Greetings,
Recently, in our chat room training session, we had a discussion on reading KP TRIGGERLINE VMA. This LINE STUDY is plotted right on the candlesticks. This is a very interesting study in that it performs two functions. 1) It gives us a 'bias' read on short term price action. In essence it tells us whether the odds favor a continued move higher or lower. 2) It is also used as a timing indicator. It confirms/triggers a buy or sell position and also tells you when to cut bait on a trade.
That's a lot of information from just one line study and obviously, we can't just write a few sentences on how to use it properly. Therefore, we've created two short videos for you on KP TRIGGERLINE VMA. Please take a few moments of your time to watch these two video's
VIDEO 1 >>> http://www.kwikpop.net/trigvma.htm
VIDEO 2 >>> http://www.kwikpop.net/trigvma2.htm
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A few comments on the current market cycle. We are now at another point where over the short term the buying cycle is starting to terminate. The last buying cycle commenced on February 16th as we got a yellow candlestick with a blue dot closing above KPAUTOSTOP (see chart below). After that turning point we saw 25 consecutive blue candlesticks as the SPX marched straight up to new highs. It broke out above our KP PIVOT 2 RESISTANCE line (White Line at 1150.45) rallying up to 1169.00. Then it rolled back to the breakout point (at the white line) to TEST the breakout buyers resolve. The buyers hung in and new buyers piled on as well, pushing prices up to a new high water mark of 1174.72 on March 23rd. This is a daily chart of SPX
Notice the color change in the candlesticks on March 24th,25th and March 26th. The first yellow candlesticks after 25 consecutive blue candlesticks. As you know, yellow candlesticks are neither bullish nor bearish, they are neutral. When the candlesticks turn yellow after being blue it warns us that upside momentum has broken down and a potential selling cycle reversal is imminent. In short, upside momentum is nearing an exhaustion point. The ratio of buyers to sellers is now starting to shift. Prices may still drift higher, but the market has run out of rocket fuel, at least for the next 5-7 days.
Please note that we do not yet have a confirmed selling cycle. The candlesticks must close below KP AUTOSTOP and turn red to confirm a selling cycle. That has not happened yet, but KP SNAPBACK is starting to flash the telltale signs of a selling cycle setting up. Notice how KP SNAPBACK has turned red and the bars are below that white line, and the bars are getting shorter and shorter. This tells us that momentum is starting to reverse to the downside, but the bars are still above the zero line so, at this point, we have no serious selling pressure. We have longs taking profit and aggressive shorts nibbling at this point. AGAIN ... THERE IS NO CONFIRMATION OF A SELLING CYCLE AT THIS POINT, but all patterns that usually set up for a selling cycle are now occurring.
If the candlesticks turn red and close below KP AUTOSTOP and the bars on KP SNAPBACK stay red and drop below zero we'll have a confirmed sell cycle. So what does that mean for a DAY TRADER?? Usually, when a new selling cycle sets up the first two or three days allow a day trader to take a more aggressive short position and hang on longer to short positions as the weak hands in the market get flushed out in the downdraft. In other words, get very bearish and get aggressive on the sell side once a confirmed selling cycle appears.
PLEASE NOTE: We don't have a confirmed sell cycle yet. And, you'll notice the price channel I've marked on that chart, until we break out of that lower channel line not much will happen. That lower channel line is right at first support of 1150.00. A break below that level will set up a move down to the 1118 area. That type of move will make a few bucks for short traders. The market may spike up one more time and that's when option traders should start scaling in on the short side with put spreads etc.. As far as the DOW goes, a move up to 11,050 would be an ideal short trade for options traders that understand the risk in trading.
WILL THIS BE A SIGNIFICANT CORRECTION?
Who knows? As long as the Fed keeps greasing the markets with free money the Wall Street insiders can keep the rally intact. The PUT/CALL ratio is at a level where corrections begin, the housing numbers keep getting worse, the Government keeps piling on more debt and is now looking at tax hikes and any other fees that can raise money, China is starting to slow down, Europe is struggling in the PIIG Pen and Japan is, well, after 20 years, same old .. same old. The market is ripe for a decent 10%- 15% correction, but I wouldn't bank on that unless we see sharp volume increases as the market declines. WAIT UNTIL THE SELL CYCLE IS CONFIRMED BEFORE AGGRESSIVELY SHORTING THE S+P 500 !!
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MY TRADES ROOM
An interesting pattern started to develop over the last couple of months. Yes, people come and go in the room, but that is the natural attrition as this is a tough business to master. The ones that have quit usually were not trying to learn how to trade and use Harry as their coach. They were just looking for somebody to make them successful without having to think or learn anything. When they discovered that fortune and fame requires a lot more effort, study and a total committment to success they gave up and sought the Holy Grail elsewhere. Hopefully, they've landed a cushy government job somewhere that requires minimal cerebral input and lots of vacation time.
The pattern that is unfolding deals with those that have made a total committment to succeed as a trader.That group possess a totally different outlook and attitude about this business. First, they treat it like a business. If you shelled out $200,000.00 for a franchise business and didn't learn how to run the business ... you'd still fail, even though it's a name brand business. In many franchise enterprises you are lucky if you even make a profit in your first year even though you're putting in 60-70 hour weeks running the business. Obviously, people looking for a short cut to fame and fortune would also fail as a franchisee if they were unwilling to learn the business and make a total committment to success.
You can start a trading business with only $15,000.00 operating capital. $5,000.00 for training, support software (Like KP or other stuff) and $10,000.00 in trading capital. Whether you start a trading business with 15K or a franchise with 200K the rules are still the same ...If you don't learn how to run the business ... you'll fail! The amount of money you spend has absolutely no bearing on your success. If you don't learn the business ... YOU'LL FAIL!
Let's look at the success side of the equation. Most franchise operations teach you to expect an annual return equal to about 40% of your starting costs. On a 200k franchise business that succeeds you'd be looking at about $80,000.00 in income.
What is possible with a miniscule 10k trading account? Trading 3 contracts per signal, if you average two index points per day, that's $300.00 per day. That's only 12% of the average daily range on the ES. On a 20 day month that's $6,000.00. Annually that's $72,000.00.
Let's assume that after 2 months on consistently averaging $6,000.00 in profits you left the gains in your trading account and upped the ante.
Again, you only target 2 index points per day, but you trade 5 contracts at a time. That brings your daily average gain up to $500.00. That's $10,000.00 per month or $120,000.00 per year. Hey, wait a minute there, that's 25% more income per year off a successful trading business started with only 15k than the income made from a successful franchise that cost 200k.
Is that really possible? YES
Is it guaranteed? NO!
Is it risky? YES
Could I lose all of my capital if I fail? YES
The risks are no greater in your trading business than in a business franchise..PROVIDED YOU LEARN HOW TO RUN THE BUSINESS. There is no easy business out there. If there were a no brainer everybody would be doing it.
You don't start out successful ...YOU BECOME SUCCESSFUL. Becoming successful requires hard work, discipline, study, practice, discipline, study, practice, hard work, study, practice, hard work, study, practice and on and on and on.Many want success but few are really willing to pay the price for success.
Here's the pattern we're seeing. Those that attend all training sessions in KP and MTR, study the charts every night, review all trade set ups over and over and over again, practice trading on a trade simulator for two months and follow Harry's calls and trade guidelines are starting to see the results of their efforts. In short, THEY'RE GETTING THE HANG OF IT.
They are beginning to turn the corner and they think and respond differently than they ever have in the past. They are making fewer and fewer mistakes and hitting more and more winning trades. They are starting to really see and understand the market. They are anticipating trade set ups before they appear and they are prepared to respond decisively with confidence. They are paying the price for success in hard work and discipline and they are BECOMING SUCCESSFUL.
If you are are really ready to turn the corner and build a successful trading business then sign on. BUT, be prepared to make no money for 60 days. You'll be trading on a trade simulator for 60 days. Be prepared to attend ALL KP and MTR training sessions. Be prepared to spend one hour every evening reviewing the 7,500 volume chart for every trade set up that occured every day. You must observe and paper trade 300 trade set ups before you commit a single dime to real trading. Keep a log of every trade set up in your diary. Review that diary every weekend.
If you are unwilling to make this type of committment then don't waste your money on MTR. The purpose of KP and MTR is to provide you with tools, training and guidance that will put you on the path to success. This is a team effort and we will do our best to help you, but your success ultimately DEPENDS ON YOU. If you are willing step it up another notch then join us and together we'll make it the real deal.
Regards,
WDH
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