Nick Garner's Blog

My trading rules! These shall not be broken!!!

This set of rules came from a superb book called Trading in the zone - the annotations are mine

Stock trading

I AM A PROFITABLE & CONSISTANT ??WINNER BECAUSE??

1. I objectively identify my edges
2. I predefine the risk of every trade
3. I completely accept the risk, or I am willing to let go of the trade
4. I act on my edges without reservation or hesitation
5. I pay myself as the market makes money available to me
6. I continually monitor my susceptibility to making errors
7. I understand the absolute necessity of these principles of consistent success and therefore never violate them.

I AM A PROFITABLE & CONSISTANT?? WINNER BECAUSE :

This is what its all about – profit and consistency. Its easy to go in an risk big and maybe make a killing, but the reality is that you get complacent and addicted and you get seduced by the market. Once you are, you are destined to lose. Only the minority win, so you have to be away from the pack and contrarian ( this does not mean go against the trend simply because its the opposing thing to do. Markets do have momentum.

I objectively identify my edges

My edge is being a good analyst and trading on a combination of sentiment indicators, solid technical analysis and a growing awareness of my internal being i.e. internal psychological management. Its an ongoing process and I have a long way to go.

I predefine the risk of every trade

This means having a plan and keeping to it. Its too easy to make a plan beforehand and get caught in the moment only to make a mistake and blow it all. The flip side of this is when you do see something serious and you are sure of its impact on your trade – whether positive or negative.

I completely accept the risk, or I am willing to let go of the trade

Once you accept you will lose your stake, then you can go in with an open mind. The open minded’ness is both in being able to read when the market is turning against your position and when to get out. There is a risk reward correlation, but its not more risk = more reward per se, its more letting your good trades run and stopping your bad ones. Its a hard one to get right and takes lots of trial and error to get right.

The biggest killer is when you go into ‘hope mode’ and begin to beg the market to go with your trade.?? The you can’t read what the market says and youre done.

I act on my edges without reservation or hesitation

Know your plan, wait for the right conditions for the setup and go in without hesitation. Sounds easier than it is…because so often you wait for the right set up, miss it and then go in anyway, only to get slapped about the place and lose your stake. Its so important to stand away from it all and be objective. It takes time to get this right, but its core to making consistently profitable trades.

I pay myself as the market makes money available to me

Its how you make this make money – by taking out the surplus profit from your account on a regular basis. Its too easy to get apathetic, let your money build up in your account and do a stupid trade and get evrything wiped out. As long as you keep taking out money you get the?? greatest pleasure of trading – money in your bank account!

I continually monitor my susceptibility to making errors

I do a lot of sport and I constantly monitor my technique and progress. its the same with trading. To survive you HAVE to keep working in self improvement When?? you begin to have a run of bad trades or a fall in profit, always look at yourself objectively and work out why. Usually its either fear or greed getting out of hand.

I understand the absolute necessity of these principles of consistant success and therefore never violate them.

So true.

Some of my thoughts and analogies:

1. Markets are like an unstable bomb…..they can go off anytime, so always treat with great care because they can injure you any time
2. Work to a plan. markets have a way of hypnotising you…. and when youre?? hypnotised, you become one of the herd. Then you lose, since in markets the majority always lose.
3. Get 1 thing right…. the trend. If you follow the general movement of the market, probability is on your side
4. The markets will be there tomorrow. There will always be another opportunity, another time. – so don’t rush in. its better to protect your money and wait than be seduced into making the wrong decision.
5. Pick the moment that is right for you. If you rush in YOU WILL BE BURNED, its part of the way the market hypnotises you….just be patient, your moment will come

_______________________

TICK
If there is a sustained period of -800 tick, then there is a major selling action. +800 for buying action.
If im long intraday and i see a – 800 tick – im closing, conversly if im short and i see a +800, I???m closing
If im long and the market hits +1000, I???m out if its a swing trade, converse if short.
Alerts at +1200, +1000, +800, +600 and the opposeite for short
When ticks spend 90% of their time above zero, with repeatred extreme high tick readings, I ignore day trading setups and take longer positions

TIKI
alerts for +26, +28, +30 and for -26,-28,-30
The higher the tiki level, the more of the dow 30 are either buying or selling
This should be used in conjunction with the tick indicator.
If there is a high TICK reading with a high TIKI reading, then this as a major ‘heavy’ up move
If there is a low TICK reading with a low TIKI reading, then this as a major ‘heavy’ down move

TRIN
The key is the trend
if TRIN is trending higher and making higher highs on the day, then its looking good Short – then I will ignore long setups
if trin is trending lower and making lower lows on the day, then its looking good Long – then I will ignore all short setups
if trin closes above 2.0 then there is a 80% chance the market will rally the next day
if trin closes below 0.60 then there is an 80% chance of selling the next day

Options
If the combined equity/index PC ratio is over 1.0 intraday I will look at going long and ignore all short setups
If the combined PC ratio falls below 0.60 intraday I will look at going short and and ignore long setups
If the market is rallying, I want to see the P/C rallying to confirm the move
If the market is falling I want to see the PC falling to confirm the move

To tell if its going to be a choppy day
5 minute chart of S&P 500 futures and use the volume indicator
if the first six bars on a 5 monute ES chart have most of the volume at or well under 10,000 contracts, then expect a tight choppy session
if the first 6 bars are well above 10k, then expect more volatility and better trends

Opening Gap
Likelyhood of gap fill: Monday 65%, tuesday 77%, wednesday 79%, Thursday 82%, friday 78%

Ticks
If there are sustained ticks of -800 or +800 there is a major buying or selling action
If im long intraday and i see a – 800 tick – im closing, conversly if im short and i see a +800, I’m closing
If im long and the market hits +1000, I’m out if its a swing trade, converse if short.
Alerts at +1200, +1000, +800, +600 and the opposeite for short
When ticks spend 90% of their time above zero, with repeatred extreme high tick readings, I ignore day trading setups and take longer positions

TIKI
alerts for +26, +28, +30 and for -26,-28,-30
The higher the tiki level, the more of the dow 30 are either buying or selling
This should be used in conjunction with the tick indicator.

TRIN
The key is the trend
if TRIN is trending higher and making higher highs on the day, then I will ignore long setups
if trin is trending lower and making lower lows on the day, then I will ignore all short setups
if trin closes above 2.0 then there is a 80% chance the market will rally the next day
if trin closes below 0.60 then there is an 80% chance of selling hte next day

Richard Arms, the originator, uses the TRIN to detect extreme conditions in the market. He considers the market to be overbought when the 10-day moving average of the TRIN declines below .8 and oversold when it moves above 1.2. Other interpretations seek to use the direction and absolute level of the TRIN to determine bullish and bearish scenarios. In the momentum driven markets, the TRIN can remain oversold or overbought for extended periods of time.

Options
If the combined equity/index PC ratio is over 1.0 intraday I will ignore all short setups and go long
If the combined PC ratio falls below 0.60 intraday I will ignre long setups and go for short setups
If the market is rallying, I want to see the P/C rallying to confirm the move
If the market is falling I want to see the PC falling to confirm the move

To tell if its going to be a choppy day
5 monute chart of S&P 500 futures and use the volume indicator
if the first six bars on a 5 monute ES chart have most of the volume at or well under 10,000 contracts, then expect a tight choppy session
if the first 6 bars are well above 10k, then expect more volatility and better trends

Opening Gap
Likelyhood of gap fill: Monday 65%, tuesday 77%, wednesday 79%, Thursday 82%, friday 78%Pivot points

__________________________

Fibonacci numbers:

0 1 1 2 3 5 8 13 21 34 55 89 144 233 377 610 987 1597 2584 4181 6765

use when setting up moving averages

__________________________

Stock symbols

FYSE trading hours

Open

US?????? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? -> ?? ?? UK

08.30 AM ?? ?? ?? ?? ?? ?? ??-> ?? ?? ?? 2.30 PM

Lunch time

12.30 AM???? ?? ?? ?? ?? ?? ??-> ?? ?? ?? 5.30 PM

2.30 PM???? ?? ?? ?? ?? ?? ?? ?? -> ?? ?? ????7.30 PM

technical indicators

Money Flow Index – MFI

The money flow index is similar to the relative strength index (RSI). The fundamental difference is that the MFI also accounts for volume, whereas the RSI only incorporates price. Many traders watch for opportunities that arise when the MFI moves in the opposite direction as the price. This divergence can often be a leading indicator of a change in the current trend.

Relative Strength Index – RSI

A trader using RSI should be aware that large surges and drops in the price of an asset will affect the RSI by creating false buy or sell signals. The RSI is best used as a valuable complement to other stock-picking tools.

MACD

There are three common methods used to interpret the MACD:

1. Crossovers – As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting getting “faked out” or entering ??into a position too early, as shown by the first arrow.

2. Divergence – When the security price diverges from the MACD. It signals the end of the current trend.

3. Dramatic rise – When the MACD rises dramatically – that is, the shorter moving average pulls away from the longer-term moving average – it is a signal that the security is overbought and will soon return to normal levels.

Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see from the chart above, the zero line often acts as an area of support and resistance for the indicator.

On-Balance Volume – OBV

OBV attempts to detect when a financial instrument (stock, bond, etc.) is being accumulated by a large number of buyers or sold by many sellers. Traders will use an upward sloping OBV to confirm an uptrend, while a downward sloping OBV is used to confirm a downtrend. Finding a downward sloping OBV while the price of an asset is trending upward can be used to suggest that the “smart” traders are starting to exit their positions and that a shift in trend may be coming.

$TICKI ?????? ?????? Dow Jones Industrial Tick
$TRINQ ?????? ?????? NASDAQ TRIN
$TRIN?????? ?????? NYSE TRIN
$PC-ST?????? ?????? Total Put Call Ratio Composite?????? Put Volume / Call Volume (All Indices and Equities for all exchanges)
$PCI-ST?????? ?????? Put / Call Ratio – INDEX?????? Put Volume / Call Volume (All indices for all exchanges)

$INDU,$UKX-FTSE,$SPX,$TICKI, $TRINQ, $TRIN, $PC-ST, $PCI-ST

$UVOL ?????? ?????? NYSE Up Volume
$DVOL?? ?????? ?????? NYSE Down Volume
$TVOL?? ?????? ?????? NYSE Total Volume

$SPX ?????? ?????? |S&P 500
DJI ??INDUDow Jones Industrial Average (sm) ?????? INDEX:

$UKX-FTSE ?????? |FTSE
$ASX-FTSE ?????? |FTSE all share

$UB3300-FTSE?? ?????? FTSE 350 – AUTOMOBILES & PARTS?? ?????? FTSE?? ?????? Index
$UB8300-FTSE ?????? FTSE 350 – BANKS ?????? FTSE ?????? Index
$UB1700-FTSE ?????? FTSE 350 – BASIC RESOURCES ?????? FTSE ?????? Index
$UB1300-FTSE ?????? FTSE 350 – CHEMICALS ?????? FTSE ?????? Index
$UB2300-FTSE ?????? FTSE 350 – CONSTRUCTION & MATE ?????? FTSE ?????? Index
$UB8700-FTSE ?????? FTSE 350 – FINANCIAL SERVICES ?????? FTSE ?????? Index
$UB3500-FTSE ?????? FTSE 350 – FOOD & BEVERAGE ?????? FTSE ?????? Index
$UB4500-FTSE ?????? FTSE 350 – HEALTH CARE ?????? FTSE ?????? Index
$UB2700-FTSE ?????? FTSE 350 – INDUSTRIAL GOODS AN ?????? FTSE ?????? Index
$UB8500-FTSE ?????? FTSE 350 – INSURANCE ?????? FTSE ?????? Index
$UB5500-FTSE ?????? FTSE 350 – MEDIA ?????? FTSE ?????? Index
$UB0500-FTSE ?????? FTSE 350 – OIL & GAS ?????? FTSE ?????? Index
$UB3700-FTSE ?????? FTSE 350 – PERSONAL & HOUSEHOL ?????? FTSE ?????? Index
$UB5300-FTSE ?????? FTSE 350 – RETAIL ?????? FTSE ?????? Index
$UB9500-FTSE ?????? FTSE 350 – TECHNOLOGY ?????? FTSE ?????? Index
$UB6500-FTSE ?????? FTSE 350 – TELECOMMUNICATIONS
$UB5700-FTSE?? ?????? FTSE 350 – TRAVEL & LEISURE?? ?????? FTSE?? ?????? Index
$UB7500-FTSE ?????? FTSE 350 – UTILITIES ?????? FTSE ?????? Index
$NMX2710-FTSE ?????? FTSE 350 INDEX – AEROSPACE & D ?????? FTSE ?????? Index
$NMX3350-FTSE ?????? FTSE 350 INDEX – AUTOMOBILES & ?????? FTSE ?????? Index
$NMX8350-FTSE ?????? FTSE 350 INDEX – BANKS ?????? FTSE ?????? Index
$NMX3530-FTSE ?????? FTSE 350 INDEX – BEVERAGES ?????? FTSE ?????? Index
$NMX1350-FTSE ?????? FTSE 350 INDEX – CHEMICALS ?????? FTSE ?????? Index
$NMX2350-FTSE ?????? FTSE 350 INDEX – CONSTRUCTION ?????? FTSE ?????? Index
$NMX7530-FTSE ?????? FTSE 350 INDEX – ELECTRICITY ?????? FTSE ?????? Index
$NMX2730-FTSE ?????? FTSE 350 INDEX – ELECTRONIC & ?????? FTSE ?????? Index
$NMX8980-FTSE ?????? FTSE 350 INDEX – EQUITY INVEST ?????? FTSE ?????? Index
$NMX6530-FTSE ?????? FTSE 350 INDEX – FIXED LINE TE ?????? FTSE ?????? Index
$NMX5330-FTSE ?????? FTSE 350 INDEX – FOOD & DRUG R ?????? FTSE ?????? Index
$NMX3570-FTSE ?????? FTSE 350 INDEX – FOOD PRODUCER ?????? FTSE ?????? Index
$NMX1730-FTSE ?????? FTSE 350 INDEX – FORESTRY & PA ?????? FTSE ?????? Index
$NMX7570-FTSE ?????? FTSE 350 INDEX – GAS WATER & M ?????? FTSE ?????? Index
$NMX8770-FTSE ?????? FTSE 350 INDEX – GENERAL FINAN ?????? FTSE ?????? Index
$NMX2720-FTSE ?????? FTSE 350 INDEX – GENERAL INDUS ?????? FTSE ?????? Index
$NMX5370-FTSE ?????? FTSE 350 INDEX – GENERAL RETAI ?????? FTSE ?????? Index
$NMX4530-FTSE ?????? FTSE 350 INDEX – HEALTH CARE E ?????? FTSE ?????? Index
$NMX3720-FTSE ?????? FTSE 350 INDEX – HOUSEHOLD GOO ?????? FTSE ?????? Index
$NMX2750-FTSE ?????? FTSE 350 INDEX – INDUSTRIAL EN ?????? FTSE ?????? Index
$NMX1750-FTSE ?????? FTSE 350 INDEX – INDUSTRIAL ME ?????? FTSE ?????? Index
$NMX2770-FTSE ?????? FTSE 350 INDEX – INDUSTRIAL TR ?????? FTSE ?????? Index
$NMX3740-FTSE ?????? FTSE 350 INDEX – LEISURE GOODS
$NMX8570-FTSE?? ?????? FTSE 350 INDEX – LIFE INSURANC?? ?????? FTSE?? ?????? Index
$NMX5550-FTSE ?????? FTSE 350 INDEX – MEDIA ?????? FTSE ?????? Index
$NMX1770-FTSE ?????? FTSE 350 INDEX – MINING ?????? FTSE ?????? Index
$NMX6570-FTSE ?????? FTSE 350 INDEX – MOBILE TELECO ?????? FTSE ?????? Index
$NMX8530-FTSE ?????? FTSE 350 INDEX – NONLIFE INSUR ?????? FTSE ?????? Index
$NMX0530-FTSE ?????? FTSE 350 INDEX – OIL & GAS PRO ?????? FTSE ?????? Index
$NMX0570-FTSE ?????? FTSE 350 INDEX – OIL EQUIPMENT ?????? FTSE ?????? Index
$NMX3760-FTSE ?????? FTSE 350 INDEX – PERSONAL GOOD ?????? FTSE ?????? Index
$NMX4570-FTSE ?????? FTSE 350 INDEX – PHARMACEUTICA ?????? FTSE ?????? Index
$NMX8730-FTSE ?????? FTSE 350 INDEX – REAL ESTATE ?????? FTSE ?????? Index
$NMX9530-FTSE ?????? FTSE 350 INDEX – SOFTWARE & CO ?????? FTSE ?????? Index
$NMX2790-FTSE ?????? FTSE 350 INDEX – SUPPORT SERVI ?????? FTSE ?????? Index
$NMX9570-FTSE ?????? FTSE 350 INDEX – TECHNOLOGY HA ?????? FTSE ?????? Index
$NMX3780-FTSE ?????? FTSE 350 INDEX – TOBACCO ?????? FTSE ?????? Index
$NMX5750-FTSE ?????? FTSE 350 INDEX – TRAVEL & LEIS

$UKX-FTSE,$ASX-FTSE,$UB3300-FTSE,$UB8300-FTSE,$UB1700-FTSE,$UB1300-FTSE,$UB2300-FTSE,$UB8700-FTSE,$UB3500-FTSE,$UB4500-FTSE,$UB2700-FTSE,$UB8500-FTSE,$UB5500-FTSE,$UB0500-FTSE,$UB3700-FTSE,$UB5300-FTSE,$UB9500-FTSE,$UB6500-FTSE,$UB5700-FTSE,$UB7500-FTSE,$NMX2710-FTSE,$NMX3350-FTSE,$NMX8350-FTSE,$NMX3530-FTSE,$NMX1350-FTSE,$NMX2350-FTSE,$NMX7530-FTSE,$NMX2730-FTSE,$NMX8980-FTSE,$NMX6530-FTSE,$NMX5330-FTSE,$NMX3570-FTSE,$NMX1730-FTSE,$NMX7570-FTSE,$NMX8770-FTSE,$NMX2720-FTSE,$NMX5370-FTSE,$NMX4530-FTSE,$NMX3720-FTSE,$NMX2750-FTSE,$NMX1750-FTSE,$NMX2770-FTSE,$NMX3740-FTSE,$NMX8570-FTSE,$NMX5550-FTSE,$NMX1770-FTSE,$NMX6570-FTSE,$NMX8530-FTSE,$NMX0530-FTSE,$NMX0570-FTSE,$NMX3760-FTSE,$NMX4570-FTSE,$NMX8730-FTSE,$NMX9530-FTSE,$NMX2790-FTSE,$NMX9570-FTSE,$NMX3780-FTSE,$NMX5750-FTSE

$PC-ST?????? ?????? |CBOE Total Put/Call Ratio (Click here for complete list of Put/Call Ratios)
$PCI-ST?????? ?????? Put / Call Ratio – INDEX?????? Put Volume / Call Volume (All indices for all exchanges)
$PCCI-ST?????? Put / Call Ratio – CBOE Indices?????? Indices Listed on CBOE – new addition
$PCCE-ST?????? Put / Call Ratio – CBOE Equities?????? Equities Listed on CBOE – new addition
$PCOEX-ST?????? Put / Call Ratio – OEX?????? Put Volume / Call Volume (Equities part of OEX)
$PCSPX-ST?????? Put / Call Ratio – SPX?????? Put Volume / Call Volume (Equities part of SPX)
$PCE-ST?????? ?????? Put / Call Ratio – Equities?????? Put Volume / Call Volume (All equities for all exchanges)
$CVOLI-ST?????? Call Volume – INDEX?????? All indices for all exchanges

$PC-ST?????? ?????? Total Put Call Ratio Composite?????? Put Volume / Call Volume (All Indices and Equities for all exchanges)
$PCA-ST?????? ?????? Put / Call Ratio – AMEX?????? Put Volume / Call Volume (Equities & indices listed on AMEX)
$PCC-ST?????? ?????? Put / Call Ratio – CBOE?????? Put Volume / Call Volume (Equities & indices listed on CBOE)
$PCIS-ST?????? Put / Call Ratio – ISE?????? Put Volume / Call Volume (Equities & indices listed on ISE)
$PCB-ST?????? ?????? Put / Call Ratio – BOX?????? Put Volume / Call Volume (Equities & indices listed on BOX)
$PCX-ST?????? ?????? Put / Call Ratio – Philly?????? Put Volume / Call Volume (Equities & indices listed on Philly)
$PCP-ST?????? ?????? Put / Call Ratio – Pacific/ARCA?????? Put Volume / Call Volume (Equities & indices listed on Pacific/ARCA)

$PC-ST, $PCI-ST, $PCCI-ST, $PCCE-ST, $PCOEX-ST, $PCSPX-ST, $PCE-ST, $CVOLI-ST,$PC-ST,$PCA-ST,$PCC-ST,$PCIS-ST,$PCB-ST,$PCX-ST,$PCP-ST

US INDUSTRYsectors

$OSX,$XNG,$XOI,$HGX,$UTY,$GSO,$XAU,$GIN,$BMX,$HMO,$DFX,$INX,$XCI,$GSV,

$IIX,$CYC,$MSH,$BKX,$TRAN,$DRG,$IXF,$GHA,$CNR,$XBD,$NWX,$BTK,$GSM,

$SOX,$RLX,$XAL

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