Stress Free Trading

Some time ago I sent out an email with the following link:
Order Entry Setup

Frankly, I did not get much response from it. I must admit I was puzzled since it had been so profitable to me. It offered free software and still does, but yet, I do not believe I had any takers. I will admit, I have a very selective mailing list as I do not want to become more involved in marketing than trading and creation of better trading techniques. It is not unlike me to purge names from the list of those who will not remove themselves. If you are not interested in receiving these emails, PLEASE UNSUBSCRIBE from the mailing list. I spend too much time and effort working on these trading systems to send it to someone who has no interest.

But that is rather beside the point for this post. That little study led me on to bigger and better things that allows me to set up trades and walk away knowing that all aspects of my trading will be handled. I have many entry options, and even more importantly, now more exit options. One can always set profit targets, but it is guess work as to where to set them since no one knows how long a run will last ahead of time. I have created exit options that will exit the trade when it goes against you as well as after it appears to have reached max profit. Of course, I have left in the safety features to assure you your risk is limited.

Currently, I set up various trades that include results from the TWPT combined with the TWSRT and Zone trades with momentum detectors and can even parallel with the TWPT and the TWSRT. I set up on four to five symbols at a time. I sometime setup both long and short trades on the same chart to catch whatever this volatile market has to offer.

The coding has been completed reviewed and changed numerous times, each time with improved results. I sometimes had too many variables trying to include all aspects, actually creating more problems than solving them. In time, the proper balance between flexibility and ease of use was reached. With the use of templates in most cases, the trade entry entails just a few clicks of the mouse. All the testing was done on live trading as simulated is never like the real thing. Yes, I lost money on some trades and made great money on others. Those losses allowed me to find out what went wrong and correct the problem so it did not happen again. In the end, my system produces those results we all look for, limited losses and unlimited gains.

The entire system dovetails with the TOS system of conditional order entry. The TW Conditional Order entry and exit system compensates for the lack of features in the TOS conditional order system and overcomes the limitations of study applications.

In case you haven’t noticed, I am excited by this and love the ability to walk away from my computer while the trading carries on. I will be creating an instruction manual (not sure if it will be video or pdf) just before the release of the package so one can see all what needs to be considered and exactly how to gain stress free trading.

I will be producing a video series (probably about three or four videos) that will cover the entire system. I will include actual examples of how to set the system up, how to implement trades and what the options there are available. Be patient, it takes a while to produce videos of live trading and produce a clean production.

See you on the other side;

Gary Odom

Why Short Trades?

The title is “Why Short Trades”, because in the process of crunching data and looking at outcomes, a very simple concept was clearly identified. I have always known it was factual, but now when I sliced and diced everything out, I actually saw how it was driven by the individual traders.  We have always heard that short trades manifest themselves more quickly than long trades.  Well, generally, that is true.  Ever wonder why?  If you have, here is why.

I have spoken before on how emotions effect the market.  Some of you blew it off and others took notice.  The latter group was the most astute in doing so, for emotion has a dramatic impact on the market.  That emotion explains why short trades move faster than long trades.  That also explains why I love going short.  For quick day trades, shorts are your best bet.  But then in a highly bullish market they may not be that readily available.  Lately, the market has been giving us a lot of opportunity to make money with short plays.  If you are trading futures, you already have a margin account so you are ready to go.

If you are only interested in buying and holding this information will still have value to you.  However, in your case it will not be for making trades but for exiting them.  So if you are a investor or swing trader do not go away.  Here is the story by way of an example.

Joe Jumpstart loves playing the futures.  When things are going smoothly he is happy to just hang in.  But when the going gets rough and prices start to drop he is the first to pull the plug and sells his position.  He and others like him will cause increased volume to the downside as the fear of loss causes them to exit and as those still in position see this, they follow the lead. It has a snow ball effect.  Why?  Fear!  The more that sell the higher the fear factor and the more that will sell causing price to drop very rapidly.

So how does this make you money?  Simple, take advantage of the fear.  If you hold a position exit, for twice of what you hold.  If not, short a position and ride it until it first starts to make a break in the move.  If you are trading a 15 min chart perhaps a two or three candle retrace on the 5 min chart will be enough for you to exit your short position.  Yes, you might miss some of the move, but then you will not get whipped sawed at the bottom when the rest the crowd is trying to recover their losses by playing the retrace.  It is like eating a watermelon, the center is the sweetest and that is what you want, the middle of the move.  Think about the time you exited a position and watched price keep going down and you were relieved that you did not stay in.  But the fact is, you lost money by not just reversing your position.  You even have a tab on the top of your charts to do that.  One click and you are in short.

The inverse of this is a long move where there is an absence of fear, but it is replaced by greed.  That often causes traders to lose money because they get in at the wrong time.  There is not that fear of loss that is pushing the move only the greed of wanting to catch the move.  Fear is stronger than greed.  And since you do not have the larger volume to drive it, it will normally be much shorter in duration.  If your timing is not incredible good, you will be whipped sawed when it flips over.  Avoid chasing price as you will generally get stung.

Now, a caveat.  I do not recommend this type of trading on a regular basis.  Your trading should be based on sound principles and a good trading plan.  But occasionally you will be presented a unique opportunity to catch some of these moves.  Just be cautious and do not push an entry.  If you were there in time and read the move early enough you will probably be ok, but trying to push it when it is too late in the move will be disastrous, do not do it.  It will take some practice and skills to get a really good read on the condition of the move, but that will come with experience.  Just knowing the possibilities, will have you looking for them and that is never a bad thing.

If you want to investigate learning how to get in on those moves, you must become very good at reading price.  Many of these moves happen much too fast to rely on any indicator or trading tool.  I am developing a trade trigger for the auto system that will be dedicated to fast moves and quick exits and works on price alone.  It is early in the game. I did some testing with it on Friday and the results are promising but not yet ready for prime time.  More on that later.

I have been doing a lot of scripting lately working on some new ideas.  One idea is auto trading.  Trying to get everything to work and still play in the TOS playground is sometimes challenging.  On Monday, I will be conferencing with the ThinkOrSwim people who are regarded as informed in the areas that I will be investigating.  By sharing screens we can get more information presented in shorter periods of time.  I sometimes do the same when I am providing support for my own studies and they cannot be answered with a simple email or phone call.  So, the outcome should be interesting and I am really looking forward to our appointment.  More on that later. 


Happy Trading
See you on the other side,

Gary Odom

Your Success Is In Question

I am troubled by your response. It is not from the lack of activity but rather from the lack of your interest. My last post to you dealt with trading psychology and I saw that fewer than average bothered to view it. That really concerns me because psychology is an important key to success.

The purpose if this post is not to send you back to read that post, but rather to caution you about avoiding things that will determine your success or failure. You may or may not have noticed that my posts are not sell pieces but rather an effort to help you understand the path to success. I have already accomplished that goal and I have a constant income to provide for my needs.

My future is not dependent on your purchase of my products. I continue to write new studies that address the constantly changing market environment and I do so more so for my own needs than developing a product to be sold. The selling of the product comes only after it helps me achieve my own personal goals. Others have helped me get to where I am today and now it is my turn to help those seeking it.

Maybe you think you have gotten a handle on this trading business. But if you have already done that, why are you still seeking an answer of how to do it? Did you really think it would be so simple that it would not require some effort on your part? I won’t lie to you. It is not easy, it is hard. If it were so easy then why are so many still struggling to become a successful trader? Why are 80% of those who are in the market unsuccessful? Why is the market place filled with those offering “simple ways to beat the market”? It is because there is always someone looking for an easy way to do a complex task. It does not exist.

I wish I could tell you that by buying the Power Trader you would have immediate success. I cannot tell you that as I would be a fraud. Can it help you? Probably, but not certainly. I can provide you with all the tools at hand, but if you do not use them and use them correctly they will not help you.

I encourage you to be curious and question all things. Even question what I tell you. For in doing so, you will learn what is true and what is false. It is through that questioning you will acquire wisdom of this crazy business of trading. Some of what we know today will not be so tomorrow; some of what we know today will be true forever. It is to the seeker to determine the difference. If my comments cannot stand your review then they are not fit to be published. I am confident I will never lead you astray. Take what you wish, leave behind that in which you do not see value, but never discount it before questioning.

See you on the other side

A Trader’s Psychology

Your “self”, or whatever you want to call it, is so incredibly important in all facets of life and particularly so in trading. Your frame of mind, attitude, focus, and confidence will, not can, but will make a difference in your trading results.

If you do not struggle with theses feelings, then you either have mastered your ability to deal with those feelings or you are a machine. There is no alternative. We are human thus we have human feelings, different in each of us, but yet so similar in a lot of respects, particularly so in trading.

You will see a lot of discussion of things like fear of loss and confidence in your trading abilities and they are, in fact , incredibly important. But today I want to address a topic that lies beneath the obvious churning that goes on in the brain and stomach. Yeah, I know, that is a lot of emotion. OK , so maybe you do not get that worked up.

I confess, I love to trade, perhaps too much. I am not bothered with any of the aforementioned emotions to a point that I cannot deal with them. Thus, my love of trading is one that I need to deal with. You see, if I am not incredibly careful, I find myself over trading. I recall Orson Wells back in the 70’s doing a wine commercial for Paul Masson wines where he states,
” We will sell no wine before its time.” That was a comment that I have taken to heart by paraphrasing it into “I will take no trade before its time”. Perhaps the wine was not that great. but the slogan was priceless.

Sometimes little things make big differences. In my case, that slogan has made a huge difference. Waiting for a signal with everything right about it was the sure answer to successful trades. Knowing when not to trade may be even more important than knowing when to enter a trade. Equally so, knowing when to get out is huge. So I have developed a little routine that I follow and it never fails me when trading the e-minis.

First picking the right time to trade. When I say time I mean time, like the time of day. There are ways to trade market open but it is not just entering when market opens. That can be an equally rewarding as well as a painful experience. Large rewards are most often combined with large risks so one must keep that in mind when entering the highly volatile market open. You cannot get greedy at that time and must be ready to exit at the first signs of a reversal in your fortune. The problem exists; when is that? And that is why I rarely trade market open unless it is a continuation of pre-market trading and rather smooth in comparison to normal market openings. This morning was one of those times and I did extremely well trading three of the indexes.

The time of day between market open and approaching lunch break for wall street generally offers good opportunities to enter trades going both directions. If the market is not highly charged when it opens it will find a time where profit taking happens before the lunch break. When they return you will likely see a similar setup for an hour or so until you see end of day position settlement. Time is critical because plans and intentions are connected with time. Remember price is a reflection of people. People with emotions just like our own. When the herd goes one way so does price, but only until it is no longer a herd mentality and there is where we hope you find yourself. Knowing what to expect might happen is huge because sometimes it actually does. If we are watchful enough we will find we get it right more often than not. And that my friends is the markings of trader.

What about getting out? Through experience I have learned when to take profits and let it go regardless of where it goes. I keep a close eye on the power indicator to tell me when when the fizzle is fading off the champagne and that is where I exit. Sometimes too early, you ask? Never, if I am at profit. Learning to accept an acceptable reward was hard for me, because, well, I was greedy. Guess what, greed is an emotion too and something we need to get a handle on as well. My TW trade manger shows me what the calculated risk is but I am not obligated to accept it. I generally do, but more important I sometimes use that same amount as an exit point. Sometimes I get right back in, but now I have money in the bank and fear no loss. One might say that a 1:1 loss to win ratio is too tight. If I were not diligent in my entry actions that would be so, but with a high winning ratio it is just fine. And who is doing the calculations and what is an acceptable loss? If I follow what I see before me, I will have a high winning ratio. From there on it is about trade management and that is where a lot of folks get burned. Using the tools offered by Tested Wisdom and controlling my emotions, I am pretty much guaranteed a positive return. I may not hit a home run everyday, but if I can just avoid striking out most of the time, I should end up on the bases. Games are won with base hits.

Sorry about the baseball analogy, it just fit so well.

See you on the other side–

TWSRT Part 2

This is the continuation of the “TWSRT with price action”. This video is a discussion of how trade entries are associated with the TWSRT. Here we cover how to use the TWSRT to enter trades and improve your results. We also discuss how to use the TWSRT to determine trade exits.

Using the TWSRT for entering and exiting trades.

TWSRT and Price Acton

This a second video on the TWSRT, however it is a updated explanation of how the TWSRT details price action. It gives you a great deal of information of what price is doing and what one might expect it to do in the near future. The TWSRT is a great addition to any methodology you choose to use to enter or exit your trades. Check it out here and look for a futures follow up video to come including incorporating the TWIndexTrader.

How you can read price action the easy way

Planning Your Trades Before They Occur

The title may sound strange to you, but it is actually something you might want to consider. I know you have heard the expression of “having your ducks in a row”, well that is pretty much what this is about. Only to applies to being prepared by knowing what you need to do before you actually enter the trade. Check the video for more.