Watch the video for details on these 10 rules to improve your trading
#1 – Have a game plan
#2 – Follow your game plan
#3 – Trade with a stop loss
#4 – Reduce risk through non-correlated market diversification
#5 – Filter your trades
#6 – Trade with the trend
#7 – Don’t listen to the news
#8 – Don’t listen to your broker
#9 – Money Management
#10 – Be disciplined

Marketclub is a fantastic service comprised of several powerful trading components including:

A proprietary stock rating system designed to accommodate day traders, swing traders, trend followers, and buy and hold investors.
Trade Triangle Technology – A sophisticated yet easy to utilize trend following and market entry / exit timing system that anybody can use
A fantastic charting platform that is powerful and easy to read. It provides real-time streaming capabilities, technical indicators, fibonacci analysis, and time frames from monthly charts to 1 minute charts.
A unique scanning feature that implements the stock rating system as well as trade triangles to help identify profitable trades
Probably the most unique and high value feature of all is that all of the above systems can be applied to all of these exchanges (including futures, forex, mutal funds, etc):
1. National Association of Securities Dealers Automated Quotations (NASDAQ)
2. New York Stock Exchange (NYSE)
3. American Stock and Options Exchange (AMEX)
4. Toronto Stock Exchange (TSX)
5. Canadian Venture Exchange (CDNX)
6. New York Mercantile Exchange (NYMEX/COMEX)
7. New York Board of Trade (NYBOT/CSCE/NYCE)
8. Chicago Mercantile Exchange (CME)
9. Chicago Board of Trade (CBOT)
10. Intercontinental Exchange (ICE)
11. Kansas City Board of Trade (KCBT)
12. Minneapolis Grain Exchange (MGEX)
13. Realtime Foreign Exchange (FOREX)

Finally, a little advertised but amazing feature of Marketclub is the ability to access and download over 10 years of historical data for every market in each of the exchanges listed above. When you combine the real-time and the historical data access, the $449 yearly membership becomes an incredible value.

About Marketclub Trend Analysis

The Trend Analysis feature provides traders of all kinds insight into the trend direction and strength using a proprietary trend scoring system.

click to enlarge

Using this system is quite simple. For instance if you are a swing trader, you would check the “new three day high” triangle, and the “new three month high” triangle, you would have have a green light to trade the stock short term.

Give Trend Analysis a Free Try
Just enter any symbol into the the symbol box below and click Analyze:

About Marketclub Smart Scan Technology
The Smart Scan feature is what I like most about Marketclub. The core principle of RecordPriceBreakout.com is developing highly targeted trading methodologies around a specific stock screen. The benefits of creating your trading plan this way are so numerous that I have dedicated this blog to this topic.

There are two different types of scans that I prefer to utilize with Smart Scan Technology. The first is using the +100 / -100 score. This will find stocks that are trending very strongly.

The second method is searching for specific entry and exit signals and trend reversals by using trade triangles. One example would be to search for a new monthly trade triangle which signals a major trend reversal. You can then add the list of stocks to the alert system which will get you into the trade at the most opportune time.

Check out this video on Marketclub Smart Scan Technology

About Marketclub Streaming Charts
Marketclub’s streaming charts are the easiest charts to read of any I have ever tried. The color scheme, font sizes, grid lines, and data points are all designed for ease of reading.

click to enlarge

I highlighted some of the important features of the charting package. Marketclub makes it very easy to change every aspect of the chart without having to sift through embedded menus (thinkorswim comes to mind). The primary time frames, symbol, chart type (line,candlestick,ohlc), studies, and trading tools are available with a single click.

All of the pertinent data about the current market is displayed at the top of the chart. The date of the selected bar, symbol, current price, change, percent change, open, high, low, and on chart indicator values are all on prominent display.

Other cool features include a small instruction box in the upper left hand corner that tells you how to use the currently select tool. The trade triangle box can be moved any where on the screen to avoid covering up any part of the chart. Of course, there are also the trade triangles which can be added to chart using the M,W,and D buttons.

Here is a full run down of all of the features of Marketclub Streaming Charts. It’s very educational, you should check it out!

About Marketclub Trade Triangles

Marketclub Trade Triangle technology provides a proprietary trend following indicator based on a weighted formula comprised of price, time, volume, highs, and lows. It is by far the fastest and easiest method I know of to determine the direction and strength of the current trend.

Many trading system depend on the adage “the trend is your friend,” or, “befriend the trend.” There are several methods traders use to determine the direction of the trend. Use of long term, or a combination of long term and shorter term moving averages, and the indicators such as the DMI just to name a few. Then there are the trend strength indicators such as the DMI, Aroon, and several uses of moving averages for example.

The problem with all of these methods is that they are a) subject to interpretation, b) time consuming, and c) many expert traders disagree on how to use each of these tools.

Such is not the case with Trade Triangles. For determine the direction and strength of the trend, all you have to do is look at the daily, weekly, and monthly trade triangles.

Strong Bullish Trend: Monthly, weekly, daily triangle are green
Moderate Bullish Trend: Monthly, weekly are green, daily is red
Week Bullish Trend / Sideways: Monthly is green, weekly and daily triangles are red

Week Bearish Trend / Sideways: Monthly is red, weekly and daily triangles are green
Moderate Bearish Trend: Monthly and weekly are red, daily triangle is green
Strong Bearish Trend: Monthly, Weekly, and Daily triangles are red.

You can see clearly from the examples above the direction and strength of the current trend. You may have also deduced that you can spot trend reversals quite easily as well. Any signal that goes from moderate in one direction to moderate in the opposite direction signals an important trend change, and marks quality entries in the new trend direction.

You might be asking yourself if Trade Triangles are this simple, how can the truly be effective? I recommend taking a look at this 13 minute video that shows you how trading the triangles in 6 different markets (can you say diversification?) over 6 quarters ending in Q4 2008 lead to an incredible 624% profit; this includes the incredible market crash the started in late 2007!

About Marketclub Trade School

Trade School is your own personal trading university where you set the curriculum with some of the most well known professional traders in the world. These audio (MP3) seminars and PDF workbooks will have you following along with trading greats like Linda Raschke, Mark Cook, and Chuck LeBeau. These seminars cover various trading techniques and information on foreign exchange, futures, day trading, money management, stocks, psychology, indexes, options and more.

About the Marketclub Trade Triangle Alerts System

The primary value of this system is the ability to receive an instant alert as soon as a new trade triangle appears. I like to add an alert for a market that I am tracking, waiting for a significant trend change. As soon as the necessary things happen to trigger the triangle I’m looking to see, an alert is sent to my email letting me know to take a look at the chart.

Checkout this video on the Alerts System

My Overall Impression

Marketclub is an incredible value, even without any of the tools and services mentioned above. The Traders Blog provides so free trading advice and content that I’m amazed they don’t include it in the membership premium.

In my own trading, I use the trade triangle technology along with the stock portfolio to track the trends in the major indicies as well as several sector following ETFS. This allows me to quickly and easily adjust my trading style to bullish or bearish, and to find stocks that are moving in specific sectors.

When combined with the historical data, streaming charts, and educational content, Marketclub will assuredly increase your trading profits. As a final note I highly recommend checking out their latest educational videos, and then taking a look at everything you get with your membership to Marketclub.

To Profitable Trades,

You should also take a look at my post – Using My Exit Strategy Tool to Sell Stocks for a Profit, which outlines the rules for this live trading demonstration. Finally, here is a link to the previous post in this series: Selling Stocks for a Profit Tool – Trading Day 1

Choppy Market Action, But Still Lower

Today’s market was very choppy, the markets started slightly higher, only to pull back almost 1%, then rallying into positive territory, and finally closing slightly lower.

At first glance, it would look like our long positions aren’t performing very well. This really isn’t the case however; remember, I didn’t optimize the entry strategy for these stocks, I just bought some stocks that looked good to go long and am depending on the trialing stop strategy to make a profit. The good news for RDN, HIG, and MTG is that the charts are showing orderly pullbacks, and are even developing some nice continuation triangle patterns.

A Cup With Handle Formation?

HIG in particular is looking to make a big move, as the chart could be forming a classic cup with handle. It plays out, we should narrowly avoid being stopped out of this stock, and be able to ride the cup with handle well past our profit target.

Current Net Profit: -$494.11

Today’s Updated Trailing Stops

Long
Sym – Close – Stop

RDN – 11.17 – 8.77
HIG – 27.44 – 23.23
MTG – 7.61 – 5.92

Short
Sym – Close – Stop

ENER – 11.89 – 13.83
NVEC – 53.44 – 63.69
AME – 35.38 – 37.18

One of the most common questions I get in email, blog comments, and in my youtube channel is “When do I sell?”

Having run record price breakout for over a year now, as well as reading many other traders blogs, I have come to realize that most of us spend a disproportionate amount of time discussing entry strategies, and not enough time discussing exits.

It has been said that a reliable exit strategy will lead to better profits than most entry strategies. As you don’t have any profits until you sell, I firmly agree with this train of thought, and thus decided to create a tool that will help my blog readers exit trades profitably.

Get The Tool Here

The Chandelier Stop

The exit strategy that I discuss in the video above is called the Chandelier Stop. Developed by Charles Le Beau, the Chandelier Stop is a trailing exit strategy which utilizes Average True Range (ATR).

Developed by Welles Wilder, True Range is defined as the greatest of the following:

• The current High Less the current Low
• The absolute value of the current high less the previous close
• The absolute value of the current low less the previous close

Here is an image that illustrates TR:

Average True Range (ATR) then is a moving average of TR, typically a 14 period moving average.

The chandelier stop then is a system of trailing exits that “hangs” a stop some multiplier of ATR below the highest high of the trade for long positions, or above the lowest low of the trade for short positions.

Ask you can see, the chandelier stop moves and adjusts based on the price action (volatility, and highs), making it very reactive to market forces.

By adjusting the multiplier of ATR as you gain profits, you can tighten your trailing stops. This allows you to let profits run, while still protecting profits.

Get The Tool Here

Probably his most famous video, entitled Why the Meltdown Should Have Surprised No One, opened my eyes to a very common sense approach to explaining economics, and, coincidentally, free market economies. The video is a real eye opener; if American’s would have just opened their eyes the could and should have seen economic and market crash coming 18 months ahead of time!

His common sense approach is on display here as well, where he directly refutes the Greenspan / Bernanke economic theory of cutting interest rates to stimulate the economy.

Peter is a student of Austrian economics, which when broken down to its basics, is a less is more approach. With clear and concise arguments that logically prove government intervention breaks the free market model and ruins economies, it’s hard to argue with this principle. Therefore, I decided to study the mechanics of Peter’s principles, and what I found is fascinating.

The first job of an economist is to tell governments what they cannot do.

Ludwig von Mises

The principle tenants of Peter’s plan.

1. Increase savings, eliminate revolving debt.

2. Become a net producer, increase manufacturing of real goods and exports.

3. Eliminate deficit spending

4. Allow the free market to work including:

1. No bailouts
2. No stimulus packages
3. Eliminate central bank control of interest rates (or the entire central bank itself)
4. No mortgage safety – real estate prices are still much too high
5. Massively reduce corporate regulation, allowing fear of loss / failure to become actual loss / failure

5. Drastically cut federal income taxes to spur savings and real production

6. Restore the value of our currency. Since 2002, the US dollar has been devalued by nearly 30%.

7. Reduce and eliminate borrowing from foreign countries.

Listen to Peter Schiff explain why the free market is superior to a federally regulated, and insured market:

Unlike the convoluted, academic economics that only the Harvard grads can claim to grasp, these concepts make sense:

Save more than you spend and produce more than you consume.

So let’s take a look at what happened to our economy, in retrospect:

How Do We Profit From This Knowledge

I’m currently working on a new rotational model for trading, and am building a custom tool that’s going to blow you away. Stay tuned!

Trade size – 100 shares
Trade opened short - 10/20/2008 at $89
Currently – 10/23/2008, stock price – $74.91

Profit – $15.09, or 15.83%

Posts About This Trade:

1. http://recordpricebreakout.com/new-hot-stock-pick-mon-short-10-19-08/
2. http://recordpricebreakout.com/monsato-mon-short-pick-update/
3. http://recordpricebreakout.com/trailing-stops-a-live-trade-example/

Managing Open Positions

 There are many skills a trader must learn in order to take the most profit from winning trades. Learning to master your positions.

I have always found it odd how many people buy stocks, and enter and exit their entire position in 1 transaction each. As a trader, we should be able to define rules in which we can add to or subtract from our positions based on what the chart and the markets are telling us.

Today I decided to sell 1/2 of the position I purchased in my virtual portfolio. Here’s why:

First, today ws a perfect example of an opportunity to mange an open position without closing it out. Today saw the market swing from flat, to drastically negative, to a nice rally. While Monsanto was negative the entire day except at the open, it did trade in a very wide range as high as $80.50 and as low as $71.00. That’s over a 10% swing!

That combined with the recent market trend of 1 huge rally followed up by several smaller (but still large) down days, could give another excellent entry point to short the stock at a higher price. The difference this time is that this time, I’ll have the additional profits to reinvest into the trade should the plan workout. However, if for some reason today’s swing in the market somehow signals a change in market direction (I highly doubt it), I’ll have guaranteed that I took 50% of the profits in cash.

What I Did

Let me start by saying that I work a full time job. I am able to check stocks before the market opens and for about the first 45 minutes of trading, and again 30 minutes before the market closes. I checked on this trade and noticed that MON was trading in the middle of a wide range, and that the market had rallied considerably.

I had already considered selling 1/2 of the position on Friday because of the aforementioned rally and fade trend we’ve seen over the past few weeks. However, given today’s turn around, I belive it’s likely we may see a bit of a relief rally tomorrow, and a strong counter trend rally on Monday or Tuesday. This will make an excellent opportunity to reinvest my profits and ride this trade to the ultimate target.

The other 1/2 of the position has been left open, with the trailing stop set as mentioned in the tailing stock update that I linked to above.

Comments, Questions, Suggestions?

I hope you are finding this live trade example educational. I encourage you to post comments and ask questions. I’ll respond as quickly as possible to each and every comment.

Survey Question 1: How Did You Find Us?

I chose this question because I wanted to know where to focus my SEO. I’m actually really surprised that Google and Yahoo came out neck and neck:

Survey Question 2: What Topics Would You Like To See Covered?

As I mentioned, I really want to deliver content that you want to read. That said, I will be providing more articles about how I conduct technical analysis along with the charts that I usually provide:

Survey Question 3: What Charting Software Do You Use?

I have had conversations with many of you about the charting software you utilize for your trading. I was shocked that many people didn’t realize the number of very powerful free, or at least inexpensive options that are available to them. Also, if you are using a commercial charting package, I want to be sure you are getting the most for your money. Over the next couple of months I will be reviewing free and commercial charting software and producing charts on the blogs using these packages.

Would You Be Interested in Advanced Charting Software and Education?

I’ve left out people’s individual comments, but as you can see I have plenty of data to help improve the content I provide. Thanks again for your participation in the survey! -Steve

Click Chart To Enlarge

I was reading a very interesting blog article on Gold, and worlds currency markets in general. Mr. Rubino from DollarCollapse.com has a very well thought out and researched theorem related to the collapse of the US Dollar and a continue metoric rise on gold due to what he terms “flat currency.”

While I would never claim to be an effective economist, nor a master of currency markets, I will claim to be an expert technical analyst, so let’s see what the chart says…

From a technical standpoint, gold has a long way to go in order for this theorem to become law. As you can see there is a huge divergence between both highs in both the PPO and the ADX vs. the price of gold. Gold is currently in a long term uptrend with a short term downtrend that is a falling wedge.

In order for Gold to maintain it’s nice upward trajectory, it’s going to need to see some very strong trading volume push it up past the downward resistance trend line which also just happens to be the 61.8% fibonacci retracement level in the current short term down trend. If that happens, the technicals setup would be a continuation pattern and would be a great entry point for gold.

Video Lesson #1 – Sharing Knowledge & Creating Wealth

Video Lesson #2 – Money Making & Chart Setups

Video Lesson #3 – The 3 Most Important Things To Know About any Market

Video Lesson #4 – How To Avoid The Most Important Mistake Most Traders Make Everyday

Video Lesson #5 – The Key Element Every Trader Needs…A Game Plan

Video Lesson #6 – 3 Keys To Successful Trades: Fundamentals, Technicals, Perceptions

Video Lesson #7 – Chart Patterns That Produce Profit

Video Lesson #8 – 5 Tips For Successful Trading in Any Market

Over the past couple of trading days, I recommended to everyone to start shorting, going long puts, and using protective puts. I also outlines some basic methods for searching out good stocks to short / go long puts. Today, I’m going to go over sector performance.

For those of you unfamiliar with sectors, stocks are broken up into different categories. The highest level category is a sector. The sectors most people are familiar with are:

1. Transportation
2. Consumer Non-Cyclical
3. Health care
4. Conglomerates
5. Technology
6. Services
7. Capital Goods
8. Financial
9. Consumer Cyclical
10. Utilities
11. Basic Materials
12. Energy

Each sector is further broken into several Industry Groups. For instance, Energy is typically broken into the industry groups:

1. Oil and Gas – Integrated
2. Coal
3. Oil Well Services & Equipment
4. Oil and Gas Operations

The Value Of Tracking Sectors

By examining sectors as a large group of stocks, you can get a fairly decent view of the “big money flow.” What I mean by big mean is investment banks and mutual funds, the true driver of stock prices. Lets take a look at a list stock sectors and some performance information:

Full Size Image

There are a few key pieces of information I like to pay attention to when I look at this list.

1. The ratio of new highs to new lows in the sector. Right now, the services sector is showing an 11 to 1 ration of new lows to new highs. This is a good indication that the services sector is getting hit hard, and could be ripe with stocks to short.
2. RS (Relative Strength) Rank. This is the rank of each sector vs. every other sector. I actually keep a weekly log of these ranks. If you see a trend of a particular sector dropping in rank, that’s a sign that big money is moving out.
3. 13-Week % vs S&P. This is a pretty simple measure of how each sector is performing against the entire market as a whole. Again, the best way to use this data is to track it over time. If you see a pattern of decline by a particular sector vs. the market, it is usually a good place to start shorting

Sector Rotation

All of the preceeding concepts are methods of tracking sector rotation. Sector rotation is the action of mutal fund and portfolio managers shifting assets from one sector of the economy to the other. These rotations are key indicators as to the state of the economy.

If you’re not familiar with sector rotation, investopedia has a great article about it.