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.

 

Want to Learn the CTP Pullback Strategy we just used to make 10R in a day?  Join the Free CTP Group Today and it will be sent straight to your email.

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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How to Analyze a Stock and Day Trade It The Right Way

We called out AMZN Long Premarket on 7/28/17.  It had earnings that took it lower but we saw reasons it should be a fade.

Join Us on Stocktwits Here to get daily stock calls like this.

After we called it, we waited for an entry and took it long just like we talked about for a 3R winner.  Join the CTP Group Today to learn this exact pullback strategy we used and learn how to make it your own.

Once you’re a member of our Group, drop me a comment.  Let me know how you traded AMZN today or stocks like this recently and why.  Are you staying consistent?  What can we help you do better?

Ben from CTP

Why You Must Focus on Rs and Not the Dollar Amount

If you’ve ever YouTube’d Day Trading one of the first things you see are videos of things like watch me make $5,000 in one hour or learn how I make $200 a day trading or any other nonsense that is only there to sell you.

The truth is, without knowing how much they were risking to make that, you don’t have all the facts and cannot POSSIBLY consider their strategy legitimate for anything more than selling purposes.

When looking at any trade result, any strategy, or any plan, the secret to success is all in the R.

R or Risk Factor is how much you’re willing to risk per trade.  Typically, the logic goes that you should not risk more than 2% or less per trade.  Many times you’ll hear this in swing trading but not as often in day trading as even that amount can be substantial.

Regardless of what the amount is, the key is understanding why it matters.

If a “guru” risks $1,000 and makes $1,000 and posts a video of it online, it’s impressive to an extent but it’s no different than someone risking $10 to make $10.  They just had a larger account to begin with.

However, if the same guru posts a video that shows $1,039 day come see how at my site” then you’ve been hooked into believing you can start making $1,000 days yourself if you just follow along.

The truth is your dollar amount return is completely dependent on your account size.  If you are only supposed to risk 2% per trade then to risk $1,000 you must be trading a $50,000 account.

This isn’t that large a number in the grand scheme of things, but when you’re struggling to come up with the $500 to pay this “guru” to show you how to make $1,000 a day, be very aware of how much it costs to copy him in all aspects; not just the profit part.

Another important reason of R value is for data comparison and trade management.  At the end of the day if you pull in $300 it is a nice day.  If you have a monetary daily goal as your main focus point (not recommended) and you reach it; then you exit all and call it.) 

But if you want to double that monetary goal, what do you have to do?  Hold twice as long?  Risk twice as much?  By tracking Rs instead of $ amounts, you can quickly see which management style produces the best Rs over the long haul and then simply make the Rs match the goals instead of trying to make the money match the goals.

If you want to make $5,000 a month, you can risk $1,000 a trade and hit it with 5 trades or you can risk $500 a trade and make it with 10R.  They do the same thing but they handle themselves entirely different.

One final point; ever wonder why casinos make you trade in your cash for chips?  Because you can handle yourself better with chips.  If you are carrying around 20s and 100s and playing with them, the money is too real, you’ll play differently.  Trading should be the same, by focusing on Rs and not the $s, you can trade the right way and hit targets whether you’re trading $25 an R this month or $200 an R next month.

Let the Rs show success; stop chasing the $$$.

If you need more help with this, we offer plenty of free training through our blog and email group or we offer a premium service with custom built management and tracking if need be.

What Makes A Trader Professional?

How many different professional traders are really out there?  If you do a google search for professional trading; you’ll get all sorts of results.

From people to strategies to everything in between.  Professional Trading has become extremely blurred and it’s time to clean this mess up.

Level 1: Professional.  The first stop on this list is the true professional.  How can you tell if the person you’re looking at is truly professional?  They must be licensed.  Whether it’s series 7, series 13, CMT, or otherwise, a true professional trader is licensed and governed by outside forces.  If they offer their name, google it and look for a license.  If they offer a company they mainly stand behind, it’s fairly easy to say they are not professionally licensed.

Pros: These are the people that handle large trading for firms.  Training from someone like this gets you true inside access.

Cons: Some of the licenses here can cost thousands into the mid $20,000 range.  They are not doing this for bragging rights, it’s the cost to handle large accounts.  A 1% fee on a billion dollar account is easily enough to cover the startup fees.

However, if you see an ex trader who used to work for a large bank suddenly decide it’s time to share that info with the world for $50 or even $1,500–you’re at the wrong place.  

This is just my personal opinion, but if a trader at that level comes down to a retail level asking a few hundred dollars for a course, I would not believe that they were ever truly at the level they claim.  You would never buy a mercedes to help someone else drive a kia.  Again, just my personal opinion, but I see this alot and I truly don’t understand why.

Level 2. Retail Professional.  Full Disclaimer: This is our Level.  

This is the level for those that taught themselves how to do it and look to teach others as well.  The main reason (at least our reason) that we are not professionally certified is we do not need outside money.  

Spending the fees to become licensed and doing nothing with it simply does not make sense.  If there ever comes a point that we look to grow beyond our capabilities and require outside capital, CTA would be our license of choice.  However, at the present time, the money is not needed, and therefore neither is the license.

Pros: They’ve learned what it’s like through experience, and through a normal sized account.  The main advantage over large accounts we have is that our stops will not disrupt the system, our exits will not take away our profits in the process; our smaller size is one of our biggest edges.  This goes for the Professional Retailer as a whole group, not just CTP.

Cons: Anybody can write a good salespage and it really comes down to gut feel with the training.  We tried 3 different courses ourselves during our learning curve.  It can be extremely frustrating learning everything only to realize they are no better off than you and you must start all over.

(This is why we don’t publish our P&L or account % increases.  If we did, it would either make you think this is too easy, too hard, or be a sales trick.  All of the above are the reasons Account Returns are usually posted, but it truly does not help do anything for the end user, only sell the system.  We fell for that trick ourselves early on and as a result simply decided it will not happen on our site).

Level 3. Everyone Else.  If you aren’t a professional and you aren’t a professional retail trader, than you’re just part of the everyone else category.  I’m talking about the gurus here, not the traders and investors trying to succeed here.

These are the types that offer services that make a million dollars, 200k, 100k a year with doing nothing more than following along.

News Flash.  Insurance companies collect millions in premiums with the goal of collecting more than they pay out.  Don’t you think companies whose sole job is making more than they lose would look into these $300-$10,000 systems if all it took was a computer program?

It’s a lie.  The worst ones are those that work for the main person by entering in first and then letting the hundreds to thousands of followers, the other ones are just as bad but take less time to figure that out as no one’s winning.

Either way, stop looking at trading like a get rich quick scheme and start looking at it like a real business.

Whoever you decide to follow; make sure they match up with your style, your goals, and will work with you to help you get there.

There are lots of incredible trainers and traders out there.  CTP of course, but there really are others.  Some do it for the money, some do it for boredom, and others do it for company.  It really is a lonely career if you don’t do something about it.

Just make sure before you invest any of your money into any form of education; you understand who they are.  

 

The 5 Mental Phrases You MUST say every day to succeed in trading.

Have you ever seen a salesman just before they give a big pitch?  The bad ones look nervous, sweaty, out of place.  The great ones look confident, excited, prepared.  Sometimes you might even catch them looking in a mirror almost muttering to themselves.  Yet when the day is done; the sale is theirs.

How is this?

Mindset.  Having the skills to do the job with the confidence to do it well.  This is an incredible combination, and that muttering you sometimes see is really them telling themselves their own phrases to succeed. 

While anyone can learn how to trade; not everyone will succeed.  The setup may be the same, the temporary loss may be the same.  Yet one trader may look at the loss and jump, while the other sticks to their plan and wins.  If you gave the same winning tip to 5 traders you’d have 5 separate outcomes because they would get in their own way.

How do you solve this problem?  Like any other problem; Mindset.  Things will go wrong, but the traders with the best mindset will outlast any other trader over a long enough horizon.  Even if the weak minded trader has a better plan, more capital, and more time, the trader with a stronger mindset will come out on top 100% of the time over a long enough timeline.

Why?  Because with the right mindset; everything else catches up.  With the wrong mindset; everything else get’s passed.  

Here are 5 phrases you must start saying to yourself every single day if you want to become a professional trader.  Say them when you have trades on, say them when you have nothing on, say them when you are backtesting, say them before you go to sleep.  Develop a strong mindset, and everything else will be easier to come by.

#1.  Don’t Waste a Day.  

Success in trading takes time.  Everyone gets so jacked up and ready to knock it out after a long webinar weekend and after a few set backs they’re ready to throw in the towel by thursday.  Stop focusing on beating this game in a week.  Focus on accomplishing something every single day that gets you closer to your goals.  Some days may have significant progress; some days may be baby steps.  As long as you live by this mantra 7 days a week, you will get there.  

No access to a monitor?  Read.  No access to a book?  Think about a winning setup you recently saw and how to build off that.  No time to think that out?  Say your 5 phrases and build up your mindset.  

Do something Everyday.  No Exceptions.

#2. Would the trader I want to be in a year do what I’m about to do today?

Building on #1, this takes it to a whole other level.  You can get too exact with this and stop doing everything but trading, however, that’s not advised.

What is advised is focusing on what you really want.  Are you studying to be an equity swing trader?  Then focus on that.  Stop considering day trading strategies because that’s not who you want to be in a year.  Are you wanting to have a $10,000 account to trade with in a year?  Then stop eating out 4x a week and start saving it.  This phrase can be taken as literal or as little as you want it.  Under no circumstances should you sacrifice family time or family expenses here, that is not the goal.  Simply make sure you’re not putting yourself ahead of your year away self very often through this.

#3.  Hard Work Beats Talent when Talent Doesn’t Work Hard.

Ever seen a winning team coast by because they think they got it made, only to get passed over near the end of the game?  There’s a reason most teams don’t stay champions year after year.  Most success results in mediocrity; you’ve got to keep at it.  There’s always someone hungrier than you, and if you coast, they’ll pass you by.

#4.  Reward Effort More than Results.

Stop looking at your bottom line first.  You can take an awful trade and make money and a great trade and lose money.  The key is looking at your tracked trades and seeing how many trades were part of your plan. 

If you follow the CTP way you won’t go live until you prove your plan out.  If you are live with a proven plan and all 20/20 trades for the month were part of the plan then reward yourself at the end of the month whether you won or lost.  The plan has proven itself out over the long haul.  A bad month should only be a bad month if your efforts were bad, not your end P&L.  That will handle itself over the long haul.

#5.  Can’t Stop.  Won’t Stop.

There will be days when you want to give up.  Days where your plan fails 100% of the time.  Days where you just can’t see yourself doing this for another week let alone another year or longer.  

When this happens, remember why you started here in the first place.  Remember what got you to this point.  Once you remember that, just tell yourself “Can’t Stop.  Won’t Stop.”  Say it over and over and over again until you believe you will not stop until you succeed.  Then do something about it.

Analyze what went wrong, track your data, look at old data to compare, go get some exercise and clear your mind, get yourself back in it.

Once you’re back; say these 5 things again.  You’ll start to see things differently.  Start to believe you really cannot stop until you succeed.  Because you’re starting to have a mindset of a winning trader.

 

Why Your Plan Needs a Stop

There are alot of traders who don’t use stops in their plan.  They do this for reasons like “The Algos are out to get me” or I lose too much with a stop” which is really just an excuse for the traders limitations.

When you give excuses for your limitations; you get to keep them.

This can be seen at the highest level all the way to the brand new trader.  Those that don’t plan for stops will be taken out of the game.  Look at Jesse Livermore.  Arguably the most famous trader in history, the book “Reminiscence of a Stock Operator” is a classic and one of the first books traders read when they get into this game.

Yet what the book doesn’t mention is after he made close to a billion dollars in one day by today’s standards, he could not be satisfied with small profits going forward.  He kept risking more and more without any stop, and within 5 years of having a billion dollar day he lost everything for the 3rd time in his life and could not handle it.  He took his own life in a bathroom.

For a more modern take, consider some of today’s hedge funds.  Assets so large they have no stops in place to wind down positions.  Look at the final exit price of VRX for a certain well known manager compared to his entry price and you’ll see just how important the stop truly is.

Who doesn’t use a stop successfully?  Warren Buffett.

Who does use a stop?  O’Neil and traders/investors like them.  It simply comes down to this.  

If you are buying something you plan on giving to your kids for the dividends, then wait for a market extreme mispricing and buy all you can without a stop.  When buffett goes in, he rarely catches the bottom.  Look at how long his bank plays took to get extremely profitable in 08-09 era.  If you’re doing this type of strategy, divide your amount into 3-12 lots and buy it monthly or quarterly and never look back.

If you aren’t investing to give to your kids or retirement, strongly consider stops.  Whether they are % based like an arbitrary 7% or ATR based off the pivot high/low, it doesn’t matter.  You need to have a stop.  

Stop making excuses and start tracking the data.  You’ll see there’s a few times you’re being stop hunted but are you basing the stop off the proper level?  Because a true breakout does not pull back 7%.  A true pullback continuation holds near that pivot low.  

First, analyze your losses and see how close your stop was to the actual level.  We have ways of tracking all of that data in the premium services section if you need help.

If you already know your numbers, then you know the truth.  90% of the stop hunts are coming from the fact you’re trying to get as large as possible with as tight a possible stop as you can get when the proper stop would still have you in the trade.

Longevity; Not Prosperity.  Focusing on the first will give you the second.  Focusing on the second will take the first away.

$10 A Backtest

No one likes to backtest.  No one likes to forward test.  Everybody just wants to trade live.  

Yet the low barrier for entry, lack of rules from outside sources, and lack of quality system team up to destroy most traders within 12 months or less.  

Ever stop to wonder why?

Nobody wants to put in the work.  

Let’s look at this a little differently.  

The average salary in America is close to $50,000 for a 4 year degree.  This may be slightly off but the math is simple so I’m going with it.  

Most traders that get on YouTube are looking to supplement or replace their income.  Let’s just assume you’re looking to make $10,000 a year on the side as a starting goal.

You found a weekend seminar that for $2,000 will teach you how to trade and make $10,000 a year.  You pay the fee and learn a ton of information and systems and strategies and you are good to go.  

You fund another $1,000 into a trading account and promptly lose it all in 3 weeks. 

Looking to make $10,000 on the side you are $3,000 worse for the wear.  Why is this?

Because you spent 4 years to make $50,000 salary and thought you could make 20% of that after a long weekend and a few all nighters.

Reality Check.  Treat this like a job.  Trading should not be any different education wise than everything else.  The goals can be different, but the timeline should at least be realized here.

New Plan.  Every Back Test or Forward Test (DEMO) trade you do, consider it a $10 deposit into your trading account.  Your account starts at zero, when it reaches $5,000, you’ve put in the time and work to unlock that money and go live if the system has been proven out.

Most traders can easily do 5 backtests a day whether its early morning or late nights.  On the weekends you can take it off or push for as many as you can handle.

If you can do 5 backtests a day, 5 days a week, that’s 25 backtests a week.

25×20=500.  

20 Weeks is the minimum time you should expect to building your plan and proving it out before going live.  

This is not a requirement, just my humble opinion.  You just have to realize that professional traders treat this like a business, and you showing up to compete with them after a weekend seminar is not going to end well for you.

You need experience and confidence to succeed here.  You can build that up over 20 weeks or longer, you cannot over a weekend study session.