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ALL RIGHTS RESERVED. RESERVED. Dr. Charles Charles B. Schaap and StockMarketStore.com StockMarketStore.com The information presented is for educational purposes. Dr. Schaap, StockMarketStore.com, StockMarketStore.com, or its representatives are not a stock brokers or investment advisors. No particular stocks, options, or futures are recommended. It is recommended that you consult professional investment advice prior to implementing an investment program. The information is intended to provide basic and advanced instruction in technical analysis. The work is completely independent of TDAmeritrade. Do not trade with money you cannot afford to lose. Trading involves potential risks. Losses are common and a part of any trading or investing program. It should not be assumed that methods taught will not result in losses.
Start with price to end with profits. Structural Pivots are real time price signals. Indicators, used properly, will indicate the best strategy. Pivots are real time price points of support and resistance. Pivots frame out price, allowing us to see trending or range conditions. Higher pivot highs and higher pivot lows show an uptrend. It is the reverse for a down trend, lower pivot highs and lower lows.
When pivots form a series of variable highs and lows, price enters range consolidation, or a sideways trend. In a range, the pivots are not moving consistently up or down. Read this article to learn more. It is posted at Pivots Circle Big Profits Investopedia.com by Candy Schaap Price Pivots Reading price action by understanding pivots will help you spot trends and use them to your advantage. It is not learned overnight.
Trend Master Series
ADX DMI An indicator is only a road sign. Price is the final word. Using the indicator (road signs) properly will increase profit opportunity. But indicators do not trade for us; we must get experience and learn to profit trade. Everything we teach always applies. For information to be knowledge, it must be the truth. Truth does not change from day to day, or chart to chart. Price points are the only real time signal. ADX measures trend strength for the best time to trade for the best profit. And DMI gives us direction and velocity of price. Chapter 6 in the book ADXcellence is on momentum.
ADX tells us the right strategy for the best use of money. Dr. Schaap created ADX Trend Strength Rules. Chart legend: 1.) PRICE breaks a down trend line. 2.) +DMI agrees. 3.) Connect pivot lows for a trendline, a visual representation of trend. This is the long term trend. Be long over and stopped out under. Are there many strategies intra-trend? Of course! Practice entries and exits and strategies. You can’t learn this by paying anyone for a course. You learn it with hours and hours of practice. 4.) A swing high in price with lower ADX, tighten the stop or take profits; or take partial profits. Divergence is a signal to change something. It is NOT a reversal. 5.) Intermediate trend profit opportunity.
The professional trader uses the correct strategy for what price is doing. Lesson in Strategy:
The orange area is sideways. And we see ADX is low (contraction) for 18 months. See Page 140 of the book ADXcellence. 1.) New high in price agrees with new high in +DMI 2) +DMI Dominance but low ADX (Strategies and Volatility page 133-4) 3.) A higher high in price 4.) A cross and hold, page 39 5.) A TREND - trend trade when there is trend. Rising ADX and +DMI signal strategy. ADXpress™ Chapter 12
Price fluctuates. From an entry at about the $60 area, price went to $99. The professional trader manages risk by securing profits. Let’s see what happened on the daily chart. Dr. Schaap covers time frames in the book and specifically in Chapter 15.
Lower time frames can help us make lower risk entries and higher profit exits when used correctly. (This will coincide with page 217 from the book).
1.) The lower ADX signals that something is changing. Trends do not reverse
quickly or often, so the strategy changes from trend trading to a more protective set up, like tightening the stop, or taking partial profits. 2.) A break of the trendline is an objective entry. We never have to predict, merely to have a plan that protects capital and preserves profit.
Just not possible! You can pay for courses and lie to yourself all you want. … Or put the time in and learn.
The sweet spot is when price never looks back and your entry is ‘perfect’.
No one is born knowing how to invest to profit in the stock market (or any other business for that matter). We learn. Once you have rules, you have to practice. Take candidates that m eet your crit eria, and write out entries and exits and stops. Time is the master because until you see how pri ce moves and watch the fluct uations and learn how t o do what you mus t do, you do not know w hat to do. I can’t tell you, no one can. It is a process.
Price is pure. Price tells us exactly what is happening. We have to have the skill to know what to do to profit from price. ADX/ DMI can give clues, can give the strategy. In the next chart we see a ‘trend’ ADX/ -DMI rising tell us we have a down trend, we can trend trade.
ADX tells us t he str ategy for the best profi t in t he best of ti me; for any time frame. The chart is the 5 min NDX e-mini futures for Thursday, March 6.
Price always makes the trade. That is why we teach pivots and trendlines, to focus on what is important. The indicator indicates and when used correctly will help traders have the right strategy at the right time. The stock market is a place to put your money to work.
Learn how to do i t the right way!
2008 © All Rights Reserved Candy Schaap
Some charts to study. I received a ton of calls and emails today so I added some charts that I felt would address the questions. The two recurring questions are 1) How to I improve my profits 2) How do I know when to trade? (which is really the same as number 1) Experience and practice are the true answers. Learning to see pivots is critical because if you can’t see direction, nothing will really help. And how do we see direction as it is happening? That takes practice. Pivots are the real time answer. ADX / DMI can help with trend strength and direction.
ADX DMI can tell you when to be in and when to stay out. Look at the difference on each chart. Look at what price is doing and what signal ADX gives. On page 134 of the book is a diagram of strategies. Look at what ADX is doing. Can you learn to recognize opportunity? Pivots are price points . When we draw trendlines on pri ce points we have objective cri teria. Green is supp ort and entry, and red is ri sk and either take profi ts, tight en the stop or leave the stop there. You wil l prof it som e and lose some but your ris k is always managed. The more you practice, the more you will profit.
Have a plan then let t he plan execute th e trade. We get in trouble trying to out
think price. The stock market is not about ‘beating’ anyone or anything; it is about putting money to work.
By the way, do make time to meet us if you are in Los Angeles for Trader’s Expo in June. Charles will be giving a lecture for trade Station.
Structural pivots are the only thing that does not lag price. Pivots ARE price. Price fluctuates between support and resistance and that is what gives us profit opportunities. The professional trader manages risk and takes profit; the novice laments what might have been.
Everything we teach applies to an chart and every time frame. This is the 15 minute gold chart.
Dr. Schaap created rules so you can use ADX DMI for the best profits and the least risk. On page 134 of the book “ADXcellence” is a diagram of strategies and when to apply. Chapter 6 teaches how to use momentum.
On this chart, ADX DMI agrees with what our eyes SEE. That gives confidence to the trade and the right strategy for what price is doing. All of the risk is always known. Price is the only real signal on a chart. Pivot lows and highs are price signals. Indicators help us frame out price action. But we can only profit when we trade what price is doing. We are only in charge of what we do. Our own actions are the limit and extent of what we can accomplish. So read price, have a trading plan, practice a lot, and learn to make your money work for you.
After entry - preserve profits!! Is it better to miss a little at the top or give back gains trying to get more?
Ever feel that way! You have to enter the trade with a plan. Higher time frames offer more opportunity. But each of us has a time frame that suits our goals and abilities. We can only do what we can do. And the more one practices, the more one can do.
Everything we teach always applies. Don’t waste my time or yours telling me what you trade. If it is on a chart, you can learn to read price. Then have an indicator that will help you. There is nothing more or less. Whatever your trade is, learn to do it.
Truth does not change time frame to time frame or from one asset class to another. Most traders get in trouble trying to impose their opinions and thoughts onto a chart. Learn to see what the truth is, then profit from it. Never underestimate how important experience is. There is a skill to this. Practice a lot. You can do it! It just takes some time. And it DOES take some effort. Charles does webinars at TDAmeritrade. These webinars are archived and available to everyone. I have the link posted at the calendar at www.ADXcellence.com on the dates, Feb 6, Feb 27 and March 5. They are free to everyone, so do take some time to watch. He is a very good teacher.
We always wish you the best in trading! The destination is worth the journey. -Candy Dr. Charles B Schaap©2008 All Rights Reserved
