Four Steps Trading Course

  

Indicator Assisted Discretionary Trading

The persistent theme throughout this entire manual and video course is one of teaching both the experienced and novice trader logical, scientifically proven methods of designing and implementing profitable trading strategies.

In this manner the trader will be able to develop the confidence necessary to execute a methodical trading plan in anticipation of a successful outcome.

To this end we will be examining systematic trading from two separate approaches.

The first strategy I will demonstrate will be one of trading from a discretionary standpoint with the aid of a library of computerized indicators, which we have developed over my many years of trading experience.

These indicators are unique to this trading course and cannot be found as a part of any other trading methodology or system. These tools are unique in the respect that they are self adaptive in nature, using Parallel Function Technology to continually evaluate their performance as measured by their activity over a defined set of past market data.

This technique operates in much the same fashion in which the pure market technician assesses the market. The pure technician ignores all fundamentals, confident that all forces impacting on the market will be reflected in price.

Likewise, this method ignores the myriad of technical forces in the market as they impact the system and instead concentrates only on the net effect of these changes on the system itself. Rather than trying to determine which phase of market activity is impacting the systems results, the system monitors changes in the market personality and makes parameter adjustments accordingly.

This all is possible through the use of Parallel User Functions.

Therefore, as the markets change throughout your trading days, weeks and years, your JFC Indicators & Systems will continue to function in spite of changes in market activity that occur regularly in actively traded markets.

The flexibility and resilience of designing trading indicators in this manner allows the trader to move forward with his or her efforts to earn profits, without the anxiety of wondering if and when their trading tools will cease to perform.

Trading is enough of a challenge, you don’t need the worry about your technology breaking down.

The second approach will be a strictly mechanical approach to making trading decisions using the Spectrum System. SPECTRUM is used for position trading, it is a totally computerized, automatic system which will issue specific buy and sell signals at the appropriate time and price.

First, then, let us examine the specific strategy which will govern our trading activities when we are trading in a discretionary manner using indicators and various market measurement strategies.

When one begins thinking about discretionary day trading, a mental picture immediately surfaces which involves a trader looking at a quote screen or charting package and randomly picking and placing trades which “look good” at the time. Often this type of trader, not having any logical method built into his/her trading strategy, will often fall into the trap of changing their trading strategy after each loss.

Note that although our trading strategy is of a discretionary nature, we go about constructing the entry and exit strategy of the trade in a logical, scientific manner. This is not “seat of the pants” trading which gets so many traders in trouble. Rather, it is a methodical approach to day trading which has stood the test of time in actual market transactions.

The 4 Step Process

As Day Traders, we all have the same questions:

The JFC Indicator Library is specifically designed to answer these vital questions throughout your trading session.

In a nut shell, these indicators can tell you which way the market is going and how far it will go with reasonable accuracy.

Let’s take a look at these four reoccurring day trading questions.

When we plan and execute a trade, there are four basic determinations that need to be accurately made to properly position a logical trade.

Step One

We must determine the major trend for the day. This will allow us to place trades only in the direction of the predominant trend. Remember the old axiom, “The Trend is your Friend”.

Tools used to determine the Major Trend are:

These JFC Indicators are designed to tell you which way the market is going TODAY. They clearly identify if the trend of the day is Up, Down or Sideways. Knowing the Major Trend is crucial to your trading success.

Step Two

We must then define the minor trend within the major trend. Even though we have defined the trend for the day, we can sharpen our entry strategy markedly by determining the exact location of specific market exhaustion. These are points at which the market is likely to end a corrective phase and then proceed on in the direction of the major trend for the day.

Let’s be honest, one of the biggest problems in day trading is getting “sucked into the bad trade”, this usually happens when we loose sight of the Major Trend. The Minor Trends or Retracements throughout the session can very often be mistaken as the Major Trend. BUT, these Minor Trends almost always run out of energy or reach a point “exhaustion”. Once this move has run out-of-gas, it offers an excellent “Entry Zone” to jump back onto the Major Trend.

The JFC Indicator Library has 4 Minor Trend Indicators. It is very important to remember that each of these JFC Indicators approaches the same task of identifying the exhaustion of a minor trend from 4 totally different mathematical perspectives. If one views this problem from several vantage points, there is a higher probability of successfully identifying a good entry zone.

An enormous amount of calculations are performed by these indicators, the JFC Cluster indicator for example performs over 15,000 calculations on each price bar.

These tools can help the trader see market nuances that are literally impossible to see otherwise.

Tools used to determine the Minor Trend are:

Step Three

We now must specifically define the entry point. When we have successfully defined the major and minor trends in our market of choice, we then are able to use one final indicator which will define short term support and resistance as an even more specific entry point. By utilizing the long honored principles of support and resistance on a short term basis we are able to allow the market itself to define our specific entry as these areas are violated by market activity.

The JFC Entry Point indicator is the tool designed for this purpose.

Step Four

Finally, we must determine an exit point for our trade. Again, as with all the self-adaptive tools we have developed over our years of market research and trading, we will be using exit methods which take recent market activity into consideration when defining an exact exit point.

We will be using indicators which define trailing stops for protection and target indicators, again derived from a series of support and resistance calculations, which will give us a logical, practical point at which we can exit the market with a profit.

Indicators used to determine an exit price are:

Thus, the four step process is completed by defining a logical exit point. It is often stated that exiting a trade is the most difficult segment of the entire process of completing a trade. Using a set, self adaptive routine can take much of the stress and guesswork out of this critical phase.

Although one may use different portions of these selected routines for trading different stock issues or commodity contracts, learning and using the four step method outlined above can be a significant step toward more consistent, and therefore, more profitable trading.