For those interested: Looking real time...

I know many of you have moved on to larger charts with GW. But S/O and I trade small charts. They suit us. I have NEVER liked anyone holding my money so I want my money PDQ! So here are a few hints to what we do.

I mark my gaps on an 8 and 21, and 55 chart. I use the RAY line from Qcharts. I make it a dash. I mark the close, the open and the half way mark between the close and open. GAPS have to close. Sometimes it may take a day and other times it can take several days, a week, weeks or even months but GAPS have to close at some point. What these GAPS do for me is give me a visuale of support and resistance.

Take NFLX for example. (I am using my 8 chart.) It gaped up on 10/12/18. I marked that gap and the center of that gap became support (I then changed my dash to a 2 thickness ray). Then on 10/15/18 the BB began to squeeze. A POP was setting up and on 10/16/18 a small gap happened on the 8 chart. (BTW that was a $4.00 move up.)

So looking at the information I have just from the gaps:

10/11 top of candle close - red dash line
10/12 bottom of candle close - red dash line
10/12 approx center of gap - red dash line
10/12 mark high of day on candle top at 10:02 8 chart - solid 2 thick red line that high was never broken through for the entire day. This makes me think market not so certain of stock rising possible pull back in store. *If there had been a steady climb like you see on 10/16 you can pretty well know the market is expecting this stock to rise. Does this always work? Is there ever an always in the market? No...

On 10/16
From that high line drawn on 10/12 you can see on 10/16 it became support abt 2:10 (8 chart) and then gained $6.00 until 15:46. Since going into earnings sell...and wait.

On 10/17
Mark the gap close of 10/16 open of 10/17 and in the center.

1-/18 center of gap broken @10:02 close 355.08. E beginning in trade out before close @10:18. about a $3.50 move. (You get about .40 to .50 per dollar move)

Or wait until center line holds and stock moves down more.

Why leave if in at 10:02 on put? Because 5 and 3 chart is showing a shift with candles pulling away from BB. Sure enough stock came back up and hit center of BB. If candles break through stock goes up if the candles hit the center line and go down NFLX will close the gap today.

BTW I generally leave my trades when the candles move away from the BB. NFLX could move in such away it would eat up my option. Sideways moves are not good for me in how I trade. Right now NFLX is fighting the 20 moving average on the 55 and the 200 on the 233. Not a sign for me to jump back in. Too much to fight. I am on to another trade LOOKING.....

Thank your for your insight on using the gap lines. I trade off the 5 minute charts and have implemented these lines into my charts. Also, appreciate the 'Traders Almanac' plug. I signed up for a yearly subscription to access their online products and will receive the 2019 edition sometime in November. Helpful nuggets!!

EARNINGS TRADER: In that Almanac you'll also find hints and ideas on ways to trade. I purchased these for several years. I don't any more. But I found them very helpful when I first started. Loads of info!

+1 on Trader's Almanac. I purchased a new one every year for the first 5 or 6 years when I started and briefly subscribed to their site. Always filtering the info through the lens of GW's calendar. One little nugget. You will gain great insight into various historical patterns. Look for pattern confluence. Example: X might be the best overall week of the month to trade and Y is the best month out of the year. Therefore, pay special attention to the X weeks in the Y months. Hint: some folks really believe in decennial patterns while others like presidential cycles (presidential cycles are the most predictable by the way). Go back and study what happens when those patterns converge. Doing that research 10 years ago would have put you in the mindset that this cycle we've bee in for the past several years will look similar to the 90's. The fact that the pendulum swung too far to the bearish side during the financial crisis also indicates a strong bounce back. No one could have predicted the exact extent of the run but you would have been in the correct mindset.

Final FYI... here's what would happen if you applied basic price chart analysis to the S&P longer term big, big charts given the above mindset. You would have expected a possible run starting in 2012 - 2013 around the presidential cycle (also coming out of the worst years cycle). I know the actual bottom started in 2009 but hang with me. Given your analysis in 2007/2008 using these patterns, you would have expected a good run possibly in 2012, early 2013. In early 2013 you had a breakout of the last major high in the S&P of around 1500 from 2007. Performing simple price projection analysis using the previous pivot high to pivot low, a reasonable target would have been around 2400 to 2500 over the next 5 to 6 years. That works out to roughly 12% a year just doing basic research, simple price analysis and buying a index mutual fund. In reality it went higher and faster than expected. Also, the above is getting in late. If you then layer in GW's teachings/techniques you would have been in before the breakout, closer to when the move started, and would have been buying instruments with returns far better than an index mutual fund. Note I'm not talking about trading, just referencing how someone could have passively worked their long term investments with very little effort given them more time to focus on short term trading.

Cheer!

NCT

P.S. Don't get too caught up in patterns by ignoring what the charts are telling you. Do your own research to validate the patterns in your gut. You have to be able to trust the research. Then use the pattern research when the charts tell you to. Most folks filter the charts through the lens of research which distorts the true picture. Do the research, know the patterns, rely on the charts always but be conscious when the charts, research and mood of the market agree. The run over the last several years was not that surprising.



Edited 2 time(s). Last edit at 11/15/2018 08:42PM by NCTrader.

NC Trader...I still use GW's 1-5 in everything I do. I am so very grateful to GW. The Trader's Almanac had 1 trade in there that I use every so often and it included almost everything from GW. That almanac helped with discipline.