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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 09.11.11

Update on all Twitter trades

Use VPOC's for targets on trending days

Switching to a bearish stance on S&P

Beginner / Intermediate Webinar

Date/Time: Wednesday-August 31st at 12:00pm ET/11:00am CT
Key Topic: Discover Prodigio's powerful scanning tools using TradeOptics and TradeVision!
Presented by: Prodigio Chief Architect - Bryan Wagner
Chat Location: Prodigio Chat Room (thinkorswim platform)

Beginner / Intermediate Webinar

Date/Time: Wednesday-September 7th at 12:00pm ET/11:00am CT
Key Topic: Prodigio: Quick Scans using Oscillators for Quality Picks!
Presented by: Prodigio Chief Architect - Bryan Wagner
Chat Location: Prodigio Chat Room (thinkorswim platform)

Beginner / Intermediate Webinar

Date/Time: Wednesday-September 14th at 12:00pm ET/11:00am CT
Key Topic: Identifying Breakout Patterns with Prodigio!
Presented by: Prodigio Chief Architect- Bryan Wagner
Chat Location: Prodigio Chat Room (thinkorswim platform)

Intermediate / Advanced Webinar

Date/Time: Wednesday-September 21st at 12:00pm ET/11:00am CT
Key Topic: Trade like the pro's with high probable trades & Less Risk: ShadowTrader Pairs Trader and Wizard Lab!
Presented by: ShadowTrader Equity Strategist-Instructor- Tom Cook
Chat Location: Prodigio Chat Room (thinkorswim platform)

Beginner / Intermediate Webinar

Date/Time: Wednesday-September 28th at 12:00pm ET/11:00am CT
Key Topic: Prodigio Chart Trading: Trading from a chart has never been easier; money management strategies and executing trades quickly and simple!
Presented by: Prodigio Chief Architect - Bryan Wagner
Chat Location: Prodigio Chat Room (thinkorswim platform)

Beginner / Intermediate Webinar

Date/Time: Wednesday-October 5th at 12:00pm ET/11:00am CT
Key Topic: Prodigio: Features, Functions, Tools and coming soon!
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. If your question is selected for publication, you will receive a ShadowTrader T-shirt and coffee mug!

Dear Shadow,

During this sell off I was able to pick up a few stocks and have made a modest profit. Some of these I would like to see if I could hold for a longer term play, however I'm a little worried that the selling may not be over. Could you explain the proper application of using a collar to protect you from the downside? I know that it can limit upside as well, but if the call is out 1 or 2 strikes I can live with that. Especially in the short term. Would you use this strategy with weekly options if available? What is the basic philosophy to implement this strategy?

Thank you,

Mark Modzelewski from Hollywood, FL

This email was sent in back in mid August and I've been trying to get to it since. Luckily the market hasn't really done much since the early August selloff so this is still very relevant.

The basic definition of a collar is simply buying and holding shares of stock, selling a call option against the stock and then simultaneously buying a put on the same stock. The usual way is to sell a call 1-2 strikes out of the money and then use the proceeds of that call sale to buy the put. If the put is at the money, then obviously this will result in a debit which is just another word for "insurance". The collar limits your upside to whatever call strike you sold, but it also takes away all downside risk as you will be long a put at some level close to your entry.

Generally, I like this strategy, however, I'd like to offer you a small twist on it that I think may be of help to you. One thing I like to do is to buy protection further out using the monthlies and then use the weeklies for the call sales. Obviously this only works with stocks that trade weekly options. Check CBOE.com for a list of them.

Now for those astute investors who know a thing or two about options, you should already be wondering how in the heck can you possibly finance the monthly put by selling a weekly which will obviously have lots less premium. The answer is with a put butterfly. Instead of insuring your stock down to zero which is what buying a single put would do, you can opt to take on a little more risk and buy a wide put butterfly whose mid strikes will correspond with some level of support on the chart that you are comfortable with. For instance, lets say you are long a stock at $50 and the stock recently double bottomed at $40. Instead of buying the $50 put outright, see if you can construct a 50-40-30 put butterfly. This will be notably cheaper than the single 50 put. At the same time, if the stock trades weeklies, look for a $55 weekly call to sell. If the stock closes below $55 within a week, sell the next week's $55 call again. You can repeat this process right up to the expiry of your monthly butterfly.

The positives are that you are only locked into your short call for a week, which is much less than a full month, and the put spread is cheaper. The negatives are that your downside protection is only good until the mid strikes of the put, and if the stock continues to tank further, then your butterfly will offer less and less protection as you trade through the mid strikes until the low strike whereupon the 'fly will just break even and offer no protection.

The overall range and volatility of the stock will have a lot to do with whether or not you can pull off this strategy effectively. You will have to spend a bit of time on the options chain and look through a few different scenarios.

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

Linear Regression and SAR

In pip academy, this week, we are combining the parabolic SAR and the linear regression channels from the previous weeks.

One advantage of linear regression is the first and second standard deviations can give a great target and support and resistance levels and the linear regression line itself can provide a dominant trend as well as a target during a pull back. One of the difficult part of trading the linear regression line is that when one is taking a counter trend trade, the linear regression can move to the price rather than the price moving to the linear regression level.

By adding the parabolic SAR, the counter trend trades can be managed from a daily risk stand point. If price is going counter trend, each day price is moving toward the target, so is the stop loss and the SAR can provide confirmation to new trends or counter trends in conjunction to the linear regression line.

Note in the image below how the parabolic SAR can confirm when it is OK to take a reversal and how when the counter trend moves don’t work out how the SAR protects the position from a larger loss by providing the stop as part of the signal. Combining different indicators that have similarities but are adjusted differently can improve the money management and timing of trades.

ShadowTrader FX Live Call of the Week

The trade of the week this week is one of 4 winning trades we had this week. The EUR/CAD is our pick because it was the highest return. We entered the trade as a short trade on a break below key support levels at 1.3830. The trade moved in our favor and we tightened our stop and let it go for a couple of hours longer. We did take profits mid morning.

The trade did edge down lower and we might have considered hanging on to the trade a little bit longer but the Canadian employment numbers were worse than expected and we decided to exit early with our profits on an intraday pull back. We gained 155 pips on the trade in just over one day.

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 discuss the Swiss National Bank’s (SNB) intervention in the franc .

The SNB announced that they would not tolerate a under for the EUR/CHF pair and that they would buy up unlimited amounts of other currencies to defend this level.

Of course, just their talking caused the franc to weaken and the pair to jump over 8% in fewer than 30 minutes. There are some very interesting points that are notable here. First, the move to push the currency pair up 8% by some analysts estimates, took a shift of approximately 1.3 trillion dollars. The annual GDP for Switzerland is approximately 500 billion. To put this into perspective, an equivalent move in U.S. GDP would require a shift of nearly 40 trillion dollars. This is a big move. Secondly, the franc should not have been as strong as it was. The move was an unwinding of a large segment of speculative hedgers scrambling to get out of their long franc positions.

Third and last for this post; Why would a country suddenly and dramatically shift monetary policy to the point where they caused 8% inflation in one day, damaging their banks and their citizens in a few short minutes rather than intervening at a slower steady pace? My expectation is that they know something is coming, something more than we know as traders know about the economy and the euro zone and they see this as preparatory to the pending problems and less painful than non action. Because of this, we expect the euro to continue to weaken as well in the near future.

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

Centene Corp. (CNC) - Short
Entry - 29.54
Stop - 32.20
Target - 25.60

There are many bear flag price patterns among the nearly 1,000 stock charts we viewed this weekend, however CNC is one of only a few stocks that actually closed beneath the bottom of the flag on Friday. If the majority of other stocks reflecting the same sort of price pattern and the broad market follow through lower this week, CNC has a high probability of following suit.

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

How Do I Find Pairs?

"A Pairs Scan Of Course!" Well especially the new folks are very curious about how to find pairs. There are many ways to find pairs, but I think that we have the coolest way to find new pairs with our "110602ProdPairsScan" Strategy. This strategy is a direct result of wonderful comments and suggestions that we get from folks all the time. Who Knows, you might just have the next great idea for us here at ShadowTrader to create the next really cool strategy.....

Go ahead and download this wiz file to your desktop or "MyDocuments" file.STRATEGY - 110602ProdPairsScan (buy).wiz

(1) Import your wiz file for the "110602ProdPairsScan" Strategy into your Prodigio Platform. (2) Open the rule tab and display the nodule and type the stock symbol into the "single OHLC" nodule where you see "ORCL" in our example. Be sure to save after you put in your symbol.(3) Now go to step 3 and open your saved strategies. (4) Now select "110602ProdPairsScan"

(5) Set the calendar time frame starting from at least a week old up to present. (6) Select the green run button and look for results. (7) Take each symbol and put them into your TOS charts and pair each of the symbols to your single stock that you previously put into the "single OHLC" nodule and check for correlation of 0.80 or higher and chart patterns. OK, would you like to learn more?

Be sure to catch any new pending trades coming out Sunday evening for Monday's Newsletter and to download your wiz files and import the strategies into your Prodigio Platform.

For the newbies:, Peter has created this short video to get you started. You can watch it here.

Any questions, email us at pairstrader@shadowtrader.net and Tom Cook will get back to you with a reply.

The Pairs Hour with Tom "The Southern Gentleman" Cook is happening on Thursdays at 4:15pm EST in the ShadowTrader chatroom on the TOS platform. Last week's show is archived here. We enjoy and encourage everyone to bring your suggestions, comments and questions to us each week during this program.

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.

ShadowTrader Stock Challenge

Play the ShadowTrader Stock Challenge! Pick any stock priced over $10, either long or short. Use the Submission Form to send in your picks on Friday mornings before 11:30am. Squawk host, Brad Augunas will pick 10 players on Friday afternoon for the following week. The entrant whose stock pick has risen or fallen the greatest amount on a percentage basis from Monday's open to Friday's close is the winner and will receive a ShadowTrader T-shirt & Coffee mug!


Challenge contestants and stock picks for 9/12 - 9/16
namefromstockdirection
Teddy Pittsburgh, PA OPEN Short
Neysa Hillsboro, OR INTC Long
IvanR Ft Lauderdale, FL BBY Long
Rainman Raleigh, NC RIMM Short
Whit Atlanta, GA AAPL Long
StevieMac Omaha, NE GLD Long
Stormie Crown Point, IN MA Long
Joey Warren, MI ORLY Long
Oil Guy Denver, CO QCOR Long
Ander Provincetown, MA TOT Long

Stock Challenge Hall of Fame
WeekNamestockdirection%move
9/5-9/9 Bob DNDN Long +10.14%
8/29-9/2 Mindcandy LNKD Long +4.56%
8/22-8/26 Mayday FOSL Long +28.04%
8/15-8/19 808Stockpikr DNDN Long +13.13%
8/8-8/12 Nala CREE Long +33.33%
8/1-8/5 Ray NFLX Short +10.21%
7/25-7/29 TradeonJohn WFT Long +10.15%
7/18-7/22 AirRun CREE Long +9.55%
7/11-7/15 Sukhush LNKD Long +12.50%
7/4-7/08 Mike from OKC OPEN Long +5.04%
6/27-7/01 Rob Weiss X Long +12.66%
6/20-6/24 Russ TNA Long +7.50%

What's New at ShadowTrader.net

New ShadowTrader website! - ShadowTrader has revamped its website yet again. More features, more functionality, new 60 second videos on the home page, an online store for the exclusive ST t-shirts and coffee mugs, and a bold, new look. Check it out now!

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.

ShadowTraderPro Pairs Hour with Tom "the Southern Gentleman" Cook - Thursdays, live on the TOS platform. 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 all things Forex. Tune into the ShadowTrader chatroom under the Support/Chat tab on your platform at 4:15pm EST.

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"

ShadowTrader is also on FaceBook at the link below

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.

09/07/11 - "Prodigio: Quick Scans using Oscillators for Quality Picks!"- Bryan Wagner

What's New

Scheduled software releases, Prodigio Learn-N-Trade scheduled shows, and upcoming feature enhancements.

Prodigio News!

Data, Data, and more historical Data... Recently Prodigio released its 2nd phase in its overall plan to offer the largest available design, development and back-test data sets (equities, indices, & futures) for Prodigio algo traders. The latest phase II release expanded data sets back as far as 20 years where possible. Phase III is currently in development and we will keep traders posted as the project continues. Swing Traders may want to take a close look at Prodigio's most recent new feature release offering the new "RTS Auto Trading Expiration Date". This function allows traders to extend their Auto trading schedules by manually setting a trade date window using the new calendar setting. This is perfect for swing trader's who may for example may want to see their strategy run continuously for say 6 weeks straight or "any time duration" defined by you the trader. This is a great trade management tool that helps traders so not to chance missing a trade due to inadvertently forgetting to "Enable RTS" Auto Trading each morning. This great new feature can be found under the RTS Strategies tab. When deploying RTS strategies and or extending your RTS Auto Trading Expiration date, please"be sure to remember to depress your "Enable Auto Trading" button atop the platform in order to activate your auto trading permissioning or you will not see/ receive any trade generation!" For more education and information on all Prodigio happenings please visit About Prodigio.

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 week's topic hosted by Prodigio Chief Architect - Bryan Wagner is:"Discover Prodigio's powerful scanning tools using TradeOptics and TradeVision!"

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. For platform assistance, questions, report problems , or simply how to use, please contact the Prodigio Support team at Prodigio@thinkorswim.com

Prodigio Platform Q/A Support Questions can be discussed/ answered by Prodigio staff members each trading day between 9:15AM - 11:30AM EST in the Prodigio Chat room on your thinkorswimin platform or by emailing Prodigio@thinkorswim.com.

The entire Prodigio team wishes you successful trading in the coming week.

Visit ProdigioRTS.com to interact with other Prodigio users. The Prodigio Forum is a great place to Ask questions, Share strategies, and Collaborate on ideas using our live, interactive forum.