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Wednesday, August 21, 2013Premium Subscriber Content

General Trading Strategies

Never trade and/or invest with money that you cannot afford to lose.

Always know any trade's risk/reward ratio. If a trade doesn't have decent ratio, then that trade isn't worth pursuing.

Never make a trade where the loss (risk) is too great to stomach.

A stoploss should !e placed at a key technical level which eliminates or greatly harms your trade.

"rom a psychological standpoint, never go allin on a trade unless it has a very high risk/reward ratio on top of a very pro!a!le

technical pattern with an un#uestioned stoploss point.

Never impulse trade. In other words, don't enter into a position !ecause you feel like you have to trade something.

$nly trade with a planned e%it (stoploss and target) strategy. Investing is different from trading in this regard. "urthermore,always stick to your stoploss point.

&hen you are feeling overly !ullish or overly !earish, take a step !ack and reanalye the situation from the oppositeperspective. Always have an eye on a !ullish and !earish scenario.

Avoid overtrading, and instead, !e picky with your trades. ou do not need to !e right all the time and profit from every move.emove ego and emotion from your trading !ecause they are never helpful.

After closing an e%tremely profita!le or unprofita!le trade, take a !reak and clear your head !efore returning. *areless mistakesare often made during this posttrade euphoria.

After a loss, avoid going into the ne%t trade e%pecting to make that loss !ack. +oreover, avoid holding onto a position past it'sstoploss point and selling or covering a significant portion of a position !efore it's reward point unless ustified.

Always remem!er that market valuations and prices are largely determined !y irrational traders trading !ased on emotions ofgreed and fear instead of from a scientific formula or method. In short, -markets can remain irrational longer than you canremain solvent. 0eynes

1on't !e afraid to !et !ig if you are e%tremely picky with your trading method and see a very high risk/reward ratio trade formaround a very pro!a!le technical pattern. "ortunes are often made in a very short period of time !y traders who are e%tremelydisciplined enough to wait a long time for a great trade to develop. Alternately, fortunes are often lost !y traders who are not

picky and !et !ig on low risk/reward ratio trades ust !ecause they feel like they need to trade.

&henever you feel pressured into making a certain trade !ecause the price is moving #uickly against your viewpoint and you're

afraid of missing a move, don't trade. ou always want to !e in control whenever you are making a trade and this pressuredfeeling is emotional and not logical. $ften times, this pressured feeling occurs right !efore a reversal.

General Buying Approaches

2uy 3 If price goes down, either do nothing or !uy more until stop is reached. If stop is reached, sell everything and look for

another trade setup.

2uy 3 If price goes up, do nothing.

2uy 3 If price goes up, continuously raise stop at key technical levels.

2uy 3 If price goes up, continuously raise stop while !uying more a!ove these key technical levels.

2uy 3 4lace limit sell at important channel/trendline, "i!onacci retracement/e%tension, and/or horiontal resistance area. If theprice forms a significant reversal pattern or !reaches an important support region !efore this area is reached, sell/cover part or

all of position.


2/18

5 com!inational approach

General Shorting Approaches

6hort 3 If price goes up, either do nothing or short more until stop is reached. If stop is reached, cover everything and look foranother trade setup.

6hort 3 If price goes down, do nothing.

6hort 3 If price goes down, continuously lower stop at key technical levels.

6hort 3 If price goes down, continuously lower stop while shorting more at key technical levels.

6hort 3 4lace limit cover at important channel/trendline, "i!onacci retracement or e%tension, and/or horiontal support. Ifprice forms significant reversal pattern or !reaches an important resistance region !efore this area is reached, cover part or all.

5 com!inational approach

Waiting to Buy or Short Approach

4atience with discipline7 Never trade !efore a wellconceived plan calls for it. +oreover, avoid !uying in anticipation of a!reakout and selling in anticipation of a !reakdown. 8et a good trade develop !efore trading instead of forcing one.

Some Highly Favorable General Trade Set-ups

4lace a !uy order's stoploss ust !elow a !ullish triangle's 9wave after a !reakout. Alternately, place a short order's stoplossust a!ove a !earish triangle's 9wave after a !reakdown.

4lace a !uy order's stoploss ust !elow a !ullish daily or weekly reversal candle once confirmed from heavy volume andfollowthrough. Alternately, place a short order's stoploss ust a!ove a !earish daily or weekly reversal candle once confirmed.

Disclosure:

Current Trading Positioning and/or Bias

Long S!/CA!, B"TC#"$%

S&ort SP', !A', C#PP(), #"L, A!S!, ()S!

Waiting to Buy S!/*P+, $"(", SS(C, T$', B"TC#"$%

Waiting to S&ort $AT-AS, S"L.(), -#L!

%Because " am a ery ongterm bitcoin bu, " aays &ae 04 o5 my bitcoin aocated 6ort5oio inested in bitcoin &ic& " &ae nointention o5 seing7 "5 t&e 6rice o5 bitcoin as to s8yroc8et tomorro, " oud be 6er5ecty &a66y it& &o muc& " &ae inested7 T&isinestment 6ortion aos me to t&in8 more rationay, ess emotionay, and it&out a arge bias &eneer " am trading t&e ot&er 6ortion

o5 my bitcoin aocated 6ort5oio, es6eciay &en " am not ong bitcoins in my trading 6ortion &en " see t&e 6rice rising7 "n t&e currentenironment, t&e ot&er &a5 o5 my bitcoin aocated 6ort5oio 9t&e trading 6ortion: is a in cas&7 " am aiting 5or a buying o66ortunity7---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Basic trading terminoogy;For the purpose of clarity, the following definitions are partially taken from Investopedia

Position T&e amount o5 a security eit&er oned 9&ic& constitutes a ong 6osition: or borroed 9&ic& constitutes a s&ort 6osition: byan indiidua or by a deaer7 "n ot&er ords, it


3/18

Bitcoin

2:*/;61

Although the daily underlying indicators are supporting further gains, the weekly upper BB in the mid-$130s doesn'texactly allow for much upside efore the price hits ma!or resistance" #urthermore, if the significant support at $10 %weeklyand daily &0sma represents a stop-loss point with a target of ($13), then uying at $1&0 represents a risk*reward ratio ofaround 1+1 which don't exactly !ustify a short-term long position"


4/18

2:*/;61 continued #rom a longer term trading perspectie, waiting to uy a ma!or trend-line touch or triangle completion makes a lot

of sense" Because this trade would hae a stop-loss !ust elow the ma!or rising trend-line %currently around $)0 and a targetwell into the hundreds and possily thousands, eery day rings this trend-line higher and decreases the amount of risk thatthis trade entails" his trade clearly has a ery high risk*reward ratio and will only getting etter"

Along with the upper weekly BB, the larger triangle possiility further limits this moe's upside while warning ofanother sell-off towards ($.0 in the short-term"


5/18

2:*/;61 continued /f you thrie on near-term trading, then uying a pullack towards $11) makes a it of sense with a stop !ust under

$10 and a target of ($13)" Although this trade is still not great with a risk*reward ratio of around (1+&, it is much etter thanattempting to uy in the mid-$1&0s with the same target and stop-loss" ou would asically e trading near-term momentumuntil the pattern of higher highs and higher lows ends" eep in mind though that this type of near-term trading is ery risky"

2:*/;61 continued his chart should always e in the ack of one's mind" As long as the 24 chart continues to trend higher longerterm, uying itcoins makes a lot more sense than selling them"


6/18

Stocks64< 3 ;.6. 6tock +arket

2horting the close elow the daily &0sma at (15.0 was the optimal trade here with a stop-loss at the recent high of160."56 and a target of (1))0 allowing for a high risk*reward ratio of (1+" /f / wasn't already in this trade, / would wait for apullack into (1560 efore shorting with the same target and stop-loss"


7/18

1A< 3 =erman 6tock +arket

/'m much less inclined to trade the 7A4 compared to the 24 ecause the trade set-up isn't as profitale" But, if /was to trade it, / would short it at (300 with a stop-loss at 8) and a limit at (6.00 allowing for a risk*reward ratio of (1+&")"


8/18

669* 3 *hinese 6tock +arket

/ really can't !ustify a short or long position in the 229: with the price currently around the middle part of a longerterm falling wedge" he risk*reward ratio would asically e (1+1 either way if your looking at a wedge continuation" / woulde interest in uying if the price fell towards the lower trend-line at (1)0"


9/18

NI009I 3 >apanese 6tock +arket

/'ll e interested in uying the ;/9/ once the price gets closer to the daily &00sma" /f a triangle forms here, thenthis would e a classic triangle reakout-uy with a stop-loss !ust under the wae-9 low allowing for a high risk*reward ratio"he target would either e the width of the triangle or the upper longer term channel resistance"


10/18

Commodities=$81

At this point, /'m really only interesting in shorting gold once it reaches its daily &00sma and ma!or hori


11/18

6I8?9

2imilar to gold, /'m really only interested in shorting siler once it reaches its daily &00sma and*or ma!or hori


12/18

*$449

=ith copper firmly in a falling channel and at its daily &00sma, shorting this commodity makes a lot of sense aroundthe current price of (3"3 with a stop-loss at (3" %triangle 9-wae high and a target within the low-$&s" his trade would haea risk*reward ratio of around 1+8"


13/18

NA:;A8 =A6

>nless natural gas surpasses $8") %channel and hori


14/18

$I8 (8ight 6weet *rude)

Because oil is at the top end of a large trading range, a short makes sense around $10) with a stop-loss !ust aoe$11) and a target of ($0" his gies a risk*reward ratio of (1+3" /f the price moes aoe $11), then /'ll consider uying witha target of ($1)0"


15/18

:N< @ ear ;.6. :reasury Note ield %@

/'m waiting to uy this pair on a pullack towards &8 with a target of (80 %ma!or upper channel trend-line and ma!orhori


16/18

Currencies9;/;61 3 9uro, "i!er, antidollar

>nless this pair closes aoe the trading range of (1"38 and (1"&, the price should continue trading etween thesetwo areas" =ith the price currently at the upper range oundary, shorting makes a it of sense around the current price of(1"33) with a stop-loss at (1"3) and a target of (1"&" his trade would hae a risk*reward ratio of around (1+)"

A;1/;61 3 Aussie>nless the price closes aoe (0".3, the price is either heading sideways or down within the falling channel@

therefore, shorting this pair makes a lot of sense with a stop-loss !ust aoe (0".3 and a target of the mid to low-0"0s" /f /wasn't already short this pair, / would wait for a ounce to (0".0) to initiate a short" At that price, the risk*reward ratio woulde, at least, (1+3"


17/18

;61/*A1 3 8oonie (inverse)he continuation pattern of higher highs and higher lows in this pair makes pretty conincing argument that the price

is heading higher" Buying makes a lot of sense with a stop-loss at 1"0&8 %last lower low and a target of at least 1"05) %topchannel trend-line and preious &011 high" /f / wasn't already long this pair, / would wait for a pullack to the daily &0sma orma!or falling trend-line around the mid-1"03s or (1"08 to initiate a short" At this price, the risk*reward ratio would e around1+3"

;61/>4 3 en (inverse)At the moment, /'m not really interested in this pair until it reaches its daily &00sma" 2imilar to the ;/9/, if this pair

forms a large triangle, / would simply wait for a triangle reakout efore uying, setting a stop !ust under the 9-wae low, andhaing a target of around (110 %ma!or upper channel trend-line" he risk*reward ratio for this type of trade would proaly earound (1+)" / would consider shorting this pair on its way towards the ma!or lower channel -trend-line if it closed elow thedaily &00sma and preious low"


18/18

Disclaimer+ Although this newsletter includes market analysis, all ideas, opinions, recommendations and*or forecasts,expressed or implied herein, are for informational and educational purposes only and should not e construed as an

inducement or instruction to inest, trade, and*or speculate in the markets" Any action or refraining from action@ inestments,trades, and*or speculations made in light of the ideas, opinions, and*or forecasts, expressed or implied herein, are committedat your own risk and conseuence, financial or otherwise"

/ want to stress that there are no actual trading recommendations within this newsletter" he trading logic in this newsletter ismeant to supplement my asic charting newsletter from a trader's perspectie while still eing educational in nature" /n short,this newsletter should e seen as an educational tool to help someone learn how to trade from my asic charting newslettersinstead of what to trade"

he charts in this newsletter are made possile y stockcharts tradingiew"

#or more information aout technical analysis, stockcharts offers free information under its chartschool ta+http+**stockcharts"com*help*doku"phpCidDchartEschool

As always, feel free to ask me any uestions ia email or chat

august 21, 2013__newsletter premium

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