Tutorials

Toward the end of this session, we got immersed in an option trade, trying to leverage a rally target in DIA. Rather than positioning ourselves to buy puts when DIA reached our objective, we projected a ‘fair’ option price by using an ABC pattern for the option itself – in this case a slightly out-of-the-money weekly put with just a day left. The thought process is a study in Hidden Pivot logic – as detailed a study as you will find in the Rick’s Picks recorded archive of tradable ideas.

We spent the hour scavenging for crumbs on a day when stocks were in a weak short-squeeze, continuing a trend begun a week earlier. The obvious play, at least in the relentlessly buoyant E-Mini S&Ps, was a ‘mechanical’ buy on any pullback to the green line. To further reduce entry risk, we considered mainly ‘counterintuitive’ set-ups. The result was not pretty, even if the trade in question went on to produce a small profit for those with infinite patience.

It was a slow day, but we still managed to ferret out two winning trades in the space of an hour. Pay close attention to the closely reasoned ‘camouflage’ entry in the E-Mini S&&Ps, since it did not go our way initially. We stayed on board anyway simply because that is what disciplined trading demands of us. The successful trader is one who understands that the inevitable loss now and then is integral to the process of winning. As such, with the percentages working for us over time, we should never have to second-guess ourselves. There is also a beautiful ‘counterintuitve’ opportunity on display here, although we were too late to jump on it. Just a single tick’s difference between points A and C turned a diabolically tricky entry challenge into an easy winner.

Anyone who has attended more than a few tutorial sessions will find in this lesson one of the most closely reasoned trades on record. We stalked April Gold with the intention of forcing an entry come hell or high water. In this case, the result exceeded our expectations. Most of the action took place on the one-minute chart, where there will nearly always be opportunities to turn a quick, small profit. What is most satisfying about these trades is that there is little stress associated with them. We risked just three ticks ($30) getting aboard, and although this sum was briefly in jeopardy – literally for the blink of any eye – the payoff made it worth the 60-second wait for results. The trade also gave us a chance to stay long for a possible ride much higher with no skin in the game. That’s what ‘camouflage’ trading is all about.

We looked at several ‘mechanical’ set-ups during this session, including one in T-Bond futures that was based on a bullish event that occurred two weeks ago on the weekly chart. There were also some day-trade possibilities in gold and the E-Mini S&Ps, with a trigger in the latter that came from the 1-minute bars. What happens when a ‘perfect’ set-up fails to produce a profit? Check out this recording for the answer.

If you can make it in New York New York, as the song goes, you can make it anywhere. During this session, we spent time in the Times Square of trading environments – i.e., the six-minute bar chart of Priceline, a $1300 stock. The leaps, feints, flutters, and wild oscillations of this giant-killer make it an ideal candidate to test our Hidden Pivot chops, particularly the camouflage technique. If you can make money day-trading PCLN, then switching to, say, NFLX or even Google will seem like a walk in the park. For the record, the trade set-up that engaged us toward the end of the session – a counterintuitive entry on 400 shares with $240 of initial risk -- went on to produce a profit of as much as $1600 within 45 minutes.

With the broad averages falling hard, we sought to minimize the risk of trade entries both with and against the trend. Once again, the emphasis fell naturally on the two tactics we use that are best suited to that goal: ‘camouflage’ and ‘counterintuitive’ entries. Please note that the running time of this recording was shortened to 36 minutes due to a Tradestation crash.

Once again, the emphasis is on ‘counterintuitive’ and ‘mechanical’ trade setups. We looked at the former in conjunction with a gold tout that had gone out the previous night. Although the opportunity looked enticing and went on to produce a profit, it was not exactly easy money. Profitability aside, the trade yielded a trove of analytical information that was to keep us on the right side of a recalcitrant April futures contract for the rest of the day (and night).

Toward the end of this session we were determined to force a short in the E-Mini S&Ps. The main enticement for this was our strong gut feeling that the stock market's next major move would be down. The futures were trendless at the time, having failed all morning to reach minor Hidden Pivot targets going in either direction. Watch closely to see how we crafted the trade using a rally target that fell between two Hidden Pivots. Just after the session ended, the trade missed triggering by a single tick, a step behind a 26-point decline. Also included in this recording is a closely reasoned 'counterintuitive' trade at the tail end, as well as a cogent explanation of why an impulse leg with a deep correction in the middle of it could be considered uncorrected for trading purposes.