Tutorials

Bond prices were diving when the  tutorial session began, ostensibly because of a fraudulent report that GDP had grown by 4% in the last quarter.  The market’s unwarranted reaction to this disinformation afforded us an unusual opportunity to buy call spreads in TLT at fire sale prices.  This lesson contains some of the most detailed instructions I’ve ever presented for “working” an options order.  As you will discover, the task does NOT require a sophisticated understanding of puts and calls -- only a focus on bids and offers for a couple of TLT calls tied to a calendar spread that deserved to be bought extremely aggressively.

Are the broad averages setting up for one last hurrah? Skip to the second half of this recording for a technical assessment, since that’s where the lesson turned interesting. The material includes not only rally projections for several popular trading vehicles, but detailed instructions on how to use put spreads to make low-cost, bearish bets if and when the upside targets are achieved.

Sometimes we forget how very easy it can be to make the $400 a day needed to earn $100,000 a year trading in our spare time. What does it take? Not much for those who are willing to focus diligently on opportunities that typically occur in the first hour of the day. Skip to the end of this recording to see what I’m talking about. The short in TSLA was based on a set-up so perfect that it would have been unavoidable for any Hidden Pivot trader who was prepared to act. The trade would have produced a profit of between $2000-$4000 in a few hours with little or no stress. Check it out if you need to be reminded of what a great camouflage trade looks like.

Although I typically warn against “trying this yourself” when I put out option trades, there are some simple tricks that anyone can learn that can mitigate or prevent costly errors. In this lesson, we paused to look at the put-and-call grid in conjunction with a stock trade under consideration. How much should one pay for a certain option with the underlying stock at a given price? There are easier ways to answer this question than you might have imagined.

Many subtle things to appreciate in this week’s lesson, including a perfect, tradable low at 1940.00 in the E-Mini S&Ps and a very juicy shorting target we may get to use in in NFLX. I continue to pay particular attention to ‘contrary’ opportunities that go against the conventional rules of ABC trading: entry points that follow ‘sausage B’ highs or lows, and the most contrarian play of all: shorting at the long-entry signals of ABC patterns that are all too obvious. We also spent a little time on the 15-second bar chart in the E-Mini, discovering in the process that although this algo-driven vehicle has grown increasingly difficult to trade, it can still be beaten. A case in point is the 1940.00 target noted above. In this lesson, I elucidate a half-dozen reasons why we should have been willing to bet the farm on the target, albeit with a stop-loss as tight as three ticks.

We spent this session poring over the charts of numerous trading vehicles on a day when stocks were being driven hither and thither by Algorithms Gone Silly. There are no dramatic moments here and no notes of ebullience or despair, only one trader’s thought process fully revealed in an earnest search for a profitable opportunity.

Getting in and out of a $1200 stock can be tricky, especially if one expects to do so risking mere pennies per share. If you are skeptical that this is possible, watch how we succeeded in Priceline -- in real time. The very subtle camouflage entry signal that got us aboard went on to produce an $800 gain in just a few minutes. Because the action occurred toward the end of the session, you can skip the first 45 minutes of this recording if you want to cut to the chase.

We had two ‘live’ trades in play when this session began, both initiated against-the-trend at midpoint pivots. The first was in GDXJ, where we caught the low of a so-far $3 rally within a penny. The second was in June Crude Oil, which bottomed 8 cents below a 101.28 midpoint pivot where I’d suggested bottom-fishing the day before. In the latter, we discovered that even hunkering down on the one-minute chart would not have gotten us safely aboard via camouflage. Bottom line: In two heavily overtraded vehicles, the E-Mini S&Ps and Crude Oil, we should abandon our search for camouflage and initiate trades the ‘old-fashioned’ way – i.e., against the trend, at Hidden Pivots that inspire a high level of confidence.

Mounting evidence that algo traders are horning in on “our” highs and lows requires aggressive countermeasures. During this lesson we looked at some more trading tactics that do NOT require camouflage. Chief among them is the timed buy-stop, which allows us to test the water nearly risklessly when we aren’t entirely confident that a trade will work. Also on display here is a way to profitably exploit ABC patterns when they look likely to stop out early birds via a second point C. The workaround is a more aggressive and pro-active approach than we have considered before.