"Meticulous Planning Will enable everything a man does to appear spontaneous."

Mark Caine

It's Your Money. Shouldn't It Be Your Plan?

SNAP vs FB on a Long Term Basis

Everybody loves to look at charts and go back and pick the perfect entry price.  That’s what’s called hindsight trading.  It does you very little good in the bigger picture to stare for perfect entries.  This does little more than grant ego a bit of a boost.

However, going back to look at old patterns, old % changes, and other statistics that you can use going forward in other trades is a very different thing entirely.

Today, we’re going to do just that with FB and use it to look forward at SNAP.

FB had an ugly first few months.  Price has a high of $45 and drops all the way to $17.55 while the lockup was going on.  For those who don’t know, a lockup is what IPOs have to prevent employees, VCs, etc from unloading on day 1.  By forcing them to wait it out a bit, the market can handle the earliest days of trading a little easier.

The yellow shaded area is where the lockup ends.  Not sure on exact dates but it’s somewhere in this range.

From Peak High to Peak Low, FB retraced 61%.

 After that, the weekly trendline breaks and price runs up to around $32 before stalling out and running back down to near $23.  

Just think about that.  Any trader who bought in the $18s saw their price almost double and return 100% in under 3 months, only to watch it pull all the way back to only being up around 20%.

How do you stomach that?  By accepting that position trades are not in it for 100% but for 500%, 1,000%, or simply the long haul.  

Trading is where you make outsized returns in a short period of time. 

Investing or Core Trading is where you will hold a position for a long term outlook (typically anything over 12 months), knowing that the end justifies the means.

Imagine you sold out of FB at $25 because it made you 50% from your $18 investment.  Now how do you feel today?

You’ve got to trade your plan, but if you’re looking at FB as a core, you’ve got to accept going in that a 100% is nice, but if it’s not your number, don’t adjust the stop to feel safe.  You’ll take yourself out before it’s finally time to do so.

Holding from $20 to a recent high of $160 would be over an 800% return in 4 years.  This is not the norm, but this is the power of core trading when done properly.  In the mean time, there were some violent 30% drawdowns, but it all comes back to what’s your reason.  If it’s a core setup, this really shouldn’t be completely out of the realm of possibilities.

Now that we've understood the Past, Let's Look to the Future

This is SNAP.

SNAP had a high of $29.44 and just recently had a fresh pivot low of $11.28.  This pivot low matched up with the lockup expiration which happened in the yellow shaded box.

From Peak high to Peak low SNAP had a retrace of 61.68%.

Notice the weekly trendline is still in tact.  The 20 simple moving average is not even close to bullish, and price has not given a higher low and high helping to confirm the low of $11.28 will hold.

That being said however, there are some STRIKING similarities between FB at the start and SNAP.

Going forward, if we can see the weekly trendline break to the upside, price to give higher lows and highs, and perhaps some other reasons that our plan requires to find an entry, then this has the makings of a strong core position.

What does that mean?

It means don’t bet the farm.  Everything works and everything fails.  

It means don’t risk more than 20% of your capital on this trade.  Even core positions fail.  The quickest way to broke is putting it all on black and praying it doesn’t come up red.  No matter how good it looks, size yourself accordingly.  You’ll sleep better this way.

It means you don’t trail the stop until much further down the road.  Remember, this is a weekly chart.  It took FB 4 years to reach 800% returns.  This is not the time to be thinking stop to break even after 4 weeks in the trade.

 

In conclusion, SNAP can easily fail, but so can everything.  If we simply look at the past to predict the future (technical analysis) then SNAP has a high probability starting to form that it’s FB 2.0.  

It’s not there yet, but it should be on your watchlist.  

What does your plan say? Do you have a setup to take this? Do you want more training and ideas like this one? Then Join the CTP Group today!

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Max Losses & How to Handle Them with an Edge

First we took the Loss.

We took a Max Loss on 8-8-17.  If you don’t know how to handle a loss, you can look to hold on longer than you should and make it even worse.  There’s a reason you plan for max losses, so that when they occur, you can take it like a pro.

Next, we stuck with the Plan.

That allowed us to take the trades the day presented instead of being distracted by yesterday’s losses.  Once all of our trades were live, we walked away.  We went to the gym, we studied other charts.  There’s no advantage to sitting at the desk and staring, your results are the same, your mental psyche is drained if you sit and stare.  There’s a better way.

Finally, We made it all back and then some.

This is how you trade like a pro.  Focus on the setups, focus on the system.  The results WILL take care of themselves over the long haul.

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The 10R Day

When I woke up today, I didn’t plan on making 10R intraday trading.  Considering my typical day is closer to 2R-5R this didn’t even seem to be possible.  However, that’s the beauty of a trading plan.  Sometimes it just comes together just right to allow you to absolutely crush it.

We kept it simple.  One failed breakout and 4 CTP Pullbacks.  The video will explain it best, but it’s important to remember two takeaways from this.  

  1.  This isn’t the norm.
  2. You don’t have to risk $1k to make $1k in day trading. 

Everything works and everything fails in trading.  Whether you swing or intraday trade, this isn’t the only way to do it.  I simply wanted to show you that if you have a plan and follow it; great things are possible.  Pay attention to the fact that I not only planned the trades, but had a process of how to protect myself as I improved.  A complete trading plan requires so much more than buy and sell rules.  

We’re in the process of building that training, but for now, hopefully this video teaches you a few things and gets you excited to work on your own custom trade plan.

 

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Understanding Multiple Timeframes the right way in 2017.

Ever wonder why you take a trade that looks perfect on your trading timeframe and within minutes you are taken out at a loss?  Losses are part of the process but understanding the higher timeframes can really help in this situation.

Using Multiple Time Frame or MTF as an analysis technique is an excellent way to only trade the best setups.  Hope this video helps.  Drop us a comment and let us know what you think or sign up for the CTP Group to get weekly emails of posts like this and more training for free.

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