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Monday, July 2, 2018

Art Of Trading Member's Inspirational Story!

Hey fellow traders and readers! 

A few days ago,  i received this email from an Art Of Trading member who's been on board for about 5 months! 

This story was so powerful, so incredibly moving, so inspirational, that I just had to share it!

Enjoy! 


"My dear Stewie,

I just want you to know that as of today, I am officially “green” in all three accounts YTD (one trading account & 2 IRAs)! All 3 suffered horrendous losses over the past few years, including a company that went bankrupt & I lost 100% of my $250,000 long-term IRA investment. But that’s truly nothing, compared to the annual losses I racked up in all 3 accounts for the last 5 years while ALL off my closest loved ones (3 family and my 3 closest friends) passed away. Seriously! From January 2014 thru last December, it’s been pretty unbelievable that everyone who I had roots with--who actually know who I am--are all gone. I should have gone on a long vacation, but instead, I tried to trade my way thru it every day, by myself, and absolutely every trade I made became a loser. In a few years I lost everything--my loved ones, my financial security, my ability to dig my way out of a deep hole, and my confidence as a person and as a trader. ALL GONE! I was pretty much at my darkest place after the holidays when I wrote to you to inquire about your special AoT holiday offer...just out of curiosity.

Without my ever telling you my situation, you reached out and showed me with your generous AoT gift that you cared and you believed in me. I don’t know why you did! But I am thoroughly convinced that you were inspired by an angel to help me when and how I needed it the most. At first, all of the AoT trades I took got stopped out & somehow I missed getting into those that ended up being really big gainers. It also took me a while to understand your process, your trading tempo & pace, and that I needed to buy more than 100 shares at a time if I wanted to make any money! It really wasn’t until the end of May when I realized that you and the amazing AoT camaraderie had become quite medicinal and healing for my grieving soul. In addition to learning far more than I ever expected, I started joking around again, laughing again, feeling a part of something again and yesssssss! making money again!!!!! I am trying to take the kindness & encouragement you’ve given to me and pass it on to others. To pay it forward. You are truly one of a kind, Mr. Stewie! You are an old soul with a generous spirit, yet you have a youthful energy and a zest for life that is truly motivating and inspiring! Plus, you are so much fun to trade with every day. I adore your Pop Quizzes!

I owe you so much for your encouragement, teachings, trading skills, experience, time, patience and the genuine caring you have given to me. I fear I will never be able to repay you. How do I put a price tag on helping me to let go of my regret? Helping me to get grounded & disciplined & more self confident? These are PRICELESS GIFTS you have given to me. No words are big enough for me to describe how grateful I am to you…How full of loving gratitude I am…Overflowing, really.

I pray that you and your young family are all blessed with love, peace, good health and long lives. And I thank you for being a blessing to me.

Shannon V.” 

Saturday, June 16, 2018

How To Trade AOT Setups When Working Full Time!

Hey folks, 

Art Of Trading member, Zach @87Alwaysred , who some of you know from communicating with him every day in the @AOTtrades private twitter feed has BRILLIANTLY and most importantly generously/selflessly took time from his very busy work schedule to write this "guide" on how he trades the AOT setups! He asked me to share it with other AOT members who work other full-time jobs but still have that passion for trading and want to incorporate trading into their busy work schedule!

Zach, lays out HOW he does it, gives examples and gives you some good ideas and will surely inspire you! 

Enjoy!   




Hey Stew,

I've made up an easy to follow and easy to understand short "guide" on how to trade your setups if you work full time. I hope this can help a few people out!

As always, you effin ROCK stew! 


Zach


How you Could Trade AOT Setups if you Work Full Time

“YOU DO NOT NEED TO BE IN THE MARKET EVERYDAY TO MAKE IT IN THIS BUSINESS”

STEP #1: (Trading Plan) Identify and study all of the setups that are contained within the daily emails. From the list of setups identify the stocks and setups that you want to trade!
STEP #2: (Look at the Previous Day Low) Stew usually sets his stops just below the previous day low if the trigger is tight and, in some cases, (ZTO from today for example) The stop was set at the current days low.
STEP #3: (Get a Feel for the Name) Using the charts that stew provides in the daily emails look at the way the name has traded in the past. More importantly take note of the price action from the day previous. Ask yourself; How big was the previous days price swing? Am I comfortable holding full size on this name? How “tight” is the setup on this name? How far off is the “trigger” from the previous days range? These are things I look at when “planning my trades". 


"Daily Price Swing from high to low" 




"Tight Setup"






STEP #4: (Managing Your Capital Responsibly) After Identifying the setups you feel comfortable with trading you must allocate the capital and set the risk you are willing to put forward in order to enter the trade. If you work full time entering names with a 4% - 5% downside risk isn’t a good idea. These names are better played if they are “managed”, meaning tiered buy ins and updated stops through out the day if necessary. The names you want to trade are names with 1.5% - 3% down side risk. The reason for trading names with lower downside risk is because you can allocate “normal size” to these trades and feel comfortable entering the position. If you want to trade names with higher volatility and don’t care for the management side of things only ever enter “half size”. If you enter “half size” on 4% - 5% downside risk names the “loss” will feel the same as a full size 1.5% - 3% risk name. Let’s use $10 000 as full size for example ($10K FULL with 1.5% - 3% downside risk is $150 - $300 loss) if you project that same idea over to a higher volatility name ($5K HALF with a 4% - 5% downside risk is $200 - $250 loss).










EXAMPLES OF SETUPS THAT ARE “EASY” TO TRADE



This TWTR setup above would be easy to trade for a few reasons.
Reason #1: The chart consolidation just under the breakout/entry point is pretty tight. 
The previous day's action was very narrow! 

Reason #2: Down side risk within the trade would be in the 1.5% - 3% loss range.





This AAPL setup above would be easy to trade for a few reasons.
Reason #1: The chart is tight. The previous days action was very narrow.
Reason #2: Down side risk within the trade would be in the 1.5% - 3% loss range.
Reason #3: APPL is a slow-moving stock. The name only gets volatile with news on the name or MAJOR MARKET UNCERTAINTY. The trade either works or it doesn’t. No managing.



In the following charts identify reasons why these setups are easy to trade? Can you find anything within these charts that I haven’t mentioned? If so share them with other members over at AOT!


















Monday, June 11, 2018

Use Smaller Time Frames to Unlock Hidden Patterns!

Hey folks !

I've been meaning to do a post of this kind for a while now.... 

One "trick" I often use when plotting charts for the overall market, i.e. SPY, QQQ, IWM etc 

I not only look at the DAILY or weekly charts to try and gauge what's going on with the "overall big picture" to hopefully try and spot PATTERNS, trade-able, actionable patterns like "CUP and HANDLE" patterns, "Head and Shoulder patterns", "Inverse Head and Shoulder" patterns, Falling Wedge patterns, Bull Flag patterns etc... 

But, most importantly, I also use SMALLER time frames such as 60 and 30 minute time frames to try and spot HIDDEN patterns that aren't visible by the "naked eye" when looking at the Daily or Weekly time frame charts!! Smaller time frame allows you to zoom down, just like a microscope and look at the "DNA"(genetic make-up) of the chart if you will !! If you know what i mean?! 


Take a look at the attached SPY chart below: AOT members who visit the 'Power Earnings Gap'(PEG) watchlist often probably recognize this chart! I've kept it and keep on there permanently! Even posted it on twitter a few  times.... 



So if you saw the above chart in the PEG watchlist, then chances are you probably saw this SPY chart attached below as well !! 

It's the SMALLER TIME chart of the SPY: the 30 minute time frame chart to be exact! 





Note, the CLEAR bottoming "Inverse HEAD and SHOULDER" bottoming pattern that emerged back in early April ! 

As a matter of fact, I was using this chart/ this exact bottoming pattern, that was only truly visible using the 30 minute charts to move out from 100% cash and start to play more LONGS at that time ..... notice how difficult it is to see that "Inverse HEAD and SHOULDER" bottoming pattern on the DAILY charts! Actually, the daily chart during the late march to early April time looked like a COMPLETE mess! 

But once you zoom down into the smaller time frames you've just uncovered a beauty of a bottoming pattern and boy oh boy, did it ever play out!

 ......Fast Forward to today.... 

Now, notice how recently the same 30 minute chart also uncovered a near PERFECT "Inverse Head and Shoulder" pattern once again, last week! 


I urge you all(every single trader) to add this KILLER weapon to your trading arsenal, folks! 

Use SMALLER time frames(15, 30, 60 minute charts) to unlock hidden patterns that aren't visible on the daily/weekly charts! Get that EDGE! 
"The edge", a thing that so many traders talk about and want is often found in the smaller time frames! 

This is a great way to spot and get into patterns ahead of the masses because you were shrewd enough to zoom down into the smaller time frames and do some "gum-shoe" detective work! 

Hope this helps!



Happy Trading! 





Join the ART OF TRADING community today! 



Monday, May 7, 2018

How To Trade an AOT Setup !

Hey folks!

As most readers of this trading blog know by now, I post many trading setups whether it be for 'Art Of Trading' members and/or also on the my @TraderStewie public twitter!

Trading setups I post come in various forms such as 'Falling Wedge' patterns, Bull Flags, Pennants, Bear Flags, Cup and Handles etc etc!

So today, I want to talk about HOW, WHY and WHEN we trade a breakout that "triggers" from one of the setups I shared. I'll show you how, when and why a setup triggers?
What's the call to action?

Let's take this SQ for example:

Posted numerous setups in SQ in the past but this recent 'Falling Wedge' setup in SQ was tweeted out on my @TraderStewie twitter feed on Friday and was also sent to Art Of Trading members on Friday as well....





SQ, was actually the 'AOT Top Pick' for Friday!! 




.......Fast forward to today, Monday May 7th 2018..... 


SQ triggered this morning about 5 minutes after the opening bell.... and here's HOW and WHY it triggered an entry and how it was traded with 'ART OF TRADING' members.... 


Below is the 5 minute chart to show you exactly WHY and HOW we took SQ long ....

Important things to know before taking an AOT setup: the stock in question cannot GAP UP over the trigger price, if it does gap up above the trigger price, I tell AOT members to "skip the trade temporarily" and wait for a new intra-day setup to emerge. This helps to avoid chasing gap ups at the open. The stock must open BELOW the trigger and move higher thru the 'Breakout Price' or 'Trigger Price' to trigger a "proper long" entry! 



Once the stock triggers a proper entry, the stop loss usually goes a few pennies BELOW the breakout day's lows(in some cases though, a stop loss can be wider and use a smaller position to compensate for market volatility, a stock's volatility, its specific liquidity etc)...



.... here's what the updated daily SQ chart looked like now..... 

Beautiful breakout today and we got into it at a great price while patiently waiting for the breakout! 




I hope this post was helpful!! 

Happy Trading!! 


Join the ART OF TRADING today!










Monday, February 26, 2018

From Contraction Comes Expansion


Art of Trading members and also long time twitter(@TraderStewie) followers have probably heard me say the words:  "From Contraction Comes Expansion"

..... well today, we're going to discuss in detail what this means exactly and how this simple concept can be so incredibly effective!!

So here we go!


Last Thursday evening as i was doing my NIGHTLY scans for Art Of Trading(AoT) members, WATT caught my attention as i was scanning my 'Power Earnings Gaps' watchlist.

Here's the original setup that caught my eyes and that's the exact setup that was sent to AoT members Thursday evening as a stock to watch the next day! And actually i liked this WATT setup so much, i actually made it the 'AoT Top Pick'!


...."From Contraction Comes Expansion" .... 

What does that mean? And why does this "simple" concept matter here for this WATT chart??

Well, let's analyze this WATT chart closely for a minute!

First of all, notice the HUGE, almost ridiculous 2 powerful spikes up(huge "volatility expansion") in late December 2017. Major news was announced for that company!

After such a big 2 day move, WATT needed to digest that huge move and it did that by pulling back quite a bit in Jan. 2018..... And come Feb. 2018, WATT went into a "volatility contraction" period as the price action on the intra-day ranges became smaller and smaller, contracting into smaller and smaller minuscule candles.... in essence, the stock became more "BORING"!!!

......Zzzzzzzzzzzzz.....

Perhaps it become "boring" to the untrained eye!!

Experienced traders know fully well that "From Contraction Comes Expansion!"


Especially note, the trading action in that WATT chart in the last 3 or 4 days in the above chart! It almost appeared as if WATT went into a "coma" like state....

Doesn't get more "BORING" than that!! Am I right?? 

Well, guess what, this's actually the exact time to PAY ATTENTION to that WATT chart and NOT SWITCH OFF!! 

Why? What is so interesting about that "Boring" ass chart, Stewie?!! 

Why on earth would you even make this stock the "AoT Top Pick" for that matter?? 

"Stewie has officially lost his damn mind!!"


It's time to pay attention because "FROM CONTRACTION COMES EXPANSION"! 

In other words, after the last few days' mini, sideways, smallish and "boring" price movement in WATT, this stock is about to wake up in a big way!

Keep in mind, after periods of mini, coiling and narrowing price action(aka, low volatility), stocks will often explode or surge in volatility!!

This trading concept is actually similar to that last Blog Post i made called:




**Keep in mind, WATT has over 30% short interest!** 

When a stock with over 30% short interest goes into "CONTRACTION" mode and is gearing up for "EXPANSION" mode.... get ready to see something awesome!!


Fast forward to Friday's opening bell !!


10 minutes after the opening bell on Friday morning, I sent out this tweet to AoT members....

WATT just triggered a long entry. Stop loss goes to just under today's opening lows($19.90)



WATT triggered a long entry once it broke over $20.60 , roughly 10 minutes after the open....

Look at that BEAUTY!! Not so "boring" , huh?!


As soon as WATT triggers that $20.60 entry, we immediately put a stop a few pennies under the day's lows(so in this WATT case, stop was $19.90) ... Target is $24.00


About an hour later, and after seeing WATT continue to steadily climb strongly higher, it was time to move stops up and protect some gains!!

So this tweet was sent to Art Of Trading members:

Can move stop loss to $21.00 now .... You'll be exiting this trade with a nice gain even if $21 gets tagged today!




For aggressive DAY TRADERS...


WATT offered a new entry intra-day as it formed a BULL FLAG pattern....

WATT starting to create a BULL FLAG intra-day






A few minutes later....WATT took out that intra-day BULL FLAG and never looked back!

Breaking out thru that "bull flag"... Stock looks very hyper and angry today!




Move WATT stop loss to $22.00 Locking in roughly +$1.40 or about +7% gain if stopped out



And for those of you who are still holding WATT(AOT Top Pick) for today...the stoploss has now been moved to $22.00 and as long as we don't stop out today I do intend to swing trade this one into next week! If you missed it, don't beat yourself up just be ready for the next one!



As you can see, WATT had a nice strong move the whole day from start to finish pretty much after 3 or 4 days of "CONTRACTION" exploded into an nice "EXPANSION" move higher which was good for a cool +12% move!

Entered WATT long at $20.60 and now have a raised stop loss at $22.00(target $24.00)


Finishing up this post on a Monday morning since we were swinging WATT ....

WATT, gapped up to open on Monday morning and ran up to $23.45 before fading back lower.....

WATT has stopped us out at $22.00! A very nice gain even if it couldn't get to $24.00



So we stopped out WATT for a cool +7% gain in only 2 days! 

Really wanted that "$24 target" to exit WATT but you gotta take what the market is willing to give you! You don't get to make the rules or tell the market what it should do. We take what she's willing to give by moving up the stop losses along the way and be grateful(humble enough to accept what she's willing to give at that moment)! 

Now, we focus on the next trade! 




As usual, my favorite part of all this is the feedback i get from 
Art of Trading members and also my twitter followers!!




Replying to 
Thanks. Glad I joined AOT. Totally worth the knowledge you spread around in this community. Lifetime skills.

Replying to 
EC and WATT my two first trade with you guys(Art Of Trading). Nice... 👏


Replying to 
Thanks Stewie - (lots of Love !!) Calling this a win



Replying to 
I got in later but still up of 5.5% great call. Almost paid for the year on this one trade



Replying to 
you called it, and should get the credit! nicely done, and glad i saw this “in time”😎👍

















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