<<< DEALING WITH CHOPPY MARKETS >>>

<<<  DEALING WITH CHOPPY MARKETS   >>>
In an favorable market environment, you’ll find very few stocks that fit our criteria for perfect set up. You almost have to force trades in order to be active. Most setups of very sloppy and corrective environments. This is the side affect of the upward tick in volatility. The necessary tightness in price for consolidative breakout patterns is almost non-existent.

Just because the indexes are under pressure during choppy markets, it does not mean that there won’t be long setups that will work. There will be some breakouts that will work, but if you take 20 of them, a dozen or so are likely to fail in the rest will deliver subpar results. The same type of setup that has a 75% success rate in returns of 3XRisk in a healthy market could provide a 35% success rate and return one 1XRisk in a choppy market.

We are not in the business of scalping for 1 to 2% while risking a similar amount. We want to get paid handsomely when we risk our money and dedicate our time. This is why knowing when to be active in when to lay low is of utmost importance.

So how do we deal with unfavorable market conditions?

We cut our risk per trade and we trade a lot less. If you risk an average of 1% of capital and make 20 trades a week, you cut your risk to 0.25% per trade in decrease your number of trades to 5-6 per week I maybe even to zero when the floors of support have given way. The trend is our friend until it is not.

You don’t limit drawdowns by only decreasing the risk of your traits, if you decrease your risk to 0.25% per buy signal, but you keep actively trading, you could still have a sizable draw down. The draw down is not the worst thing that could happen to you in a choppy market. Losing your confidence is far more dangerous and far more significant.

Choppy turbulent market environment, it is of paramount importance to keep the keel in the water.

Being too active in a choppy market environment could condition you to adopt all lot of on healthy trading habits. If you get too many hits–and, possibly, even go to cash?

You are not only protecting your capital, but also your emotional well-being and confidence. In a sloppy, choppy turbulent market with a horizon difficult to discern, it is of paramount importance to keep that keel in the water.

Being too active in a choppy market environment could condition you to adopt a lot of unhealthy trading habits. You get too many hits—losing trades—even if they are small ones, you will start to subconsciously doubt your market approach and methodology. You will start to take quick tiny gains because it would be afraid that the market will take them back.

If you are too active during choppy markets, you are going to lose your confidence because of the many losses you may incur. When this happens, you are not going to be aggressive when it matters and weighing you really have to perform in order to make a difference.

Once a more healthy market environment presents itself —it always does—you won’t be in emotional state to take full advantage of it. The majority of your gains are supposed to come in this favorable market environment. You won’t be able to be active exactly when you have to pounce.

exerpt from a work in progress, Kairos Ops’ Guide to Momentum Trading

The Week in the Rearview Reviewed

Here’s a great chart showing all the times people thought, ‘This is the top.’

Not All Clean Energy ETFs Are Created Equal – FMD Capital Management

Kairos Swing Opportunties

No doubt, there are many ways to extract money from the markets but there are two major ways to consistently make money in the market:

1) Hunt for several huge winners in the year. Build large positions in them and ride it for monstrous gains;
2) Hunt for hundreds of 5% to 30% short-term winners when the goal is to compound capital quickly by actively moving in and out of them —swing in/swing out.

There is no right or wrong approach year. Both have a place in the toolbox of each active market participant.

Everything comes at a price. If you want to catch a 200% to 300% long-term winner, you have to be willing to sit through multiple consolidations and several bigger than 30% pullbacks. Not everyone has the stomach or intestinal fortitude to ride big stock market gainers, but perhaps you don’t have to.

If you sell all your winners when they are up 20%, you’ll never catch the double or triple. Period

Also, in a given year, there are a lot more 20% moves then 100% moves. If you learn how to catch hundreds of quick 5% – 20% moves, your capital could appreciate it very quickly while you keep the drawdowns in your account to a minimum.

Swing trading is among the fastest way to grow capital if you learn how to properly apply its principles. Swing trading is all about velocity and opportunity cost of capital the goal is to stay in stocks that are moving quickly in our favor and avoid “dead money” periods.

Stocks move in 5% to 30% momentum bursts that last between 2 and 10 days before they mean reverse of going to sideways consolidation. The goal of every swing trader is to capture a portion of a short term momentum verse, while avoiding consolidation periods. Then to repeat the same process hundreds of times in the year by risking between 0.5% and 1% of capital per idea. This is a management; preservation of capital is job number 1.

The beauty of swing trading is that it provides many signals. You don’t need to risk a lot per signal. You won’t second-guess yourself whether to take a signal or not. One trade will not make your year or your month, but it won’t ruin it. Here relies on the magic of compounding. The idea is to grow capital quickly by being leveraged to the hilt during favorable periods and being mostly in cash during unfavorable periods.

Basically, we all are looking for the kairos opportunity, the golden opportunity at the right moment in time.

30 minute

30 minute

CBYL   30 minuteINTL  dailyINTL  daily

Lotto Play/Coffee Can Candidate

Lotto Play/Coffee Can Candidate

RARE DAILY

60 minute

60 minute

WUBA DAILYYINN weeklyYUM. daily

SSNI DAILYTROV  WEEKLYTSLA DAILY

Seen & Noted May 11th

STOCK UNDER ACCUMULATION
http://finviz.com/screener.ashx?v=351&t=AMPH,ASGN,AVD,BBRY,BRSS,CACQ,CALM,CMCM,CSIQ,DEG,DF,DRNA,ELNK,ICAD,IMKTA,INCR,INTL,JMEI,JOY,KERX,MGNX,MYOS,NHTC,NOAH,NVEE,NVRO,NWSA,OSIR,PAYC,PINC,PTBI,RDUS,RELY,RNF,ROSE,SBCF,SEDG,SIGM,SKYW,SPPI,TACO,TAXI,TROV,UBNT,Z,ZEUS,ZU,&ta=0&o=-change

STOCK UNDER DISTRIBUTION
http://finviz.com/screener.ashx?v=351&t=BREW,CALA,CMT,ENV,FISH,FTK,IMH,KNDI,NBL,NLS,PARR,PNX,PPO,RDNT,RFP,TM,TNK,TPX,VRTS,&ta=0&o=change

WATCH LIST MEMBERS W/ MO’
http://finviz.com/screener.ashx?v=351&t=ASHR,ASHS,ATHM,CHII,CLVS,CMCM,CN,CNXT,CSIQ,DRNA,DRV,GOGO,IAI,INTL,JMEI,KBA,NFLX,PAYC,PEK,POWR,QQQC,RGEN,RTRX,SBND,SEDG,TBT,TMV,TROV,VIMC,WB,X,ZU,&ta=0&o=-change&r=11
ONE FOR THE ROAD

“Problems are a good thing. They’re a necessary thing for those pursuing success. Without problems there would be no solutions, no innovation, no breakthroughs and no millionaires. Problems stimulate creative thought and action. Problems allow individuals and society to evolve. Having said that, problems also create anxiety. They agitate and frustrate us. They hold us back from moving forward and realizing success in life. The solution to seemingly intractable problems is persistence. Persistence, the habit of never giving up, can solve most of life’s intractable problems. Unfortunately, most give up. They lack persistence. Consequently, those who give up are never able to solve their problems and, as Henry David Thoreau so eloquently put it, they live lives of quiet desperation. If you want to succeed, there is only one path – persistence. Never, ever give up on solving a problem. Solutions alter who you are. They enable you to grow and evolve.” – Tom Corley

Seen & Noted — the Weekend Edition

TOP 25 ETFs OFTHE WEEK
http://finviz.com/screener.ashx?v=351&t=COW,CU,DBB,DBC,EWG,EWI,EWL,EWP,EWQ,EWS,FXE,FXF,GDX,IGE,MOO,PPLT,SLV,SMH,UGA,UNG,USO,XLB,XLE,XME,XOP,&ta=0&o=-perf1w
TOP STOCKS OF THE WEEK
http://finviz.com/screener.ashx?v=351&t=AAWW,AVD,BCO,BLVD,CKSW,CLNE,EBF,EBIO,ELLI,ENOC,GLUU,IMH,IMMR,MRC,NTRI,OCN,RYAM,SKYW,SYT,TMST,TWI,WRLD,WX,XPO,ZEUS,&ta=0&o=-perf1w
THE WORST WEEK OF THE YEAR
http://www.advisorperspectives.com/dshort/updates/World-Market-Snapshot.php?referrer=feed43.com
INDICATORS: Fundamental, Dentiment & Technical
http://www.yardeni.com/pub/PEACOCKBULLBEAR.pdf
COMPANIES ARE DOING BETTER THAN 1Q FINANCIALS SHOW
http://fat-pitch.blogspot.com/2015/05/companies-are-doing-much-better-than-1q.html
THE TEN MOST IMPORTANT ECONOMY CHARTS OF THE WEEK
http://qz.com/395794/the-10-most-important-economic-charts-of-the-week-5/
STRATEGIES TO TRADE THE RISK-REWARD EQUATION
http://www.investopedia.com/articles/active-trading/042915/strategies-trade-rewardrisk-equation.asp
BASIC TRUTHS ABOUT TRADING
http://www.smbtraining.com/blog/the-basic-truths-of-trading
LEARNING FROM TURTLE TRADE ED SEYKOTA
http://www.newtraderu.com/2015/04/08/ed-seykotas-10-top-trading-principles/

ARE YOU LIVING TO TRADE OR TRADING TO LIVE?
http://www.thetickertape.com/perspectives-trading/2015/04/living-to-trade-39361/
10 LIFE RULES
http://www.huffingtonpost.com/2014/08/29/dr-phil-life-laws_n_5734666.html
DAVID LETTERMAN REFLECTS
http://www.nytimes.com/2015/05/03/arts/television/david-letterman-reflects-on-33-years-in-late-night-television.html?_r=0