All language subtitles for 3. Session 3 - March 21

All right, guys.

Today is March 20th, and this is our
final session with Linda Reschke.

I must tell you that each session, I was
making a lot of notes.

And I think that if you haven't been
doing that, if you haven't been

to Linda and how she looks at the system
creation, how she looks at the

validation of the signals, how she...

backtest those, how she finds the points
of the entry and so on and so forth.

This session today is crucial in the
development of any trader because Linda

going to talk about the process, the
process of how we incorporate trading

our lives in such a way that it becomes
an unconscious habituation of

good. rules and principles and concepts.

And it's very crucial to create that
type of lifestyle for you

as a trader or as an investor.

There should be always the time where
you're going to go through your process,

where you're going to post -analyze what
has happened, and so on and so forth.

So all of those things are extremely
important, and I urge you to take notes

today as much as possible.

We've been talking about Linda's book,
and I'm still reading it, and it's a

fascinating read. And it's so easy to
read, and it's so funny. For me, there

a lot of references also to the Bay
Area, San Francisco, and the Pacific

Exchange. I believe Akron Akajima is
there right now. So there are so many

references that Linda has in that book.

And also, you see the progression.

where Linda has started as a trader and
how she's going through the progress of

becoming more knowledgeable, more
skilled, understanding the business

meeting different people in the
industry.

And there are so many great stories.

And Linda is very frank and honest about
this, and I love this a lot.

Because as traders, we really, really
have to be honest to our results.

One of the stories, early stories in the
book that I really like is the story

where Linda had a straddle and, you
know, had a big drawdown. And by that

86 ,000, you know, back then was a lot
of money.

You only have one screen.

Guys, I have not switched the screen
yet, by the way.

So I'll switch the screen. Don't worry.

So all of these stories are just a
progression of how the trader develops,

it's very important to approach this
book from that perspective as well.

So please go to Linda's website, order
the book, and enjoy the read.

All right, and with that, now, Damon,
I'm going to switch to you.

Okay.

So there should be, yes, the slide now.

Okay. Great.

Thank you, Linda, for being here.

And it's all yours. Thank you.

All righty, you know.

And I'm actually doing this from Tampa
today, just so you know.

And if I had had just a tad more time, I
had a wonderful picture of driving

through the middle of the state, which I
might just have to tack on to the end

of these.

And it said, Welcome, home of the
Redneck Mud Park, the world's most

off -road park.

And I thought, well, wouldn't that be
fun if I said, well, I'm just a little

delayed because I had to go en route
through the mud park.

Here in Florida, we have all the major
attractions.

But now, you've got the last part of our
three -part series here, Trading

Process and Routine.

And this truly is the most important
part of our... presentation because if

are not prepared, you cannot take
advantage of the opportunities that we

in today's market. So what we're going
to do today is a little bit of

everything. Whoa, whoa, whoa, whoa. I've
got a nice sensitive mouse here.

We're going to first take the first hour
and go over the process and the

routine, and I'm going to show you
exactly my process and routine that's

remained unchanged for over three
decades, and I really feel that this is

made me successful.

And if I hadn't been able to do this day
after day, I really would have, and if

I don't do it on a daily basis, I am
behind the gun even before the market

opens. And if you remember, covered a
lot of material. In the first session,

recovered modeling and statistics and a
lot of shorter -term systems as well as

long -term systems.

And then in the second session, we
covered practical trades and strategies

setups, such as that new two -period
rate of change, highs or lows, leading

to possibly extended runs or larger
opportunities.

And part of this was based on one of
those models that we reviewed in the

session of when you have multiple closes
on one side of the five SMA and this

persistency of trend phenomena.

And so today, then, we're going to tie
all these things together and see how do

we scan for these things beforehand?

How do we scan for them intraday?

How do we organize all this tremendous
amount of data and volume coming in?

And how do we narrow it down to the
program that's going to work for us? So

going to show you exactly my process and
routine.

And then we're going to start live as if
it were the start of today. And what do

I look for? And even if it's a longer
-term opportunity or I'm in trades

already, how am I managing them? So
super practical on that.

And then in the second part of the
presentation,

I got some emails from some of you of
things that you would like to see. So

we're going to look specifically at some
of the things that I look at when I'm

trading the S &Ps, even if it's just day
trading.

And I think you might be surprised at
just how basic and simple it is. There's

no reason why.

Anybody that hasn't gotten some basic
familiarity with chart formations and a

momentum oscillator couldn't replicate
this exactly.

And then, for fun, I thought that I
would review the current status of the

markets. or at least the status as it
was as of last weekend.

So in all fairness, I didn't want to
cheat and show you slides after the FOMC

presentation. I wanted to show you the
slides before the FOMC meeting results.

And then you can truly see how do the
technicals unfold given the news, not

after the fact, and what would you have
been looking for beforehand, and how did

it play out.

And in all fairness, I did not see the
last hour of trading per se today, but I

did see that the S &Ps closed up about
36 handles.

Once again, we would not be able to take
advantage of these types of

opportunities if we didn't have a firm
process in place. So my first comment

is you have to be able to trust this
process.

Don't ask questions. If you follow the
process, you will have the edge and the

opportunities will arise.

I say this because in my book, which
thank you for your comments for those

have read it, that you have emailed me
with, you'll see numerous times I was

definitely behind the gun or caught in
very difficult situations and had some

huge losses.

You can't go worrying about the market
that you lost the money in. You just

to have confidence that if you just keep
following that same routine every day,

just stick with your systems or your
models, do the best job you can each

eventually that process is going to lead
to a rising equity curve. Over time, of

course, because it is a law of numbers.

So let's just look a little bit more
about what this process really involves.

It's a series of actions. It's nothing
more than almost having a checklist,

one step at a time, one piece of
information at a time.

And this is a process that we go through
to keep us consistent.

It's also important to have a process
because it will keep us objective.

And goodness knows how much over
-sensory stimulation there is and data

at us and distractions from all
different fronts, from the television,

friends' flippant comments, to another
trader expressing their opinion, to

perhaps the Internet, things that we
don't necessarily go out seeking, but

they're always floating into our sphere
of consciousness.

And it's very difficult for us to
maintain objectivity. And I think once a

trader loses this type of objectivity,
that's where some of the larger mistakes

and errors can come from. So this
process really helps us to at least

these unforced errors and at least have
some control over these cognitive

biases.

So it's going to also keep us engaged
during the very slow periods.

Because as you know, the best
opportunities do not present themselves

It's really a patient game and a game of
waiting and waiting.

And what do you do to keep yourself
engaged, to keep yourself active,

for when there is an opportunity?

And this same philosophy applies even if
you have a regular full -time job, even

if you're just doing end -of -the -day
charting or even charts on the weekends.

You still need to have a consistent
routine and process that's going to keep

waiting and waiting for when, boom,
there is that opportunity because they

ring the dinner bell when it comes
along.

For me, process was always my lifestyle
as I say it. It had to be

overriding towards all other areas of my
life.

It doesn't mean that it consumes you 24
-7, but for me to make it as a

professional trader, I had to
prioritize.

Doing my homework. I had to prioritize
doing things that a lot of time were

drudge work and boring things. It's not
always fun coming up with new indicators

and doing research.

It really is nothing more than going out
and practicing 10 ,000 putts out there

on that putting green.

You don't think about it. You just do
it.

And so once you've started to remember
last time I asked you all to think

what markets you're trading, what style
you're trading, what types of things

appeal to you, and to start to think
about, as if you were to put a

what your process might be, just one
action at a time.

And so this is what's going to lead you
to rely on your own homework. And I just

can't emphasize this enough, that the
people that I see around me, if they're

investors, part -time traders, Full
-time professional traders, the ones who

successful, have always done their own
homework and stuck up for their own

opinions or roadmaps or models, if you
will, as to what's going to unfold in

markets. You have to be an independent
thinker in this business.

Okay, I love this slide because it tells
us, it catches us off guard.

Think about it.

The first time I saw this, I fell for it
too.

I read that top line wrong.

And the problem is, is that our minds
like to jump through pieces of

to connect the dots. But lots of times
there's missing pieces of information.

Okay, we don't know everything out
there. So we're going to connect the

best we can, but with incomplete
information. And that's where a lot of

might fill in the blanks, if you will,
with either incomplete information or

information that's definitely.

our slant or our bias, we will find
supporting evidence to support our

And this is, again, where some of the
bad trades come from. So it doesn't mean

that you have to be a quant per se, but
it does mean that you have to have a

model and a process.

Okay, the Internet, good or bad? I have
to confess. I am not sure I would be the

trader that I am today if I had started
when there was the Internet.

It's very difficult.

to not go down rabbit holes in terms of
blogs, e -mails, social media, Twitter,

a zillion different things. And there's
a lot of information on the Internet.

Even if I want to Google Wyckoff and see
articles that have been written about

Wyckoff, I could probably pull up 100
pages.

And all of a sudden, you're burning a
lot of time. So just think about how you

allocate your time with your use of the
Internet. And I'm talking about aside

from... our charting programs, or
software applications for execution,

just think about how you allocate your
time to the Internet and if it's helping

you reach your goal or distracting us.

I will be the first to admit that I am
subject to a lot of cognitive biases

and I just can't help it.

That's why, if you remember, Wyckoff was
the one that gave the original talk on

a theme that Hank Pruden then espoused
on about being your own best

client and doing your work and your
preparation in a room with no windows

closed door. In other words, you have
blocked all outside distractions and

influences.

Okay, then you can truly do your own
best work and be

free from some of these emotions and
cognitive biases that creep in.

So let's just do a real quick refresher
of what they are.

Everybody's talked a lot more about
these in the last 10 years. First, it

started off with the School of
Behavioral Finance, which introduced a

novel concepts 20 years ago about why
people make the decisions they do.

But so much more work has been done in
going terms much deeper.

And I love this little cartoon because
it tells how we are influenced by the

very first thing that we see, whether
you admit it or not.

Confirmation bias, I think, is one of
the biggest traps for traders in the

market.

If you have a position on, you are
always going to be looking for evidence

supports your position.

It's very difficult not to.

I'm sure you have heard from some of the
more exceptional professionals out

there, the Ray Dalios of the world or,
you know, Tudor Jones, and they will say

that they always go looking for the
things that will prove them wrong.

per se, where would their analysis or
their thesis go wrong instead of

looking for what is going to support my
opinion or belief.

So, for example, a very obvious case
would be when we made those big lows

at the end of December, and if you
allowed yourself to get too bearish,

would be very easy to start looking for,
oh, gosh, we're going to be in a

recession. Oh, goodness, China's in a
slowdown.

Oh, look at these charts, made new
momentum lows.

And you're only seeing one side of the
coin.

So I'm not going to say anything more on
this because I suspect that most of you

know what I'm talking about from your
own personal experience.

And I can find myself doing that to this
day if I have a position on,

I want to go and look at what are the
fundamentals or what is the basis that

could support this position, and that's
totally wrong.

I had a gal that used to work for me
back about 15 years ago, and she's

mentioned in the book, and she had a
wonderful system that she came up with,

it's called the time frame justification
system.

So if you're in a position and it's not
feeling quite right, have you ever gone

and all of a sudden you're looking at
hourly charts?

Or perhaps we're looking at weekly
charts, or we're looking for the time

that's going to justify us holding that
position.

So just be aware of that little trap.

Anchoring bias.

That could be being influenced by
information that came into your sphere

earlier point in time.

This was a case where we had the
commitment of traders report

showing large commercial long position
in the Japanese yen.

So you can see each week when they give
the reporting here how the commercials

are these purple lines up at the top,
and they had a very long position.

And then what happened is the market did
have a good rally. And you can see here

on the weekly charts, I'm going to
practice something here.

Let's see here.

On these weekly charts, this huge
breakout that we had from that base.

I'm actually trying to use this little
pen function here.

On the left -hand chart, A wonderful
breakout to the upside, and this was

the commercials were massively long.

And as a trader, it's very easy to say,
oh, this is starting a new leg up. Where

can we go?

Look at that big round number up there,
par.

The market traded there in the past. Why
can't we go back up and test those

highs, you see? And this information is
sticking in our head.

And on the right -hand side, I put up.

A daily chart of exactly that last bar
on the weekly.

So you can see if we're thinking on the
dailies, we still have an uptrend here.

We're still seeing that, oh, I want to
buy dips. I wanted to buy dips, this

of mentality.

If I look at the weekly chart, I don't
see any sell divergence.

So I'm still being influenced by this
last piece of information that I got on

the commitment of traders.

And then when we retrace back to that
moving average, perhaps my brain is

thinking, oh, it's just another little
dip, it's just another little pullback.

And I drop my guard and I forget the
fact that perhaps we had three pushes

Perhaps that price rejection spike up
there at the top was a very sharp

indicating new downside momentum.

You know, I'm perhaps...

blind to these things because I don't
have a quantifiable model that's telling

me at this point I'm just thinking about
that last traders report.

So you see it would be very easy to just
drop your guard a little bit and you're

still thinking about something that
perhaps was from the previous month or

previous couple weeks before.

The bandwagon effect, of course, none of
us are subject to the herd mentality,

right? We're all astute market
technicians.

But there's a lot to be said for market
sentiment and how people do feel

more comfortable when they are thinking
in terms with the crowd behavior. And

here at the right -hand side, with this
bullish sentiment reading, You can see

that spike up in the blue line at the
very far right. I would love to be able

get this to work.

And I, excuse me, I'm just trying to
play around with the little pen

But you can see at the far right -hand
side of the chart.

That bullish sentiment reading was the
highest reading in many years, and that

was right at the market top.

So the most people were bullish right at
the market top.

Another bias, which we don't want to say
is a cognitive bias, but it is, and

that's when you turn your head in the
other direction from something that's

working and stop managing the risk.

The ostrich effect.

Oh, I'll just pretend that I don't see
this losing position on my sheets.

Oh, if I just ignore it for a couple
days, it'll come back into the direction

that I want it to.

Recency bias.

On this left chart, which is a chart of
the NASDAQ, basically the QQQs,

think how you were feeling if that day
closed where we had that big

bar down, that break from that last
swing high, and you can see that

that bar closed around 158.

And at that point, you're probably
feeling tremendously bearish. Well,

been studies that show that people will
be influenced by the last bar of the

price movement. So if the last bar was a
high to low bar, the majority

of people will have a bearish bias.

And if the last bar was a low to high
bar, the majority of people will have a

bullish bias. So this is behavioral
finance 101.

And if you go and look at the right
chart, you'll see that the very next day

did a quick test below and then popped
right back up. So even if you were

thinking, well, we might need to rotate
around and consolidate a little bit, you

might have been caught off guard for
just how far that swing snapped back up.

to the upside, okay? So always keep an
open mind as to what the next day's

action can be.

So in addition to the recency bias and
all these other cognitive things, how

many of you have thought that if I just
knew a little bit more, that's better?

And that's not often the case. Sometimes
it just muddies the water and

complicates things. More indicators just
creates more confusion.

A wonderful technician that's passed was
Dick Arms, and he used to have a great

expression. He says, if you have a
watch, okay, and you look at

that watch, you'll know what time it is.

But if you have a watch and somebody
else has a watch and they have different

times, you'll never know what time it
is. It was something to that effect, how

just because you have two sources of
information.

may make it more confusing.

The optimism bias, it is a known fact
that humans are generally a lot more

optimistic.

We are just that way by nature. We tend
to overestimate our own abilities.

We overestimate how great we are as
traders.

We overestimate the probability that the
trade that we have on is going to have

a good outcome.

and therefore we drop our guard against
the risk management as being as

stringent as we should be about our risk
management because we always want to

have a positive outcome.

The loss aversion bias, losses are felt
twice as much as gains. We're much more

fearful about having losses than we are
feeling good about our gains.

And lastly,

Ego bias.

Everybody else has these cognitive
biases, but none of them apply to me,

Because I know them all. And I will tell
you, I've been in the markets now for

almost 40 years, and I catch myself
every day with one of these biases.

I'm not a machine, so I have to always
make sure that I have that.

process and that ritual and that
homework that's going to keep me in a

consistent routine because that way I
have the greatest odds of either being

the groove if I'm day trading or trading
actively during the day or if I'm not

sitting in front of my screens every
day, I have the greatest odds of at

capturing one of the signals that I'm
looking for.

So routine and rituals are our friends,
be it if we're traders in the markets,

if we're doing professional sports, if
we're a musician, anything that is a

performance -oriented discipline.

And definitely trading in the markets is
a performance -oriented discipline.

The only thing that counts is going to
be the bottom line or...

Following your system and not making
unforced errors.

There's a lot we can do to protect
ourselves also in terms of the right

environment and structure.

For example, if you are a full -time
trader sitting in front of your screens,

create an office that's free from
distractions.

Where you don't have young children
walking in on you in the middle of the

or dogs coming up and barking at you at
your desk like mine likes to do if I

don't shut it out of the office.

All right. Same thing. If you're just
doing your homework at night and perhaps

you have a family to attend to during
dinner, make sure that you have some

time, some quiet time where you can go
in in the evening.

and do your studies or your homework and
preparation without any distractions,

without interruptions.

You can create this environment
yourself. You can be creative in any way

you need to be, but you have to take it
upon yourself to create the environment

that's going to facilitate your
business.

So think of it as a substitute for a
mechanical system. Perhaps you're not

a mechanical system, but this is the
next best thing, and I can't emphasize

important it is.

Now, in terms of processes, we can have
separate processes for each part

of our business.

Just as if you were a large company and
you have different departments, each

department has people that they answer
to, a general flow or routine that's

spelled out.

So the thing about our business with
trading is that we're the only ones to

accountable to ourselves.

We're not answering to a boss.

So it's very easy for us to get sloppy
around the edges or say, oh, I'll come

that after I'm through with my TV show.

That's where the real discipline comes
in. It's not a discipline in terms of

people like to think about the risk
management. That's a whole entirely

field. It's a discipline about being
accountable that you are going to follow

your process.

So we are going to look at separate
processes for how I do my homework and

preparation, how I'm going to do my
execution, how I am going to manage a

once it is on, and my process, too, for
making sure that I'm healthy and in a

proper mental state.

And you could, in theory, write down a
checklist for each of these areas.

for each routine that you do.

You don't want to write down checklists
that are too long because, trust me, you

will never do them. But at least it will
give you a good starting point because

we want to approach the markets the same
way every day, every morning,

same time, and so forth, and take one
day at a time.

Okay, I'm going to show you exactly what
I do, and this is the only way that I

have been able to manage as much as I
have been able to do, and there's still

more I would love to do, but I just
can't make it work. I am a one -trick

and even though I have all these
wonderful ideas for more trades and

and systems, I have to limit myself to
my specialty.

At the end of each day, such as today, I
will print off my trade sheet at the

end of the day.

I used to make this trade sheet by hand
and then just Xerox a bunch of copies,

but it's my form that I fill out every
day.

friends that do the same thing. They
have different spaces and they put in

different types of information, but
writing stuff down is the very first

So I print off my trade sheet and then I
write down the closing prices of the

markets that I trade. I write down the
prices and I write down the two -period

rate of change.

Once I've logged all my numbers,

And, by the way, part of logging these
numbers includes logging the market

internals, which I'll show you, the
trend, the breadth, the ticks,

the closing ticks, and a few other
metrics.

Then I'm going to zero in, and I'll
start looking at one market at a time.

found that I can go through 24 markets
in pretty much 20 minutes.

So I'm not doing deep analysis.

I'm not drawing pivots all over the
place and squiggly lines.

I'm just looking for my specific
patterns to see, are they setting up?

will show you those in the second half,
how they set up for today.

So I simply go through one market at a
time. I'm looking for those two period

rate of change patterns I showed you in
the very beginning.

or perhaps I'm analyzing the daily
weekly charts for potential structure,

as we looked at in the second half.

But my specialty is really looking for,
is there a trend day

potential for the next day? So that's
the main thing I focus on at night. Then

I'll write down a simple little note to
myself. Is it a buy day?

Is it a sell short day? Or is it a
breakout mode?

I don't really write down much more than
that. I keep it pretty simple.

I write down two words.

Maybe I'll write down the swing high or
the swing low if there's a key pivot

that I think the market can go to.

Lastly, I'll note if there's any
compelling daily chart formation with a

oscillator pattern that could be a buy
or sell divergence.

And the funny thing is, I might only get
one pattern per market every three

weeks. So it really doesn't happen as
often as you would think. But I'm always

keeping an eye out.

And I have to write down the next days.

calendar in terms of economic numbers is
it going to be an FOMC is there a crop

report if you just trade stocks you
might want to definitely make note if

particular stock has earnings or for
example you know next week's going to be

big week for Apple with their annual
conference and reveal so all these

write down at night and I do it when the
markets are closed of course Globex is

trading and so forth, but the stocks
aren't open yet, and we don't always

if there's going to be a big gap such as
Biogen today until the next

morning.

So this I just had to show you was what
I've been doing for 30 days.

Five years about, and you can see this
was when the S &P was at 1407, so I just

write down the closing price.

I write down the two -period rate of
change.

one line of data, and then I make my
little notation. If it's a buy day or a

sell short day, you can see in that
middle column on the bonds, on the right

-hand side, I've got 1, 2, 3, 4, 5, 6,
7, 8, 9. So I was writing down, once

got to 7, that we've got an extended run
going on.

Now you can see the price right there,
145 .30, then 146 .18.

And look where we were. Even eight days
later, we were rallying up to 148 .12. I

don't know if you can see that. It's
right smack in the middle of the page.

And at that point, FC cell, I wrote down
first cross cell.

This is just one day at a time because
that was the pattern that set up on that

310 oscillator.

So you can see we don't really have.

many of these daily patterns that unfold
with the chart structure.

But I might not have caught it at that
time if I didn't go through and write

that down one day at a time. And this is
really important to my preparation.

Here's the sheet that I print off of
TradeStation.

It's a radar scan sheet.

And it just goes through each of my
markets.

High and low for the day are the most
important pivot points.

And then some of the patterns that we've
already looked at that are just done in

my silly notation here.

The plus one is if there's a three -bar
triangle.

The B and the S is there are if there's
a pinball buyer sell.

And on the right -hand side is a
volatility breakout system.

That's what I use for stops a lot of
times. I don't necessarily trade the

system, but it's an average true range
function that's quick and easy.

And if I have an existing position on,
it serves as an excellent stop since

an ATR -based type of function.

I used to fill out this sheet by hand 30
years ago. Of course, I didn't have all

the patterns on it that I do now, but I
would still write down something similar

where I could then go through and do my
homework on the individual

charts.

So this is the page that I use for my
nightly homework. I'm mostly looking at

that lower left.

candlestick chart to see if there's any
compelling patterns with that two

-period rate of change.

You saw last week how we had that new
momentum highs coming

out of a three -bar breakout or a little
small trading range for a couple days,

how that could lead to continuation, and
that's exactly what gold had there.

with that first big green bar up that
was at the end of February. You see, we

had three little narrow days. It popped
up. And if I were doing my homework on

that day, I would simply write down new
Momo highs so that I knew

that we should get some continuation for
a couple of days.

So that big green bar up at the very
bottom there, is different than the big

green bar up at the very top, which is
coming at the end of the swing. So I

you to understand totally the importance
of the context.

Big range expansion coming out of the
little narrow bars is different from the

big range expansion at the end of the
swing. And I know that you are all...

pretty sophisticated enough in your
technical analysis by now to understand

that. And on this particular chart with
the gold in the middle, the daily, you

can see we had our three pushes up. And
if I look over on the weeklies, I can

see we were a little bit overextended on
that weekly swing up.

I usually don't put too much faith in
the 120 or the 240 -minute charts on the

right side of this slide, other than the
fact to note that they did make new

momentum lows.

So I know the next day, if we have a
rally or reaction, it's

probably going to start to form a bear
flag.

where, as you know, the traditional
Wyckoff sequence, if we have a reaction

we'll still have to go down and retest
because of that downside momentum.

So I go through and I just simply click
one market at a time, make the notes on

my sheet, and when I've filled out my
sheet, this is what it looks like.

I suspect I'm probably the only one that
can read my chicken scratch.

But this was from a couple years ago,
and I wanted to keep it real.

And these are the types of little
squiggles and notations I'll make to

So this is the way I can go through and
look at 24 markets and

just make one or two notes. It does not
mean that I trade all these markets.

Please understand that. If I have more
than four or six positions on at once, I

am asking for trouble.

But I have to make it part of my process
because I want to be there if a ripe

opportunity presents itself.

And then, of course, at the very bottom,
I'll make any special notations on this

particular day.

I noted that the ticks had a very narrow
range. It was an inside day range for

the ticks.

We had a high put -call ratio and a few
other little technical notes that I

wanted to make to myself, five -year
auction, FOMC, et cetera.

So it's the process and the preparation
for me that puts it all together.

It's not that I trade all these
patterns. It's not that I'm trading, you

half of these markets. I might not even
make a trade in those live hogs for six

months. But if I hadn't been going
through that process, would I have been

for that live hog new momentum highs
that set up?

Last week. And by the way, they're still
going up and making new highs.

So it's grunt work for sure.

Absolutely. But this is my business.

Then I take all my notes on that sheet
and I transfer them over to this sheet.

This is my worksheet for that next day.
So I made out my game plan for the

day. Now I need a clean sheet that I can
write down things as the

day unfolds. And you see my little note
at the bottom left there, winners

readily admit errors. And I actually
have another piece to that,

and it's correct mistakes immediately.

So I still print out the same sheet, and
here it is.

As the day is going on, I transfer my
comments from that game plan sheet that

you saw initially.

And for example, if you look at the top
right of this sheet where it's got the

gold and the silver and the copper, CP
is the CQG symbol for

copper. I know some software programs
like TradeStation will use HG.

But here I've got gold, silver, and
copper, and I simply wrote down buy day.

I'm looking to buy those.

At the bottom of the sheet, I write down
my existing positions.

This was when I had my fund. This is
back in 2013, so I was still

actively trading my hedge fund.

And I will write down.

The bonds, minus one. That was minus one
unit. So I had my unit size.

The EC, I was long one unit. And I'm
going to write down the stops on those

positions or where I would be wrong.

And then as the day goes by, I will
write down my actions. So you can see in

middle part of this sheet, ZCH.

Three is corn.

Z -W -A -H is wheat.

At the start of the day, I wrote down to
exit these positions.

That's what my model was telling me to
do. Perhaps I had initiated the position

the day before on a range expansion
function.

Now, all of you know...

Sometimes when the markets look the best
and sometimes when you have the best

winning position on, you don't want to
drop your guard. I might want to look to

sell out or take profits on a test of a
high or a push above a previous high.

So that's why I was writing down exit
and then I write down what I did. I sold

$1 .30 and three quarters there in that
corn.

I must have made a mistake on that
natural gas because

I'm not so sure why I wrote down stupid,
but I wrote down stupid, sold 83,

bought 60. I'm not sure what I was
alluding to there, but that's pretty

that I'll make that type of comment to
myself.

So this is my process.

I have charting software and a zillion
screens, and you can sit

there, and I do watch the price change
all day long, but I'm still very

active in my management process, in my
preparation process, and throughout

the day of writing things down with a
pen on paper.

This was my same trade sheet from the
early 90s. Now I've got it on an Excel

spreadsheet where I can just print it
out mechanically.

But this was from the early 90s, so I
really wanted to show that I have stayed

consistent to my process day after day
after day for so many years.

So everybody can develop their own
routine.

You have lots of examples around you. We
were talking last week about

Investors Business Daily, Bill O 'Neill,
the CanSlim process.

There's lots of different models that
you can go through that are appropriate

for investors.

that perhaps are not necessarily looking
to be quite so active during the day.

But even if you're just simply an S &P
day trader, I think it would behoove you

to write down the Globex levels, write
down the previous day's key

little swing highs or swing lows. Are
there any gaps?

Are there any pertinent areas where the
market?

might have what we call a decision
point, a decision level, like that would

considered support or resistance, a test
level, all right? So go through and do

your preparation in the evening. I do
have one friend that gets up at 5 in the

morning to do his preparation and
homework. I don't suggest that, but I do

strongly suggest doing it the day before
so that you're not influenced. by the

overnight action. It's better to do your
plan the day before and then adjust it

as you come in in the morning than to
try and scramble and do it in the

And the reason is because you will be
very biased by what happened overnight

the overnight action. For example, this
morning we gapped down.

And it would have been very easy to
think, oh, it's a failure. It's after

They sold it off on FOMC. Big gap down.

But what happened?

We had a pretty good rally. And you know
what? There was an excellent technical

reason why. It was exactly on one of
those models that we learned in the very

first session. And we'll look at that at
the end of this.

We'll say, what was it that we learned
from our extended run or our two -period

rate of change or these models that we
looked at in the very first session that

were screaming that there was an
opportunity?

All right.

Moving on.

Now the day has started.

We've done all our preparation.

And by the way, everything that I just
showed you, from logging my numbers,

looking at the sentiment readings or the
market internals, then going through

those 24 markets and making my
notations.

It does not take longer than 40 minutes.

I can do it in half an hour if I have
to.

I just put my mind down and do it. It's
a lot of grunt work. So it doesn't have

to be this big two -hour analysis thing
every night. If you are spending two

hours at night doing your homework,
you're going to be too burned out the

day to trade.

It needs to be efficient but thorough.

I come in in the morning, and I try to
sit down at my desk at the same time

every day.

I brush my teeth. I go into the kitchen.
I make my tea. I take the dogs out for

a quick little walk. Boom, I'm at my
desk at 7 a .m. Once I sit down at my

I do have to remember to put on my
binaural beats music or some Pandora

music just because that.

Kind of sets the stage there with a nice
meditative tone to it.

Now I'm going to look at the 7 a .m.

Central Standard Time reading, okay? 8 a
.m. Eastern Time. And you'll see why.

We already looked at this in one of the
models.

in that very first session where we saw
the price movement, the trends start off

the session openings.

And we use 8 Eastern Time because that's
when the big boys in New York sit down

at their desks. That's what they've
always done from trading the bonds and

financials. And that's what we're going
to use even for the S &Ps for our

initial S &P reading.

And you'll see why.

I like to look and see how did Europe
trade.

How did the global markets trade?

What is the DAX doing? So this morning
when we came in and we sat down, the DAX

actually had sold off pretty hard. It
had been in a pretty good downtrend, and

told Kyle, my assistant, that we would
look for a five -minute buy divergence

the DAX, and that might be the sign then
that the S &Ps were ready to rally.

Or at least you don't know that they're
going to rally 35 handles, my goodness

gracious, at all. But at least we're
trying to get a little rhythm from the

overnight markets. That's important for
me as a shorter -term trader.

And I like to look at the boons. So, for
example, yesterday was a strong day up

in the bonds and the boons. And coming
in this morning, I could see that the

boons had...

Pretty good upside follow through, as
did our bonds, but that wasn't going to

sustainable on top of yesterday's move.

It didn't mean the market was going to
necessarily fall out of bed, but it

wasn't going to be sustainable for that
morning session.

Then I like to look at my tick charts,
and I'll show you these in the second

half, too.

Are there basic patterns forming? And by
that, I simply mean...

Bi -divergences, flags,

ABC consolidations.

I'm pretty simple in terms of the
patterns that I look for.

And if it doesn't strike me between the
eyeballs, I don't want to have to squint

to see something. In other words, the
best patterns.

stick right out at you. They almost look
too good to be true, but they're the

good patterns because there's the volume
there and the volatility to make a

reliable pattern.

Lastly, I'm going to look and see what
are the big movers in stocks before the

opening because

As you saw in our last session, that
FinViz is a great scanning tool, and

sometimes it can just set the tone or
perhaps prepare you so you aren't

blindsided. For example, there was a 100
-point down gap in Biogen this morning,

but did the NASDAQ care?

No, it really didn't care. It wasn't
affecting that major market index.

So it was already priced into it. So
you're not caught flat -footed by seeing

these things. And instead, if you do
have an upside bias, is there any

leadership that we can find to the
upside?

Or perhaps if you're looking for the
downside, where would the downside

leadership be?

Is there an opening gap? That's the
first thing once those S &Ps then open.

Do we have a gap greater than four
points, and how do we immediately trade

that gap? And this morning, you could
see that we gapped down and immediately

rallied to fill that gap.

Remember in the first session, we talked
about that burning dog model.

Okay, so it's something where I have
some hard statistics that I know the

market's going to trade into that gap
area 70 % of the time.

Do we do that right away?

Do we need to go down, test, and then
come for the gap?

And if you're going to close the gap, is
it starting to accelerate?

So right away you see that when I sit
down, if it's 7 or if it's 8 .30

when the New York Stock Exchange opens,
I have specific things that I look for.

It is my ritual because that way I don't
get brain fried by all of a sudden

being inundated by so much information.

In other words, what I'm doing is
chunking data.

I'm trying to look at the day in blocks.

Now here's something very interesting as
an aside.

Did you realize that you can only
concentrate for 90 minutes at a time?

Once you go past 90 minutes, you really
need to stand up and walk around for

three minutes. You can't process
information for eight hours straight all

long. So that's another benefit of
chunking data.

marking tasks for you to do at certain
times or intervals, and then giving

yourself a little mental break.

At 9 o 'clock, or rather, it says 9
Central Time. That really should be

9 Eastern Time.

No, I'm wrong. It's 9 Central Time, 10
Eastern Time. I'm going to check what

the first 30 -minute volume of the day.

So in other words, is it better than the
previous day?

If so, that increases my chance of a
trend day.

If it's lighter volume, then it
decreases my chance of a trend day.

Obviously, yesterday, being an FOMC day,
was a much lighter volume day. So we'll

look at a chart and just see what the
past couple days.

And then if we do get a good trend with
an increase in volume, what do we want

to do?

We want to press that morning trend into
Europe close because the morning

session is a sweet spot.

And then take a break.

Go get some more coffee. Go get some
more tea. Get a glass of water.

hydrate, hydrate. It is so true that our
cognitive processes are not

nearly as good if we aren't hydrated.

You don't think nearly as well if your
body needs water, and

that's the last I'm going to say about
that.

Once the New York session opens, the
first thing I do is look at

my Stock board here. This is trade
station, and this is my grid.

Do I trade all these stocks?

Absolutely not.

But it is my process, and it helps me
see the tone of the market. Now, this

a number of weeks ago, and on this
particular day, on the far left column,

you'll just see three stocks in green,
and the rest are all red.

So that's my top 40 NASDAQ shares.

And then right next to that is the top
40 NYSE shares.

So at the start of this day, I could
glance over and immediately see the

For me, it's the same as those heat maps
that you can...

I have a friend who doesn't look at a
screen like this, but he simply pulls up

the heat map and sees the number of
green and red squares that are popping

at him and the groups.

So that's his way of processing
information, and I think a lot of people

that. It's a wonderful, wonderful tool.

On the far right of this page,

At the top, it's a relative strength
grid for the futures market. So on this

particular day, the SGB, that's the
boons.

So the boons were the relative strength
leaders, which should be no surprise

when you're seeing the sea of red in the
stocks.

And then the dollar was right up there
as well.

I can just glance at this. I'm not
reading all the numbers and the symbols,

for me, this is my way of processing
information.

Just so you know, the third column over
and the fourth column over, one's green

and one's red, those are the shares that
are best up off the opening price, and

the one next to it are the shares that
are down.

down most off the opening price.

And we looked at this last week.

Remember how the stocks would have that
big five -minute opening bar or a huge

gap? And if you're a stock day trader,
you can just go and pick the top

three of these and the bottom three of
these and look for a long trade on the

strong ones and a short trade.

on the weak ones, and it works better
than anything else. It's not going to

100 % of the time, but it works well
enough.

And then the two columns next to those
where you see those little blue squares

and the little red squares, that's
simply the stocks making new highs on

and the stocks making new lows on the
day.

So in this particular example, I don't
really see many stocks making new highs

or new lows on the day.

and it was probably in the middle of the
day, and we might have been having a

sloppy downside bias trading range day
at that time.

But on a day like today,

you will see that column with the blue
lit up. And it's the same as if you're

watching the ticks hit plus 1 ,000,
except that it stays lit up. And I will

never consider making a short trade
against that. It's just telling you that

you're long, to stay long.

That's really the useful metrics of
this.

Equally important, telling you when to
stay with a winning position.

And this was a day, just to show you the
flip side of the coin, where the

majority of the shares were green.

And you can see my NASDAQ column on the
far left and right next to that, the top

40 NYSE.

And then on my relative strength on the
far right,

Aside from coffee and the hogs at the
top of the list, there was the DAX, FDA,

that's the DAX, RTY is the Russell, ES,
S &P, all the indices were the

strongest relative strength leaders.

And a pretty strong sea of blue there
for indicating new highs.

All right, everybody see that?

So, boom, I keep this monitor off to the
side.

I turn my head and I glance at it maybe
two times during the first hour.

And for me, again, my point is just
showing you my process, how I can go

through that first hour, that first two
hours, the first three hours of the day,

almost on autopilot, just waiting for my
signals to pop up.

So here are some visual cues that I have
created for myself.

And you can do this, too, with any type
of indicator. If you wanted to have

alerts pop up, if an hourly stochastic
is overbought or oversold.

Here I've just got funny little blue
dots to indicate spots where there could

bear flags on weak stocks or bull flags
on strong stocks.

So this is a separate monitor.

What I try to do is I don't want to mess
with my monitors during the day. I

don't want to end up playing with things
because if I start playing with

indicators or reconfiguring charts, it
takes me out of my trading mode.

And sometimes it's very easy to do when
we're anxious or we're nervous or we're

not quite sure what's happening with the
day.

Instead of just gathering your breath.

being calm and taking a pause to step
back, we want to start pounding on our

keyboards or monkeying with indicators
or changing the colors or playing with

things. And that's okay, but just
understand once you start going into

mode, you have left.

the arena of trading mode, okay? You've
left that arena of stocking,

patience mode, waiting for your signals.

So I have a lot of monitors, but I'll
always keep this particular one, and

actually got 15 charts.

I just wanted to pop this up and show
you a close -up of four of

them.

And I stick to my, even though I do my
homework on 24, I'll always have my same

15 up in the same spot, and I don't
touch it. This is my stable. These

are my resources.

You could do the same thing if you had a
stable of 20 top trading stocks that

you want to keep an eye on.

Or even on the daily charts, if you had
a stable at night that you looked at of

20 top relative strength stocks that
you're keeping your eye on for a trading

opportunity.

Or better yet, if you get one of those
signals like the new momentum highs or

lows or you've got a position on, keep
that chart up along with the other

on one page and leave that page up.
Don't go monkeying with it.

So this is the same thing. I have
another grid that's just the five

charts. And I'm not trading off the five
-minute charts, but I just want to have

them up for when that market starts
moving.

And as you can see, you can't just...

I'm just going to go back. You can't
just react to little dots, okay? If I

didn't have my preparation and game plan
ahead of time that was telling me gold

is a sell short day, look for the
trading opportunities to the short side,

I'm focused in on only looking for the
short trades on gold. But if I didn't do

that,

Okay, you can see I wanted to show you a
chart with bad signals because it's not

so easy that we just put up little
signals and they pop up and we're

the colors.

Trade by numbers. It doesn't work that
way. So my previous

page are little cues, okay, but they're
not trading signals in and of

themselves.

I have to have already done the homework
so that I have the confidence that I've

got my bias set ahead of time because,
remember what I said, the blue dots

could be the buy signals, and in a
downtrending market, the sell signals.

see this S &P chart on the top right,
that big blue dot as we're falling out

bed.

Well, that's happening right after we
were coming off of the divergence and it

was a weak market. And on my sheet, if I
didn't have trend day up or buy day, I

would very easily get suckered into
making a bad trade.

So I just wanted to explain to you that
there is no little magic dots or magic

indicators. They're just my way of
creating little signs and roadmaps to

monitor things.

Really important to have a completely
separate weekend process.

It's my Sunday night process or Sunday
morning if I've got plans for Sunday

evening. And again, it does not take
much time.

My basic things that I look at take me
no more than 30 minutes.

But I also want to do...

My computer maintenance on the weekends.
I don't want to be messing with my

computers during the trading week.

So on the weekend, I'll look at the
commitment of trader reports.

I look at the sentiment readings.

I'll go through my top 200 stocks for
weekly structure. And trust me, it

take long because the weekly charts
don't trade, don't give you a choice

opportunity, but maybe once a quarter.

I update my contracts on the trading
platform. For example, if things are

rolling, I want to be sure that I've
prepared that ahead of time.

Computer maintenance has become an ever
-increasing important part of this

business because we rely so much on our
computers for our execution

and our charting.

I do always do the backups. I do the
cleaning out the caches, a lot of little

things that I'm sure most of you have
come to learn through learning the hard

way, or hopefully you're more
sophisticated than I've been and knew it

you had to hit those emergency break
type of things. But it's an important

of our business.

As traders or investors, make sure your
computers are up to snuff. I like doing

research. search on weekends but above
all you have to do something fun you

get out of the house go see movies go to
an art show do some sports do something

take the family on a picnic you must do
something to completely clear your brain

This is back to the mental health part
of the process.

For example, exercising every day or
getting out of the office at a certain

time.

Because if you are not 100 % upstairs,
if you are tired or fatigued mentally,

you don't have to be tired physically.

But trust me, at the end of the week, I
am really fatigued mentally.

You're simply not going to be as sharp.

And you will miss things. Even if you
are a systematic trader, you will miss

things.

Okay, I'm not going to talk too much
more about process and all this kind of

stuff. But most of you know by now that
we don't want to focus on the dollars.

We don't want our goals to be expressed
in terms of dollars.

We want our goals to be expressed in
terms of our process and our sequence.

So keep in mind that you did a good job
if you did your homework

every night, if you took the signals you
were supposed to take, if you were

paying attention and concentrating. That
is far more important.

in terms of keeping your process goals
and how much money you made or lost.

Because it's equally destabilizing if
you got lucky and caught some big wins.

And likewise, sometimes it's hard to
keep going if you had, let's say you're

trading a mechanical system, but it took
a beating that week.

Well, that's just the system. You're
still trading your system. It's not, you

can't take it personally, you see.

So always think about.

Am I doing what I should be doing
correctly?

Am I going about my routine correctly?

Am I making fewer unforced errors this
week than I did the previous

week? If you happen to see something in
your preparation, did you act on that

signal? So monitor your performance in
terms of these process goals.

as opposed to the dollar goals.

And remember that very first slide I
showed you in the beginning.

Trust the process.

You must do that. You must trust the
process.

Same thing if you're an analyst. One of
the analysts out there that I respect

the most, who's been a very good friend
for almost 40 years, is Larry McMillan.

And Larry McMillan has been sending me
his options report or his nightly

homework that he does now for goodness
knows how many decades.

And I make it a point to not look at it
first thing in the morning when I sit

down. Sometimes I'll open it at lunch.

I'll do best if I look at it at the end
of the day because his type of...

Analysis is a little bit longer term in
orientation than mine is, you know, and

he follows a different routine. But I
will have to say this. I totally respect

and admire the fact that he has been 100
% consistent in his

analysis and routine for all these
years. It doesn't mean 100 % correct.

but I never see him deviate from the
types of things that he is looking at.

And if it works out or doesn't work out,
that's a different story.

You know, he might be taking one of his
trades or signals that's a Bollinger

Band type of standard deviation
function.

It's not going to work 100 % of the
time, but he's going to keep following

strategies.

as they unfold, and I've never seen him
deviate from that, unlike a lot of

analysts out there who sort of hedge
their bets.

You know, they kind of speak out of both
sides of the mouth. Well, I like the

market unless it doesn't hold and it
goes down, and then I don't like it type

hedging, you know.

This is the strategy. This is the
signal.

There's a seasonal bullish tendency the
day before the holiday. Therefore, we

buy options on that day and we'll sell
them three days later and it's worked

65 % of the time over the last 40 years.
Okay, that is cut and dry.

So just be conscious about how you
monitor your own progress and

routine.

We've already gone over the variables
that we can control, our environment,

research, how we can find ways to be
accountable.

If you are finding yourself making too
many unforced errors in your trading,

either missing trades that you should be
taking or taking trades that you

shouldn't be making, some creative
solutions can be have a trading buddy

share your results at the end of the
day.

Or share them with your spouse or email
them to a coach or find some way to

make yourself accountable to somebody
else if you are not being accountable to

yourself and instead taking that ostrich
approach of sticking your head in the

sand.

We've already mentioned the importance
of models because they add an element of

objectivity. that we can trade around.

I'm not going to go on much more about
this because we've got charts to go

through. But as an example, Wyckoff,
Elliott, Gann,

Stoudelmeyer. They all came up with
their own unique models for structure.

They all came up with their own unique
process.

So whatever you come up with must be
unique to you in order

for you to believe in it and follow it.

Okay, you will be able to read these
slides at the later date and point if

would like. I can email them to you as
well as Roman can email to them. So

are just extra supportive things that
you can go back and look at yourself.

But given everything that I have said,
start off simple.

Don't try and do it all because you will
fail. You can't succeed trying to do

too many things at once.

Concentrate, concentrate.

All right.

And eliminate those distractions.

Let's look at some charts because one of
the questions that I had was,

what do I look for when I'm day trading
the S &Ps?

or intraday opportunities.

And this is yet another monitor that I
have that I don't touch, that it's

up. It's just like my Insight Grid that
had all those lists of stocks.

And this one just simply has the 5 and
the 15 and the 120 minute.

Sometimes I'll make that 120 minute a 30
minute.

And I'm just keeping my eye open for a
recognizable pattern.

I'm going to sit back and wait and wait
until I see a recognizable pattern. And

a lot of times I miss stuff or I don't
see a pattern. But these, to me, are the

major indices.

Somebody said, oh, the Russell's not a
major indice anymore.

And I don't know how they can say that
given the fact that it represents the

small cap shares. And, yes, it was a
little sloppy and weak the past couple

days. But so what? There was enough
leadership.

It's still an important part of the
equation for me.

So this was just a couple days ago. I
think it was on two

days. It was before the FOMC meeting, I
believe.

And you can see the three pushes up, one
of the patterns that we looked at in

the very beginning with structure on
those S &P 120 -minute chart, the very

Left chart. If you just be patient with
me, I'm going to try one more time to

engage our little pen mode here.

Pen. All right.

And I don't seem to be able to draw.
Roman, are you there? Yes.

So the pen is going to be on the
GoToWebinar module.

I'm there and I'm clicking on it. And
then you have to choose the pen and you

can choose the color of the pen.

Well, maybe I'm not choosing the color.

By default, it could be black.

That's exactly what it is. Oh, well, I'm
not going to get very far drawing with

a black pen, am I?

Okay, now we're in business.

Whoops.

Glad you guys are patient here.

Okay. One more time. Third time's a
charm, right?

Okay.

I'll have to try a different time. But
you can see the top left chart,

the 1, 2, 3 pushes up on that 120
minute.

And if I go down, and at that time on
the 15 -minute, you can see the cell

divergence on the S &P 15 -minute. And
this just hits me between the eyeballs.

I'm watching this unfold.

It's always up there. And you can see
how pretty it was.

On the far right side, I've got the 15
-minute Dow. It's the middle chart on

the far right side.

I'm going to do this one more time.

I'm sorry, Roman. I've tried to click.

Okay. No worries. But we see the cursor,
so we're following the cursor. Oh, you

do? You see this?

Yeah. Okay. Then I'm in business here.
Good.

Well, you can see the 15 -minute cell
divergence and the classic oscillator

pattern. I will look for something like
that.

When I am trading the S &Ps, it's really
basic. That's what I said. I'm looking

for the divergences, the momentum
divergence that's confirmed by at least

these other indices because the NASDAQ
sometimes does not always behave like

S &Ps.

if it's being influenced by one of the
larger big four fangs there. And then

can see at the bottom here, we actually
had the little five -minute bear flag.

After making this new momentum lows,
your Wyckoff sequence, we react back up,

and we have to retest back down. We may
not make a full retest, or we may make

a whole new swing down.

I don't know.

what we're going to get. I just know
that I've got a good opportunity to put

a trade. And then it's always a matter
of seeing what the market gives me.

So, for example, if I make a counter
trend

trade on this 15 -minute chart on a sell
divergence, okay, in my mind I'm

saying, let me see if we can make it
back.

down to that moving average because a
divergence is a regression to the mean

type of trade.

I don't know that we're going to punch
through it. I don't know if we're going

to fall short, but I'm always watching
price relative to a moving average or

price relative to a swing high or swing
low. In this case, you see we had the

price relative also to a gap area.

So I never put out targets per se. I'm
just seeing if we can get to that level.

And sometimes we'll exceed a target and
sometimes we'll fall short.

And in this particular case, we actually
had a much greater swing down.

Now, I might have covered it, that
moving average. That's just fine.

I took my piece and I walked away.

And then you wait until you get another
recognizable pattern.

And if you don't get a recognizable
pattern, then you just keep waiting and

keep waiting and you keep waiting.

Here is the other screen that I look at.
It's the tick charts.

I like to look at a 3 ,000 or 4 ,000
tick chart, a 9 ,000 to 12 ,000 tick

chart.

A 16 ,000 to 20 ,000 and a 40 ,000 to 60
,000. So there's no right or wrong

parameters. If it's heavier volume, I'll
watch a 4 ,000 relative to

a 3 ,000. It's very similar to looking
at the 5 and the 15 and the 30 and

the 60 minute. The big difference is it
includes the overnight data.

So when I look at the 5, 15, 30 minute
of the S &P and NASDAQ and Dow,

I'm only looking at the pit session
data.

Why?

Two reasons.

A, that's the start of the NYSE opening
and all the volume comes in on the

stocks at that time. And B, it's
pointless to look at a five -minute

That includes the overnight data because
there's not the volume and the trading

there to necessarily make the
symmetrical patterns that I like to see.

look at the tick data, it condenses
everything proportionately to the volume

ticks are the number of frequency of
ticking up or down, you see, price

So in this particular case,

There was a very recognizable pattern
towards the afternoon session there

you can see this nice little momentum
divergence.

And that, to me, is a beautiful trait.
It's symmetrical.

I like to see symmetry in the chart
formations, meaning I don't have to

and there's too much noise.

If there's too much noise, I'll just see
what I want to see.

So we had obvious volume here because
the volume makes clean oscillations, you

see? Even though it's a tick chart, it's
getting good volatility there.

If I look down below that, I don't
necessarily see any chart formations on

9 ,000 tick. It's not like there are
compelling buy or sell divergences. But

what do you see here?

It's that equilibrium level, that
sideways line. You see?

So we went over this in that very first
session when we were looking at

structure. Our sideways line.

is equally important as a pattern.

So let me repeat that in a different
way.

A non -pattern or a non -compelling
oscillator formation can be

equally as important as one of those
patterns that's hitting you between the

eyeballs because that's where we tend to
get our breakouts.

They come from these low volatility
points, from things that we can't see in

oscillators, from things that aren't
necessarily traditional chart

but yet...

If you were a market profile person or
you looked in terms of the volume nodes,

it's building a big node here. And you
can see once we broke from that, we had

more significant downtrend.

And then that reaction back up where
I've got that blue arrow drawn was a

perfect classic Wyckoff setup for a
retest back down, new momentum lows,

react back up, retest. That is the
recognizable.

pattern on that chart right there.

On the 20 ,000 tick next to it, you see
that cell divergence up there? That was

that same divergence that we just looked
at on the 15 -minute chart. And you can

see that it also shows on the tick
chart.

So right here in the course of one day,
I have three obvious trades

to me that I couldn't anticipate.

But that happened as the day was
unfolding.

So I'm working with the market, letting
the market tell me when there's a

recognizable pattern or opportunity.

And I find that every single day will
have at least three recognizable

along this way of thinking.

And on the top right, I just simply have
a big 60 ,000 tick or an 80 ,000

tick. It could be like a 120 -minute
chart. And what I like to do is always

the key levels marked off.

So I want to recognize those swing highs
and those swing lows because we're

either going to come down and test those
and As you know, if we break through

them, then we'll go back down to the
middle of the range.

Or if we hold support there, then we'll
get our continuation pattern back to the

upside.

This was FOMC afternoon.

So this was two days ago.

Wait a minute.

Excuse me. It was yesterday.

I'm on the wrong planet.

And all I wanted to point out here was
that even if you were waiting and didn't

make any trade all day long, there was a
wedge at the bottom there. You could

see those three pushes down and an
upside breakout from that. But let's say

were still standing on the sidelines
because of the uncertainty from FOMC.

You can see once we made that new
momentum high and that push up, The

reaction down, a little small flag
pattern. There was a long trade

And the second retest down, another long
trade opportunity. I don't even have

any oscillators up on this particular
chart.

But I wanted to show you that, A, you
don't have to anticipate what's going to

happen with the FOMC results or the
announcement.

Let the market tell you because once a
market comes to life, it's like the ball

is in play.

You see, then you have something to work
with.

If you're in this little slop and chop
rotation here, you can see at this part

of the trading here, there's nothing
really to work with.

You don't want to be trading in dead
markets where there's just sideways

Who cares if you miss this break? It
doesn't matter. There was a reaction

that set up a great little short scalp
if you wanted.

But I'm just saying, let the market come
to life so that you have something to

work with.

And here, I just wanted to show it to
you again.

With a full layout of the grid that I
just showed you, the 4 ,000, the 9 ,000

tick, the 20 ,000 cell divergence was
there from yesterday, but now I've

all this information for you.

And you can see right here, this was the
little space that we just looked at in

close detail.

upside momentum after the FOMC, a little
ABC consolidation.

Now, perhaps the oscillators might be a
more useful crutch, little cell

divergence at the top.

Who cares if you missed all this? It
doesn't matter. We broke sharply here

new momentum lows.

Boom! If you're waiting, there's your
signal. You just need one trade a

day.

I don't sit there and make 20 trades a
day in the e -minis because what would

happen if I did is the first two would
be winners, and guess what? They would

get successively worse and worse and
worse as the day goes on.

You just can't process that much
information consistently and expect

good results. You will start making more
and more mistakes.

At least I do, and I know it's pretty
common for traders to make money in the

morning and give it back in the
afternoon.

You can see at the top here this cell
divergence that showed up on the 9 ,000

tick. That was the same pattern here on
the 4 ,000 tick. So that's why I always

like to have multiple time frames up
because they will catch different cycles

different rhythms. You see?

And then here on the far upper right,
you can see we came down in that

ABC type of feeling, quasi -momentum
divergence.

And at the same time, that was that
wedgie 1, 2, 3 push thing down, okay,

wasn't perfectly symmetrical.

But that higher time frame was showing
you that divergence.

So that's what I look at when I'm
trading these S &Ps. I don't do

don't do GAN lines.

I don't do Ichimocho Cloud stuff.

I don't do Elliott Wave. I don't do any
of these other things. I'm just waiting

for a recognizable pattern with a simple
momentum oscillator.

And I do look at one more thing in all
fairness.

And that has to do with the tone of the
day.

I do have a two -minute chart with the
ticks plotted underneath.

Okay, this was the day before the FOMC
here.

And what I wanted to show you was this
little aberration up here where there

a big bonk down at lunchtime. And what I
have found is that a lot of times at

lunchtime there is unusual.

program activity, and you will very
often see extremes in the ticks

around the middle of the day that really
don't mean anything in terms of

momentum.

You'll see it, and the rustle will
almost always move.

And I've always noticed that the funds
tend to divide up, you know, the

funds and these types of things tend to
divide up their order placements into

three parts. I don't know if this is
true or not, but it's hypothetical to

This is my theory. They do some in the
first hour.

They do some in the middle of the day
and some in the last hour.

So this was an aberration.

But aberrations impart information. So
it was telling me at the time there was

an urgent big program that was probably
taking profits, would be my guess,

probably liquidating and taking profits
at this point.

But the other things I keep on the
bottom of this chart is.

I like to watch the breadth. And you can
see the breadth had pretty much been

declining off of the opening price. Even
though the S &Ps made new highs here,

the small cap Russell was not. It was
steadily deteriorating in a drip, drip.

So that would reflect itself in the
market breadth.

And then at the very end, this was not a
great example, but I will.

Always keep an eye open for the tick buy
and sell divergences at the end of a

swing. So this was not a great tick buy
divergence.

It was just about an equal test there.

Okay, so that's just to sum up what I
look at when I'm making S &P trades, and

I've been trading the S &P futures since
the very first day.

They were listed in the early 80s, and
that's what works for me.

It's just a matter of staying in the
moment, working with the market, having

lot of patience, and I just let it go if
I miss something. And I see so

much after the fact. I'm like everybody
else out there.

Oh, I should have seen this or I should
have seen that, but if I can just find

one or two spots.

That's what I'm happy with.

So the things I'm looking at now, I
wanted to show you some big picture

and what I see as the overall state of
the market because you'd be surprised at

how much information we can look at in
just 20 minutes.

Remember I told you that your weekend
homework doesn't have to be more than 10

or 15 minutes?

Okay, big picture.

This is the OEX index, and the only
reason I have the OEX index is because

that's what shows the equity put call
ratio on it. That's the only put call

ratio I look at. I don't look at the
index option put calls because there's

too much arbitrage with those.

And I get this data off of StockCharts
.com.

It's an exceptionally wonderful program
for sentiment. And if you want things

like the McClellan Oscillator or a host
of zillions of indicators and charts and

groups and relative strengths, I think
that StockCharts .com is the best value

out there for somebody that's an
investor or an end -of -the -day.

person that doesn't want to fork out a
lot of money because it's exceptionally

reasonable. And what I wanted to show
you on this chart is where we are at

Last weekend, with our put -call ratios,
this is the equity -only put -call

ratio, and you see this middle graph
right here.

Pretty neutral, right?

The green arrows are where we spiked up
with these high put readings on this

moving average basis, and you can see
how they coincided with previous

Why do we have to make this game so
complicated?

It's just keeping an eye open for these
two to three to four ripe

opportunities every year.

So make this part of your weekend
process because that way you will be

when one of these sets up. And it just
is patience, waiting, waiting for it to

unfold. Either pushing back down to the
lower end of the range where I have the

red arrows drawn, which shows the
caution once everybody's in or is too

bullish, you see.

I'm not sure where my cursor went, but
the red arrows coincided with

times that you want to take some money
off the table because what does

reading teach us? It shows us that
everybody's already in.

So when the put -call ratios are very,
very low, everybody's long calls,

everybody's bought, everybody's already
in.

Okay.

Oops. So on to the next page.

This is a big picture chart that also
shows the AAII

bulls. And the nice thing about
StockCharts .com is you can look at this

detail if you want, if you want to look
at just the past couple months, or if

you want to blow it up and look at the
last six years or seven years like I'm

looking at right here.

So we can see from the previous slide.

Where we are now is we're not
overbought, nor are we oversold. We're

neutral, which means there'd be no
reason to fight the existing trend and

getting bearish.

Okay, we're not at any real extreme.

Here you can just see the huge extreme
that we were just at when we had an

exceptionally high reading.

In the AAII bears, that's the American
Association of

Investors. And I also look at

Investors Intelligence, II.

So these are the stable metrics that
I've followed for years and years.

So we've just come off an exceptional
buying opportunity. The low -risk buying

opportunity is over.

It doesn't mean, though, that we still
don't have opportunities along the way.

It's just those major investment -grade
opportunities, that window's past.

We don't see a spot where you have all
those green spikes at the exceptionally

high level. When these green spikes get
back up there, we'll be looking to take

some money off the table.

I'm a big believer in George Soros'
theory of reflexivity, that the market

swings from one extreme to the other
extreme. It's always going to overshoot.

And you can see that we have not
overshot to the upside bullish sentiment

readings yet.

This here was showing us that the
oversold condition from

just... a week and a half ago, had
corrected. We had a nice dip down.

If we're just looking at the day -to
-day basis, it was actually the first

dip down that we had since we came off
that major bottom there.

All right?

So this is just simply the New York
Stock Exchange with the McClellan

oscillator.

The McClellan oscillator is a simple
breadth oscillator.

But the interesting thing about it is
that he has his summation index, which

really important for looking at market
tops, because that's when we'll start to

see divergences that then lead to the
more significant tops.

But what do we see on the far right
-hand side of this chart?

This summation index made new all -time
highs.

There's no divergences at all.

So intermediate term, or short term
rather, we've corrected back up to

We're not overbought.

This was on Sunday night, okay? It takes
a lot more action than just today's

action to get this back up to overbought
readings, and we're not anywhere near

forming divergences in this very long
-term summation index.

So all of these charts are available to
you from very nominal price on

StockCharts .com, and you can see what
they do on the far right -hand side.

blow up that action into detail for you.

Another thing that I look at on the
weekends is I like to look at the global

indices, and I simply do that with the
ETFs.

So I'll look at EWZ for Brazil, EEM for
the emerging markets.

I have a grid of like 24 of these things
up, little dinky squares all on one

chart. And they all tend to pretty much
look similar, except with varying

degrees of relative strength.

So you can see that right at this point
on Sunday night, We had the Euro stocks

leading to the upside. Of course, Hong
Kong has been the big relative strength

leader and Malaysia right up there.

And believe it or not, Italy and Spain
and Switzerland have been setting the

world on fire.

But then we have some that were just
lagging a little bit. There's no top in

them yet. You can see this emerging
market index had a nice formation here.

and it hadn't yet made new highs. It
might have done that today. I didn't

at it yet at the end of today.

But I love looking at the daily and the
weekly position of all these global

indices because just with a glance, you
can see I don't have any oscillators,

but it's very easy to see if there's any
seductive chart formations, simple

little continuation patterns, and I
really just have to look at it once a

Big picture again. Now, this was on
Sunday night before FOMC, and I was just

telling you what I saw.

I saw the broad market in a balanced
area in the middle of a big trading

So obviously, the techs and the semis
have been setting the world on fire with

their relative strength.

It's not that the broad market's in bad
shape.

It's just that it hadn't quite caught on
with the leaders yet. So for me, I just

saw a big, broad trading range in the
small cap.

Obviously, the S &Ps at this point had
already taken out that upside high, and

we're right at this key level here. And
now I made several scenarios for myself

on Sunday night.

I said, If we can't hold, or maybe it
was rather at the end of Monday, if we

can't hold around this level, this 2825
area in general, and we start

closing below that, the 2776 is the
middle of that range. That would be if

market made a convincing bull trap.

So if we made a bull trap, I would look
for it to fall back down to 2775 area,

just because it's in the middle of the
range.

Worst case scenario, if we couldn't hold
that area, then we would go test the

lower end of the range. And in an
extreme bearish scenario, we would fall

the low of that range by an equal amount
that we tested above that range.

So those are just real simple metrics.
I'm not predicting what's going to

happen. I'm just saying what would
happen if one of those areas didn't

But if we do hold here, then I projected
at the very least we should go back up

by an equal amount to that 2907 area,
which would be just the top of that big

breakdown bar.

And then, of course, it goes without
saying that all -time highs is within

striking point.

You can see at the far right of this
chart, I don't have anything bearish on

oscillator. We had our one, two, three
pushes down with a correction.

We rallied up. If this was going to
fail, it would have to fail hard.

But right now, it's just in no man's
land. There's no cell divergences

the trend. And for me, a divergence has
to be the clean kind of.

W or M feeling, all right? So that's
just what I was looking at. This is

the FOMC. What do I see in the dollar
index?

Four years of trading range, basically.

So we're just in a big range. There
wasn't anything compelling either way

we were going to bust out to the upside
or break down to the downside.

And indeed,

When FOMC came out, we had a one -day
downside flush in the dollar, and then,

course, today it rallied right back up
again.

So that's classic trading range action
for you.

Sorry I couldn't see anything really
earth -shattering there, but this is the

environment that we're in, and sometimes
we want to see more than there's really

there in the chart.

This was the 10 -year yield chart. I
like to use a yield chart instead of

looking at the bonds because to me it
gives the truest big picture data.

I can go back and look at five years,
whereas the bonds will have continuation

charts that are so full of distortions
because of the way that they roll.

So I'm very keen on the 10 -year yield
chart, and then I'll look at the 30

yield chart. And you can see right where
we were sitting going into FOMC at this

key line here that was also the area of
previous highs.

These are the things that create
structure for me.

So at the time, I was thinking, well,
we're either going to flush down below

those highs, and if we do, then it would
be logical to push down to that 2 .5

yield level, which was sort of where the
upside breakout began.

And you can see the oscillator here.
It's possible that over the next couple

days, we could form a weekly buy
divergence and snap right back up.

Or we could get continuation on down.
But this is how I like to frame things

out. On Sunday night or Monday on the
close, it still looked like that this

going to try and flush down. I didn't
know if it was going to make a new leg

down or if it was just going to form a
divergence.

And that's how it is when we do our
analysis.

Are we going to test?

Are we going to make a new leg down?

Or are we going to form a loss of
momentum and come right back up?

And it's very difficult to predict in
advance.

Gosh knows it's hard enough to predict
anything with all the noise that we have

out there.

But you can see with patience we can
wait for a recognizable pattern. And now

I have the coup de grace for you.

Last week, I left you with Navidia
having a fresh upside breakout. Did you

how that continued to get legs?

So this morning, this was around 11 o
'clock in the morning. You could

see this first thing in the morning,
too. I'm like, let me see if I can find

something interesting for today. And
this was what was popping up on my grid

for... the range expansion, the
breakaway gap, and the new

momentum highs on that two -period rate
of change.

So this is just what we were looking at
last week, a recognizable signal telling

us something very important, that
there's a great urgency here in the

and this is exactly the type of thing
that can now lead to an extended run

or persistency of trend.

But wait, there's more.

Okay, that was the NASDAQ, and I was
showing you there that we came in today

with already multiple closes on one side
of the SMA, the extended run

already underway.

So there was no reason to be overly
bearish today because we knew that if we

have the first close below,

that it would still set up a buy signal
that first closed below the 5 SMA. Now,

this was midday, and obviously this got
legs and kept running and running.

And this is my radar scan on the trade
station, you see, where those little

squares that pop up, those are the new
momentum highs on the two -period rate

change.

So TradeStation is the tool that I use
to scan for this, and I know that you

find this on other types of software as
well.

TradeStation, by the way, is free for
those of you that trade stocks.

And then I always have the weekly chart
there, so you can see that that was

poised for a new leg up on the weekly.
These are my three main things.

This was another one. It hadn't quite
broken out yet, but it was the same

pattern that we looked at last week with
that bull trap, or rather the bear

trap, just poking below that previous
swing low, trapping the shorts.

And over here on the right -hand side,
we made new momentum highs on that two

-period rate of change. We got the range
expansion.

Let's see if we can get legs, baby, and
keep running. And just so you remind

yourself that it is a market of stocks,
not a stock market.

This was today, this morning, the banks.

This was USB, but Bank of America looked
the same. And, in fact, yesterday I got

the cell signal on these when they made
new momentum lows yesterday. And you

can see today they had downside follow
-through. And at the very least, you

could put in a break -even stop.

So with that.

This was also the hourly structure
coming in to this morning. I just wanted

show you the different things I look at
and end with the volume.

Ta -da!

This is my NYSE volume, the first 30
minutes.

Part of my daily routine and ritual once
the market's opened and it's been

trading for the first half hour, I mark
off how the volume is relative.

to the previous couple days.

And you could see today the first 30
minutes was better than yesterday. That

should be no surprise because
everybody's waiting for FOMC.

The hourly volume was better than the
previous two days' volume. And, of

we continue to accelerate with our
volume all day in terms of

relative to the previous couple trading
days, aside from options expiration that

you see there. So that should have given
confidence that we had some good trend

action.

This is my 7 a .m. reading. You can see
those orange lines make the

bands for the 7 a .m. reading, and I
picked the best trends. We had trend

in the yen off that 7 a .m. reading,
trend up in the crude, and trend up in

the S &Ps on that far left chart.

So that's why I like to look at this
thing even a little bit earlier than

that 8 .30.

So that sums it all up there, okay? It
does take time.

I just showed you the summation of 38
years of trading, and I want you to

understand a couple things through this
whole three series.

A.

It is just taking one day at a time. I
can't predict.

I can only work with the material that
the market is giving me at the time. I

can't force it. I have to wait for a
recognizable pattern like that new two

-period rate of change, making new
momentum highs.

I'm not going to be able to take
advantage of that, though, unless I

Routines and rituals by which I can
organize my data and my processes.

These things need to be part of a
consistent routine that takes priority

everything else.

But you must streamline it too so that
it's not taking you two or three hours

every night because you will be so
burned out.

What I've just shown you together is 38
years of processes being built, one

on top of the other.

Some of you have been in the markets for
a long, long time and are intimately

familiar with the Wyckoff methodology
and the processes that Romans taught you

and the Wyckoff analytics whole program
has taught you. But some of you are also

newer to the game.

Don't try and do everything at once.
Take one market or one little pattern.

Build your processes around that and
then take it one day at a time.

Nobody can predict and nobody can
forecast.

And my hero, this was the best book that
I read a couple years ago, Richard

Feynman's book.

He won the Nobel Prize in physics.

Physics is the science that we think of
as being absolute.

Physics. And his answer was, I have a
problem. approximate answers and

beliefs and different degrees of
certainty.

And I'm not absolutely sure about
anything.

And that sums up my philosophy about the
markets.

I am eternally a student just as you
guys are. With that said, I do have

time for questions. And lastly, if I
didn't cover something or you would like

copies of the slides, please.

So email me at lbrgroup .com, and let me
get these

questions open. Or else, actually,
Roman, can you read them off for me?

Yes, of course.

There are a couple of questions from
John.

Where would you enter the divergence
trade? And the second one, do you

extended hour data at the open for time
-based charts?

That's a great question. I don't have
any way of aggregating the overnight

action onto a time -based chart. That's
why I use the tick charts.

If you're looking at stocks, of course,
you can set the session hours on

something like TradeStation.

Set the session hour to open an extra 30
minutes before the New York Stock

Exchange. That will give you a good
enough indication if there is a very

actively market trading pre -market. But
the tick data, and of course...

I like to look at the Globex highs and
lows for the S &Ps. That's important.

And I'd rather almost look at the 5 -
and 15 -minute chart of the DAX and

Eurostox than I would the S &Ps.

But that's just me.

In terms of how do we enter a
divergence, especially if it's on the

intraday charts, such as those little
examples I was showing you on the 15

-minute chart.

Or the tick charts?

And that's an excellent question because
I don't want to be catching a falling

knife, nor do I want to be selling when
it's still going up.

I like to watch the tape around those
periods. And on a 15 -minute chart,

there's quite a bit of time just to
watch how the price is trading. And the

important ingredient for me, if I'm
looking to buy a divergence,

I want to make sure it has stopped going
down.

I'd rather be just a little too late
than too early because I want to see

it stopped going down so I know my risk
point.

And then I can put in a stop after it's
just been ready to turn.

Now, I have a friend who will like to
use, say, for example, five -minute

candlestick bars.

I don't use candlestick bars on my
intraday data, but he likes to put a buy

above the high of that bar. That may or
may not work for you.

I also will look at things.

such as the ticks, to make sure that
they've truly flushed and had a selling

climax, if you will, or at least they're
starting to get a little bouncy.

So I hope that answers your question.

There's no correct way to initiate.

It's a matter of style.

So I'll be a little bit more aggressive
on my entries in terms of entering

without confirmation.

In exchange, I get better trade
location, but I might have a lower

win -loss ratio.

So you could enter with a little bit
more confirmation.

You'll have a higher win -loss ratio,
but you'll have not as great trade

location and perhaps a slightly wider
risk point. So everything's a trade -off

there, and it's going to come down to
your own personal style.

I see something about asking about dark
pools, and I don't

look anything about this. I have nothing
to do with that. I like looking

at the...

Bigger picture stock charts, if I am
going to enter a stock on a five -minute

chart, which is really crazy, your
opportunities to do that pretty much are

going to be in the morning session.

Usually five -minute charts are
incredibly noisy on most stocks, unless

showing an increase in volume and range
expansion, and you might just get one

flag formation or one divergence.

For me, I just like to trade the stocks
where I can go buy or sell some decent

size. I don't want to be dealing with
thin, illiquid things where I can't get

good enough size position on because
then I'm just wasting my time.

I use IB, and they just route to the
best place.

Or even with TradeStation,

you can click like 1 ,000 shares at a
time, and I find I don't really get much

slippage.

And so I don't bother with those things,
nor do I bother with putting any faith

in the algorithmic things, the depth,
the market depth, the size of the bid

the size of the ask on the futures
markets, because I can tell you from

CTA, we work algorithms out there that
you can't even see, such as...

I might want to buy 300 euro currency
futures, but I'm not going to put in a

of 300.

I'm going to sit there and tell my
little algorithm, work to buy 300 over

next minute, do it at random intervals,
take some on the offer, work the bid at

some, blah, blah, blah. You set these
little things running amok, you see, and

nobody can see what they're doing.

And same thing with the stocks. You
can't see anything by the size on the

offer with stocks. You can't even see
what's there. So all this nonsense about

being able to read the matrix and read
the book and stuff to me, it doesn't

enter into my trading at all.

And if somebody makes money with it,
more power to them.

What would be the simplest setup to
start with and in what time frame?

The simplest setup is looking for
continuation patterns where you've got

established trend, okay? So any time
that you've got volume,

any time that you've got volume and
something that's moving,

see if you can catch that first
continuation pattern, make a trade,

and then immediately look.

Just think, where would you be taking
profits? Don't think that it's going to

a home run trade.

If you're just starting off, you need
practice getting in and practice getting

out. All right? So don't worry about the
big picture, how much money you're

making or not making. The execution
skills have to come first.

So that would be my recommendation.

Let's see here.

Go ahead.

Yeah, Linda.

I think there are maybe a couple more
questions, so maybe quickly, if we could

address them, we are five minutes
behind.

So the question here is, are you using
for the channel bands, the Bollinger

bands, or maybe something else?

Those are Keltner channels.

I thought I reviewed those in the first
session, but just real quickly, it's an

average true range that's centered
around a moving average. I use...

2 .5 average true ranges centered around
a 20 -period exponential

moving average.

I believe it's now the default setting
on the majority of software programs,

but any chart that you see on my
presentation, I use the Keltner

And the last question, how do momentum
indicators indicate congestion that

from leads?

Well, the momentum indicator is probably
not going to show any clean swings or

divergence or flags. And the best way
that you can study this is find periods

where the market's in a choppy, noisy,
light volume trading range and see what

the momentum indicator looks like at
that point. And it'll probably make lots

little wiggles and jiggles. And the best
indicator that you can use to study

these periods, is if you look at an ADX,
a 14 -period default

ADX, and you will notice that in
congestion periods, that ADX will drop

down to a really low reading relative to
what it's been.

And if you look at a momentum indicator
at that point, you will see you'll be

equally likely to give a false reading
because there's really not any momentum

to measure.

So let's wrap that up with that last
question. If you have more questions or

me know what you liked best about this
whole series that Roman sponsored with

his Wyckoff Analytics, please email me
at lbrgroup.

at att .net.

And again, thank you guys so much. I got
quite a few emails from those of you

that have read my Trading Sardines book.

And I just want to say thank you for
taking the time to send those. And thank

you for participating in today's
session.

Thank you, Roman.

Linda, that was amazing.

And again, as I said, I was taking a lot
of notes.

Some of the things that kind of stuck
out for me. Why go do your own work in

room with no windows or doors?

That's what Hank was repeating so many
times in all of the classes that we

attended with him. So that was just such
a great reminder.

Processes substitute for a mechanical
system.

So many times in classes we talk about
how we want to conduct our trading in a

more mechanical way, meaning that we
need to have rules. We need to have the

process. And that was just great. And my
favorite, correct mistakes immediately.

And that's that post -analysis that we
require, you know, on our timeframes and

with our trades. So it was just...

Such a fantastic presentation, Linda,
and the whole series. So much

We're so grateful as a community that
you've come to us and delivered this

knowledge, and we just hope to see you
in the future. Thank you so much.

All right. Night, gang.

Bye -bye.