Here is my special monthly investors report from my automated trading business.
INNER-Investing Monthly
March Newsletter: http://www.algotrades.net/inner-investor-outlook-march-2014/
Sincerely,
Chris Vermeulen
As you likely know I have been working on automating my long term SP500 investing strategy which I call AlgoTrades. I would like to mention that we are taking on new clients to our AlgoTrades automated investing system.
We are very excited to tell you that the doors are currently open for you to become a part of this new way of investing.
To ensure peak performance from our automated trading system and trading results for our clients. We have a limited number of seats available to ensure this. As with any good system, once there are too many clients the profitable edge in the market will no longer exist. As we are trading the system with our own investment capital, we are going to monitor and protect our system.
This system is very exclusive as it can only handle a limited group of clients. Be sure to join today, before we are over subscribed. Reserve your seat to have our system trading a portion of your investment capital.
LEARN MORE – 4 MINUTE VIDEO:
http://www.algotrades.net/automated-trading-systems/
SUBSCRIBE TO ALGOTRADES INVESTING SYSTEM:
http://www.algotrades.net/subscribe-algorithmic-trading-system/
Sincerely,
Chris Vermeulen
Founder of AlgoTrades Systems
www.AlgoTrades.net
www.TheGoldAndOilGuy.com
Good morning!
Both the Canadian and US stock markets are closed today. Futures trading have shortened mixed hours also. Being a holiday and limited trading there is no video this morning.
Taking a look at the futures market we can see trading up another 1.35% today which is great to see. So far out silver position is up over 12% in just a few trading sessions.
View Recent Exclusive Silver Report: http://www.silver-phoenix500.com/article/silver-global-price-forecast-sterling-opportunity
Natural gas is no fire once again… up nearly 5% again today and is now testing the recent spike highs in price in which we shorted earlier this month for a net 20+% profit in only a few days. Nat gas actually looks ready to rally even more this time so I am not looking to short it unless we get a picture perfect setup again.
The SP500 (broad market) continues to claw it’s way higher and its trading up 0.25% this morning. We are going to leave the stock market alone until we get a correction in price, then we will review the charts for a possible trade setup.
On different note, today we are excited to announce the opening of doors to our automated trading system for investors. Many of you are already on the waiting list as we have a limited amount of client seats available to have the system traded automatically in your brokerage account and it is first come first serve. Keep in mind today is a holiday with brokers and services are running on a skeleton crew. If you have not taken a look at our automated trading system you can review all the details here: www.AlgoTrades.net
Chris Vermeulen
Recent price action in the stock market has many traders on edge. With the market closing below our key support trend line last week, the market has now technically starting a down trend.
While trend lines are a great tool for identifying a weakening trend and reversals in the market, I do not put a lot of my analysis weighting on them.
Most of my timing and trading is based around what I call INNER-Market Analysis (Market Stages, Cycles, Momentum and Sentiment). Using these data we can diagnose the overall health of the market. Knowing the strength of the market we can then forecast short term trend reversals before they happen with a high degree of accuracy.
In this report I keep things clean and simple using just trend lines. During the last three weeks we have seen the price of stocks pullback. And because 2013 was such a strong year for stocks most participants are expecting a sharp market correction to take place anytime now.
So with the recent price correction fear is starting to enter the market and money is rotating out of stocks and into the Risk-Off assets like gold and bonds.
Stocks tend to fall in times of economic uncertainty or fear. These same factors push investors towards the safety trades (Risk-Off) high quality bonds and precious metals. As more money goes from risk-on to risk-off, stocks will continue to fall and the safety trades will rise. The move by investors to select the safety of gold and bonds compared to the volatility of stocks will result in these risk plays to moving in opposite directions.
Let’s take a look at the chart below for a visual of what looks to be unfolding…
How to Trade These Markets:
While these markets look to be starting to reverse trends, it is critical that we understand how the market moves during reversals and understand position/money management.
Getting short stocks and long precious metals in the long run could work out very well, but if you understand the price action that typically happens during reversals you know that the stock market will become choppy and we could see the recent highs tested or possibly even a new high made before price actually starts a down trend. And the opposite situation for gold and bonds. Drawdowns can be huge when investing and why I don’t just change position directions when the first sign of a trend change shows up on the chart.
Price reversals are a process, not an event. So it is important to follow along using a short term time frame like the daily chart and play the intermediate trends that last 4-12 weeks in length. By doing this, you are trading in the direction of the most active cycle in the stock market and positioned properly as new a trend starts.
What I am looking for in the next week or two:
1. Stocks to trade sideways or drift higher for 3-6 days, then I will be looking to get short. Again, cycle, sentiment, and momentum analysis must remain down for me to short the market. If they turn back up I will remain in cash until a setup for another short or long entry forms.
2. Gold remains in a down trend but is starting to breakout to the upside. I do have concerns with the daily chart patterns for both gold and silver, so next week will be critical for them. We will be using some ETF Trading Strategies to take advantage of these moves.
3. Bond prices (not yields) look to be forming a bottom “W” pattern. They have had a big run in the last few weeks and are now testing resistance. I think a long bond position is slowly starting to unfold but if we look at the futures price charts for both bonds and gold, they have not yet broken to the upside and have more work to do. As mentioned before ETFs are not really the best tool for charting but I show them because they what the masses follow and trade.
Get these reports every week free at: www.GoldAndOilGuy.com
Chris Vermeulen
Author of “Technical Trading Mastery – 7 Steps To Win With Logic”
This is the last part four of my four part series. The biggest mistakes traders and investors make which costs them time, money and usually self-confidence when trading are laid out in in the information below.
This last mistake is the by far the biggest and hardest problem individuals have. Believe it or not, the best way around it is with the use of algorithmic trading strategies which trades for you simply because we cannot mess things up. This is one of the reason automated trading has exploded in the recent years.
The Four Biggest Mistakes
1. Lack Of A Trading Plan – Part I
2. Using To Much Leverage – Part II
3. Failure to Control Risk – Part III
4. Lack Of Self-Discipline – Part IIII
Mistake #4 – Lack Of Discipline, this silent killer is in all of us!
Over the 16 years in which I have been trading and investing, I have never found a person who has not had discipline issues in their trading career. The brutal honest truth you likely do not want to hear is that you will never succeed at trading if you cannot follow a proven trading strategy and all its rules over and over again.
While some individuals just don’t have enough discipline to trade, most of us fall victim to fear, greed or our ego causing us to break our trading rules and do silly things with our money or open positions.
Lack of discipline is failing to do what you should do in a given circumstance when trading your strategies. We all know how easy it is to break rules from time to time because our gut feeling is so strong against what our trading strategy is doing but it is a huge mistake to intervene.
How to Avoid Your Lack Of Discipline
There are only three ways that will only help reduce (not eliminate) your lack of discipline.
1. Lose enough money that you now respect the market.
2. You have taken the time to think, create, and test a proven trading strategy that trades within your market philosophy and risk levels. I talk about this in great detail in my book “Technical Trading Mastery – 7 Steps To Win With Logic”.
3. You either automate your trading strategies or subscribe to a Automated Trading Strategy that removes you from the equation.
An interesting way to think of trading is not think but react.
The key to defeating your lack of discipline is to create and trade a system that is very simple to execute. And you must have 100% confidence in the system so you do not step in and alter its trading decisions. The key is to react and execute trade first with your proven strategy, and then once you are done you can think about what and why things did what they did all you want.
The last point I want to make, is that if you have your own system it is crucial that you are not tinkering with it all the time. If you keep tinkering with it, then you will never truly know how well it works thus you will second guess its activities and remain an un-disciplined trader.
Four Biggest Mistakes Series Conclusion:
My primary goal of this series has been to show you that there really is only one person who can control your success or failures in trading along with everything else in life. That person is you. In the end you are responsible for everything you have done.
The most common pitfall traders fall into is that when something goes wrong, they blame the market for the loss and not himself.
The key in trading is to accept that you will have losing trades and understand that it is part of this business. And when you lose a trade be sure not to allow these bad experiences have a negative effect on subsequent trades.
So the next time you find you self contemplating breaking a trading rule that has proven to work well over the long run for you, know that if you fall off the discipline train you will instantly be categories as one of those 90% of losing traders kind of guy.
I hope that his series has helped you. If you missed the previous parts, scroll up and use the links within this article near the top for Part I, II and III.
Here are some important resources for conquering these four biggest mistakes:
1. Read my new book “Technical Trading Mastery – 7 Steps To Win With Logic”
2. Take the Trading As Your Business program
3. Complete the Trading System Mastery Program
4. Build your own Automated Trading System with RIZM
5. Or review my All-In-One Automated Trading System
Chris Vermeulen
This part two of a five part series of the four biggest mistakes traders and investors make which costs them time, money and usually self-confidence when trading stocks, ETF’s or futures trading strategies.
The Four Biggest Mistakes
1. Lack Of A Trading Plan – Part I
2. Using To Much Leverage
3. Failure to Control Risk
4. Lack Of Self-Discipline
Mistake # 2 – Using Too Much Leverage
With this section talking about leverage I am mainly going to be referring to futures trading because futures provides the most leverage. Anytime I talk about futures trading with someone, more times than not they either say they do not trade those things, or they tune out all together because in their mind its crazy and risky.
While there is no question that futures can be volatile at times, what individuals do not understand is that it’s not the volatility of the market that cause problems. It’s proven that most large cap big name stocks actually have more volatility than the majority of futures contract whether it’s the SP500, wheat, corn, gold, oil etc… The problem is the amount of leverage one used with their money.
Understanding Leverage
The difference between trading stocks and futures is the amount of capital required to enter a trade. While this could be a very long and detailed section with examples of leverage, I am going to keep things simple and short cause it’s really not that difficult.
Using an example of a trader which we will say his name is “Dave” who wants to trade the SP500 index with their risk capital here are two examples that show how leverage drastically changed the outcome of a position.
Dave has a $10,000 account, and wants to swing trade the SP500 index.
Option #1: He buys $5000 worth of the SP500 ETF (SPY). And if the SP500 rises in value by 3% Dave would see a $150 gain on his trade. This ETF has no leverage and follows the performance of the stock market.
Option #2: Dave decides to buy 1 ES mini futures contract which is the SP500 Index futures contract. Using the same numbers as the previous option, the SP500 rises in value just 3%. How much money did Dave make on this trade? He made a whopping $2,625 on the same move that the ETF did, how is that possible?
Let me explain, when you buy a non-leveraged ETF like the SPY with $5000, you are literally only trading with a $5000 investment. But with futures, when you buy one ES mini contract which is worth roughly $5000, you are actually controlling roughly $75,000. So think if it as 17.5x leverage on your money.
So that 3% gain in the stock market is based off a $75,000 investment which is how you get $2625 or a 52.5% return on your money.
Futures trading in my opinion is not for beginner or intermediate traders. The only way your money should be involved with futures is if you truly understand how the market move and have strict money management rules, or us a system that trades and managed positions for you. Remember, leverage is a double edge sword that can make you wealthy or broke quickly if not traded appropriately.
Why Do Traders Make Mistake #2?
The simple answer is mainly because of “ignorance”. I’m not saying most traders are ignorant, im just saying most individuals are unaware of the mount of leverage involved with futures trading or even the 2x and 3x leveraged ETF’s.
People who are used to putting up $10,000 of capital to buy $10,000 of stock/ETFs often assume they are doing the same with futures. Little do they know, that $10,000 position in futures is actually controlling $170,000 and in some cases up to $330,000 in capital.
Another problem is that most brokers will not tell you when you are over leveraged. Brokers make money on trade commission’s so it’s not too often they tell you to trade less and watch your leverage levels.
How to Avoid Mistake #2
A way in which you can try and void trading with too much risk is by having the properly account and position size. The key is to use just enough leverage on your money to generate above average returns while not exposing you to too much risk.
Of course trading with leverage come increased trading emotions. This is one of the reasons why automated futures trading systems have become so popular. Having system (mechanical trading system) can eliminate a vast majority of emotional and psychological issue us as humans struggle with.
Using To Much Leverage Trading Conclusion:
In short, if your trades will typically have a drawdown of say 20%, then you must be sure your account has enough money to be able to enter the same size position after lose 20% or your account. If you will not have enough money left to keep trading then either adjust your strategy or deposit more capital.
To get a solid feeling of how leverage works I suggest spending 20 minutes and play with a calculator and play with the potential gains or losses using various leveraged instruments like the 1x, 2x, 3x exchanged traded funds, and also futures contracts like the ES mini which is $12.50 per tick, or $50 per point.
I do provide trade ideas and my position sizes for all the trades I take at my ETF and futures trading newsletter www.GoldAndOilGuy.com
Stay tuned for Part III – Failure to Control Risk
Chris Vermeulen
The use of cycles is perhaps the most misunderstood areas of technical analysis. And is widely miss used within automated trading systems. This is because there are a wide variety of approaches ranging from magnetic, to astrology to time based cycles.
The purpose of this tutorial on cycle analysis and implementation into automated trading systems is to present a logical perspective on what cycles and how they enhance your technical analysis studies.
Originally I was attracted to cycle analysis back in 2001. Back then, there was very little information about cycle analysis and even less on how to identify them within financial instruments. Cycles can be somewhat measured using conventional indicators such as RSI, stochastics and moving averages. But, better yet is a custom cycle analyzer indicator I created to make cycle identification and implementation automatic within my trading strategies and my fully automated trading system.
Here is how the moving average can help spot cycles, but keep in mind they are lagging indicators. The lower indicator shows the long term cycle and swing trading cycle I focus on. Remember cycle lengths change over time which is why I automated the indicator and have it run within my automated trading system. But you should get the gist of how cycles look and function.
I am going to touch quickly on a few areas of cycle analysis which I hope you find somewhat interesting.
Cycle Perspective by Market Participants
Cycles also known as waves are observed almost everywhere including nature. Ancient civilizations designed calendars and time measurements cased around cycles. This has creating the most standard measurements we all live by and track on a regular basis. The length of day, year, seasonal changes and even the phases of the moon and stars. These are just time based cycles but the same type of thing carries across noise like musical notes, light spectrum’s, and in liquids like waves in the ocean.
Philosophical Cycle Foundation
The financial markets are truly efficient and follow random walk principle. The fact that so many like Larry Williams and Paul Tudor Jones along with many other long term consistent traders pull money from the financial markets prove this if a more detailed analysis of the random walk theory is applied and you will see some interesting results through cycle analysis.
Understanding cycles and through tracking where they are I their current phase gives you a pretty good idea to where the financial market is headed for a short distance into the future with high level of accuracy.
Understanding Cycles & Automated Trading System Implementation
The stock market or any financial instrument chart is similar to an aerial photo of a river. There are times (sections) where the price movements appear random while other sections have distinctive cyclic pattern (waves or a snake like pattern).
No matter how good you are of a trader or investor you are, trading the markets requires us to take a leap of faith along with many assumptions to follow our trading system whether it is an automated trading system or not.
Understanding cycles is just a piece of the overall puzzle although I would account for it to be 1/3rd of my analysis for timing and position management of my automated investing system.
So what are the other pieces of the puzzle?
Glad you asked (subconsciously)!
According to my research the market is in a cyclical state roughly 20-35% of the time. Logic indicates that you should have a trading strategy that can identify and trade this type of price action.
The stock market trends roughly 25-35% of the time also. So another trading strategy is required for taking advantage of this price action also.
And then there is the random none tradable price action. This is when the market is giving off mixed signals and this typically happens during a change in market conditions from an uptrend to a down trend or from cyclical price action to a trending market.
Understanding and identifying what I just talked about will greatly improve your trading, investing and reduce stress and emotional trading.
My Automated Trading System Identifies Active Cycles and Trades
In conclusion, it took me years of studying cycles to master identification and timing of trades based around them and to be honest I am still learning and improving this process.
If this short tutorial sparked some interest then I highly recommend opting in to my free newsletter below. In a week I will be making my soon to be published book “Technical Trading Mastery – 7 Steps To Win With Logic” which is the perfect holiday read and trading education book to kick start 2014. I will be making the book available to my followers only two months before it’s available on Amazon, Barns & Noble’s etc., which won’t be until Feb.
While I am bias towards this MUST READ BOOK, I feel it will truly improve how you think, feel and trade the markets for the rest of your life.
Happy Holidays, and remember to send me your feedback and ideas on topics you would like to learn more about!
JOIN MY FREE ETF TRADING NEWSLETTER & GET MY BOOK 2 Month EARLY!
Chris Vermeulen – www.GoldAndOilGuy.com
Tis the Season for the most powerful seasonality trade of the year!
With the stock market up big in 2013 and most participants are speculating on a pullback in the next week or two, I have to say I am on the other side of that bet. Being a technical trader I focus on patterns, statistics and probabilities to power my ETF trading strategies. So with 37 years of stats the seasonality chart of the S&P 500 index paints a clear picture of what is likely to happen in December.
If you do not know how to read a seasonality chart, I will explain as its very simple. The simply shows what the index has done on average through each month over the past 37 years. December typically has the strongest up trend and probability of happening any other time of the year.
The Big Board – NYSE
The NYSE also referred to as the Big Board, is an index with the largest brand name companies. Most individuals do not follow this, but to me its as close to the holy grail of trading than anything else I know. I use many different data points from this index (momentum, order flow, trend) for my ETF trading strategies.
You must follow the trend of this index if you want to be on the right side of the market. While I follow and track the New York Stock Exchange closely and it has its own fund NYC but it’s an ETF trade I do not use. These big stocks are what really move the market (S&P 500) I think so I always trade with this index trend in mind.
S&P 500 Weekly ETF Trading Strategy – Bullish
The chart below is self-explanatory I think… But let me recap.
The overall trend is up, so your ETF trades should be to the long side buying on the dips. The chart below goes back three years so the candles are a little condensed and small, but what you need to know are these two points:
1. After a correction within a trend, probability says that price is more likely to continue rising than it is to reverse. Notice the market just had a running correction through the summer months.
2. A reversal candle on the weekly chart (bullish reversal candle) generally indicates a 2-3 week rally is likely to happen.
Conclusion: Seasonality says higher prices, weekly chart below shows bullish reversal candle… Oya!
The Bigger Picture: 3 -6 Months Out…
This is a quarterly chart and BIG picture outlook. Over the next 3-6 months we could see the stock market start to become choppy and rollover into a minor bear market for a couple years. That is the best case scenario I think… The other scenario is a major crash back down to the 700-1000 level on the SP500 which would cripple the baby boomer’s from retiring and getting a job would be impossible for almost everyone – full blown recession way worse that what everyone is saying we are in now.
Things are going to be really interesting over the next few years and things for south you better be prepared to make a killing during the next bear market or life will not be fun. The nice thing is that you can take advantage of these moves without ever having to lift a finger with my automated trading system.
ETF Trading Strategies Holiday Conclusion:
In short, I think we have a couple good weeks ahead of us. Holiday season, quality family time and a rising stock market paints a nice picture in my mind.
Anyway, I hope this report was helpful and somewhat educational. I always appreciate feedback and things you would like me to write about how I interpret, trade or analyze things. I am here to help and new topics to write about are always welcome!
JOIN MY FREE ETF TRADING NEWSLETTER!
Cheers,
Chris Vermeulen
ETF Trading Strategies Newsletter
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See How My System Crushed The S&P 500 By 14.35%
“Make 2014 the year to remember with some extra
trades from my new index trading system!” Despite the insanity of recent market rally and overseas financial issues, my followers and I are enjoying continued success with my TheGoldAndOilGuy program. Those who trade futures could be earning a robust 82% average annual return in 2014 with the new implementation of my automated trading systems for the SP500 index. Are you making money as the market continues to make new highs? If not, then you are likely trading from the gut and have a bias as to which way you want the market to move instead of following the major trends at play. November has been another highly profitable month for the system and subscribers pocketed more profits yet again today on our SP500 trade.
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LOOK AT WHAT SUBSCRIBERS SAYING!
Dude you are so awesome. Learning so much. Can’t thank you enough for the education and guidance you provide. -Luke Connel Hi Chris,
Thanks for the tip. I just sold the 10 weekly calls purchased shortly after you called this SDS play for .50 cents – they hit 1.01 yesterday while I had an appointment – today I sold for .94 – risked $500 made $440. Appreciate your updates and high profit trades! Regards, – Jim Thompson, North Caolina Fantastic advise……..I’ve never seen anybody give the advise on time based on current market movements consistently like this.Great work Chris and please keep it up! Cheers !! – Michael I., Toronto, Canada
Hi Chirs, I just wanted to say thanks for putting out the Morning Pre-Market Wrap Up videos. Personally, I am so addicted to your morning videos that I feel like my morning pre-market routine is not complete until I view it. You have helped me progress in my market knowledge and trading so much I can’t imagine not having that resource each day. If you ever putting out an educational DVD set containing all of your market knowledge, and maybe sharing how you obtained your trading skills. I for one would be very interested in getting it. Thanks again for all you do, and the service just keeps getting better and better! Hi Chris, I really admire your discipline, which in turn is helping develop mine – I am more than happy to sit on the sidelines and wait for the more probable setups, which inevitably come.
Keep up the stellar work..! Cheers, – Bry Chris,
I like the way you keep us out of dangerous markets and prepare us for an upcoming, low risk, tradable trend. Glad you do not buckle under pressure from subscribers to make a fast but dangerous buck. I am learning a lot about how to trade with you and appreciate the time you take to educate us. The last video about the oil futures market was eye-opening. Take care, – Lars
If you give me some time to prove myself in 2014 you should not only make money but learn to trade at the same time.
If you think my automated trading system is just another internet marketing trading scam, I applaud your skepticism. I come from a world where only results backed by cold, hard numbers have value, NOT empty words and hollow promises. So there’s no need for me to forgive you if you think my system which I have traded since 2006 and is automated to alert you only when the highest probability trades are available, is too good to be true. In this day and age, you SHOULD be skeptical. But the results for my system have been explosive and it continues to outperform the SP500 index. Basically, it’s beat the vast majority of hedge funds, pro-traders and money-managers! Join today and get ready to make 2014 the most exciting year for trading yet. TheGoldAndOilGuy newsletter will now incorporate some of this automated trading systems trades so we can benefit even more from the market. Warning: There is a risk of loss in trading. It is the nature of commodity and securities trading that where there is the opportunity for profit, there is also the risk of loss. Securities trading involves a certain degree of risk, and may not be suitable for all investors. Derivative transactions, including futures and forex, are complex and carry the risk of substantial losses. Past performance is not necessarily indicative of future results. It is important you understand all the risks involved with trading, and you should only trade with risk capital. This information is for educational purposes only.
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