Tutorials

Well, maybe not always, but it does work most of the time. I’m referring to the rABC, or reverse ABC, trade. We’ve been looking at these set-ups in various time frames, discovering that they produce win so consistently that we needn’t pay obsessive attention to the 1-to-3 risk:reward relationship that has been a mainstay of the Hidden Pivot Method. In this lesson, we focused on scalping rather than swing trading. If your execution skills are up to snuff, you can grind out $150 winners all day long with the rABC. Incidentally, the Boeing short initiated toward the end of the hour went on to hit its ‘D’ target, producing a theoretical profit of as much as $400 when covered 54 minutes later.

The so-called rABC trade shows excellent potential to turn a profit on otherwise dull days. This particular day was as dull as they come, with stocks in a dirge as the trading world’s lunatic fringe awaited an announcement from the Fed. Even so, there was enough price movement in the E-Mini S&Ps and some FAANGs that there was plenty to do. If this kind of trading seems too frenetic, keep in mind that you can cash out $50-$400 winners all day long provided you’re quick enough to get in and out of the many set-ups that materialize. Moreover, the same tactics that apply in lesser time frames can easily be applied to bigger patterns that don’t require lightning-fast execution skills.

We had a good read on a market that opened strong but which was weakening and possibly reversing at mid-session. There were several trades with the potential to trigger later in the day/week, but you should pay particular attention to one that cropped up in VXX near the end of the hour. It can be traded like any other vehicle and became a nearly perfect ‘mechanical’ buy here. There is additional material on shorting the currencies using ‘counterintuitive’ set-ups. They are in strong rallies and feeling too risky to short mechanically.

This lessons offers a smorgasbord of mechanical and counterintuitive set-ups, none of which triggered during our hour together. There were opportunities for possible trades at a later time, however, and it will therefore be worth your while to check them out at your leisure. Skip to the end of the Q&A period that followed the session for a finely nuanced discussion of a mechanical trade that was borderline. For your information, the trade worked out although I had decided against doing it. The takeaway is important, and it is this: Don’t overthink trades that meet our criteria.

Trades generally work better if they are initiated before the trend becomes too obvious. This is also true for trades entered in the first 15-45 minutes of the session. Many traders are sitting on their thumbs in the early going, waiting for a flash of inspiration. What they often get instead is an opening range that, far from inspiring, becomes the basis for second-guessing each other for the remainder of the day. During this class, the emphasis was on using Hidden Pivot entry tactics not long after the opening bell. This was an unusually good day to have attempted such trades, as you shall see. There are also some closely reasoned ‘mechanical’ and ‘counterintuitive’ set-ups for your consideration.

How far can we budge from our goal of never risking more than $1 to make $3? This relationship has always been held as crucial to Hidden Pivot trading, but suppose we are ‘certain’ of a trend reversal at D and want to fade the target even if this costs us some pain? That is what I’m suggesting here, so you’ll want to pay close attention to the first 15 or so minutes of the lesson. We also stalked mechanical trades with an eye toward doing many more of them on charts of smaller degree.

There was something for everyone in this lesson. First we looked at ‘mechanical’ set-ups in various futures contracts. Most had not triggered but showed promise looking out over the next fewl days. We also attempted to force a trade in the E-Mini S&Ps, which were uncooperative – which is to say, eventless. Finally, a Q&A session delved into some subscribers faves that may be of interest to all.

The mechanical trade has become our work horse because it’s easy to execute and so often profitable. In this lesson we extended its usefulness by using mechanical set-ups in charts of smaller degree instead of the more labor-intensive ‘camouflage’ tactic. An advantage of this is that all entries are accomplished with limit bids and offers rather than with stop-market and stop-limit triggers. The point is illustrated via a successful mechanical trade we did in the E-Mini S&Ps.

Our weekly hunt for real-time trades bagged no elk or bear, just a couple of squirrels. The goal was to affirm the idea that no Pivoteer ever went broke trading against the trend at well-defined D targets. We attempted this in NFLX and TSLA, only to discover that even if the law of averages favors us, there will always be outliers that lose money. Still, there’s some good material here relating to camouflage set-ups, a tactic we haven’t used much in the last several lessons. These trades are work-intensive, but on days like this one, we were able to combine them with ‘mechanical’ triggers to yield action on a dull day.