Trading Theory

Andrew’s Strategy Set Theory

Feb 19th, 2016 | By | Category: Trading Theory

In this video Andrew Falde looks at combining diversified strategies in different asset classes to create a portfolio equity curve that is reliable and smooth. This strategy set will be an on-going update.

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The Analyst Downgrade Bottom–Micron

Aug 17th, 2015 | By | Category: Steven Spencer (Steve's) Blogs, Trading Lesson, Trading Theory
When a stock has been in a longer term down trend there are many ways that it can put in a tradeable bottom (assuming it isn't a commodity stock in which case it may just file for bankruptcy at some point). The fundamental cause of its down trend goes away. This is what happened in Apple in 2013 after its 40% decline. Its iphones' margins stopped eroding and it put in a bottom. I shared my thoughts on that scenario here. Sentiment just becomes too bearish. We saw this in Pandora when it sold off last month to $13.30 before their earnings release. The stock's fundamentals hadn't deteriorated since it had traded under $20 Read more [...]

Inside The Trading Vault – A look at CL_F

Aug 5th, 2015 | By | Category: General Comments, Intraday Levels, market structure, Technical Plays, Trader Development, Trading Ideas, Trading Lesson, Trading Theory
      Trading Vault Concept - "When charts are in a trend, we are often tempted to pick bottoms or tops because we FEEL a chart has reversed enough.  The slightest drift over or under a level, we trigger our trades to initiate a trade in the direction of the move, but in these markets breakout and breakdown levels are part of a wave retracement event, not an isolated event.  If the chart does not hold its retracement, the move is failed. This can keep me out of bad trades and failed moves.   Learning to implement a strategy that uses this market behavior is essential to consistent trading results" Let's Read more [...]

Study Price Action & Stop Being A Silly Troll

Jul 25th, 2015 | By | Category: Steven Spencer (Steve's) Blogs, Trading Lesson, Trading Theory
Back in April I tweeted a picture of a SPY chart that I thought was rather instructive. Here is the chart: A few things we can take away. The first is that the SPY 204.30 had been tested in February and then again in March. The bounce in March was very fast moving from the low to SPY 211 in four trading days. Often, when a market moves very quickly from a low to a high that move is unsustainable and we will have a re-test of the low. The SPY in fact did drop very quickly back to the low in late March before taking several weeks to climb its way back to 211. This second move to 211 was slow and steady with many market Read more [...]

Cool Technology With Some Great Ideas

Jul 10th, 2015 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Ideas, Trading Theory
In the past few years SMB has built some remarkable trading tools. We led the pack in moving to HTML5 years before others (can use on smartphones and tablets). But beyond the cool technology in Scanner, Radar, and Real Time it is the actual idea flow that comes from very experienced traders. Traders who have spent years learning how to identify the best risk/reward setups. If we look at the past few days in the market there has been a lot of anxiety and a lot of volatility. During this sort of environment to have access to an AM Meeting where I explain short setups in ACE, CNC and TSLA with key levels can be invaluable. I also Read more [...]

Oracle Had A Fundamental Catalyst That Made It A Good Short

Jun 21st, 2015 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Lesson, Trading Theory
ORCL reported disappointing earnings after the Close on June 17th. The next morning it traded lower before rallying back $2 with the market. I had two reasons why I thought it would roll over again the next day. One, I believed the large market rally the prior day was the primary driver of its bounce from 41 to 43. Two, after large funds had a chance to digest the earnings release which showed disappointing subscription numbers they would sell, because SAAS is the only major catalyst for ORCL at this point which I am aware. The above graphic is from the pre-market game plan I write out each day so it is easier to follow Read more [...]

Why Netflix Was A Short Today

Jun 21st, 2015 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Technical Plays, Trading Lesson, Trading Theory
Netflix has been on quite a tear since they reported strong earnings in April trading higher by more than $200. But for short term traders who each day look to trade lower time frame trends NFLX offered a good short setup Friday morning. These are some factors I considered prior to sharing the setup in our morning meeting. Netflix had a huge blow off top the prior week moving up $60 in 1.25 trading days. Following that blow off top it trades $50 lower before starting to move high the prior few days. Typically, after a stock tops and trades lower it will begin to narrow its trading range without a major news catalyst. Oppenheimer Read more [...]

A Low Risk Entry For A Long Term Breakout–FEYE

Jun 11th, 2015 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Lesson, Trading Theory
Since the beginning of the year FEYE had been consolidating between 38 and the mid 40s. It has had a lot of positive news flow this year but had many failed breakout between 45-46. I made a conscious decision not to get long in the mid 40s until it cleared all resistance for the year on heavy volume. On May 28th it had that breakout after spending three days in a tight consolidation at 45. With buyers firmly in control I decided to get long for a move to 49-50. My planned entry price was just above the recent consolidation at 45.50. My stop was below 45. I used an automated "script" to execute the trade. Parameters included Read more [...]