3 Phases of the Move, 3-Strike Rule, Tape Reading and Using Momentum

As always, we made plenty of profits in the trade room today, and we spent some quality time learning about our methods.

Our goal is to teach our members ONLY what they need to make profits when they trade, so we skip the fluff, and we stick to the nuts and bolts of our day trading methods.

In today’s webinar in the trade room we talked about a few different topics as we scanned the markets for our Fast-Track trading method.

Follow-Through:

– When the market is EXPLODING or moving quickly in the direction of your trade

o 3 phases to every move:

 Initial noise is when the pattern is beginning to show signs of entry

• Big buyers on the tape
• Good speed of the tape
• Momentum confirms

 Follow-through

• The majority of the BIG MONEY now enter the market
• This will come very shortly after the initial noise

o If it DOESN’T come very quickly, we need to be careful

• This also gets the attention of the day traders, which now has them entering the market a few moments after WE enter the trade

o These day traders that come late to the party, they are the ones that help us make money

 Exhaustion is the final phase, and this will be different every trade we take

• How far? How long? Does this trade go?
• We look for signs of exhaustion to tell when the market is beginning to slow down

o We should take profit at the exhaustion
o We look for

 Slowing speed (pace of tape indicator)
 MACD to curl against
 Momentum to curl against

Range Charts: each bar contains a specific amount of trading range, shown in TICKS

3-Strike Rule:

– Applies to taking profit targets

– If I see a profit target tested, but NOT filled 3 times, I will then assume the market has something in my way

– Move my target and FORCE the target filled

o Use my DOM or my trade management chart
o Grab the profit target, move it down to fill the target.

 If the 3 strike rule occurs on your first target you will move your stop to entry +1 tick, and then let the trade run.

• Either the trade will fill your stop on its way to reversing against you (no risk), or it will fill your target and keep on going to make you money!

I think the 13 and the 21 range method trades are awesome! 34-range is a little too slow, but don’t let that discourage you, just watch the 34 as well.

Minimum requirement for BIG MONEY in the market

– Big money is the BIG institutional sized traders
– They move the market, not the little day traders
– Filter = 5 contracts, so id like to see a block of 4-5 of those 5 lot orders, or 2-3 20 lot orders

o The key is seeing the follow-thru
o We see the initial BIG MONEY, but then watch closely b/c the additional BIG MONEY will come very quickly and that’s when I want to enter
o Lack of the follow-thru, lack of the big money is a NO-trade signal, stay away!

Using the momentum indicator:

– Avoid overbought /oversold territory

o Long trade requires momentum curled up from the bottom, and avoid over-bought
o Short trade requires momentum curled down over from the top, and avoid oversold momentum

Time & Sales Window

– Grew background shows up when you see buyers at the High of day, or sellers at the low of day
– We use this for entry signals or triggers.