading tips helps refocus you to act and think like a
professional trader who enjoys the good life because of doing all the
right things…at the right time….which is every time.
2. Limit your trading to a consistent time period each day. You
should know your start time and stop time and you should be
extremely disciplined in sticking to it each and every session.
3. Backtest your time period and determine consistent
profitability. This will give you the confidence you need to
succeed by knowing that your predetermined timeframe does
indeed produce profits. It is best to use a preprogrammed
spreadsheet to track your trades.
a. Note – Manual backtests are far more valuable than
automated backtests because it forces you to think through
every trade.
4. Focus in on a single market that meets your specific needs.
When I speak of needs, I am referring to three essential things.
a. Capital requirements; don’t select a market that you
cannot afford.
b. Enough quality trades on a day to day basis, as discovered
in your backtest.
c. A market that you are skilled enough to trade with perfect
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 executions. You should practice in a sim account until you
have proven your ability.
5. Less is always more when day trading. Your quitting time
should be teamed up with a dynamic goal setting strategy. If
you can hit your goals before your hard stopping time, all the
better.
a. Your goals should be based on what the market wants
to give you vs. what you want from the market. We call
this the Power of Quitting. One of the universally best
formulas is what we call ‘poq1.’ That means you need at
least one winner and a positive result, then quit for the
session. Combine that with a maximum number of trades
and a hard stopping time and then prove it is consistently
going to grow your account via your backtest.
b. There are other PoQ formulas:
i. poq2 which requires two winners and a positive result
ii. requiring a winner to be a full target winner and not
a partial winner
iii. ‘x’ number of winners vs ‘x’ number of losses,
whichever comes first. This approach doesn’t require
a positive result but will do a great job in limiting your
quantity of daily trades and could prove itself to be the
best profitable approach over time.
c. The important thing is to live to fight another day. A great
day trading strategy will win more often than it loses so it
is essential not to give back your hard earned gains due to
one bad session. This leads us to the next essential point…
6. Surrender to the fact that there is NO such thing as perfection
in trading. NOTHING wins 100%. The good news is that
you don’t have to win 100% to be extremely successful. Trying
to divorce your losing trades from your winners is not possible
and IS a loser’s pursuit. Accept that fact and move a long way
towards long term, consistent profits.
7. Add a 2nd and then 3rd market to your day trading routine but
stagger them so that you don’t find yourself trying to execute
multiple trades at the same time. This leads to mistakes.
Mistakes lead to losses.
8. Strive for 100% perfection in your execution of your tradeplan.
Zero mistakes is the goal you always want to strive for, each and
every session.
9. Limit your risk. NEVER risk more than 2% of your trade capital
on any given trade. Great wealth comes from consistency. Go
for lots of singles and doubles with the occasional homerun.
Swinging for the fence on every trade leads to lots of strikeouts
THE SINGLE MOST IMPORTANT INDICATOR
Very smart people have invented all kinds of indicators to put on
price charts to help us make heads or tails out of what price action is
likely to do next. Indicators that tell us when a market is overbought
or oversold help us determine when we might want to start looking
for trades in the opposite direction. Momentum indicators, moving
averages, volume, trend, support/resistance, you name it! There are
more indicators than any one trader will ever know what to do with.
Most of them are misunderstood, misused and lead to losses. How
can I say that? Simple! Most traders lose money so it just seems to
me to be a logical conclusion.
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and lots of losses. Just increase your position size as your
account grows.
10. Find a good mentor. Whether it is a reputable virtual traderoom
or some other sort of trade coach, this is a very important key to
success.
11. Treat your trading as a business and run it with ‘best practices’
each and every day.
There is a lot of money to be made day trading but most traders
don’t know when to quit and will often turn a positive session into
a negative one. Or they don’t have their entire tradeplan figured
out in advance. Or they break their own rules, get distracted, make
mistakes, etc.. Having a mentor (or trading partner) is a great way
to be disciplined because you will be held accountable for your
actions or lack of actions. It forces you to ‘plan your trade’ and then,
‘trade your plan.’ Ultimately, it takes a very professional mindset.
You want to treat your trading as your business and not as a hobby,
your source of entertainment or anything else. If you exercise ‘best
practices’ as outlined in this article, you will be ahead of a majority of
traders out there and will be in the best possible position to succeed.
Finally, seek out an eMini (futures/day trade) Trading Course that
teaches you ALL of the above pointers. One trading course that
does teach all of the above is the Premier Trader University’s
Trend Jumper Trading Strategy. This comprehensive course offers
everything listed above and a whole lot more:
• Proven tradeplans with rules to follow
• Video based training
• Live, in the market training
• Chart structure that leaves NO guesswork on when and what
to trade
• Directional bias
• Price action based trading; takes advantage of price momentum
• High percentage targets
• Favorable risk reward ratios
• Clear and concise training that makes everything crystal clear
Trading should be easy but it is not simple. The PTU Trend Jumper
makes trading as easy as it could possibly be. Sure, it is not the
only eMini Trading Course that covers all of the above essential keys.
But it is a great choice that has a long term proven track record.
Whatever you choose though as your eMini day trading course, you
will be best served if you insist that all of the above is covered in a
comprehensive, easy to understand way.
by TJ Noonan
I believe that any one or select combination of a many different
indicators can prove to be valuable and help us determine profitable
trade opportunities. I’m sure of it in fact. A winning combo is
not so elusive. But unless one uses the one single most important
indicator of all, the likelihood of being able to succeed at trading,
no matter what combo of ‘other’ indicator one uses, is nil to none.
After successfully calling trades in a live traderoom for nearly 7
straight years, of this I am most sure.
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 So what is this magical all
important indicator that holds
so much power, that your very
own trading success depends on
it more than anything else? This
indicator will work with any
market, timeframe or style of
trading. It is an indicator like no
other, with absolutely nothing in
common with any other indicator
or trading tool you have ever used
or heard of. Oddly, it’s not even
an indicator that you can put on a chart. It’s far more powerful
than that. This indicator will even tell you IF you stand a chance
to succeed as a trader or if you are doomed to lose your hard earned
capital, like most people who try to trade.
What amazes me, even more than the power of this simple all
important indicator, is how many people don’t know of its existence
or how to use it when they finally discover it. Worse, is that when
one is finally told of this indicator, it is either ignored, or brushed off
as an amusing afterthought. Every now and then a person losing at
trading will find their way back to this indicator and finally give it
some serious thought. Fewer still might actually begin to put it to
work and in so doing the person trying to trade would have taken
their first step to actually becoming a trader; one with a real chance
at success.
The single most important indicator that you just have to use if you
hope to succeed at trading is... drum roll please... Your actions!
Yep! You heard me right. This is where eyes glaze over, where most
people will move on, ignore what I’m telling them or merely chuckle
to themselves with amusement while thinking, ‘what bull*$%t!’
And those are the people who will continue to chase, continue to
make every mistake in the book, continue to lose their money, and
continue to not drink the water like the dumb thirsty horse, that was
just shown the water; ironically, sticking to the pattern, all actions
that will be ignored, to the detriment of the person’s hope to become
a successful trader.
Your actions ‘indicate’ everything you need to know at this exact
moment in time for your advancement as a trader. Think about it
and you will see that it is 100% true. Moreover, it doesn’t matter
what indicators you put on your chart if you do not pay attention to
what your actions are telling you about your trading. It’s a realism
that no one can escape from.
You’ve heard the phrase ‘action talks, bull-dung walks,’ right? You’ve
probably heard it said a slightly different way. The way I like to
think about it is that ‘actions are the only language worth listening
to.’ Not words. Words are meaningless if not backed up by actions.
Listen to the ‘actions.’ That’s where the real truth is revealed. It’s not
what one says. It’s what one does!
It requires a large dose of humility, honesty and being humble to be
able to listen to what your own actions are telling you. Yet within
the language of your very own actions are the answers to why you
are either succeeding or failing at trading. What you do ‘indicates’
several critical things about your trading, as well as what precisely is
the next step that you must take to get yourself onto the pathway to
success. That’s a pretty powerful indicator, wouldn’t you say? Think
about it. What you do actually indicates:
• WHY you are trading
• What you want from your trading
• What you are doing to achieve your goals (goals you might not
32 www.netpicks.com
fully understand if you don’t listen to your actions)
• What you are afraid of
• What you respect
• What you don’t respect
• Whether or not you are succeeding or failing
• What you need to work on to stop losing
• What you need to work on to succeed
Here are some examples that will help you better understand why I
put this indicator above and beyond all else. In fact, they are actually
questions whose answers make my point loud and clear for those
with the humility to answer them honestly.
• How many times do you intervene with your trade against your
tradeplan rules? Why do you do that? Your very own actions
indicate the answer.
• Do you even have a tradeplan? It requires action.
• Did you research it yourself? Did you backtest it, forward test
it and practice it? These are actions that indicate one of the
above bullet points. Or, lack of actions if you haven’t done
them.
• How many times do you ditch a market or strategy for another?
It seemed to work when you first were interested, but after a few
losses, you’ve had enough and are moving on to something else?
Come on! Be honest or you won’t get it. We call this chasing
performance and it is the grim reaper to a person-trying-to-
trade’s bankroll. These are actions that are indicating to you
critical information! Are you paying attention to what this is
‘telling’ you? If so, what are you doing about it? If not, then
why not? Better take action before the grim reaper lays your
account to rest.
• How many times do you trade just to make back a loss outside
of your tradeplan? Do you even have a tradeplan? (Yes, I know
I asked this already!) Listen to your actions.
• How many times do you give your profits back to the market?
Didn’t your tradeplan have a goal strategy in place? Need I ask
again, do you even have a tradeplan? Why did you do that?
What are your actions indicating to you?
• Do you believe in your tradeplan? Or, do you just think you
believe in your tradeplan? Realize that your actions will indicate
the truthful answer to this question. You can’t talk yourself into
believing in something. That won’t work. You have to do the
stuff that creates belief. It is something that must be acquired by
the things that you do. Are you doing those things? Why not?
• Fear, greed, fun, thrills, ego are all the wrong reasons for trading.
Yet they are all reasons that are indicated by your very own
actions! No MACD, price channel or moving average is going
to reveal this to you. In fact, no combo of indicators will give
you this all important information about your trading. Only
your actions will indicate the true reason that you are trading.
Moreover, your actions will indicate exactly what you are asking
for and what you are most likely to get.
It took me a long time to discover this indicator. I was resistant to
the truths it offered. I wasn’t honest enough to recognize what I was
being told by my very own actions. Once I finally ate a large plate of
steaming humble pie, I was finally able to understand the language
of my actions and to acknowledge what they were indicating to me
and it was at that point that everything began to change for me. We
actually do get what we want from the market.
There’s only one real reason to trade and that is to make money.
www.premiertraderuniversity.com
Most traders lose money yet they are getting exactly what they are
asking for. Not what their asking for by the words they speak.
Words are meaningless. They are getting what they are asking for
with the only language that actually matters. Their actions! Yet,
like any language, it is not so easy to learn how to understand it. To
understand your actions, you have to be able to understand yourself.
Apply yourself and you can do it though. Your words say that you
do want to be a successful trader, right? Back it up with actions. If
you are honest and humble, your actions will be understood and
they will indicate what it is you need to do to get on the winning
track. Then, as Michael Jordan would say, just do it!
Your actions ARE the single most important indicator. If you don’t
pay attention to them, your chances of succeeding will be completely
dependent upon good luck. So if you decide to remain thirsty and
ignore this all important indicator, let me be the first to wish you,
Good Luck! You’re going to need it.

TAKE TARGETS THE MARKET GIVES YOU by Shane Daly

Your trade is in profit so how can you keep the majority of it and
not give too much back?
Structure as a means to exit your trade and turn the paper profits
into account profits is a sound methodology used by retail traders
and institutions.
For this article, I am going to cover longs however the same principles
apply to short trades.
Catching Trend Changes
For you though, you know that trying to catch the trend turns
(selling the high in this case) is difficult and you also know that two
leg corrections are pretty common. You are looking to buy into the
uptrend that is not truly broken. With that, let’s turn to the trade we
covered in an earlier article.
This chart shows the buy at an area where price was supported.

Trending Markets = Rhythm

We know that markets make higher highs and lows when moving
up and the opposite when heading south. A higher high can only
be made when price is pulling back and depending on your trading
method, this presents both long and short opportunities.

Looking at the following chart, we can see that price is in an overall

uptrend.

What makes sense at this point? Let’s look at what has probably
occurred.

1. Price makes a higher high and starts to pull back

2. Price puts in a higher low and starts to rally
3. Price puts in a lower high and starts to drop

Many people see the rhythm broken and start to think shorting the
market is the right play. Price slams through the low and those that
didn’t short when the move at #2 stalled pile in on the break. continued on next page

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 All those that went short have their stops in either of the two red
boxes. What we are not sure of is the strength of those levels. What is
the conviction of those sellers? We won’t know their conviction until
price comes back to those areas where a few events could take place:

• Price can rally right through those levels

• Price can be rejected short
• Price can find balance near the top of the swing

We don’t know what will happen but we know this:

If price rallies through the levels, those that sold near the highs
will have to cover by buying which will drive your long position up
pretty quickly. It will also confirm that the uptrend is still intact.

If price is rejected short, there is a good chance our stops will be

hit.
If price finds balance and consolidates, our patience will certainly
be tested. Those that lock in some profit may find their stops hit on
failed breaks short.
The shorts were ripped out of their positions and longs were driven
upwards 226 from entry while full position exits banked 82 pips.
Was it a good play? Before you say yes or no, look at this scenario.

Conclusion? Use those areas as profit taking levels.

You may say you would not have bought the lows but it’s obvious
some did. They may have seen a big rally up and then taken the first
pullback in fear of missing “the big move”. Other may have skipped
the first retrace but after seen the big green candle, were waiting for
the next pullback to buy.

Taking Profits At Objective Levels

By having a take profit in those areas we are using the structure of
the market, the rhythm of the market, and accepting a few scenarios
can play out in those areas to objectively put some money into our
trading accounts.
Do you leave a runner? Is this the best way to take a profit? This next
chart will show you how price reacted to those highs.
As you can see, there is nothing guaranteed or perfect in trading.
Understanding Context, Structure, and the Psychology (CSP) of the
masses can be a huge plus in enabling you to add money to your
account on a consistent basis.
Using these types of levels for profit taking can be a consistent way
to add to your account because it takes into account the CSP. Using
the scale out and trail type of exits can make this more effective and
I will cover that in a future article.

THE 100 YEAR STORM AND THE POWER OF ONE AND DONE by TJ Noonan
The most successful tradeplans and strategies will have its worst
session of the year.  This is such an obvious statement yet it never
fails to amaze me how inexperienced traders freak out over such an
occurrence.  Most traders quit at the first sign of trouble.  They wait
for their market and chart, whatever it may be, to post some winners
and then they begin.  I’ve written about this numerous times.  There
is a stair stepping rhythm to a healthy growing equity curve.  Nothing
is perfect but the general concept for a winning tradeplan is that the
winners and losers will come in, two steps forward, one step back,
two steps forward, one step back.  As a trader, if you can achieve this,
you are on the road to financial success.
The inexperienced trader doesn’t even give the idea of an equity curve
any thought.  When they wait for the markets to be ‘trading well,’

34 www.netpicks.com www.premiertraderuniversity.com
they typically get in at the end of the two steps forward and at the
start of the one step back.  Then just at the time when they’ve taken
more pain than they can handle, they quit.  They quit right at the
end of the one step back.  This leads to continued frustration, losses
and repeating the losing cycle until a trader has no more capital
to trade with.  We call this typical pattern “chasing performance,”
and I don’t know any trader who hasn’t experienced this at some
point in their trading careers.  The question is how long one stays on
this destructive cycle. It is habit forming and hard to break.  Traders
typically throw the baby out with the bathwater and give up on
a productive and profitable strategy/tradeplan.   They can’t see the
forest from the trees.  Perhaps they were even unfortunate to have
been caught up and thus traumatized by the ill effects of the 100
year storm.
We teach how to avoid this with various effective techniques but the
simple solution is to build a strong foundation and acquire the big
perspective so that you can see the forest from the trees; the trees
being each individual trade and the forest being the equity curve,
the result of the accumulation of all the trades within the tradeplan,
regardless of the strategy.  This is how we make money as traders;
taking trades that fit within the rules of a winning tradeplan.  This is
what we mean by operating a trading business instead of just being
someone trying to trade.
Even the best tradeplans and strategies will experience a “100 year
storm,” that rare occurrence that will hit you hard and test your
belief, confidence and ability to stay the course through thick and
thin.   Within the realm of the natural order of things, extreme
events happen that will trigger a cascade of losing trades with no
end in sight, at least while you are in there trading your plan, and
experiencing this.  I’ve seen it over and over again, even with the very
best tradeplans.  They DO exist and smart traders will think of ways
to minimize the damage and maintain the ability to stay the course.
I’ve moderated and hosted a live traderoom with great success for
nearly 10 straight years.   We’ve had tremendous equity growth
in just about everything in that traderoom yet, each and every
successful tradeplan has had its 100 year storm.   The first time I
experienced this, over 9 years ago, still stands out in my mind as if it
were yesterday.  I’ll never forget during my first year, trading the ER2
(remember that?), we experienced an 11 trade losing streak; the 11th
coming on the first trade of a Monday to start a new week.  Imagine
if you had been one of those disciplined traders, following your plan,
losing one trade after another to end the week and a Friday with
your 10th loss in a row.  Could you have stuck with it?  Would you
have?  Many would-be disciplined traders didn’t even make it THAT
far.  After each losing trade, more and more gave up and each day the
traderoom attendance was less than the day before.  How would you
have fared?  Now imagine if you did persevere and showed up on
following Monday, only to lose the first trade of the session and the
11th losing trade in a row.  I remember that it felt like all the air had
been sucked out of the room and at least 30% of the room quit at
that very moment as the attendance dramatically dropped again.  At
that moment, there was a break in the clouds and blue skies began
to peak through the darkness.
The next trade of the day came as they always do, and finally
the losing streak was over.   It was a winner.   Then the next trade
won.  Then the next..  In fact, that first winning trade, on the heels of
the 11 losing trades in a row, was the first trade of a 16 trade winning
streak and all new equity highs.  The 100 year storm had come and
gone.   Coincidentally, we had recently done a webinar showing
the risks of drawdowns. We had looked at a typical tradeplan that
won 2/3rds of its trades (two steps forward, one step back) which is
www.netpicks.com
what we have found to be the sweet spot
when examining tradeplan results and
stats.   Credible studies show that there
is a 1% chance that such a tradeplan,
winning 66% of its trades will experience
a 10 trade losing streak.   Amazingly, it
was the 650th trade of this very resilient
and solid tradeplan that was the 1st trade
of the 11 trade losing streak.  Go figure!!
The 100 year storm will happen.  It happens with all markets, charts,
strategies, tradeplans, etc.   We’ve had a few recent examples with
each of our favorite markets, charts and tradeplans.  Yet without fail
(after numerous people trying to trade wound up quitting), these
markets and tradeplans overcame the storm only to reach for higher
and higher equity levels, and resumed their profitable winning ways.
This leads me to one of the most powerful weapons a trader has at
his or her disposal to combat and minimize the damage that can
be caused by the 100 year storm.  The answer is trading less; LESS
trades per tradeplan session.  You’ve heard us talk about our standard
practice of dynamic quitting goals over the years called the ‘Power
of Quitting (poq).’  How about taking it a step further?  The Power
of One and Done.  That’s right!  One trade, win or lose, then quit
for the session.
There is so much sense to this idea that it amazes me how many
traders don’t even give it a second thought.  Traders believe that if
they want to make more money they just need to trade more.  Over
and over again, we discover that this is a huge fallacy, at least in
the way that most traders think about it.  A good strategy should
be able to be traded, over and over again, regardless of tradeplan
rules, etc.  What they fail to realize is that strategies are comprised
of tradeplan rules. They are not just trade setups, to be taken
whenever a trader feels like.   Winning strategies are great setups
made even greater with the smart combination of rules, both
starting and stopping, as well as smart money management, flawless
trade execution and the psychological ability to trade the plan with
discipline and consistency.  Think about it.  Most traders fail.  It’s
not a coincidence.  To succeed requires putting it all together. There’s
no room to leave any of these important elements out.  Trading less
goes a HUGE way of helping a trader put it all together while also
enjoying additional benefits that add to the bottom line in a big way.
Over trading leads to  a myriad of problems that causes traders to fail
like; bigger drawdowns, increased trade expenses, the likelihood of
giving back one’s trade profits to the market (which happens more
often than naught), fatigue   and burnout, emotional attachment,
more time and effort, more errors and mistakes, the risk of getting
sucked into the 100 year storm, all of which will lower the average
net profit per trade aka, expectancy.  After all, the average net profit
is the magic number to focus on, above and beyond everything else.
The secret to success is discovering the proper risk exposure to the
market and gaining the highest ‘average net profit per trade,’ net
of all wins, losses and expenses.   The more you trade, the more
commissions you pay, the more slippage you pay and the more
risk exposure to the market you endure.   Markets trend and then
they consolidate, chop, churn, etc.  If we can quit positive on most
sessions, we can grow our equity and find ongoing success, which is
why we trade in the first place.  Learning how to make money as a
trader begins with learning how to not lose money.  You don’t have
to trade more to make more money.   In fact, the opposite is the
real answer.  Trade less!  Then as your account grows, give yourself a
continued on next page
www.premiertraderuniversity.com 35
 raise by moving your finger from the ‘one’ to the ‘two,’ and increase
your position size.  At some point, your account will grow faster and
faster until you have reached your maximum position size.  That is
the trader’s ‘promised land’ because as your account continues to
grow, your risk profile will decrease more and more.
If you still want to trade more, just add more ‘one and done’
tradeplans.  You can stagger them or create a portfolio of one and
done tradeplans so that you get the amount of activity you want and
in so doing, getting the added benefit of greater diversification.  You
can have your cake and eat it too.  You can control your risk exposure
to the market, greatly reduce the risk of being hurt by the inevitable
100 year storm, and gain the highest average net profit per trade
possible.  Moreover, you can limit your time investment and enjoy
a better lifestyle.  Time is the most precious commodity of all and
the power of the one and done approach will pay you back in many
different ways, the greatest of which being in time.  The profits will
come as you grow your equity and increase your position size while
sticking to a very smart and controlled risk to capital ratio.
Think about it. Think about why you are trading in the first place.  If
you are trading to make money, the only legit reason to trade in my
opinion, then I have just given you the keys to the kingdom.  The
100 year storm will happen.   It could be on the next trade.   We
never know until we are in it.  We do have the power to avoid it
though.   Do your homework and build your trader foundation
with a good log of trades.  See the forest from the trees.  Study the
numbers.  You’ll find that your highest average net profit per trade
will come from fewer trades.  Trade less.  The 100 year storm will
pass and you’ll still be in a strong position to continue with your
winning tradeplan.

ANOTHER FREE INDICATOR? by Ron Weiland

What if I told you we had found the “Best of the Best” Free indicator
out there? Would you skip right down to the bottom of the article
the EURUSD. There
were many more pips
FREE
and just download it? I hope not, here’s why! made earlier this year as
well. Are we Crazy? How
Everyone has heard the saying, “Nothing good is Free”, well that is could we give this away for
not always the case. You know McDonald’s was recently giving away free? Because we value your time and
free coffee. Now it may not be gourmet or a starbucks, but heck it attention. We want your business, so if we give you something with
can save you a few bucks and there were no tricks. HUGE VALUE, you will come back and take a look at what we sell!
How about airports or hotels and free Wi-Fi, or the free breakfast.
Don’t you find value in those two items? They might trick you a little
bit and have a higher room rate, because the breakfast is included,
but I know those are some of the things I look for when comparing
room rates.

So, what do the companies want from you when they offer you
something free, like a “Holy Grail” indicator or a free download
e-book? They want your time or your contact info, like email or
SMS! You don’t realize how valuable that information is.

Most of the things folks offer are garbage and so it is not worth your
time. Many of them want you to sit through some sales webinar
to get this free item. You probably get 2 or 3 emails a day offering
you something for your time. Just attend this webinar or watch this
video and enter your email.

We here at Netpicks are not that much different. We want your

business and know that your time is very valuable. So, we need to
up the game a little bit. Here is what we do;

We need to offer you some education that will change your trading

• We need to offer you some education that will change your

trading forever!
• We want to give you something that will make you money!
• We want to show you how you should not waste your money
any place else!

So, what do you think, are you ready to give us your email address?
Not yet? What do we need to do to sweeten the deal? What if I gave
you that “Best of the Best” free indicator?
Take a look at these last two Forex trades, over 700 pips in profit on
There you go. We can’t hide from live trades. That is why we trade
in a live room 4 days a week with our system and our clients. They
make money, we make money! So, if you are not making money.
You need to make a change! You need to find a Team of Traders that
will work with you and trade along side of you until you become

36 www.netpicks.com www.premiertraderuniversity.com
successful! That is what Netpicks is all about.
Are you ready for the “Best of the Best” Free Indicator? Are you
really ready? Can you handle it? Ok, we trust you; you just need to
trust us. Here you go, use it wisely and Great Trading!
THE TEACHER APPEARS WHEN THE STUDENT IS READY by Jane Fox
I started trading back 1999 and made more money than I’ve seen
in a lifetime. Unfortunately I lost it all within the next year when
the market turned down. It didn’t take long to realize I didn’t know
what I was doing and the only reason I made so much was because,
as the saying goes, “Even a monkey throwing darts at a chart could
have made money in 1999.”
If I wanted to be a “trader” I knew I had to learn how to trade in all
markets. So I started my search.
I lost track of that search over the years because I was hired by an
online trading firm to write articles on technical analysis but the
whole time I knew I was missing something. I was finding all the
things I was espousing becoming mostly rhetoric and not much
substance. Some of the oratory I found unsettling was, “Let your
profits run and cut your losses.” What does that really mean? How
much profit? At what point do you cut your losses? You cut them too
short and you’ll never make it as a trader. Then the one that really
started to grate on me was all the different “Holy Grails” out there.
Everyone seemed to have a different indicator, a different way of
manipulating price and volume, so they just knew what the market
was going to do.
Then I found Mark Douglas’ book Trading in the Zone and knew
that I had found for what I had been searching for years. It was a
Zoneplan, or better yet, an automated plan. I knew I needed an
automated system so I could take the emotion out of trading but,
more than anything, I started to realize, all the hard work had to put
in well before you ever entered a trade. This would keep the actual
art of trading very very simple. An interesting side note was that ever
technical analysis article I had published up to this point, and there
were many, finished off with, Plan your trade and trade your plan.
Little did I know way back then, even before I read Mark Douglas’
EXCEL WITH TRADESTATION by Will Feibel
In previous articles we covered the use of custom indicators and
paint bars to visualize special conditions and create unique trading
strategies not available in the standard TradeStation toolbox. The next
step in this progression is to code your strategies using TradeStation’s
EasyLanguage programming language. That’s a great approach if you
have programming experience or decide to invest the time needed
to learn it, and TradeStation has a couple of PDF books that can
help you learn, the EasyLanguage Essentials and the EasyLanguage
Functions and Reserved Words, available on their website. An
alternative however is to use a spreadsheet program to perform
your analysis. You could use a free spreadsheet like that available in
www.netpicks.com
www.premiertraderuniversity.com/
tjnew/download.html
book, I knew actually what I needed. This book just put words to it.
No need to go into what happened in the years from when I read
Douglas’ book to present day but suffice to say, by 2012 I had become
very discouraged and was almost ready to throw in the proverbial
towel. I didn’t know how to find a plan let alone how to automate it.
Although I expected the same old, same old, I decided to attend
one more class, and from this one course I walked away with the
answers. This particular course virtually changed my life, or to be
less dramatic, my trading life. I truly mean this, it changed the
trajectory of my trading career. Interestingly, if I had taken this class
at any other time in my career it probably wouldn’t have made the
difference it did. You know the proverb, “The teacher appears when
the student is ready.”
This class introduced me to Quantitative Trading. Trading that did
not involve any kind of guessing and was your pure “Plan your trade
and trade your Plan.”
From this course, I got the basic algorithmic code from which I
could learn the syntax I needed to code my ideas. From this course I
learned the software I needed. From this course I found the best data
provider. From this course I got everything I needed to springboard
me into my own algorithms.
I don’t want to bore you with all details (probably too late for that)
but after hours and hours (and I mean hours) of work and thousands
of dollars I coded all the strategies I considered were the best of the
best, optimized them, tweaked them to make them better and put
them together into the QiT portfolios.
There is a lot more to this story, how I took algorithms and made
them my own but that will for another day.
the OpenOffice Suite or you
could use Excel, which may
already be on your computer.
We’ll use Excel 2007 for this
article.
Before we can perform any
analysis we need to get the
TradeStation chart data into
Excel. This process is quite simple and consists of the following
steps:
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www.premiertraderuniversity.com 37
 Load a chart of the instrument that you want to analyze into
TradeStation. You need to decide on the instrument, the time frame
(daily, hourly, 5 minute, 377 tick, etc.) and the amount of data (how
many bars of data or a date range). In Figure 1 we are loading ten
years worth of daily AAPL data.

Figure 3 – Save the Data

Now you’re ready to import the AAPL data into Excel. In Excel use
the menu and select Open, then in the Open window select “Text
Files” in the “Files of Type” dropdown menu. Select Desktop as the
location and pick the “AAPL Data” file, as shown in Figure 4.

Figure 1 – AAPL data

Open the TradeStation Data Window using the File/View/Data

Window menu sequence. Once it’s open click on the “Show All”
icon on the top of the Data Window and this will expand it to
include one row for every bar on the chart. In our example the
first row is for the Nov 3, 2004 bar. Notice that each row has the Figure 4 – Load the AAPL Data
date and time, open, high, low, and close price, plus volume and
open interest. You may not need all of these data elements and you After you press the Open button Excel will launch the Text Import
can easily exclude them from your Excel import. Note that if you Wizard. In Step 1 leave the default settings (Delimited, Start Import
have any indicators on the chart you will also see the values of those at row 1). In Step 2 under Delimiters check the Comma box and
indicators displayed. In Figure 2 you’ll see the data window for the you’ll see the image in Figure 5.
AAPL chart but I’ve included a 50 period and a 200 period moving
average which we’ll use in our analysis.

Figure 2 – Data Window

Save the Data Window contents to your computer by pressing the

“Save” icon on top. This will open up a “Save As” window and you’ll
need to name the file and tell TradeStation where to place it. In this
case we’ll name the file “AAPL Data” and place it on the Desktop as Figure 5 – Comma Delimiter
shown in Figure 3.

38 www.netpicks.com www.premiertraderuniversity.com
In Step 3 we have the opportunity to perform some special
formatting of the different columns or exclude columns from the
spreadsheet. You can leave everything at default and Excel does a
good job of determining the data type. We will however exclude the
Open Interest column from our import so we click on the column
and select the “Do not import column” button as shown in Figure 6.
Figure 6 – Exclude Data Column
Figure 7 – AAPL Data Spreadsheet
Press the Finish button and Excel will load the data into a new
workbook. The data will be very basic and unformatted but you are
now ready to perform your own analysis. Figure 7 shows the basic
spreadsheet.
IS PROFITABLE TRADING CLOSER THAN YOU MIGHT THINK? by Mike Rykse
As we head into the home stretch of the 2014 trading year, it’s always
important to check in on your trading goals for the year. Part of this
process in my own trading is also to take a look at the success rate of
the trading industry as a whole. It’s interesting to talk with traders
on a regular basis to hear how successful people have been with their
trading. To be perfectly honest, the numbers leave a lot of room for
improvement for most traders. We poll the attendees of our sales
webinars to get a feel for the success rate in the trading industry.
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You are now ready to perform your own analysis of the AAPL data
without needing to learn to program, simply use your Excel skills
to manipulate the data. As a simple example let’s assume that you
want to know the average range of the daily AAPL price bars over
the entire ten year period or maybe only over the last year. That’s
simple, create a new column in the spreadsheet that calculates the
range (high minus low) and then use the built in AVERAGE and
STDEV functions to calculate average and standard deviation. In
Figure 8 we show the result. We’ve also applied one of the standard
formatting options to make the spreadsheet more attractive and
easier to read.
Figure 8 – Average and Standard Deviation
You can of course create more complex analyses using the Excel
capabilities. You may for example want to determine if AAPL is a
stock that has strong and lengthy trends. To ascertain that you could
calculate the number of days where price is above or below both the
fast and slow moving average while the moving averages confirm
the direction (fast higher than slow for long, fast below slow for
short) out of the total number of days. Or you could look for candle
patterns based on the high/open/low/close of consecutive bars, or
determine duration and size of price moves once certain levels are
exceeded, or count how often floor trader pivot levels are violated,
etc. etc. We may revisit some of these in future articles.
It often seems that you need to be a programmer in order to analyze
large amounts of price data. Hopefully this article has shown you
that this is not the case, that you can indeed become your own analyst
by using the simple spreadsheet skills that are already a part of your
personal toolbox. Now load up some data and start analyzing!
It’s amazing how low the overall success rate really is. I have heard
people say industry wide that less than 5% of traders are consistently
profitable. I would say the results from our polls are higher than
this 5% number but not by much. So why is it so hard to trade
profitably? What do so many fail? How does a trader get over to the
profitable side?
continued on next page
www.premiertraderuniversity.com 39
 I ran across the following Thomas Edison quote over the weekend.
“Many of life’s failures are people who did not realize how close they
were to success when they gave up…” The truth is many traders are
closer to being successful than they realize. Trading is a hard but very
rewarding job. The rewards are endless if you put in the hard work
to become a disciplined trader. However, this is often times where
many trading dreams get derailed.
To trade with consistency you have to have a detailed plan in place for
approaching the markets. While there are many products out there
that promote trading systems which help develop that detailed trade
plan, the real issue is with the actual trader. It’s a lot like heading to
the gym to get a work out in. Come January 1 there will be a whole
segment of society that will come up
with New Year’s resolutions, with
many of those focused on personal
health. As a result, gyms worldwide
“ Many of life’s
failures are people
will see their busiest months of the who did not realize
year. However, come May 1 many of how close they
those gym goers will have given up were to success
on their goals. Why? Even though the
when they gave
thought of living a longer healthier life
or having that beach body in shape up…
for the summer months seems good
enough to motivate, the bottom line
is people don’t like the pain and hard
–Thomas Edison ” too high or too low. Stay consistent.
work required to be successful with these goals. Trading is much the
same way. Becoming a consistently profitable trader takes hard work
that is often times too much for people to overcome.
The biggest reason traders fail in my opinion is the overall dislike
of being wrong on a regular basis. Looking at my overall winning
percentage for the year across all trades that I have taken, I can
clearly see that I’m wrong on average 4-5 times out of every 10
trades. Doesn’t seem that impressive right? However, here I am going
into November with a really profitable year going. The reason I am
able to see success is that I know where my edge is at and that is in
my system. If I can take all trades throughout the year that meet my
WHAT EXACTLY IS AN ALGO? by Jane Fox
Bear with me if you can and try to get through this first paragraph.
An algo or, in other words, an algorithmic trading system is the
interaction between data and a fixed model (an algorithm) where
the model needs the data to process its logic. A static model is used
to periodically scan dynamic data resulting in a trade list – or signals.
Since the model is static and the data is dynamic, the trading system
performance depends on the synchronization between the model
and the data. Changes to either the model or the data will result in a
new system. Whew, you made it, good job!
Quant Traders Use a Model
What we’re saying here is that Quant traders use a fixed set of rules
to determine trade timing and direction in a systematic way. On
the other hand, discretionary trading is not confined to the same
scientific parameters; instead, the discretionary trader utilizes
intuition and “market feel” in order to make technical decisions.
The human mind, however, is continuously bombarded with outside
emotional influences and when discretionary traders want a certain
outcome, situational influences can result in the exact opposite. It is
called mind sabotage.
40 www.netpicks.com
system criteria, then I will be successful in the end. However, if I give
up after every losing streak then I’m left missing all the winners and
winning streaks.
It’s amazing how year after year I look back over my results to see
that most of my profits are made within a few short windows of
time. I never know when these blocks of time will occur so all I can
do is keep taking the trades as they come, knowing that the odds of
success are in my favor.
Sure taking the trades as they come, surviving the pullbacks, trusting
the odds that your system gives you are all easier said than done.
So what can we do to put steps in place for ourselves to become
disciplined traders? Here are some of the steps that I use as a guide:
1. Find your system and trust it religiously by taking all trades.
2. Trade small to control risk. Grow the account slowly so
swings in the equity curve are easier to handle.
3. Keep a trade journal. Document all trades so you can learn
from success and failure. Prove to yourself that the odds are
in your favor.
4. Control emotions. Losers happen get used to it! Never get
5. Be open to change. Most people fail because they do the
same thing over and over expecting different results. If a
market or your approach doesn’t work make a change!
I know these 5 steps aren’t rocket science but neither is trading!
Often times we make it complex when it doesn’t have to be. Keep
things simple and put the 5 steps listed above into your trading going
forward. Using these 5 steps won’t mean the end of all losing trades
but it will mean you put your focus on overcoming the roadblocks
that make most traders stumble. Now is a perfect time to get a head
start on your New Year’s trading resolutions. Put some of these steps
into practice and you will be well on your way to reaping the benefits
of a great business.
The discretionary trader does not always make the same interpretation
of a market indicator (chart, technical study, fundamental
information, etc.) or use it in the same way each time it’s applied.
This trader uses personal judgment to determine the value of that
indicator at any given point in time.
Discretionary Traders Use Intuition
Since the discretionary trader must, per force, analyze the market(s)
on a regular basis, it’s said that they gain the opportunity to
develop a more intuitive feeling for the market resulting in a better
understanding of how it operates under given sets of circumstances.
However, the most essential argument against discretionary trading,
and for becoming a Quant trader, is the psychological element.
Since discretionary trading is beholden to the analysis and execution
performed by the individual rather than the system, it runs the risk
of biases, lack of discipline, and other psychological short-comings
resulting in failure.
Thinking, Fast And Slow
In his book  Thinking, Fast and Slow, author Daniel Kahneman
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explains that the human mind employs two distinctly different
methods of thinking at the same time. When it comes to trading,
these different ways of thinking often oppose each other, and
ignorance of their existence can explain why humans are not good
traders. Daniel Kahneman and Amos Tversky won the Nobel Prize
for the “Prospect Theory”  that uses cognitive psychology to study
how people manage risk and uncertainty. Their findings are highly
important in financial economics and reveal the weaknesses of us
humans in investment decision-making.
“Experts are uniformly inferior to
algorithms in every domain that has
a significant degree of uncertainty
or unpredictability, ranging from
deciding winners in football games
to predicting longevity of cancer
patients. One has to accept financial
markets are no exception to the
rule.” Daniel Kahneman
Kahneman refers to these two types of thinking as System 1 and
System 2. System 1 thinking is described as “fast, automatic,
frequent, emotional, stereotypical, subconscious” and System 2 as
“slow, effortful, infrequent, logical, calculating, and conscious.”
System 1 relies on intuition and assumptions – in the trading world, this
is called discretionary trading. Whereas properly harnessed intuition
can be a tremendous asset, improperly harnessed intuition can lead to
overconfidence, isolation, and the creation of confirmation bias which
leads to statistical errors.
Kahneman says once a plausible answer comes to mind, overriding
it can be extremely hard work. When
people create a cognitive bias, they
develop a tendency to only believe
supporting arguments while ignoring
valid points to the contrary. Traders can
then refuse to cut their losses by simply
not acknowledging evidence that could
have saved them a lot of money.
When a position does not move in
an expected way, people must be disciplined enough to stick to
predefined rules because of the natural human tendency to operate
under the overconfidence of System 1.
GARBAGE IN – GARBAGE OUT! by Troy Nooan
In other words, asking the right questions.  I am of the belief that
most people trying to trade end up failing because they don’t know
what the right questions are, that need to be asked and answered.  I
have learned over the many years of working with countless traders
and running a successful live trade room with a constant interaction
with numerous traders in real time live market action that failure
comes from approaching the session with the wrong ideas.
Today a gentleman took a couple trades in the Crude Oil Futures
377 tick chart.  This is a tradeplan with ongoing long term success.  I
didn’t even know this trader was present in the traderoom until he
posted the following comment:   is probably destined for ongoing frustration and a dwindling trade
“Ouch!  Crude just had two brutal losses in a row.”
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Also, since a discretionary trader is relying upon his/her own analysis
and not a set of automatically generated buy/sell decisions, another
disadvantage is that the underlying analysis is often limited in the
number of markets that can be traded. Whereas a mechanical trader
can apply a system to a wide array of markets.
“The universe of trading systems is
divided into two – having confidence
and having faith. If you want
quantifiable confidence, the kind of
confidence that tells you whether
or not to hit soft 17 at blackjack,
whether or not to hit the blot in
your inner table in backgammon, or
whether or not  buy a new 52 week
high – use quantitative analysis. Everything else is faith.” Howard
Bandy
Even though  here at QiT  uses 100%  algorithmic  trading, and
does not utilize any discretionary override,  QiT still recognizes
the advantages built into the discretionary trading model and
thus continuously monitors the algorithms for system health with
optimization techniques. This way we are able to stay current and
adapt to market changes.
QiT models the price, volume and other technical analyses in a way
that gives a huge edge over discretionary trading. An edge we can
quantify with back testing. An edge you can see with your own eyes.
Each night the entire US stock market is scanned for patterns. The
stocks that meet our criteria are called signals because they signal
a trade with the highest probability of winning. But we don’t stop
there. We then use another filter to rank all the signals and only
trade the best of the best. Once again, we don’t stop there! Each
signal we trade then uses a limit order to turn a very good trade into
a great trade.
These patterns are expressed in a formula our trading system
development software, Amibroker, can read so they are reproducible
and can then be evaluated statistically.
The metrics QiT uses to evaluate  backtest  results are called
the evaluators and model development is done through Amibroker
with Norgate Premium Data providing our data.
I instantly knew that this was a trader approaching his session
without asking the right questions; perhaps not even asking any
questions.   I asked him a question though.   I asked him “what is
your tradeplan?  Are you supposed to be taking CL trades this late
in the session?  We already finished our usual tradeplan today and it
ended positive.”  There was a long pause before he finally answered,
“I started late today.”
This one simple and common example illustrates exactly how and
why so many traders regularly fail, even with a winning system
and tradeplan.  It shows how a well intentioned ‘would-be’ trader
account.
continued on next page
www.premiertraderuniversity.com 41
 Two losing trades
are extremely
common.  It goes with
trading.   It’s pretty
much meaningless
too, in the context of
an ongoing winning
tradeplan.   How it fits
in with random, shoot
from the hip trades on
the other hand, well,
that’s a completely
different story that
usually doesn’t end
well.   open for business when the money making transactions are ready
Imagine owning a different type of business.   I like to think of
a dry cleaning business, or a pizza shop; maybe even a hardware
store.  Whatever -- some sort of small business.  How do you think
that business is going to do if the owner or manager were to show
up whenever he wanted to open for business?  Today he shows up
at 9 am.  Tomorrow he opens his doors at some other random time,
etc.  You get the idea, right?  Do you think that business has any
chance of succeeding?   ongoing successful businesses if only he would just run one of them
Trading is a business!   Success comes from running one’s trading
business with ‘best practices’ and a disciplined consistency.  Think
about the two losses in our above example.  The trader was following
no tradeplan.  Basically, he was closing his eyes and throwing darts
in the general direction of a hazy target.  Let’s take this a step further
though.  Let’s say that we were trading our tradeplan, following the
rules, and the first two trades were losers.  Should we quit that plan?   possible?  How is that working out for me?  Perhaps a better and
Now imagine that you ran a pizza shop and no one came into buy
pizzas today.   Normally you run a business that makes money on
a regular basis, but today for whatever reason, no one wanted to
eat pizza.  You still had to pay your employees, pay the electricity
and gas, etc.   You lost money today.   What does that say about
your business?   Are you going to quit and close your doors
tomorrow?  You have a money making business but today, it didn’t
bring in enough income to meet your overhead.   That happens,
right?  Yet the business is an ongoing success.  Hungry pizza eaters
from miles around are going to come in and buy more pizzas!  Do I
have to tell you not to quit?
Winning tradeplans take on losing trades don’t they?  Two losses is
nothing.  Winning trades do follow though, right?  That’s why it is
a winning tradeplan.  I had a session not too long ago where I was
thanking the trade gods for the two losing trades I started the session
with.   As a result, I had to take a third trade, per my tradeplan.  The
third trade was a huge reversal that gained over a $1.33 in Crude Oil
Futures, which equates to $1,333 of profit per contract!  If I had won
a typical +.22 on the first trade of the day, which I always consider
a great success, I would have only made $220 per contract.   I’m
never going to complain when that happens but, because I began
my session with two losses, I was able to catch the big homerun
winner.   I’ve seen even bigger winners follow a few losses.   The
winning business requires the ongoing operation of the business
and not whether any transaction wins or loses.  Was I nervous after
the two losses?  Not at all!  I can see the ever growing equity that
occurs by merely following the rules of my tradeplan; by opening my
doors for business and executing my business transactions per my
plan.  Besides, knowing something about your business is probably a
good idea too, right?  I know that 100% perfect winners do not exist
42 www.netpicks.com
in trading and if it did, it would quickly by illegal anyway.  The good
news is that I don’t need such perfection.  Perfection comes from the
imperfection, really.  Trading is like fishing.  If a fish gets away, you
throw another hook in the water, so long as you have a productive
fishing hole.   If the motivation is not dying of starvation, you’re
going to be just fine so long as you don’t abandon your attempt to
catch fish.
The trade gods work in mysterious ways but the big point here is
that the money is made by the results of the tradeplan, not any give
set of random trades.  Not trading with a plan, and taking two losses
in a row, something that one should expect on a regular basis, usually
results in a trader saying “Ouch!” and quitting.  To me, the bigger
ouch is missing the next trade, or worse, not keeping your doors
to come pouring in; not throwing your hood in the water when the
fish are ready to bite.  
The typical profile of a losing trader is someone who unwittingly
quits the winning tradeplan after a few losses and then trades some
other random chart and strategy.   His dry cleaning business had
no customers today so tomorrow he opened a shoe repair shop.  A
week later he was running a flower shop.  Perhaps all three would be
consistently and with a proven plan.
So what are the right questions?  How does one not fall prey to this
common theme of failure and losses?   It all begins with knowing
why you are trading in the first place.
Am I trading to win on every trade?   If so, why?   Is it even
more productive question to ask is ‘why am I trading in the first
place?’  Is it to make money?  If it is, and you recognize it as being
so, then you are on the right pathway to success.  Because the next all
important question presents itself:  “What is it I have to do to make
money as a trader?”  The answer is to trade a winning tradeplan that
grows equity over time, due to the statistical edge that the plan gives
you.  Placing a pizza shop in the middle of a desert might not do as
well as putting it in the middle of a well populated neighborhood.  
If your answer of why you are trading is to prove how smart you are,
or how good your pizza is, then you will get completely different
results.   “My pizza is so good that it doesn’t matter if I put it in
the middle of the Mojave Desert, people will come from miles
around regardless.”  Or, “I am so much smarter than the market that
I don’t need a stinkin’ tradeplan.”  Funny how many people think
so lowly of themselves that they have to prove, to themselves, their
worthiness by outthinking the market, and ultimately preventing
their own success from ever happening, since they wind up realizing
that they can’t outthink the market.   It’s one of the great ironies
of the trader battlefield.   Garbage in, garbage out!   My money is
on the neighborhood pizzeria and on the trader with a proven
tradeplan.  Ask the right questions and then proceed to do what it
takes to succeed, based on the answers.  
If succeeding at trading means making money on a consistent basis
and the only way to do that is by following a proven, money making
tradeplan, then your pathway is made simple.  All you have to do
is follow it.  It doesn’t have to be garbage in, garbage out.  I prefer
to open my doors for business, fire up the oven and put the pizza
in.  Pizza in, pizza out.  Yum!  With a good winning tradeplan you
could open up a chain of them.
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HOW OTHER MARKETS CAN INFLUENCE YOUR TRADING DECISIONS
by James Kessick

Yesterday a very important aspect of trading came up in the EU

trade room and I wanted to take the time to discuss it in a little
more detail. Similar markets tend to move in a similar way, but
changing the way you trade because of them is something that
can be problematic if you don’t consider  how other markets can
influence your trading decisions.

Level of correlation
It’s really important to take the level of correlation between markets
into account. Some products are highly correlated such as different
bond products on the same yield curve (e.g. Schatz, Bobl, Bund)
or different calendar months in the same market (e.g. Crude Oil).
Because these markets are so correlated, there tends to be a great
amount of spread trading activity. This basically means buying one
contract and selling the other in order to trade the relationship
between the two instead of the changing value of each market
separately.

Other markets are correlated and the spread can be traded, but their So what can you do?
relationship isn’t always as clear-cut. This kind of correlation might
be seen between bonds from different countries (e.g. Bund – 10yr
Note) or different stock indices, particularly between those from
Identify potential drivers
If you believe that there’s a  leading market, the first thing you
different countries (e.g. Dax-S&P). These kind of relationships range
can do is look at what the possible drivers for each market will be
from being quite tight in the ultra-short-term to fairly incoherent.
over the course of the session and the short term. Prevailing market
Global economic macro drivers can move these markets together
direction driven by global macroeconomics or political risks taking
and so the relationship is stronger, but then influences much more
place for example, could influence both the markets that you focus
locally specific to the individual markets can play a role.
on. However, information that’s more relevant to local markets is
likely to have far less of an effect across all the markets that you’re
FTSE – Europe on Thursday watching.
This was the kind of thing seen on Thursday between the FTSE and
the EuroStoxx/Dax.
Pre-plan what you do
Although these are all European indices, the FTSE was behaved You might believe that you have a good feel for how another market
somewhat differently due to different influences on these markets. affects the one that you are trading. However, for the information
The FTSE opened and went straight up to begin with, whilst the to be useful, you need to not only understand how another market
EuroStoxx/Dax tested lower and struggled to push higher. When affects your own, but also how this will alter your trading decisions.
one market clearly has an idea of what it wants to do but there’s a
There might be key features of the market’s movement that you
reluctance from a correlated market to go with it, there’s a distinct
believe will drag your market with it. There could be a major breakout
possibility for a reversal at some point. On the other hand, the
for example or the market might have suddenly moved much further
markets might have lost sync with each other.
than it would normally. How will this then change what you do?
If you’re trading one market and watching another to take your Will you aggressively look for trades in the same direction or will
trading cues from, when there’s a breakdown in the relationship it you back off taking trades against the direction of the move?
can be mildly frustrating and potentially costly to say the very least.
Whatever you do, the most important thing is to consider the
But relationships between markets clearly do exist and to ignore
implications of how a correlated market is moving and what if any
them altogether leaves us susceptible to the natural inclination of
changes you’re prepared to make to ensure you perform well in the
looking for patterns.
market that you trade.

ARE YOU READY FOR BINARY OPTIONS? by Ron Weiland

Yes, I think it is only a matter of time that we will dip our foot into
the Binary Options water. The good news is you can trust that if we
put something out, you know it will give you the trader an edge in
your trades. We will also tell you what you need to watch out for as
far as bad brokers and avoiding scams in this fast growing market.
A binary option is a type of option in which the payoff can take
only two possible outcomes, either some fixed monetary amount of
some asset or nothing at all. The two main types of binary options
are the cash-or-nothing binary option and the asset-or-nothing
binary option. The cash-or-nothing binary option pays some fixed

Let’s first take a look at what Binary Options are. continued on next page

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 amount of cash if the option expires in-the-money while the asset-
or-nothing pays the value of the underlying security. They are also
called all-or-nothing options, digital options (more common in
forex/interest rate markets), and fixed return options (FROs) (on
the American Stock Exchange)
So, let me take that definition and put it into layman’s terms. You
decide that a market (forex pair, stock, commodity, or Future) is
going to go up or down. Then you pick the timeframe that you think
it will happen. You place a Call (that it will go up), or a Put (that it
will go down) and pick the time frame that you think it will happen.
This could be a daily timeframe, in 15 minutes, at the end of the
month or even 60 seconds.
You have decided what you think will happen with the market and
the time it will happen. Now you place your bet. You can wager $5
to $2500 and if you are right you get a percentage of the bet back
as a gain like 75 to 85%, plus your initial wager. Look at the picture
below.
In this example, you think the EURUSD will be above or below
1.07461 at 18:45Z and that is in about 9 minutes from now. You
are going to wager $25 and will win $46.25 if you are right, but if
you are wrong you lose the $25 bet. So, like the definition said, you
are not buying the currency, and it is an all or nothing you win or
you lose.
This is how it looks once the trades are over. Yesterday, I had one win
and one loss, but ended the day positive by $21.50.
So, what am I looking at to help me in my Trading decisions? We
will get to that later, I still need to put fear into you and warn you
about some of the many possible risks. It’s not quite the same and
going to Vegas and playing Roulette.
Does it scare you that most of the Binary Options Brokers are
over in Malta or Cypress? What about that many of them are not
regulated? The US SEC and CFTC have issued a joint warning to
American investors regarding unregulated binary options. So, you
defiantly want to do your homework and research the broker before
you send them any money. Check the internet for customer reviews;
see if anyone had any problems making withdrawals out of their
account. Also, make sure you review all the terms and conditions
from the broker.
You will find that most brokers what to give you bonuses (extra
money), to get you to deposit more funds. Some of these bonuses are
100% or more of your initial deposit. If you deposit $1500, they will
give you another $1500 to trade with. The catch is that you must
44 www.netpicks.com
make a lot of trades before you can make a withdrawal, so make sure
you know the rules before you accept bonuses or risk free trades.
A risk free trade is, they will pay you back what you bet, even if you
lose. This is a bonus, so it will put a restriction on your withdrawals;
so again, go over all the rules with the broker before you accept
them. From my experience, they did not try and hide anything and
were very clear.
Also, you want to avoid all of the emails that you get about Binary
Options Robots that will make money and trades for you. From
what I have been able to research, it is garbage and can’t be trusted.
Just like MT4 Robots that will make you money while you sleep, it
almost never happens like that. Remember, if it sounds too good to
be true, research then run away!
So to recap, things to do before you open an account and fund an
account.
1. Make sure you Research the Broker online, check the reviews
and see if anyone has had any issues.
2. Check and see if the Broker is regulated and what agency
overseas it.
3. Make sure you understand any bonuses and if you take them
what restrictions will that place you making withdrawals.
4. Perhaps, open a small account and don’t take any bonus, then
request a withdrawal of some of the funds. Make sure it works
like they say it will.
5. Don’t allow anyone else to trade your account! No Robots or
Signal services!
6. Start very small, in Demo or only trade $5 on each trade so you
get a feel for how your strategy will perform.
7. Use the Power of Quitting. Make a trade or two and be done
positive for the Day.
Trading Binary Options is a lot like gambling, you are going to
either win your bet or lose it and the one downside is you don’t get a
1 to 1 return, remember you usually win 70 to 85% of your original
bet. On the positive note, the odds are more in your favor because
there is no green 0/00 on the Roulette table, just Red or Black. You
can also try and stack your odds by making your trading decisions
based upon some indicators that you hope will give you an edge in
your trade.
The hardest part about creating a trading system to give you that
edge in Binary Options trades it the factor of time. We have some
incredible systems and indicators at Netpicks, so when we get a long
signal…the odds are in your favor that it will hit full target or at
least get to money management. The difference is, we don’t know
how long it will take to get to target. It might zoom up to target in
a few minutes or take a half hour or longer. Time has never been a
factor in our trading.
Time is the Critical difference in regular trading and trading with
Bianary’s. You get a long signal and so you buy a call, all the market
has to do is be above your strike price. The question is, how long do
you think it will take to get there? If you are right that it does go up,
but you pick a 5 minute expiring option and it does not move for 8
minutes then goes to target, you were right about it going long, but
missed how long it would take, you lose the bet.
You can choose many different time frames to place the bet on your
trade. Thirty second, to a minute to 2 minutes. Also, they have
trades ending every 15 minutes and you can’t trade those in the last
5 minutes of the trade. These are the trades I look to day trade. I take
the trade if I have a signal with about 6 minutes left in the trade, so
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that is how long I think it will take. I will show you some examples. I
also like a monthly or weekly trade. You can make bets that Apple or
any other market will above the current rate at the end of the month.
These are called long term trades and I have about 10 of these open.
If you think Gold will be higher at the end of the month on a swing
trade type of signal, then you can place longer term trades like that.
Sneak Peak – Netpicks Trader Lab
So, let me show you a system I am working on and a few of the
signals that have been working well for me. There is still a lot of
testing. You know that Netpicks will not release a system until we
have proven it out. We can’t do a signal service as the trades happen
fast, but maybe a live room, or we teach you and you look at the
charts. We will give you all the training. Take a look at this signal.
THE EXISTENTIAL PLEASURES OF PROGRAMMING TRADING
SYSTEMS by Will Feibel
All of my previous articles have covered technical analysis of trading
charts and some basic programming techniques that anyone can
apply to create custom indicators. In this article I will step back and
talk about why I think every trader should learn how to program
trading systems. There are several reasons:
Building – If you played with Lego’s or Meccano sets as a child
then you experienced the joy of building something out of many
small parts. Pushing around your Lego car or lifting a toy with your
Meccano crane gave you a sense of pride and accomplishment.
Programming a trading system is very much like that. You start with
a concept from the system designer, you’re told the basic elements
that compose the system and then you flesh it out into its simplest
elements, factor in the possible interactions between them and finally
assemble your programming tools to build a program that (hopefully)
does exactly what the designer envisioned. That final outcome can
be dots or lines on a screen or actual trades that get executed through
your broker’s servers but in the end it’s the grownup version of your
old Lego starfighter. Unlike the starfighter however, your program
assists you and/or other traders in maintaining discipline in trading
and achieving profitability. Another way of looking at it is that like
for a carpenter or a cook the end result of your work is something
that exists in the real world, not just a punched time card.
Creating – Every design that you are given as a programmer,
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I look to take trades with about 6 minutes left before 10:15 (every
15 minutes). You see there was a signal at 10:09 to go long, I placed
the Binary Option order, my bet was that the price would be above
1.07451 on the EURUSD at 10:15. As you can see price did move
higher and hit a target, but we don’t care about that, just that it was
higher when the option expired at 10:15. All you do is watch the
chart for the signals and if they come at the right time, you place
your order. You see a long at 10:02, you would not take that because
you wait for a signal that only has about 6 minutes left in the option.
Let me show you one more example.
This was the same day, you see a signal on the EURUSD at 08:54
and bet that the market will be higher than 1.07725 at 09:00, you
won 85% on top of your original bet.
This is a system under development and I don’t know when we will
release it, but I wanted to warn you about the dangers of Binary
Options and brokers and some of the risks of trading. It seems to be
a hot market, because people can gamble on the markets with very
quick trades and open small accounts with $250. Remember, just
live Vegas, most gamblers lose, so be prepared, do your homework
and give yourself the edge in the Binary Options market that will
keep you winning more than you lose. Remember, the Power of
Quitting. If you win, take your money and run, come back and
trade tomorrow. If you want more info on what is new in Binary
Options, stay tuned to the Newsletter or email info@netpicks.com.
Great Trading.
whether it’s you own idea or someone else’s, is an opportunity for
creativity. You need to imagine a new thing, something that has
never been built before, and come up with a creative way of making
it real. The more unique the design, the greater the need for creativity
from the programmer. This may take the form of a completely new
approach to automating a trading task, or a new, more useful way
of presenting the system information to the trader. I suspect that
what the programmer experiences is not that different from what
Van Gogh felt as he painted that starry night.
Solving – Closely linked to creativity is the puzzle solving aspect
of programming a trading system. If you’re a discretionary trader
then your brain is assimilating a huge amount of stored and visual
data as you look at a chart. You see patterns and sequences without
necessarily being consciously aware of what you’re doing. As a
programmer you need to deconstruct those insights and determine
what is at the bottom of them and see how to put together all those
elements of perception into an assembled whole. As you get deeper
into the task of writing your code you’re also constantly figuring
out how to use the capabilities of your programming language to
accomplish a specific trading task. And at times you’re trying to
determine how you can combine coding techniques that you’ve used
in the past to create something completely new and different. This
puzzle solving aspect of programming is very similar to the process
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 of assembling a jigsaw puzzle or solving a crosswords puzzle, and just
as rewarding.
Learning – As a programmer you’re constantly learning and
keeping your brain challenged. That takes the form of learning more
sophisticated tools provided by your programming language of
choice or learning entirely new programming languages, each with
their own syntax, structures, advantages, and limitations. And the
more languages you learn the easier it becomes to learn the next one,
much as happens with spoken languages. This learning can also come
from looking at the work of others, perusing their code to learn new
techniques and improve your own efficiency and effectiveness. This
constant learning keeps the programmer’s brain active and alive.
Meditating – When you are deeply immersed in programming
LEARN TO PROFIT FROM CHOPPY MARKETS WITH OPTIONS TRADING
by Mike Rykse
What is the one market condition that drives traders crazy? For
most, the answer to this question is the dreaded choppy market.
It could be the slow choppy market like we see during the summer
months when many markets just sit in a tight range. Or it could
also be the wild choppy market where we see big moves back and
forth with no follow through in either direction. Regardless of which
type of choppiness we are seeing, these stretches can cause major
headaches for traders trying to generate profits on a consistent basis.
Fortunately for options traders there are trade types that actually
thrive in these choppy conditions.
One of those trade types is called an Iron Condor. While the name
might sound complicated, the trade is actually really simple to put
on. The first thing you have to do when looking at an Iron Condor
is to take yourself out of that mindset of picking whether the stock
is going to make a big move up or down. For many traders, this is
a new way of thinking because we are all taught to try and find the
stocks that we think are going to make big moves. Instead, with an
Iron Condor we are going to try and create a profit window that
we need the stock to stay inside. The stock could go up, down, or
sideways and we can still make money as long as it stays inside of
our window.
The Iron Condor’s profit window is setup by selling an out of the
money call spread and an out of the money put spread at the same
time. By selling these two spreads we are trying to box the price
into that profit window. While this might seem complex and risky
it is actually a fully hedged position meaning we know what our
maximum loss could be if the trade moves against us.
So let’s walk through an example to show how this trade is setup
from start to finish. This is an actual trade that was taken in our
Options Mastery training room. Back in late February we were
looking at TLT which is an ETF that tracks the bond market. In
looking at the chart, we took the opinion that TLT had already
made big moves both higher and lower over the last few months and
there was a good chance that we might settle into a choppy stretch.
So we started to look at creating a trade that would allow us to profit
from that choppy stretch.
When setting up the Iron Condor, we knew we had to sell an out
of the money call spread and an out of the money put spread at the
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your trading system you lose all track of time and of all the small
interruptions of daily life. You enter what some might call a Zen
state or a sense of deep meditation. The world disappears and you
are alone with your code, immersed in the task at hand. You don’t
even notice the passage of time and when you finally complete
the task you emerge feeling refreshed and proud of what you have
accomplished. This is the same feeling enjoyed by any craftsman or
artist upon completing the object of their craft, be that a cabinet or
a sculpture or an exquisite meal.
Any of these aspects could be the subject of an entire article. My
hope though is that I’ve convinced you to give it a try. Programming
may sound like a complex task, but it is no more complex that
cabinetry or painting or learning to play a musical instrument. And
the rewards of doing it well are just as satisfying. Go ahead, give it
a try.
same time. When we sell these spreads we are actually collecting
premium to put the trade on. That premium that we are collecting
for placing the trade is the maximum profit potential. In our
February trade we decided to sell the March 133/134 call spread and
the March 125/124 put spread at the same time. For the call spread
we were selling the 133 strike call and also buying the 134 strike call
to hedge it. On the put spread we were selling the 125 strike put and
also buying 124 strike put to hedge it. Notice on both spreads the
difference between the strike prices is $1. Our goal on these types
of trades is to collect as close to 40% of the width of the strikes as
possible. So in this case we were looking to collect around .40 when
putting this trade on. We actually collected .37 when placing this
trade so we came very close to the ideal .40 that we were looking for.
The 37 that we collected for placing this trade represents our
maximum profit potential. Remember options represent 100 shares
of stock so our maximum profit on this trade is $37 per spread.
While this might not seem like a lot of money the capital required to
make this trade is only $63 per Iron Condor (the difference between
the strikes minus the premium collected). So we could put this trade
on 10 times and still have only $630 of capital at use. The $63 capital
requirement to put this trade on also represents our maximum loss if
this trade moves against us.
TL T Iron Condor
Symbol: TLT
Trade Date: 25-Feb
Sold to open: March 133/134 Call Spread
Sold to open: March 125/124 Put Spread
Premium Collected: .37 or $37 per Iron Condor
Max Profit Potential: $37
Max Risk: $63
Capital Required: $63 per Iron Condor
Profit Window: 133.37 - 124.63
Bought to close: .11 or $11 per Iron Condor
Profit: .26 or $26 per Iron Condor
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Earlier we mentioned that an Iron Condor is a trade that creates a
profit window which we need the stock to stay inside. So what does
the profit window look like on the TLT trade? First we start with
the strike prices of the options that we sold. In our example this is
the 133 call and the 125 put. We take these strikes and also factor in
the .37 that we collected for putting the trade on. We add the .37 to
the strike price of the call option to get 133.37 and we subtract the
.37 from the strike price of the put option to get 124.63. These two
numbers (133.37 and 124.63) represent the break even points of the
Iron Condor. Or in other words, they represent the boundaries of
our profit window. In order to make money on this trade all we need
TLT to do is stay between 133.37 and 124.63. TLT could move up,
down, or sideways it doesn’t matter to us. We just need it to stay
inside of the window. You can see this demonstrated on the chart
below.
One of the big obstacles that options traders face is time decay. Time
decay is the amount of money you pay to own the option each day.
When you buy an option the time decay is working against you.
In our Iron Condor example, we are selling this position to open
the trade. So in this case the time decay is actually working for us.
We are making money each day the stock stays inside of our profit
PATIENCE WITH A TRENDING MARKET by Shane Daly
Imagine being able to pinpoint the exact turning point of any
trending market.
Imagine being able to ride that change of trend all the way to the
reversal in the other direction.
It would certainly be an incredible event that would no doubt make
you a lot of money.
The reality is though that you can’t do it with any consistency and
those times you nail the turn, trust it was probably luck.
Go Against The Trend
Many people still try to attempt it though and you can try by
limiting your risk.  There’s an obvious point where you know you
are wrong and that is where the stop would go.
Those losses will add up though and the death from a thousand cuts
will bleed your account dry.
Patience in trading is often talked about and after a recent
conversation with someone entering the trading world, I wanted to
put an example together on how I look at patience.
I am going to use Forex as an example because I much prefer to
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window. We can also make money on this trade if the stock moves
up, down, or sideways meaning there isn’t the pressure there on us
to pick market direction. Finally because we sold this position to
open the trade, in order to close it we have to buy it back. The goal
is to buy it back cheaper than we sold it for so we can pocket the
difference. The perfect scenario for us is to get TLT to stay inside of
our profit window and then profit from the options getting cheaper
through time decay and also a potential decrease in volatility.
The great part about this trade is that we are giving ourselves so
many ways of being profitable. We don’t have to decide of TLT is
going to go up or down. So like we just covered, we could actually
be completely wrong on market direction and still make money. Not
a bad scenario to be in.
In our example TLT we were actually wrong on our assumption that
it was going into a choppy stretch. After placing this trade, TLT
continue to make big moves. It originally made a move lower and
then higher as you can see on the chart. So it didn’t get choppy but
we did stay inside of our profit window so we were able to close the
trade out for .11 and book the $26 profit per spread. That’s close to
a 70% return in just a few weeks and the stock didn’t even match up
with our original assumption. Not a bad way to get paid.
The key to successful trading is to be involved with markets and
products that give you the flexibility to make money in all types of
market conditions. Over the past 13 years of trading I have learned
that markets don’t always move for us. Those choppy stretches will
come at some point. The neat part about options trading is that you
can still make money during these stretches. Profiting from choppy
sideways markets isn’t a problem when trading options and that’s
not something you can say about any other product. Take the time
to learn strategies like the Iron Condor so you can continue to grow
your account when we get into those nasty choppy markets.
swing this market, use higher time frames to do so, and this pair
was brought up to me by a trader.  Unlike intra-day trading, swing
trading is an arena where you must exercise patience or you may
catch yourself going the wrong way in the face of a trending market.
Trending Markets For Swing Trades
In a swing trade, I look to capture a clean swing in a trending market.
Why trending?
Markets move in an impulse/correction pattern and an intact trend
will have the impulse move larger than the corrective move.  As well,
if in a counter-trend play, abrupt ends to the correction especially
with a large influx of buying/selling pressure may not give you
enough notice to reduce risk or take profits.
In reversals of trends, rarely will we get a V shaped turnover as many
trends end with a consolidation period.  Seeing this formation
and the details on lower time frames can give you hints as to the
intention of the big money.
Here is a portion of the daily chart of USDJPY.
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www.premiertraderuniversity.com 47

After many months of consolidation, this pair broke the high of 2013
in Sept 2014 and hit the high in Dec.  The pullback is the largest
pullback in price but not time since the breakout.  It’s obvious that
after such a long run up, there are people looking to short the first
opportunity.  Not the cleanest of pullbacks which should alert you
to the possibility that a reversal of trend may not be in the cards.
You can see where there was attempted violation of an area that
supported price and price was rejected back in the direction of the
trend for about 500 pips.
Those that were looking for a reversal had the next day put in a rally
of 200 pips.  You can imagine that those shorts had to take action to
protect themselves.
As an intra-day player though, there were probably some good
opportunities depending on how you approach your day plays and
which “trend” you decide to trade.
While this bounce may have been an opportunity for intra-day
players or shorter term swing traders, I look at higher time frames.
This is a portion of the weekly chart in the same date range which
showed the bounce.  If not already long on the daily, what does this
weekly show you?
• Decent strength in the buying pressure
• The attempt to drive price lower was sharply rejected.
Does it give you any indication that the uptrend is in any danger?
No.
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Which direction still has the higher probability of not only seeing
the resolution but also larger moves? The uptrend.
Chat About Trend
Let’s head to a chat I had with the trader that actually prompted
this article.
This trader had positioned himself long in the direction of the
weekly by playing a move after the bounce.  He bought a pullback
after the bounce around 117.00 by dialing into the 60 minute chart.
The issue he is having is that price has gone into a range after he
scaled out and he is wondering if he should position himself short.
I am not one to tell anybody what to do with their position and
maybe shorting is the right play.
But I see this on the weekly:
•
Price is taking a breather and working off the upside move.
• Price will coil and break to the upside.
• Multi-week strong run up in price.
That would be my working plan and would look for patterns to get
me into the pending move off daily chart patterns if I traded this
pair.
However in trading…you have to be ready to just go with the flow:
1. It is not beyond reason that price could rocket to the
downside and never look back.
2. We could also see price break to the upside out of this
pattern and then be overtaken by selling pressure.
This would obviously have me curbing any sort of position to the
upside in this market.
For now…..patience in allowing what was the trending market
direction to continue is needed if this was my plan.
Many traders will not sit and wait for whichever market to show
its hand but instead will rely on assumptions to get them into the
market against the trend.  Assumptions usually don’t work out in
your favor.
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• Big run up would equal overbought and primed for reversal. 
SHORT
• Too long in consolidation would equal lack of buying
interest.  SHORT
• Price divergence would equal reversing move.  SHORT.
I have found patience was one of the hardest things I have had to
accomplish in trading.  Not just in entering trades but also holding
trades that have not been invalidated but are just not moving.  Swing
trading though demands patience and patience pays off when you let
the market tips it’s hand and you just go along for the ride.
To end this, here is another part of the weekly chart from the middle
of 2013.
A. Price had rallied from Sept 12 (77.12) and capped in May
2013 (103.72).
B. Price broke to the downside (93.76) and then formed the
ARE GLOBAL EVENTS CHANGING THE TRADING WORLD? by Mike Rykse
Being involved in the financial markets for the past decade I have
been able to see many different market conditions play out. I have
seen the market crash back in ‘08 and ‘10 followed by a move to all
time highs ever since. We have had times of high volatility and times
where watching paint dry sounds like more fun. However, when we
take a look at today’s market does it feel like the game is changing?
In the last year, the markets have brushed off terrible economic
numbers which confirm the economy still needs time to recover. We
have also seen global uncertainty caused by volatility in Japan and
now the Russia/Ukraine crisis. After all this the markets are still up
near all time highs. Traders and investors are showing no signs of
fear and are buying every single downtick that this market shows.
We haven’t seen a 10% pullback now in the last few years. Does this
really mean everything is ok and we should all just continue buying
the new highs? Let’s take a look at some ways we can approach these
new market conditions.
First, we have to acknowledge the presence of the Fed as a big player
in today’s markets. The U.S. Federal Reserve has actually been joined
by other countries in trying to support their economies. As a result
of the historic monetary policies being used right now, we are seeing
endless buying opportunities. There is no fear in the market because
traders know the Fed is there to prevent any significant downturn.
However, this approach is also coming with some consequences.
We are seeing markets make historic moves higher towards all time
highs. We are starting to see signs of bubbles in many markets which
can be concerning. This also gives great opportunity as well if you
know how to identify the right products. Take the movement in
Natural Gas for example. Earlier in 2014 we saw a move to all time
highs in Natural Gas. We saw endless buying for 6 weeks bringing
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same pattern as we see now.
C. Price broke to the upside and capped at 121.84 where we
find ourselves now.
Is a swing trade short really in the cards right now or is history going
to repeat itself?  Have patience and let the market show the way.
this product into bubble territory. When you see movement like this
in a product you have to be ready to act. Sure enough once we got
to end of February this product had pulled back from the highs and
did so very quickly. Instead of being paralyzed by this move you have
to be ready to profit when the markets turn. We made good money
on the pullback in NG by selling Call Options and Call Spreads
because we were able to spot opportunity.
We are also seeing impressive moves higher in some of the grains
and cattle products. While these aren’t popular products with many
retail traders it’s important to recognize the moves. Feeder Cattle is
a market that has been limit up a few times now in March. Prices
in the Corn and Soybean markets have also been on the rise. What
does this mean for us? It means we have opportunity in the coming
months. It might mean we are trading products that are new to us
but as long as I am making money I don’t care what the product is.
Stocks like NFLX, PCLN, and GOOG have also been relentless
on the upside for the past 6 months and are now reaching levels
where buyers will start to run out of steam. When these stocks turn
it won’t come with advanced warning. Traders will rush to the exits
all at once meaning you have to ready to act. I love when these
situations develop because these turns can provide incredible profit
potential. Using simple strategies like long Put Options or long
Vertical Spreads give you a chance to profit from these quick moves
lower. Having the ability to spot opportunity is something all traders
have to learn how to do. Don’t get suckered into buying new all time
highs day after day. If you are ready to spot market extremes you will
see some of the most profitable trading of your career when those
markets turn.
Markets can’t move to all time highs on an endless basis without
a series of pullbacks along the way. When you take a look at the
overall market using a product like the S&P 500 it’s easy to see a
market that is due for one of these pullbacks. That doesn’t mean it
has to happen tomorrow or next week. It does mean we have to be
ready to play that 5-10% pullback when it does happen. One of the
products to watch for signs of a market turn is the VIX. The VIX is
a product that tracks the levels of implied volatility in the S&P 500
Index Options. It’s an important product to track because we won’t
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 see the pullback without the VIX spiking up. Looking at the current
levels of the VIX in the 14.00-15.00 range is a sign of low fear. I
am looking for a move to the low 20’s in the coming months which
should also mean the market is rolling over. There are a few ways to
profit from this move. First, you can trade an ETF like VXX which
tracks the movement in volatility. This product does offer options,
which makes it very attractive for smaller retail traders. Should we
see the market rollover and volatility expand that will give us the
opportunity to profit with a product like VXX Call Options.
Even with all the global events causing economic uncertainty there
are still great opportunities if you are willing to think outside the
CAUGHT IN A BLIZZARD; THE STORY OF TWO TRADERS by Tj Noonan
I’ve been getting a lot of emails lately that remind me of a short film
I once saw some time ago. Four wayward travelers were lost in the
mountains working their way down in search of their camp. There
was a terrible blizzard that had been raging for days. The travelers
were completely exhausted and had to take every labored step with
caution so as not to fall in a ravine or abyss that could be hidden
by thick snow. Meanwhile, the snow was coming down strong
and it seemed like it would be
nightfall soon.
As they trudged along, one step
at a time, roped together, one by
one they began to be overtaken
by exhaustion. The leader, who
was obviously the strongest
and most resolute, tried to
encourage them onward, but
finally he gave in and against
his better judgment, relented
by allowing for a short break.
Little by little they each fell
asleep as the snow whirled
around and came down so thick that it was impossible to see more
than a few feet in any direction.
As it went, they all died. When the snowstorm passed and the sun
came out, we learned that they were literally 20 feet away from their
camp and if they had just persevered and continued onward a few
more steps, they would have saved themselves and survived their
torturous ordeal.
The other day I received two completely opposing emails. One was
an email loaded with despair. A trader had tried trading one of
our systems. It was clear by his colorful descriptions that he hadn’t
taken the time to even get familiar with the rules, let alone trade it as
intended. Immediately, he trudged off on some reckless adventure
and wound up lost. He had experienced some immediate losses
and was in the midst of what would seem to be a hopeless blizzard
without a compass, roadmap, or means of finding his way back to
a safe haven. Exhausted from the experience, he told me that the
system sucked and he decided to give up.
I did offer to help him figure out what was the problem and to
also help him get on the pathway back to successful trading. It was
obvious from his account of what had happened, that he had never
bothered to do any preliminary work to establish any sort of ‘edge’
in the market. I knew this because when I asked him to send me
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box. This could involve trading markets you have never considered
before. Spotting short term opportunities in these markets that are
at extremes will become more important than ever in the coming
months. In my opinion, volatility has been low for way too long.
The move in Natural Gas is a perfect example of what happens when
a market gets to an extreme. The overall equity markets are reaching
extremes and as traders we need to be aware of that. We need to be
ready to profit from markets turning quickly because when fear kicks
in things speed up. It’s not a time to jump out of the markets due to
fear of a pullback. It’s time to take advantage of products like VXX
and Equity and ETF Put Options to profit from the move lower.
Stay flexible and we could all be in for a really fun rest of 2014.
his tradeplan so that I might review it and offer suggestions on how
to improve it, I never heard from him again. He had entered into
the live markets without any foundational work, no plan and no
clue. It was like the wayward travelers stuck in their blizzard with
no vision or knowledge off where they stood in relation to where
they needed to get to. With absolutely zero vision this trader was
doomed to fail at the first sign of trouble. Quitters always quit as
losers, never as winners. He may have been so close to his camp
and instead of working through his situation, he laid down and gave
up. Experience has taught us that the best trades always follow the
toughest. It’s just how markets work. We arm ourselves with a well
researched tradeplan.
Within about 15 minutes of that email, I received another one. A
trader had not only found his way back to camp, he had discovered
enough detailed information to avoid the blizzard altogether. He
had combined his new trade strategy with the powerful analysis tool,
the UTA. He was very excited after uncovering a beautiful tradeplan
and a pathway to successful trading. He had put his plan into
action and was thrilled to learn that his well researched tradeplan
continued to perform for him in live market conditions. He did
his foundational work, established an edge in his chosen market and
then formed an effective tradeplan to help him navigate the always
dangerous live markets. He traded his plan and continued to enjoy
the success as his plan had indicated he would. He continues to
trade his plan with confidence and even if he gets stuck in a blizzard,
and experiences a series of losses, he knows where his safe haven
is and to not lie down and give up. He knows that if he just puts
one foot in front of the other, and takes the next trade as his plan
dictates, that he will find his way back to his camp and will work
through the temporary set back.
Our trade data is loaded with valuable information. So many traders
don’t bother to mine the hidden gems within. They’ve got it at their
finger tips. It is within their reach. But instead of taking a few more
critical steps to unlock the treasure chest of knowledge, contained
within their data, they just assume give up. It’s easier to just lie down
and die. We all know what the outcome is at that point. The sad
thing is, that a few more well guided steps was all that was needed
and was the difference between success and failure.
Learn how to trade before you trade. Learn how to unlock the
treasure chest of wealth contained within your trade data. Do the
foundational work and establish a plan that gives you an edge in the
market and then, trade that edge. If you do, you’ll be in a far better
position than the majority of traders in the world and will have given
yourself the greatest chance of success.
www.premiertraderuniversity.com
HOW TO PICK THE RIGHT TRADING SYSTEM by Ron Weiland
If you are like me your inbox is full of Get Rich Quick, The Best
Forex Trading system Ever, Easy Forex EA, and this free indicator
or that. I am sure that if you are new or not successful, you are
looking at all of these emails and systems and not sure what to do.
Hopefully, this article will give you some cold hard facts that you
need to recognize before you pay one penny for a system or indicator.

1. All systems have losses

2. You will have periods of Drawdown
3. You need to test the system you have, so that you know what to
expect

These are 3 of the most important factors in trading. No one likes

to lose, but you will have losses, even a string of losses. You can’t Figure 2
judge a system by the performance in a month or two. The real
review needs to go back over several years. This way, you will know I put an arrow over each winning trade. It was about even 4 wins, 4
that after 3 negative months in a year, where you will be at the end losses, but the wins were much larger than the losses. So, we made
of the year. money. This is April and May where we had some very nice runs and
banked a lot for the year. (Figure 2)
Drawdown is important, because you need to allocate the right
amount of risk to your trading. If you trade too much, your account
can not survive any negative months and therefore, you will not be
trading when things turn around and grow. We always want people
to start out with a low risk, say 1 or 2% of your account. This way
a few losses in a row will only make a small dent in your trading
capital. Remember the saying, “he who fights and runs away, lives
to fight another day”. In trading you fight the market every day and
try and win. Some days you win some days the market wins. That is
trading. The key is to win more than you lose and to be focused on
your trading. Treat it like a business!

I am going to show you the AUDUSD on a Daily Chart and it is not

one of the best performers. It did quite well last year with over 1869
Pips and this year we are over 1000 pips. What is important is that
inside of the bottom line Pips is some losing months. In fact, last
year one pair lost money for 5 straight months. Wow, does that scare
you? I might worry, if I didn’t know that those same pair always won Figure 3
every single year in the end. That is why testing is so important. So,
let’s take a look at some of the trades from Jan and Feb of this year Now after a large move you can expect some chop and we got
on the AUDUSD. (Figure 1) it in June and July. The market drifted lower, but always pulled
back hard. We are moving back into more profit for August and
September. (Figure 3)

So, how can all of this help you? Remember to test any system you
are looking at. We have tested all of ours going back many years and
now forward test them. Keep a mix of markets. That way if you
have a bad month on one pair or market, you might have a good
month on the other. Don’t be afraid of losses. If you knew that your
system wins consistently every year, but not every, day, month, then
you will be able to trust it and stick around for the winners.

At NetPicks we don’t stand still. We are always looking at new ways

to trade better and improve performance. That is what is unique
about us. We are live, in the markets every day along side of our
traders. So, you know that, if we give you a trade plan and say “do
this and you will be successful”, then do it. You won’t win every
Figure 1 trade, nor will we, but you will win in the end and that’s what counts.

www.netpicks.com www.premiertraderuniversity.com 51
 (800) 515-0335 x (949) 481-2396 x info@netpicks.com
9400 Macarthur Blvd, 124-417
Irving, Texas 75063

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