Technical Analysis Strategies Transcript
1. Title Slide 2. Good Day Traders, This is Roger Scott from Market Geeks with another video tutorial for you. Before I begin I want to remind you to visit marketgeeks.com for your free swing trading strategy report and don’t forget to subscribe to our video channel for trading videos and trading tips. 3. One of my favorite technical analysis strategies and one I often recommend traders start off with is the 4×4 strategy. During the last several months I received many questions from traders who are now using this method to trade stocks, ETF’s, E-mini Futures, Commodities and Forex. 4. The 4×4 is one of the simplest technical analysis strategies that measures pullbacks. The premise of the strategy is to wait for a market to make a 1 month high, retrace for a few days and then resume the original trend. I will demonstrate the method on a recent trade so you can see exactly step by step the entire process. 5. You can see the stock makes a 20 day high followed by 4 consecutive down days. If the stock made a 20 day high 2 days earlier it’s irrelevant, if it’s not followed by 4 down days. Some traders get confused because they see the market made a 20 day price high a few days earlier; you have to look at the 20 day high in hindsight after it made the 4 consecutive lower closes, otherwise the 20 day high is irrelevant. 6. The second biggest issue traders have with this method is ignoring lows that are equal to each other. I guess I should have mentioned this but the 4 consecutive closing low prices can be equal to each other. This doesn’t happen very often but it does happen; you can see from the picture that two of the 4 days had equal closing prices, this is acceptable. 7. This is another problem area with some traders. Make sure your 5 day closing price is above the 4th day closing price. It’s not sufficient for these two prices to be equal to each other. You want to see the market turn around and show some movement on the 5th day, this is the day prior to the entry. There should be some interest and volatility during this day, so you want to see some momentum coming into the market at this stage. 8. The 5th day is where you make your decision, if the market closes strongly and there’s some momentum coming back into the stock or other market you are trading, place a buy stop 2 ticks above the high and if your filled 2 ticks below the low to protect yourself in case the stock turns against you. One of the biggest reasons why traders lose money trading technical analysis strategies such as the 4×4 method is because they avoid placing stop loss orders
9. The 6th day is the most important day, this is when your order either gets filled or gets cancelled. Remember, this strategy has to be either filled or cancelled. Don’t let your order linger around after the closing bell on the 6th day if you don’t get filled. The point of this method is for the market to snap back in the direction of the trend after a 4 day pause. If your order doesn’t get triggered you must cancel the order, no matter what your gut feeling is or what you think will happen. You have to stick to this strategy and follow all rules as precisely as possible. 10. This is the final part of the strategy and one that you need to pay attention to. Always know exactly what your risk level will be and always place your stop loss order at the same time you place your trade. If you are trading multiple positions, you can take a portion of your profit at 3 * the risk level and a portion of your profit at the 4 * risk level. To calculate the risk level you simply take your fill price and subtract it from your stop loss level. 11. Lastly, when selecting your daily hit list, you want to make sure that the stocks or any other market you trade has good liquidity and volatility. If you are trading stocks make sure that the average daily volume is above 500,000. If you are trading other markets such as futures or emini’s, make sure the markets you chose have reasonably good liquidity and volatility. You want to avoid low volume stocks; stocks with big spreads, taking long position in stocks priced under $20.00 dollars and avoid trading during holidays. 12. Thanks for joining us for today’s video tutorial, please visit Market Geeks for your free short term strategy report and don’t forget to subscribe to our video channel for trading video updates and trading tips, this is Roger Scott wishing you the best in your trading. http://www.marketgeeks.com/technical-analysis-strategies/ http://www.marketgeeks.com