The Strategic Approach (SA)

September 15th, 2012 | Posted by Ivan K in LTM | RBT - (0 Comments)

A road less traveled!

In this day of instant gratification few step back to smell the flowers let alone to look at the bigger picture.  This weekend I shall share with you part of what I do and how I do it in relation to being involved with the markets.

We all are speculators in the markets, either actively or passively.  Anyone saving money is also speculating on the future worth or buying power of that money. Everyone sees that trading the markets, whether stock, futures or currency markets is speculation.  Putting money into your personal retirement fund is also speculation. Buying government bonds people are beginning to see is not without risk either.

Going to uni to get a degree is also speculation.  Speculation is hard to avoid.  The lure of speculation is increased through stories of what can be and perhaps has been made.  The lure is also increased by the incredible leverage that is available in all the markets.

Finally, technology has also added to the bait.  Pc's are cheap, net connections are also pretty fast and fairly inexpensive globally and even here in Vanuatu. Online trading means that virtually anyone can play.

I forgot to mention another aspect that entices people into speculation.  The thrill of the chase and the instant gratification of getting it right. Whilst some view speculation as a business very few truly approach it as a business.

Speculation comes from the Latin word 'speculatio' meaning 'observation' ... food for thought!

Right up my alley of looking and looking for opportunities to apply the setups.  No forecasting, no guessing ... looking for opportunities that fit my requirements.

And I go looking in the strangest of places.  I look at timeframes of charts that are not commonly used to arrive at my smorgasbord of possibilities. This has the real advantage that I am seeing what most do not.

Back in the 1980's I developed a concept I dubbed Hybrid Fractal Charts (HFC's).  Rather than being constrained by regular views of daily, weekly etc HFC's offer me the ability to use 3 day charts or 7 month charts. At one stage I plotted 2.5 day charts of the Australia Stock Index futures.  I am limited only by my imagination and to a lesser extent the software.

The essential idea is to find one or more of the 12 setups across a multitude of timeframes.  Then the vetting process takes over. More on that another time.

A 12 week HFC view of USA stocks through the eyes of the Dow Jones and S&P 500 ... narrow gauge vs broader gauge of the USA market.  The bulk of the run up from 2008 is over so no interest there at all.  Until either new highs above 2007 are made (probably will) or a movement down from these levels.  Translation is no interest and no Strategic Approach opportunity.

A point to flag is should the new high eventuate, that will complete a 3MT sell setup.  This would then definitely be of interest.

The HFC approach can be used on any market and any timeframe.  The next 2 charts feature the EurUsd pair and the Dollar Index (DX). The DX measures the US dollar against a basket of  currencies. This time I am using 3 week HFC to illustrate the concept.  In other words, one bar represents 3 weeks of price action. One major advantage of using 'unusual' timeframes is that your entry and exit levels will probably not coincide with those of a lot of other traders.

This means that slippage will be less as you are not competing with a herd of other traders.  Additionally, it becomes harder for those inclined to go stop hunting.  I am sure some of you have experienced the market just bliping to your stop order, take you out and then resume in the same direction as you had. Hmmm.

Clearly you can see that the DX market moves in the opposite direction to the EurUsd pair.  It is logical as the DX measures the value of the US Dollar against a basket of other currencies.  On the other hand, the EurUsd measures the value of the Euro as measured by the US Dollar.  These two markets are nice candidates for the 3D setups.

The EurUsd gave a GO buy 3 bars ago and is still long. There  is a PHH on the last bar. The current 3 week bar does not present a setup to either go long or to go short.

Unsurprisingly the same comments (in the inverse) apply to the DX chart above!

The Gold market has been steadily marching upwards since the RTV and QIP buy setups appeared 3 bars ago.  That is 9 weeks ago. It has moved by about 2.5 R since the long was triggered.

Gold is clearly the leader in this movement up as evidenced by its proximity to the last SH in the early part of this year.

The rally in Silver was heralded by a FO buy that was then followed by and reinforced by a HRT buy and the DIP.  The rate of ascent in both Gold and Silver are saying that there is more to come on the topside.  It is about now that the headlines around the world will begin to feature Gold more, accompanied by calls for the price of the yellow metals to reach the stars.  Well perhaps just the moon to start.

I do need to stress that the Gravy Train has left the station and chasing a train on along the tracks is never a wise course of action.

The two charts below illustrate my concept of 3D setups to perfection. Firstly Crude Oil and Heating Oil are two excellent candidates for the 3D approach as they are clearly related markets.  They move in unison as if they are connected at the hip.  Until they do not!

You would be hard pressed to find a better example of the concept of the 3D group of setups. Five bars ago, after both markets had been steadily moving down in step, a S3D buy concept appeared. It is a merely a concept as it does not adhere to the exact requirements of a S3D buy setup.  Notwithstanding that, there was still a clear message provided by the S3D approach.

This was then seconded by providing a textbook C3D buy setup. This time the exact requirements of the setup were met. Neither market has looked back since.

The current movement up appears to be running out of steam as evidenced by the non-expansion of range in both markets. There is no sell setup to investigate at this point.

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This little walk through a few markets has shown you that the setups can be found on any timeframe chart and on any market. It has also illustrated one danger of trading multiple markets.  Instead of lowering your risk by diversifying across markets you have actually increased your risk as the markets are very correlated.  A trap for many a player.

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L.I.V.E.T.M. students have heard me explain my philosophy towards being a speculator and my role in that context.

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My role is to milk the cow (the market) sufficiently for my needs and goals without killing the cow.

A lot like the role of a dairy farmer!

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Dat's it from me for now ... until the next regular LSR update in a few hours.

September 14 – Friday 11 pm RO (early again)

September 14th, 2012 | Posted by Ivan K in LTM | RBT - (0 Comments)

Greetings one and all!

Here we are on Friday night in down town, out of town Port Vila, Vanuatu, South Pacific.  Yes I know I am early for this one.  Given the outside the bell curve movement last night resulting in some nice R's I want to ensure that the campaigns are managed so that not too much is given back to the market.

Crude Oil is the only market to get on with the job with any gusto.  There is currently about 3R on the table so time to lock that one up and say merci.  (For what it is worth, French is one of the three official languages in Vanuatu.)

The low made so far is at the 1R level, hence the PRSL can go there.
As 2 R is very close to current prices we can give this market some room.

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Locking up 3R is a neat way to end the week!
Naturally should the market rally and offer 4R who are we to argue.

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Both Gold and Silver have broken above the previous High
which is also yesterday's High.  AA territory.
Another 3R can be locked up.

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There is a warning of a potential top in the making courtesy of a
3D concept.  Additionally, the supposed 'psychological' level
of 100 bux is on the horizon (as if that matters).

The only thing to do is to consult your Campaign Management rules,
place the appropriate SL and enjoy Friday evening.

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Please click here to read my article on OP's

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Only you can judge if the LSR concept is for you!

September 14 – Friday 11 am RO (early)

September 14th, 2012 | Posted by Ivan K in LTM | RBT - (0 Comments)

All the charts are 12 hr bars, allowing heaps of time for life whilst maintaining the ability to compound more speedily than using daily charts.  This particular application of my  L.I.V.E.T.M.  approach I have labelled the LSR - LifeStyle Ruleset, for pretty obvious reasons in my mind.

Just twice a day to do some 'work'!

PS.  Even though I put this post together about 2 hours ago, there has been no material change in the markets covered.  Hence no need to amend any of the comments regarding the various setups or the CM of the positions.

In fact, the markets are currently putting a late spurt to the topside which enables the PRSL's to lock-up more profit for you on the campaigns.

This is NOT the time to become bullish!
The train left the station ages ago.
A full 500 pips ago!

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This is NOT the time to become bullish!

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As above!

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The move up is very scrappy ... translation: The FM's up are very short,
with the longest run being just 3 bars!

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There is no Special Opportunity for today.

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Great lesson today in 'All-One-Market'itis' as well as on OP's.

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In terms of size of the last 12 hr bar in all the markets, they are all way outside the bell curve of 'normal'.  This dramatically increases the probabilities of the range of the next 12 hours being smaller than this one.  Another way of viewing this is that the volatility will be less.

For those of you who trade in options, the decrease in volatility will have a decidedly negative affect on the value (premium) of both Call and Put options.  Taking a partial profit on long Call options would not be an un-wise thing to do!


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