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Trading Made Simple(r)

  • #7,881
  • May 14, 2022 7:54am May 14, 2022 7:54am
[quote=RobinHood;14000140]{quote} Hi Paul, Thank you for your post. The best news is that it is only a demo account.

Morning RH,
ARKK chart Dly. Can this ETF be sold short, I recall a conversation we had where shorting was allowed, if so this was a nice tradeable ETF.

I also look forward to your reply, to enhance my knowledge, especially comments relating to Continuation trades on the ARKK chart.

Ben
  • #7,882
  • May 14, 2022 8:08am May 14, 2022 8:08am
Quoting UkSmurfy
Robinhood, hope you’re well. I wanted to get in touch and let you know how I’ve been getting on applying your teachings. I alluded to the fact I was doing quite well previously, which I felt I was for quite some time. Unfortunately, the recent downward swing in the US markets humbled me, I’ve just about finished licking my wounds and am starting to reassess so thought I’d get in touch and let you know what happened. My strategy was roughly as follows: - Each weekend I’d scan the SP500 for stocks trading with my 3 long EMA’s all in the correct order...
I've given much thought as how I feel is best to reply to your post and what I feel would be best is that I do it in several different posts. First, let me address what you wrote, then I will address what I do, and then I will address how I do it (or vice-versa).

Robinhood, hope you’re well.

I wanted to get in touch and let you know how I’ve been getting on applying your teachings. I alluded to the fact I was doing quite well previously, which I felt I was for quite some time. Unfortunately, the recent downward swing in the US markets humbled me, I’ve just about finished licking my wounds and am starting to reassess so thought I’d get in touch and let you know what happened.

This downward swing has hurt the vast majority of stock traders and investors, and it's going to get much worse before it gets much better. However, we as Forex traders do and understand something that most stock traders don't, and that's how to Short stocks, so we can make money no matter which way the market (or a stock) is going and I will teach you how I do it in a later post.

My strategy was roughly as follows: -

Each weekend I’d scan the SP500 for stocks trading with my 3 long EMA’s all in the correct order for an uptrend. This usually gave me a weekly shortlist of around 100 stocks.

100 stocks is way too many stocks to consider, you need to add a filter (indicator) to cut that down by about 2/3s. One easy way is by only trading stocks over a certain volume, like 2 -3 million shares traded daily. This alone would cut the S&P 500 list by about 50% or so (or more). Plus, the spreads tend to be much smaller on the more heavily traded S&P 500 stocks. That makes getting in and out of a stock much less expensive, and something that you don't have to consider when paper trading (trading a demo acct.), but it's a VERY real expense. Spreads between the bid and the offer can be as low as a penny, or as high as x dollars. So high spread stocks cost you a lot to get in, and also a lot to get out of. No Bueno.

I’d then browse the shortlist at the end of each trading day and make entries based on my 3 short period EMA’s, I’d apply some discretion to entries, avoiding consolidation and avoiding continuation trades extended well above the Longer EMA’s, preferring to take entries bouncing off them instead. I’d enter with limit orders above the high of the signal candle and exit when my shortest EMA crossed my second shortest. Id always risk a fixed 1% of my account, and place my stop loss below the obvious swing low.

These were wise things to do, and good daily habits. BUT, I would have also considered what the Weekly charts were doing FIRST, meaning to apply the same logic to them.

This seemed to work great and prior to the downward swing my 10k demo account was sitting at 13k in 2 months trading, however only 1k of this was realised profits. The recent downturn stopped me out of many trades and left me sitting on 8k. This swing happened over 3 days. At times I had many open trades at any given time, and closed a total of 88 trades, perhaps this was my mistake. Obviously, I deemed this downward swing unacceptable and thus I need to revise my strategy. I confess it was a big emotional hit, I was daring to dream I could have found my ‘holy grail’.

Trading 88 stocks was unwise because what you basically did was trade what is similar to an Index (fund), you would have been better off just trading the SPY (S & P 500) and/or the QQQ (NASDAQ). I limit myself to no more than 30 stocks at a time, and I risk no more than 3% on any one stock. And, if I have 30 stocks at once, when I find one I like, I remove the one that I don't like the most.

I think perhaps a trailing stop exit could’ve captured more profits, at times I found myself giving large amounts back to the market on otherwise winning trades, but it’s hard to tell if this would’ve saved me in the end. Frustratingly almost every trade I made was initially successful and I have no doubt this entry strategy is profitable.

This is WHY I like trading Continuation Trades the most. You always have a small clearly pre-defined stop such as just below the most recent swing low (or you don't take the trade), and if that gets hit, you exit no matter what. You MUST to learn to:

"Trade What You See, and Not What You Think".

I wondered if you have any improvements I could make or could criticise any obvious mistakes I made.

I'll get to that in one of my next few posts.

I’ve just about finished university for this year and will have more time to focus on trading, hopefully I can weed out my issues, I feel like what you’ve taught me has brought me closer than ever to profitability.

I would suggest that you read some good books on trading psychology and money management, DO NOT READ ABOUT TRADING METHODS or SYSTEMS. Those things will only confuse you.

Thanks again for all your selfless contributions to us at FF, I hope to hear from you.

You are welcome!

Paul

More to come soon...
Always a Student, Never a Master - Emulate What Works
  • #7,883
  • May 14, 2022 8:18am May 14, 2022 8:18am
[quote=btrfx1;14000464]
Quoting RobinHood
{quote} Hi Paul, Thank you for your post. The best news is that it is only a demo account. Morning RH, ARKK chart Dly. Can this ETF be sold short, I recall a conversation we had where shorting was allowed, if so this was a nice tradeable ETF. I also look forward to your reply, to enhance my knowledge, especially comments relating to Continuation trades on the ARKK chart. Ben
Yes, it can be shorted but there is a better way to trade it short so-to-speak. There is a fairly new ETF called SARK that is the mirror image opposite of it, so when ARKK goes down, SARK goes up and vice-versa. This way you don't have to pay the extra cost of borrowing ARKK shares to short them.

Based on that, I wouldn't short ARKK, but I would trade SARK long, so I'll show you the Continuation trades on that.

Attached Image (click to enlarge)
Click to Enlarge Name: SARK.PNG Size: 153 KB
Always a Student, Never a Master - Emulate What Works
  • #7,884
  • May 14, 2022 8:57am May 14, 2022 8:57am
[quote=RobinHood;14000467]
Quoting btrfx1
{quote} Yes, it can be shorted but there is a better way to trade it short so-to-speak. There is a fairly new ETF called SARK that is the mirror image opposite of it, so when ARKK goes down, SARK goes up and vice-versa. This way you don't have to pay the extra cost of borrowing ARKK shares to short them. Based on that, I wouldn't short ARKK, but I would trade SARK long, so I'll show you the Continuation trades on that. {image}
Yep got it, an thanks. I just sent you an e-mail on Ranges used ARKK as an example but did play with some other stocks you posted recently think one was
WY and ADP

I wonder what sectors are held in ARKK, wonder if I can find that out.

OK mate, tend to Paul's needs, us Old fellas can roll around on the ground while, while the young ones try n change the world
Ben
  • #7,885
  • Edited 10:31am May 14, 2022 9:04am | Edited 10:31am
[quote=btrfx1;14000483]
Quoting RobinHood
{quote} Yep got it, an thanks. I just sent you an e-mail on Ranges used ARKK as an example but did play with some other stocks you posted recently think one was WY and ADP I wonder what sectors are held in ARKK, wonder if I can find that out. OK mate, tend to Paul's needs, us Old fellas can roll around on the ground while, while the young ones try n change the world Ben
All Holdings from ARKK

Holdings and Allocations

Tesla Inc 9.91%
Zoom Video Communications, Inc. Class A 8.53%
Roku, Inc. Class A 7.95%
Exact Sciences Corporation 6.09%
Block Inc Class A 5.40%
Teladoc Health, Inc. 4.86%
Twilio, Inc. Class A 4.31%
UiPath Inc Class A 4.05%
CRISPR Therapeutics AG 4.04%
Spotify Technology SA 3.60%
Coinbase Global, Inc. Class A 3.53%
Intellia Therapeutics, Inc. 3.51%
Shopify, Inc. Class A 3.01%
Beam Therapeutics, Inc. 2.74%
Unity Software, Inc. 2.66%
PagerDuty, Inc. 2.47%
Robinhood Markets, Inc. Class A 2.35%
DraftKings, Inc. Class A 2.26%
Fate Therapeutics, Inc. 2.01%
Signify Health, Inc. Class A 1.97%
Roblox Corp. Class A 1.71%
10x Genomics Inc Class A 1.45%
Ginkgo Bioworks Holdings Inc Class A 1.44%
Twist Bioscience Corp. 1.27%
Stratasys Ltd. 1.22%
Veracyte Inc 1.15%
Sea Ltd. (Singapore) Sponsored ADR Class A 0.97%
Invitae Corp. 0.95%
TuSimple Holdings, Inc. Class A 0.88%
Pacific Biosciences of California, Inc. 0.88%
Materialise NV Sponsored ADR 0.83%
2U, Inc. 0.73%
Cerus Corporation 0.72%
Berkeley Lights Inc 0.27%
Dreyfus Government Cash Management Funds Institutional 0.16%
Compugen Ltd. 0.15%
Always a Student, Never a Master - Emulate What Works
  • #7,886
  • Edited May 15, 2022 4:56am May 14, 2022 8:28pm | Edited May 15, 2022 4:56am
[quote=RobinHood;14000489][quote=btrfx1;14000483]{quote} All Holdings from ARKK Holdings and Allocations

Afternoon RH,

Here is the chart I wanted to share indicating a nice uptrend opposite to the ARKK chart.

It is just one of the ETF's in a list---but went up in relation to the ARKK one

RH---That attachment that was attached below needs to be deleted

I sent an e-mail to you with the chart I wanted you to compare with ARKK.

Since Microsoft did an auto update last night I don't understand why I have an issue but there is one and help may be here in the morning---till then Nite
Ben
  • #7,887
  • Edited 12:21pm May 15, 2022 6:53am | Edited 12:21pm
Although this is a Forex trading forum, many traders "eventually" end up trade stocks. Numerous traders here have asked me to talk about how I trade stocks in detail. Much of what I talk about regarding trading stocks can also be applied to trading many other things such as the Forex, Futures, Commodities, Options, etc.

For those who want to trade stocks, but think they don't have enough money to, you can now trade stocks fractionally. That means that you can buy any fraction of a share of a stock, so if a stock is $20 and you want to buy 1/20th of it, you can with $1. Here's some brokers who allow it to be done.

The best brokers for fractional share investing (in the U.S.) are:

Charles Schwab
Fidelity Investments
Interactive Brokers
RobinHood
TD Ameritrade
E-Trade
Merrill Edge
Vanguard

If you can't open an account with any of these brokers, do an internet search for: "Where can you trade fractional shares in (fill in the name of the you live in country)" for example, Germany.

Moving On...

I would like to mention that I play around with indicators and chart settings a lot, it's a hobby for me and it has been for over 30 years. I'm like the artist that never quite knows when the painting he's painting is "done". I think many, many, traders are also like this.

With that being said, exactly which indicators and chart settings I use today might not be exactly what I use tomorrow. If I find something that I like more than what I currently use, I add it to the chart and/or I might delete something or just change a current indicator setting. The possibilities are infinite.

I also switch time frames a lot. I find that different stocks react differently to my chart settings on different time frames, sometimes better on another, and sometimes worse. I just pick which time frame that looks the best to me for that particular stock. I most especially do this when day trading.

First I must explain my stock chart settings.

In this instance, I am using "TC2000" as my trading platform.

Upper Window:

1. RH1 = 4 ema, last (close), dotted line, yellow
2. RH2 = 9 ema, last (close), solid line, magenta
3. RH3 = 14 ema, last (close), solid line, blue
4. RH4 = 50 ema, high, solid line, grey
5. RH5 = 50 ema, last (close), dotted line, grey
6. RH6 = 50 ema, low, solid line, grey

Lower Window:

I named this the "RobinHood Oscillator" (abbreviated "RHO"). TC2000 is the only trading platform that I have been able to create this indicator on, so I don't have it for MT4....YET.

7. RH7 = MACD 6 & 10, dotted line, yellow
8. RH8 = MACD 11 & 13, solid line, magenta

*Place a horizontal white dotted on "zero" on the MACD. This is very important as it tells you whether to trade long or short.

RH4, RH5 and RH6 are what I call the "Roadmap".

I call this template the "RobinHood" template because it is always the basis of what I use (or parts of it) in some form or fashion.

Here's what all that looks like on a chart:

Attached Image (click to enlarge)
Click to Enlarge Name: Apple Weekly Chart.PNG Size: 205 KB

In a future post regarding trading stocks, I will explain how I use all of these indicators. Once traders get comfortable with this template, I will add at least one more indicator that I currently use to the chart. I am not doing it now because I think it would be too confusing at the beginning. It's regarding the RoadMap...an addition to it.

More to come...
Always a Student, Never a Master - Emulate What Works
  • #7,888
  • May 15, 2022 7:21am May 15, 2022 7:21am
If you are reading (or have read) my last post, refresh the screen as I had some important typos in it that I have now corrected.
Always a Student, Never a Master - Emulate What Works
  • #7,889
  • May 15, 2022 1:57pm May 15, 2022 1:57pm
Quoting RobinHood
Although this is a Forex trading forum, many traders "eventually" end up trade stocks. Numerous traders here have asked me to talk about how I trade stocks in detail. Much of what I talk about regarding trading stocks can also be applied to trading many other things such as the Forex, Futures, Commodities, Options, etc. For those who want to trade stocks, but think they don't have enough money to, you can now trade stocks fractionally. That means that you can buy any fraction of a share of a stock, so if a stock is $20 and you want to buy 1/20th...
It is amazing how after all this time you still give us new information and knowledge (& for free!)

I really want you to know that one of the reasons why I became a profitable trader was because of this thread.

Forever thankful
Only the Mediocre are Always at their Best
  • #7,890
  • May 15, 2022 2:31pm May 15, 2022 2:31pm
Quoting RobinHood
Although this is a Forex trading forum, many traders "eventually" end up trade stocks. Numerous traders here have asked me to talk about how I trade stocks in detail. Much of what I talk about regarding trading stocks can also be applied to trading many other things such as the Forex, Futures, Commodities, Options, etc. For those who want to trade stocks, but think they don't have enough money to, you can now trade stocks fractionally. That means that you can buy any fraction of a share of a stock, so if a stock is $20 and you want to buy 1/20th...
Robinhood, thanks for your recent posts. I've digested your comments on my experience and you've made some great points for me to take onboard. I appreciate your comment about trading so many stocks it ends up effectively an index fund. I kinda knew that at the time, but my inner voice telling me to 'stick to the plan' convinced me to persue every promising set-up.

Thanks for sharing your template, your roadmap is very similar to my Long EMA set-up but its provides a very clear visual indication of the trend, and its adherence to the 50EMA. I'll be implementing that.

Thanks again,

Paul.
  • #7,891
  • May 15, 2022 4:10pm May 15, 2022 4:10pm
PipsAndGainz & UkSmurfy

I really appreciate your thoughtful comments.

There's more coming. Just give me a little time, these posts I make take some effort.

So stay tuned.

- RH
Always a Student, Never a Master - Emulate What Works
  • #7,892
  • May 15, 2022 5:33pm May 15, 2022 5:33pm
Quoting RobinHood
PipsAndGainz & UkSmurfy I really appreciate your thoughtful comments. There's more coming. Just give me a little time, these posts I make take some effort. So stay tuned. - RH
Ditto, We are so fortunate to have your expertise on board.

Donald
  • #7,893
  • May 15, 2022 6:50pm May 15, 2022 6:50pm
Quoting Coffeebuff
{quote} Ditto, We are so fortunate to have your expertise on board. Donald
Thank you Donald, I really appreciate it.

Happy Trading!

- RH
Always a Student, Never a Master - Emulate What Works
  • #7,894
  • May 16, 2022 2:56am May 16, 2022 2:56am
@robinhood , @emmanuel7788, once a trade has been entered, do you guys simply trail the stop to the lowest low (or highest high) of the last 2 bars for a buy (or short)? Or you simply set to BE once 1:1 R is hit and then trail from there? Cheers! anyway here are 2 running trades of mine based on H4 and D1 . Demo account
Attached Image(s) (click to enlarge)
Click to Enlarge Name: screenshot.png Size: 44 KB
Click to Enlarge Name: screenshot.png Size: 48 KB
  • #7,895
  • May 16, 2022 4:06am May 16, 2022 4:06am
H4 continuation , D1 down, GCAD
Attached Image (click to enlarge)
Click to Enlarge Name: screenshot.png Size: 44 KB
  • #7,896
  • May 16, 2022 4:17am May 16, 2022 4:17am
Took my first trade with this system. Buy USD/CHF H4.

I also looked into selling AUD/CAD H4 but it looks like we are in a support zone.

Feedback is appreciated.
Attached Image (click to enlarge)
Click to Enlarge Name: USDCHF.PNG Size: 34 KB
  • #7,897
  • May 16, 2022 5:07am May 16, 2022 5:07am
Quoting benjamintoh8
@robinhood , @emmanuel7788, once a trade has been entered, do you guys simply trail the stop to the lowest low (or highest high) of the last 2 bars for a buy (or short)? Or you simply set to BE once 1:1 R is hit and then trail from there? Cheers! anyway here are 2 running trades of mine based on H4 and D1 . Demo account {image} {image}
I stay in until my stop gets hit or until I get a signal from 1 or 2, or more indicators to get out. And very often it is the HMA that tells you first.
Always a Student, Never a Master - Emulate What Works
  • #7,898
  • May 16, 2022 5:12am May 16, 2022 5:12am
Quoting Berje
Took my first trade with this system. Buy USD/CHF H4. I also looked into selling AUD/CAD H4 but it looks like we are in a support zone. Feedback is appreciated. {image}
Welcome!

Ideally, you should have entered on the open one bar back from the last bar on your chart.

Doing that would have reduced your risk by quite a bit, and would have given you a greater profit should the trade go on to win.
Always a Student, Never a Master - Emulate What Works
  • #7,899
  • May 16, 2022 7:00am May 16, 2022 7:00am
Quoting RobinHood
{quote} I stay in until my stop gets hit or until I get a signal from 1 or 2, or more indicators to get out. And very often it is the HMA that tells you first.

So you don't move your stops up ever. U simply wait till there is indications to exit or you hit the SL . Gotcha. Thanks ! Great system.
  • #7,900
  • Edited 12:07pm May 16, 2022 7:12am | Edited 12:07pm
RobinHood Oscillator Explained
Attached Image (click to enlarge)
Click to Enlarge Name: RHO Explained.PNG Size: 219 KB

Here's how the RobinHood Oscillator (in the lower window) works.

1. You can only initiate Long trades when the magenta line is above the white zero line and you can only initiate Short trades when the magenta line is below the white zero line.

2. You can only initiate Long trades when the yellow line is above the white zero line and you can only initiate Short trades when the yellow line is below the white zero line.

3. Crossover Trades are initiated when the one of the 2 lines mentioned above is above the zero line, and then the second line crosses over to the same side of zero that the first line is on.

4. Long Continuation Trades are initiated when the magenta line is above the white zero line and the yellow line is above the magenta line. When the yellow line dips below the magenta line and then crosses back up above it, that is when the Continuation Trade is initiated. * It does not matter if the yellow line also crosses down below the white line. Vice-versa for Short trades.

5. On Long trades, you "can" use the yellow line crossing down below the magenta line to exit the trade. Vice-versa for Short trades.

6. I almost will never take a Long trade if price is below the Roadmap (the 3 grey lines in the upper window) and vice-versa for Short trades. With the exception of, if price is above the Roadmap on the next higher time frame which is typically 3-6 times higher than the time frame that you are trading.

There is another line that I will introduce after you've had a chance to fully digest how the oscillator works.

Any questions?
Always a Student, Never a Master - Emulate What Works
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