7 Easy Steps to a Complete Trading System
Hi I'm Greg Weitzman. As a veteran trader I’ve been in the markets trading my own accounts and helping others do the same for more than 22 years.
In my decades of trading, teaching, developing and educating — and helping others profit in the markets — one thing has stood out time and time again.
The price of every stock, market, index, commodity and currency moves in cycles.
Sometimes, prices float along slowly, not doing much.
You’ll see an explosive price move that seems to come from nowhere.
Moves like these tend to last only a few days.
That means traders who know what to look for and who are prepared to buy and sell fast can make huge profits in very short spaces of time.
The report below details the “Reversal Strategy” I’ve created to help everyday investors and traders spot and trade these types of moves
Explosive price change can happen both on the way up to higher prices and on the way down to lower prices.
Investors for the most part will look for stocks that move towards higher prices, but traders who generally have greater risk tolerance can trade stocks that are declining as well, by selling short.
The purpose of this report is to educate traders and investors alike on what I have found to be a simple and quick way to find stocks that are about to have explosive moves and that can potentially lead to substantial profits.
The strategy I am about to explain can also be used to trade options. Due to the short holding periods of stocks that meet the criteria described below, options (calls, and puts) can be an ideal way to trade these.
If you feel like this could be too advanced for you, you should definitely check out this presentation
Now, anyone can use this to potentially make a small fortune in a matter of days, sometimes hours, while only risking $50 - maybe just $5 on each trade recommendation..
Before we begin it is important to understand the difference between Fundamental and Technical Analysis.
The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value.
Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only interested in the price movements in the market. (Investopedia)
The biggest part of fundamental analysis involves delving into the financial statements. Also known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and all the other financial aspects of a company.
Fundamental analysts look at this information to gain insight on a company's future performance. (Investopedia)
In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor. (Investopedia)
Fundamental Analysis will look at things like the cash flow, income statement, earnings and management of a company. It will evaluate the company’s products and services in order to determine its future growth and profitability.
By contrast Technical Analysis considers that the ‘fundamental analyzing’ of a company or stock has already been done, and will use tools such as Charts, Indicators and Mathematical Formulas to determine if money is flowing into the stock (prices likely to increase) or flowing out of a stock (prices likely to decrease), and at what rate. (Accelerating or decelerating)
Take a few moments to watch this short video. You may be surprised to discover how easy this is.
By "working" just 30 minutes a day, 3 days a week, people are retiring from their jobs. They're buying their dream homes, putting their kids through college, and giving back to their communities.
All because of this one EXTRA-INCOME strategy.
Charting platforms are loaded with hundreds of indicators used to analyze price movement; fortunately you will not need most of them. In fact my analysis requires only 3 indicators.
Bollinger Bands® consist of a center line and two price channels (bands) above and below it. The center line is an exponential moving average; the price channels are the standard deviations of the stock being studied. The bands will expand and contract as the price action of an issue becomes volatile (expansion) or becomes bound into a tight trading pattern (contraction). (Investopedia)
The ADX, which can be used as a standalone indicator to measure the strength of a trend, is also an integral part of the Directional Movement System developed by J. Welles Wilder.
The genius behind the Directional Movement System is that if segments the analysis into 3 components.
They are ADX: Overall Market Strength This tells us only if the market has ‘energy’ but does not tell us it which direction.
The ADX component can also signal the start of a new trend, or the expiration / exhaustion of an existing trend
DM + DM-
The 2 DM components which stand for Directional Movement are appropriately labeled DM+ and DM-, and calculate the upward or downward trend movement.
DM+: Measures the strength of the buyers DM-: Measures the strength of the sellers
By comparing the DM+ and DM- the Indicator has a unique ability to measure and summarize both upward and downward movement, and compare them
Use the DM (+/-) To Determine the Trend
DM+ is above: Buyers are in control
DM- is above: Sellers are in control
If doing your own analysis seems daunting, or if you are simply looking for a quicker way to access trades, you may want to consider a 'Done for you' service where analysis and alerts are delivered to you by an expert.
Once your chart is built with the proper indicators in place, it becomes your template, your main work space for performing technical analyses on any stock, index, futures, Forex pair, commodity or currency
Finding the Stocks that are about to Explode.
Now that you have an understanding of the tools you are using, and have configured your chart for analysis, save your chart as a template.
This will allow you to scan through a large number of different stocks without ever having to change the chart itself.
By creating a list of companies or markets that you want to analyze, all you need to do is simply click on the symbol and the chart will update to that particular stock chart.
You can see from the image below that clicking on the symbol for CME, immediately brings up a chart of CME with all the indicators already in place.
STEP 1: Scan for stocks with a rising Bollinger Band Channel, this indicates that the prices are in an uptrend.
STEP 2: Look for pullbacks to the lower Bollinger Band; this indicates a short term retreat in price in an otherwise Long Trend.
STEP 3: Look for the ADX to Drop below 20 and begin rising again; this indicates that the short term pull back is nearly over and prices should resume moving higher consistent with the longer term trend.
STEP 4: Enter trades as close to the lower Bollinger Band as possible while the ADX is climbing off of 20, e.g. 20-24 range.
STEP 5: Monitor your trade. Never leave a trade without checking on it at least once a day.
STEP 6: Plan your Exit. Exit the trade on exhaustion, when the ADX crosses into the exhausted region, (above 40)
STEP 7: Exit the trade on a failure if the DI- Crosses above the DI+
STEP 8: Always have a stop loss. This is the maximum financial loss you are willing to take on any single trade or position. E.g. if your maximum allowable loss is $1,000 and you have purchased 1,000 shares, then your Stop Loss is a $1 move below your entry price
All of the conditions above can be inverted when looking for short selling opportunities.
Would you be surprised to learn that...
He started to pocket a few thousand here, and a few thousand there… until his account grew 50X larger to a whopping $5 million in a couple of years.
These results were stunning.
Could you follow in his footsteps?
All you need to do is follow his instructions.
Did you enjoy this content?
My ADX Reversal system is easy to use, and could be all you need.
But... If you are seriously interested in learning about investing in the stock market, or how you could improve your current investment strategy...
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