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ShadowTrader Video Weekly
The video below is produced by ShadowTrader.net founder, Peter Reznicek. Each video contains a look ahead at what the market is going to do next week, along with what sectors/stocks are about to move, and specific trading ideas for the coming week ahead.
At ShadowTrader.net we believe that every investor's success begins with a good trading plan. For maximum benefit, please review the enclosed video prior to start of your trading week.
Grab some popcorn and enjoy!
Shadow Trader Video Weekly 05.01.11
Live Gold Trade
Sold too soon, but chart parabolic now
Keep eye on daily channel for entry
Beginner / Intermediate Webinar
Date/Time: Wednesday-April 27th at 12:00pm ET/11:00am CT
Key Topic: Prodigio back to the Basics: How to use Logic, Time, and Adapters!
Presented by: Prodigio Chief Architect - Bryan Wagner
Chat Location: Prodigio Chat Room (thinkorswim platform)
Intermediate / Advanced Webinar
Date/Time: Wednesday-May 4th at 12:00pm ET/11:00am CT
Key Topic: Prodigio Intelligent Application of Linear Regression Concepts with Wizard Lab!
Presented by: Prodigio Chief Architect - Bryan Wagner
Chat Location: Prodigio Chat Room (thinkorswim platform)
Ask the ShadowTrader
Each week, we select one email from the hundreds of thousands that we receive each week (slight exaggeration), and answer it live here in this forum thereby educating readers and making one lucky person famous for the day.
Email your questions in to asktheshadow@shadowtrader.net and we'll take it from there.
Dear Shadow,
Can you expand or explain how a trader can define or manage risk on any trade or investment. Is there a specific formula or technique that is better than another.
Thanks
Dr. Jeff from Pittsburgh, PA
Excellent question. As with everything at ShadowTrader we believe in keeping things as simple as possible. We assume that the majority of people are trading overnight as opposed to intraday, and as such we strongly feel that risk needs to be a percentage of portfolio size. Let's look at an example, using Google (GOOG) and a recent setup that occurred in this stock.
In the chart above, I've circled a swing trading setup. Note the two bottoming tails that precede Friday's move up. Let's say that you saw this setup on Thursday night and were looking to get long this stock. Your thought was that you wanted to get long $1.00 over the highs of those two little reversal bars with a stop $1.00 below the lowest point of those two days.
Given the parameters above, your risk pointwise is $7.18. You want to always have a defined amount of total portfolio value at risk. We like to recommend one half of one percent. That means that if your account is $100,000 for example, your total risk should be no more than $500 per play.
You would then take $500 and divide it by the total point risk (7.16) to find your number of shares. In this example, that would come out to 70 shares. This is the "big secret" to being able to hold through the pullbacks and be able to give the stock the breathing room that it needs to go to target. You know that even if things go totally wrong and the stock was to reverse back below the lows of those two reversal bars, your risk is going to be half of one percent of your total portfolio. It's manageable, and you'll be able to sleep! Best of trades to you....
ShadowTrader Weekly FX Recap
ShadowTrader Weekly FX Recap is your weekly scoop on all things Forex, with fresh content catering to both the experienced FX trader and those just starting to get their feet wet. ShadowTrader Pip Academy is a weekly online lesson where traders will learn the basics of the Forex market, technical analysis, and fundamental analysis as it applies to trading currency. ShadowTraderPro FX Trader Live Call of the Week will highlight as actual trade taken in the newsletter over the past week and recap the setup and successful execution of the trade from start to finish. Things You Should Give a Pip About is a look at ahead at the news and markets that you should be paying attention to in the coming week to improve your chances of success in the currency markets.
ShadowTrader Pip Academy
Divergences and Confirmations
In last week’s pip academy, we continue to look closer at the MACD to identify when the price and indicator agree or confirm and when they disagree or diverge. Recall from last week that the MACD is created by using two moving averages, defining the difference or delta of the two lines and then taking a moving average of the difference. By doing so we are watching the average of the rate of change or the momentum of the currency pair (or any other investing instrument you might be interested in).
Because price does not always stay with history or within the statistical ranges, the opportunity to look for additional signals arises in the subtlety of the indicators. Notice in the chart of the GBP/USD how the price and the indicator both are making lower highs. This is confirming the down trend by showing that the bullish momentum in each peak is declining. This drop in momentum shows us the bulls do not have enough dedication to push the price out of the bearish trend.
Now, notice how the bearish momentum gives up on the bearish trend. The momentum as defined by the MACD indicates that although price is falling there is not much of a bearish push behind it and we can see that the lack of momentum in the down trend lead to the end of the down trend and the beginning of the next uptrend. This is known as a bullish divergence. When price makes lower lows while an indicator makes higher lows, the indicators and price have stopped agreeing or diverged and usually means a correction and occasionally that divergence can lead to a trend reversal.
There are a number of indicators that are diverging from the current trends and we may see pull backs in these significant trends we have seen over the past few months.
ShadowTrader FX Live Call of the Week
The trade of the week this week is on the EUR/GBP. We have been in this trade patiently now for a couple of weeks. We sold as we confirmed a bounce off of long term resistance and we bounced off of long term resistance again on Friday.
We still like the set up a lot on this pair and we are going to add to the position on Monday if price continues to drop, likely at 0.8850. The pair could give us two positions now with a lower risk per contract and stronger resistance to keep us in the trade.
We are only up 2 pips or $3 right now on the pair but if we add to the position and hit our target, we will see a gain of $736 in the next week to 10 days.
To get daily FX analysis of major pairs, economic data, and live, real-time trades on currencies every day, follow the ShadowTraderPro FX Trader on MyTrade. This service is now available for FREE. All you have to do is click on "Tools" tab on your TOS platform or go to www.MyTrade.com and "follow" ShadowTraderPro FX Trader.
Things You Should Give A Pip About
In things you should give a pip about this week, we look at the Ben Bernanke Circus Spectacular, where all your favorite fed clowns and death defying dollars perform for someone’s entertainment.
What we saw this week in the first ever Fed Chairman Press Conference and Q&A period was very similar to the kind of press conference I would expect to be called after a scandal. One of the few ways to save face in the event of being caught doing something you shouldn’t is to hold a press conference and answer questions. It appears that is what Bernanke wanted to do. The economy has not recovered and the dollar has reached record lows, the U.S. credit standing globally is weakening by the day and in turn inflation is rampant.
When the lights came up in the big top, Bernanke stated that they would not continue QE2 past June (which means we will continue QE2 for the next 60 days) and they did not see any reason they would be justified in QE3. Well some of us didn’t see justification to QE1 or QE2.
Bernanke stated numerous times that a strong dollar is critical to a healthy U.S. economy but the actions of the fed have weakened the dollar in most comparisons by 30% in the last year alone. My personal favorite comment was that the Fed couldn’t make oil. Though I agree with the sentiment that you can not produce oil Mr. Bernanke, the reason oil prices are high is not due to the lack of oil production or increased demand alone. Oil prices have doubled in the past two years, demand has not double in the global recession and production has remained fairly constant. The rise in oil prices I primarily due to the lack of buying power in the dollar.
If you want to bring oil prices down and bolster the economy and the worlds view of our credit rating, stop spending and weakening the dollar. Hopefully in the next 3-6 months we will see the dollar stabilize in the global markets with the possible future change in Fed monetary policy.
ShadowTrader Free Weekly Trade Idea
Each week Peter and his minions scour the markets to find the best equity and forex setups for the followers of the Swing Trader and FX Trader. Premium subscribers get 2-5 of these daily. Every weekend we present one trade idea from either the equity or the forex side here. Note: Free weekly trade ideas are strictly DIY (do it yourself!) and are not actively managed or updated once presented and may or may not be stocks that are currently in play in our newsletters. For a more "full service" feel, with real-time email alerts and updates, please check out the ShadowTraderPro Swing Trader and ShadowTraderPro FX Trader
Bally Technologies, Inc. (BYI) - Long
Entry - 38.00-37.80
Stop - 36.80
Target - 40.80
There is a good possibility that the broad market will experience a 1-2 day pullback in the coming week. This weekend's free trade idea is designed to take advantage of that pullback for an long trade entry.
Last week, BYI broke above a medium term descending trendline. That descending trendline will cross a supporting ascending trendline this coming week (orange lines). It is this point where we have established an entry range between 38.00 down to 37.80.
BYI will be more apt to move down into the entry area on a broad market pullback, and then with a reversal back higher by the broad market, BYI should move in sync.
The stop is placed just under the 200 day moving average (blue line) at 36.80 and the target of 40.80 is at a longer term descending trendline (not pictured) on a wider daily chart. This setup provides a 3:1 risk:reward ratio.
For an average of 2-5 trade ideas like this every day along with daily market analysis and trading guidance, follow the the ShadowTraderPro Swing Trader. This service is now available for FREE. All you have to do is click on "Tools" tab on your TOS platform or go to www.MyTrade.com and "follow" ShadowTraderPro Swing Trader.
ShadowTrader Pairs Trading Corner
"Pair Range in TOS and Rule Building in Prodigio!
We are very excited to bring you new strategies with DISCA-DISCK for this upcoming week. So, let's take a closer look at how we set up for a short entry and what we look for with the pair. Notice the pair is presently trading at $4.80 and has resistance around the yellow line at $5.40. Now let's also consider that generally when a pair moves up into resistance it will continue to push through that resistance point. When this happens, the question becomes so how far will the pair range? Well generally it depends on the volatility of the pair and historical extended moves with regard to the distance from the mean. OK, now let's consider our target after our short entry and expect the pair to trade back to the mean. In this case it is $4.38 and we would likely add a few pennies to that and call it $4.45 or so. Next we want to go to our Prodigio Wizard Lab and start our rule building below.
As you will see, in Monday's Newsletter for the Pending Trades Portfolio Section, we have listed the same logic as discussed from our TOS chart above. We have built the above entry rule in Prodigio using our logic derived from TOS and setting up of all our necessary parameters and nodules for target and stop as well. In summary, our "entry" is (GTE) Greater than or equal to: $5.40, our "target" (LTE) Less than or equal to: $4.45, and our "stop" is (GTE) $7.00. There you have it and you are all set to go.
Don't forget to check out the archives of this past Thursday's Pairs Hour Show, where we took another in-depth look at "Wiz Files", "Rule Building" and "Time Adapters". Be sure to check out the new "Wiz File Strategies" in this week's Pairs Daily Newsletter.
This is an incredible service for all of our following viewers, no matter if you are just getting started, or if you are already experienced with Prodigio. We hope all of you are taking advantage of our Prodigio Webinars as they are offered, as well as our regularly scheduled Pairs Hour Show every Thursday at 4:15pm to 5:15pm,(EST). "We wish everyone a great trading week ahead"
Any questions, email us at pairstrader@shadowtrader.net and Tom Cook will get back to you with a reply.
The Pairs Hour with Tom Cook is happening on Thursdays at 4:15pm EST in the ShadowTrader chatroom on the TOS platform. Last week's show is archived here.
You can get real-time text messages sent to your phone every time we trade or post a new newsletter. Just text "follow st_pairs" (without the quotes) to 40404 on your cellphone. No twitter account is needed. Enjoy.
What's New at ShadowTrader.net
ShadowTrader has moved to MyTrade - All three ShadowTraderPro newsletters have moved from RedOption to MyTrade and are posted FREE daily. Click on "Tools" tab on your platform, or go to www.MyTrade.com.
ShadowTrader welcomes Jireh Chao to the SquawkBox. Tune in every day from 9:15am to 4:15pm to hear this fresh new voice on ShadowTrader! Let's hope he sings better than Peter!
ShadowTraderPro Pairs Hour with Tom Cook - Thursdays, live on the TOS platform, with new host, Tom Cook, a 1 hour program on the basics of pairs trading. Tune into the ShadowTrader chatroom under the Support/Chat tab on your platform at 4:15pm EST.
ShadowTraderFX Hour with Blake Young - Tuesdays, live on the TOS platform, Blake is hosting a 1 hour program on the basics of FX trading. Tune into the ShadowTrader chatroom under the Support/Chat tab on your platform at 4:15pm EST.
ShadowTrader.net relaunch! - The shadowtrader website has been redesigned to reflect our new relationship with MyTrade. Check it out here.
Twitter & Facebook - Did you know you can get real-time tweets when ShadowTrader advisories send out newsletters or trades? Just text the following (without the quote marks) to 40404 on your cellphone. Twitter account not necessary.
For Swing Trader text "follow st_swing"
For FX Trader text "follow st_fx"
For Pairs Trader text "follow st_pairs"
For Weekend Update text "follow st_weekend"
Prodigio RTS
thinkorswim the premier online broker, as rated #1 overall by Barron's, offers a truly revolutionary trading experience. Introducing Prodigio RTS, powered by thinkorswim technology. Prodigio is more than a trading platform, offering a cutting edge approach to equity & futures trading. With Prodigio, users have the capability to create, analyze, and test real-time strategies, create rules based trade-idea-generation alerts, and create trading rules and strategies using drag-n-drop-point-n-click. Prodigio also delivers active-trader order entry functionality, low latency back testing, and advanced customizable analytics. All are supported by a professional fully automated and/or semi automated robotic system to execute your trading, on one seamlessly integrated trading platform. To request activation or to learn more about thinkorswim Prodigio, email prodigio@thinkorswim.com.
Training videos
Every Wednesday at 12pm EST, we host live "learn-n-trade" webinars teaching users all the nuts and bolts of Prodigio and its unique functionality. Everything from basics to advanced automated strategies is covered. Last Wednesday's webinar can be viewed below. To access the entire list of archived webinars, please visit ProdigioRTS.com.
04/27/11 - "Prodigio back to the Basics: How to use Logic, Time, and Adapters!- Bryan Wagner
What's New
Scheduled software releases, Prodigio Learn-N-Trade scheduled shows, and upcoming feature enhancements.
We hope that everyone is enjoying the new and exciting Pairs trading feature recently released on Monday April 18th. STPro Pairs Trader launched in conjunction with Prodigio the new Automated pre-set .wiz files for pre-loading STPro Pairs Trader Alerts using Prodigio. What this means to traders who trade Pairs is, ShadowTrader using Prodigio .wiz files now makes it easier than ever before to pre-load, enter, manage, and exit a Pairs trade completely automated! Traders can now pre-set their STPro Pairs trades each evening/morning ahead of the market opening, deploying an institutional approach to trading/triggering off of "the Spread"! For more education and information on this new powerful approach visit Pairs Hour Show Archive, and watch Automated Pairs Trading I and II.
On Wednesday April 27th, Prodigio senior instructor Bryan Wagner introduced "Prodigio back to the Basics: How to use Logic, Time, and Adapters! On Wednesday April 13th Prodigio instructors presented "How to Build a $Tick Fade strategy in Prodigio. $Tick Fade is an exciting intra-day strategy used many professional trading entities and an exciting professional trading approach for abnormal sudden quick scalp moves to trade. For more education and information on this strategy approach visit Prodigio Video Archive.
We invite you to join us this week on Wednesday at 12:00pm ET on the thinkorswim platform for the Prodigio Learn-N-Trade webinar chat. This weeks topic hosted by Prodigio Chief Architect is: Prodigio Intelligent Application of Linear Regression Concepts with Wizard Lab!
To activate your no-charge Live or PaperMoney Prodigio platform account, simply email support@thinkorswim.com with the subject line: Prodigio Activation Request. Please be sure to include your thinkorswim Demo/Live Username & Account number for expedited activation.
Prodigio Platform Q/A Support Questions can be discussed/ answered by Prodigio staff members each trading day between 9:15AM - 11:30AM EST on your thinkorswimin platform under Prodigio Chat room.
The entire Prodigio team wishes you successful trading in the coming week.
Visit ProdigioRTS.com to interact with other Prodigio users. Ask questions, share strategies, and collaborate on ideas using our live, interactive forum.
