May 2019 – Trading POC

How To Diversify Your Day Trading Webinar Part 4

Posted on May 30, 2019 by blogger

Dont Put All Your Eggs in One Basket: How to Diversify Your Day Trading
Webinar Transcript Part 4 of 4

This webinar transcript is brought to you by NetPicks, day trading systems and strategies developer since 1996. For more free day trading articles, analysis, videos, webinars, and more be sure to visit http://netpicks.com/trading-tips.

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Bob Malinowski: Yeah. Thats a place here — theres multiple places on the internet you can go. This is a fairly new one that actually marks some of — pointed to us to a few weeks ago that I found quite interesting. If youre a Forex trader, theres a lot of great information on this website. Its called forexticket.co.uk. And this chart that I brought up here on the front page, there was a link called Forex Correlation. And again if youre a Forex trader, the nice thing about Forex is you can reduce your trading sites so easily by trading, you know, fractions of whole lots of minis and micros and etcetera. So thats really a great site for that.

Brian Short: Okay. Next question is from Anna and shes asking which of the NetPicks system is the speaker trading?

Bob Malinowski: I — I have traded all of them. I am currently trading the SST and the Keltner Bells. All — you can trade any system. There — you can trade UT — the ultimate trading machine, the ultimate — you name it. Any system that NetPicks has come out, they all work, theyre all a positive equity curves, so — but the ones Im trading with are the SST and the Keltner Bells.

Brian Short: Okay. And I think she continued on with the question. I just located it. Shes asking if you should do FX daily or swing trading, shes just asking for some guidance sir.

Bob Malinowski: Theres this guidance on the correlation, lets see, as it–

Brian Short: Its in regards to the system, I guess. Lets see. Its more — its really not a fair question. Shes asking if you could explain which system to choose, FX daily or swing trading.

Bob Malinowski: Well, let me tell you, this looks a great approach — Im not going to make this an advertising for NetPicks, but I mean NetPicks is a company that provides so many trade plans, several trade plans and systems that you can customize through your own trading stuff. If you are a day trader, you can day trade. A swing trader, you can swing trade. I also do options trading, I use the SST to swing trade options. This presentation is focusing on day trading but whatever your style is. If you got a full time job and you can only do swing trading because youve been — youre in computer only one or two times a day, do swing trading. If you got the time to be at your computer for a stretch of a couple hours at a time, do the — do the day trading, supplement it with some swing trading. These principles Ive outlined of diversification apply to any — any trading style, I simply want to focus on day trading here because day traders tend to start off and all of the time stick with only one market and — and that will work. I mean you can see from the equity chart, one market with a good profit factor, that will make you money. But Im simply offering suggestion you may want to consider more than one to smooth out that curve a bit. Make those drawdowns a little smaller. The smaller drawdowns also allow you to add a little more risk because part of the — part of the issues with risk management is, particularly with day traders is that they dont want to blow up the account. They dont want to risk so much that theres a chance that two or three days in a row, youre wiped out. So again to answer your question, the principles apply to all trading styles, I recommend you trade the style that best fits your, you know, your life.

Brian Short: Thanks Bob for that. Another question from Wooter I think, and Im going to answer this Bob. Hes asking a question here, any chance we could get the SST program for ThinkOrSwim. Well, we will definitely give it a shot. Im going to tell you that our most recent endeavor to get Keltner Bells program on ThinkOrSwim is really — it hit a roadblock. And the issue there is the back office programming language that ThinkOrSwim has is hugely limited. Some other things were doing behind the scenes, I know you dont care as an end user but there is a lot of stuff going on behind the scenes to run these calculations and what we found, we had an expert in ThinkScript who is just totally stumped on how to accomplish some of the calculations we need to do, and it has to do with the Ray Processing. I dont want to bore with that. Basically ThinkOrSwim cannot handle a Rays and thats a key thing you need when youre trying to set up these indicators and do the calculations it need to do. So, well give it a shot. Im not going to guarantee that well be able to get it accomplished.

Bob Malinowski: Yeah, let me add something to that, Brian. Let me just add something that TradeStation was developed as a charting tool, a platform for the charting. Thats how — thats — its back and it was developed that way. It got into brokers and trades after that. ThinkOrSwim came from an options market developed with Stanford. They started out as separate tools. I personally think you need to treat your trading as a business, consider TradeStation as a premier charting tool, it takes a full ends of the charting tool and placing trade on TradeStation. I do that with my options trade. TradeStation — Im sorry, ThinkOrSwim — ThinkOrSwim is a great options platform that provides lots of tools for trading options and ThinkOr — Im sorry, TradeStation is a great charting platform and so, you know, again, consider your business tools get to include, you know, more than one.

Brian Short: Yeah, more in making a statement in regard to ThinkOrSwim saying that theyve been having a lot of charting problems since their acquisition by Ameritrade so I think that same thing.

Bob Malinowski: Yeah. Ive had a few issues with them since the acquisition that I never experienced before. But theyre still great C-tool.

Brian Short: Yeah, its a great tool. Its an awesome tool for trading options. Frank is asking a question here. Im going to shout it out here to you, Bob. What is the main commodity market for a dollar, e.g. crude oil or gold, are all of these parallel or correlated to each other or the opposite? Is the trend movement for all these markets the same?

Bob Malinowski: Okay. Ill just put it something like this chart here. Yeah, basically, I mean, this is something that you kind of notice. Most of these markets are not so correlated that its going to make a lot of difference to you. Believe it or not, even an 80 percent correlation like this chart shows here which shows, you know, these two vehicles trading, you know, yeah, ones fairly correlating with the other, it will still create quite a remarkable smoothing in your curve, because theres always new ones that take place even though theyre correlated and you know, even as high as 80 percent, you can still get smoothed because it would have to be 100 percent correlated of course to make no difference at all and any difference at all, any — any non-correlation at all will aid in the smoothing to a greater extent than even I thought when I first started investigating it. Thats why those charts where I showed the combining of two markets and then combining three, we did notice a big difference. I mean, there was a difference, it was smoother but its amazing, you know, just a couple of markets even loosely correlated can provide great smoothing.

So to answer your question, these correlations are like gold, you know, gold goes up when, you know, you name, you know, interest rates go up, gold goes down or if the stock rate goes up, gold does, so oil does. You could stop all the time. The problem is those relationship kind of changed over time too. We go through a different periods where gold seems to be a couple more to, you know, the dollar. And then they kind of breaks away. Particularly these days with so many issues going on in the world, you know, we never thought the European markets affect US markets to the degree of it doing now. So my answer would be take a look at the charts yourself. Thats a really good way to do it. Bring up a chart. If you couldve trade gold and youre going to trade oil or an index future, bring a couple of them up, bring them up in your training platform and just look at them and see if it looks something like this, whether it loses a couple or, you know, doesnt it look more like this where theres hardly any correlation at all. But believe it or not even something loosely couple like this can add diversity to your trading and certainly anything thats 60 percent or less, youre good to go.

Brian Short: Okay, Ive got one last one question here and well let me just put this out there, were going to start to wrap things up. If we missed your question for some reason, go ahead and put it into the text well take a few more minutes here and get those all answered up. And this question comes from a long time NetPicks customer Levi. Hes asking, Can one mix stock options with trading indices and have that be considered correlated?

Bob Malinowski: Stock options — I mean, it depends on the stock option youre trading. I mean you can pick maybe a trading AAPL stock options and the NASDAQ future. Well obviously AAPL, on the NASDAQ and there is a correlation because if the NASDAQ goes up a lot, then you kind of expect AAPL to go with it and vice versa. Again theres that kind of 80 percent that, you know, stocks tend to move with, you know, with their corresponding market. But I would consider an index and a particular of stock, especially if the stock is on the index — yes, it will be correlated. But even that amount of diversification will help smooth out your curve. Ill be careful though about if your stock trader just doing a bunch of high flying NASDAQ stocks on the road unless youre day trading them in an uncoupled way, maybe youre trading one for an hour then another one for an hour because these correlations are — theres hardly any correlation between trading times with trading the first hour one stock and the second hour another stock, and if youre day trading, that correlation is hardly existent. Unless theres a strong trend for the day or a strong trend, you know, for that morning session, generally speaking when youre trading different periods of time, the correlation is going to be much lower than if you trade them at the exact same time. So if youre going to do that, well trade them different times.

Brian Short: And we have one final question from Assim. Hes asking do we have a list of the FX currency pairs that are related or not? And I think I can answer that Bob. Basically it refer to the — that correlation table that Bob had opened in his presentation. And thats going to show you whats correlated and whats not. The closer, as Bob said, the closer you are to 100 percent, the more closely correlated the currency pairs are.

Bob Malinowski: Right. Right. And again, this is a 5-minute correlation here that this particular website shows correlation by day and by hour, by week, and its very interesting when you look at how some pairs are highly correlated, you know, on a day or a week but when you look at on a 5-minute correlation, theyre not correlated. So its — its kind of interesting. I think part of that may also be due to the fact that lets say the Asian currencies are traded heavily — more heavily during the Asian session than say the European or the U.S. dollar and the U.S. session. So you may have again, uncoupling because of the different sessions. So again, when youre looking at Forex pairs, look at the time frame youre going to be trading and look — just bring up some charts. This is — this is just a, you know an example of some of the tools available on the net but basically, look at your particular environment that youre trading. I trade these hours of the day, okay. Let me bring up some charts and just look at them. Lets compare a couple pairs each of the day you know, say for 10 or 20 days or so that I trade during comparisons, just ballpark, see what — how correlated the pairs look. If they — if they dont look very correlated, then youve got a good chance that, you know, the decoupling will really help smooth out your trading equity curve.

Brian Short: And we do have one final question, I know I said that before but this will be the last question. This is from Anna and shes asking lastly, What is the function of correlation, the chart that you have up right now shows a 5-minute correlation but this would be changing all of the time and shes got another question or was just asking will this be changing all, you know, every five minutes.

Bob Malinowski: Yes, you know thats a good question and Ive gone to this site a few times and I know it hasnt really changed much in the time Id looked at it. So its my sense that this is an average of how this parallels are correlated over a 5-minute period but Im not — Im not 100 percent sure. I would visit the site and see how and if this number do change over time. Im not really much of a Forex trader myself so I dont spend a lot of time looking at Forex correlation. So this is something you may want to just take a look at yourself.

Brian Short: Well again let me thank everyone for being in our presentation today. I hope it was beneficial to you. Let me say a special thanks to Bob, sorry I have a cold, Bob for doing the presentation today. It was very informative and again, I want to remind you that we have a presentation coming up on November 20th from coach TJ. Itll be on 0:53:31 testing and I put the link into the chat there for you to click on and get signed up. Make sure you dont miss that. Im sure its going to be a very good session as todays was.

So again, thank you Bob. Thanks everyone.

The Long Condor Spread – A Highly Profitable Range Trading Strategy

Posted on May 27, 2019 by blogger

They come up with some interesting names when it comes to option trading strategies. The Long Condor is a setup that is attractive because, although you pay a bit more in brokerage, the risk to reward potential can be quite outstanding. You might say the long condor is a cousin to its more popular Iron Condor, the difference being that whereas the Iron Condor is a combination of call and put options, the Long Condor involves only calls or only puts, as the case may be.

How to set up a long condor

The long condor is a combination of 4 option contracts, all the same type (calls or puts) and expiry date, but with a spread of different strike prices encompassing a range.

The idea is that, of the four strike prices, the two middle ones are ‘sold’ positions, while the two outer ones are bought positions. The formation therefore has a ‘body’ (sold positions) and ‘wings’ – like a bird. Because the sold positions cover two separate strike prices, the body is larger, so a condor, being a large prehistoric bird, seems to have been adapted for the description. It was a bird of prey and in this case, the ‘prey’ is profit.

The best time to enter a long condor option trading strategy is when you believe that the underlying stock is due for a reversal, but not a large reverse. It is designed to be a range trading strategy, so you only want the stock to retrace back within the parameters of your four strike prices. You would structure your trade around the current market price of the share.

Let’s say the current price of XYZ is around $87 and you believe that $90 is a strong resistance level. This is what you could do.

Buy 1 ‘deep in the money’ call option at $75 strike price
Sell 1 ‘in the money’ call option at $80 strike price
Sell 1 ‘at the money’ call option at $85 strike price
Buy 1 ‘out of the money’ call option at $90 strike price

If you were doing the long condor with put options, it would work in reverse. You would want the stock price to be around $77 and believe that $75 is a strong support level.

The whole setup should cost you around $1 multiplied by the number of shares per contract. If the share price at expiry date is between $76 and $89 you will make some profit. The maximum profit would be achieved if it expires between the two ‘sold’ positions, namely $80 and $85. You are relying on the underlying stock to retrace back to within this latter range by expiry date.

The principal idea behind a long condor is to take advantage of option time decay. It is a longer term strategy so you are looking for options with an expiry period of at least 90 days. The major portion of realized profit occurs during the last 30 days, when time decay accelerates exponentially. The 90 day period will give you ample opportunity to assess future direction of the stock and the optimal time to close out the position.

Profit & Risk Potential

The beauty of this strategy is that if it carries to expiry date, it usually realizes and excellent return on risk. In the above case, for every $1 invested you should receive up to a maximum $4 in profit at expiry. That’s up to a 400 percent return. Your maximum risk is your initial debit, which in the case of our example is $1.

This being the case, if you manage your capital well, you can have multiple positions open as you see opportunities arise. It also means that, if taken to expiry and maximum profit achieved, you only need one in four trades to be successful in order to break even.

If the stock price breaks through the upper strike price in the case of calls, or lower when puts are involved, you will be at risk of having the shares assigned to you as you draw closer to expiry date. At this stage, you would need to exit at least the ‘sold’ positions and possibly the whole setup. If you believe the stock will continue trending away from this breached resistance or support level, you may wish to hold your bought positions to realize more profit. An observation of longer term peaks and troughs will help you here.

Best chart setups for the strategy

The best chart patterns for this strategy are channels. This is where you can draw a line over the peaks (resistance) and another parallel line under the troughs (support) and observe a sideways movement. It could have a slight gradient up or down, but the support and resistance levels must be clear. If the stock has just retraced from the support or resistance levels, you have the ideal spot to enter the trade.

Channels are essentially a range within which the stock is likely to continue trading. Other support and resistance areas on a chart could be noted, but you would need to feel sure that the impending reversal you expect will not result in a large move.

Final Points to Consider

When looking for long condor opportunities, you want to ensure that the credit premium you receive on the ‘sold’ positions will be of sufficient size to make the overall cost of the setup very cheap in comparison to the maximum potential reward. You need this in order to cover the extra brokerage you will incur upon entering and exiting the trade.

For a range trading strategy, the long condor is a very attractive one, due to its high profit potential. You don’t need to limit yourself to the maximum profit potential at expiry. You may be happy to just let some time pass and when the stock returns to an opportune place, take what would still be an excellent profit earlier.

Entities In The Trading System In Indian Stock Markets

Posted on May 23, 2019 by blogger

There are four entities in the trading system. Trading members, clearing members, professional
clearing members and participants.

1. Trading members: Trading members are members of NSE. They can trade either on their own
account or on behalf of their clients including participants. The exchange assigns a Trading member
ID to each trading member. Each trading member can have more than one user. The number of
users allowed for each trading member is notifi ed by the exchange from time to time. Each user
of a trading member must be registered with the exchange and is assigned an unique user ID. The
unique trading member ID functions as a reference for all orders/trades of different users. This ID is
common for all users of a particular trading member. It is the responsibility of the trading member
to maintain adequate control over persons having access to the fi rms User IDs.

2. Clearing members: Clearing members are members of NSCCL. They carry out risk management
activities and confi rmation/inquiry of trades through the trading system.

3. Professional clearing members: A professional clearing members is a clearing member who is not
a trading member. Typically, banks and custodians become professional clearing members and clear and settle for their trading members.

4. Participants: A participant is a client of trading members like financial institutions. These clients
may trade through multiple trading members but settle through a single clearing member

The Importance Of Binary Options Trading

Posted on May 20, 2019 by blogger

The stock exchange can be a pretty dangerous place, financially, but with potentially huge gains, also financially. An easy way to start is using binary options trading because binary options trading is very easy to use! Binary options trading is safe too! The concept involves buying into ‘stocks’ of a company, which means that you by some shares (You can buy shares through binary options trading!), which in turn means that you own a percentage of the company and are entitled to a certain percentage of the gains of the aforementioned company (You will know it all when using binary options trading!). However, this can be a risky business as using binary options trading there are no risks!
Binary options trading is riskless! If you buy into certain companies and they flounder, then you lose everything that you have invested into the company. The opposite may be said too (Dont worry if you use binary options trading you will have 0 risks!) Binary options trading is that safe! What happens if the company goes into debt, and has no capital left to pay it (You will not have to worry about this if you use binary options trading)? Perhaps, as an owner of the company, you will be asked to help in paying these debts so the company can get back onto its feet. (You will never go through this is you use binary options trading!)
Investing your money is not risky if you use binary options trading. Some people are interested in beginning their own stock portfolio (Use binary options trading!), or trading stocks because they’ve heard of how much money you can make through this practice (Binary options trading will help you make $). But at the same time be aware of the potential loss. However, in 2008 a different type of exchange was created, and this exchange is called the binary options trading. In binary options trading, the binary options trading investor is offered a much simpler way of investing their hard earned money in a yes or no environment. Unlike other ways binary options trading is easy whereas other ways are more complex. Binary options trading has only 2 possible outcomes: yes or no.
Yes or no? you may ask (never lose money with binary options trading!). Well, yes! You see binary options trading is an important new facet of the stock exchange in that it offers potential investors a simplified system, dictating that potential investors no longer need to be learned and/or experienced in the field of finances. Binary options trading works like this: you find something that you want to invest in, and then find a broker that will allow you to invest in this area of the exchange. Then you either make a call or a put. If the stock or bond or whatever you invest in follows your prediction with binary options trading, then you make money on it. So, use binary options trading and start to make money.

How To Install Expert Advisor Onto Mt4 Auto Forex Trading

Posted on May 17, 2019 by blogger

MT4 is a standalone installation trading platform for individual Forex trader. Anyone can open a trading account with the Forex broker, download the trading program and install onto the PC. Setup and configure the broker server and login to your trading account to begin trading. One of the key features of this trading platform is programming capabilities, beside able to do charting, store historical price data and execute trades.

Expert Advisor

The core programming language is MQL4 or Metaquotes language 4 is a C program look a like programming language. Its comes with program function structure, variable declaration, operands, conditional checks, calling of technical indicator, time date function, math operations and other features. All files end with MQL format and are editable using the editor that comes with the trading platform. These are commonly call expert advisor and are used to run on MT4 trading account.

Create EA

Before you start, you have to code your trading strategy into programming codes MQL and compile with no error. Or you can purchase third party codes and use it to run on your trading account. You need to decide the time frame and open the currency chart of your choice after you login to your Forex trading account.

How to load EA

First you have to copy the MQL file (Expert Advisor) into your MT4 program folder experts. Then run MT4 and it will automatically compiled the expert advisor and it will appear in your navigator windows under the expert advisor directory. Simply select the desire expert advisor and move over to your currency chart. (Click and drag). You will see the name of the expert advisor at the top right hand corner of your currency chart. And look out for a smiling face on the right. If you see a cross then you did not enable EA trading.

Enable Expert Advisor

MT4 comes with an option to disable or enable the expert advisor trading on the top middle panel. Click to disable or enable it. You may have to set some parameters at the tool tab into option menu and go to Expert Advisor tab. You will see a list of tick box to select. In more cases, tick Enable Expect Advisor, tick Allow live trading, tick Allow DLL imports and tick Allow external experts imports. And leave the box empty for Disable experts when account changed, empty for Disable experts when profile change, empty for Ask manual confirmation and empty for Confirm DLL function calls. With the above set up, you should see a smiling face at the top right corner of your currency chart. You call load as many EA you want. My recommendation is limited 8.

Changes to program

If you need to change the expert advisor due to bug or program update, simply click on the name of the expert advisor, choose modify and it will automatically open the metaeditor for you to make changes. Once all changes done, simply compiled the program and it will automatically update the copies that is attached to run on your currency chart.

Source: http://www.bestforexranking.com