11 06 21 - ACTIVE TRADER PRESENTATION CANDLESTICK CHARTING - TINA LOGAN QUESTIONS - BLUE I RETYPED SOME OF HER SLIDES TO SAVE ON THE

SIZE OF THIS FILE THOSE THINGS APPEAR IN GREEN She will be happy to answer questions at tina@tinalogan.com. Also you can go to the website www.tinalogan.com Tina Logan is an active trader, trainer and the author of Getting Started in Candlestick Charting.

TINA LOGANS CHART AND MARKET ANALYSIS STYLE I focus primarily on price (in candlestick form), volume and volatility (P-V-V). I analyze trends (including identifying support-resistance areas on charts and look for price setups that provide low risk, high reward trading opportunities. I utilize top down analysis to monitor the broad market environment and to determine where money if slowing (e.g. Sector analysis). Then she narrows down to stocks. I use indicator for various purposes, such as the following: Trend analysis, support-resistance (e.g. moving averages), warnings, divergence, confirmation and scanning. However, I do not enter or exit a trade based solely on a signal from any indicator. Price action and analysis of the surrounding chart landscape is what pulls me into or pushes me out of a trade.

We can get a 10% discount off the book by typing Active Trader in the comments section during checkout. She will issue a refund within a couple of days. This is good to 7/31. Swing trading is an active style of trading that capitalizes on short-term trends or price swings that occur frequ3ently on charts. Swing trading refers to a method where traders attempt to profit off directional price moves (either up or down) that typically last for only a
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short period of time. This type of trading is appealing to traders who wish to trade actively, but prefer to avoid the rigor of day trading. Swing traders capitalize on the emotional reactions (and over reactions) of market participants. The emotional crowds behaviors are imprinted on charts in the form of price action volume and volatility. Swing trading works because identifiable price patterns occur on charts over and over again. Swing trading is a concept and works on any time frame. If there is not enough movement on a larger time frame she will move to a smaller time frame she does not consider it scalping she calls it intraday swing trading. She likes Tellichart from Worden brothers and also does webinars for them that are archived on their site The market moves in little 3 - 5 bars moves. This is the life blood of the market. This can appeal to someone who does not want to be a day trader. She wants to be in for the swing and out for the pullbacks. Sometimes there is a target and sometimes not, then she uses candlesticks to get out. Successful swing trading is not a matter of chance. It starts with an understanding of the phenomena that occur on charts that end to be repeated. Following are some examples that will be addressed in this presentation: Markets move in trends. Price swings occur within trends and trading ranges Price tends to revert to the mean. (she uses the 20 MA) Morning Gaps have a tendency to fill (and often quickly) - this is very important in her trading. Candlesticks reveal sentiment of market participants. - she is not a pure candlestickian (her word) but they do not determine her trade they are just additional information. The above concepts, along with an understanding of volatility influence my swing trading decisions. A trader must watch the things that occur in the marketplace in order to be effective.

VOLATILITY

Remember 2007 - 2009 at one point the 14 day average on the Dow was 600 points - yesterday it was 140. Another time it went crazy as the May 2010 flash crash it was very volatile for a couple of weeks. The picture on the slide shows the Bolinger Bands which show volatility. MEASURES OF VOLATILITY Following are some ways to measure volatility: Measure a stocks current volatility against is average volatility. Standard Deviation is such a measure, (e.g. Bollinger Bands). Compare a stocks volatility to that of all other stocks. Beta is such a measure. Average Daily Range or Average True Range. Logarithmic scale provides a quick gauge of volatility. Lets focus on the logarithmic scale. In Tellichart (version 2007, click on the first letter L in the lower right corner of the chart.

She is using the 2007 version of Tellichart for all of this.

She wants to see the change as a percent as saying a stock moved up or down one gridline means something completely different for different stocks. Think GOOG versus a much smaller stock. This is important when you are only taking short swings out of the market. Also increased volatility lower your ability to hold thru the pullbacks. Same price range stock but you can see the differences in volatility of price between the gridlines.

As a general rule, the higher the percentage between the gridlines the more volatile the stock. Keep this in mind when determining the following: Whether a stock meets your risk tolerance or not. How you will trade the stock (e.g. short or long term. If an entry you are considering offers adequate reward compared to the risk. A poor entry in a highly volatile stock can be devastating. Which account to trade the stock in (e.g. margin account of retirement account). There is nothing wrong with avoiding a stock because it is too volatile. Slippage is often really bad. Even experience traders need to know when to step away. The more volatile the stock the shorter time frame you want to trade. Never chase a stock - you must take risk and reward into account. She is much more likely to trade a volatile stock in her margin account and not her retirement account. WHAT IS LOW AND WHAT IS HIGH VOLATILITY? That is subjective - traders have different levels or risk tolerance. Following is a general rule I follow: About 3% or lower = lower volatility range. Typical of ETFs (not the leveraged ones) and mature companies. It may not be difficult to hold through the pullbacks at this level of volatility. Between 4-8% = medium volatility range. It is harder to hold through pullbacks. Above 8% = higher volatility range. It may be very difficult to hold through pullbacks. Above about 12% = bucking broncos! She uses zoom 5 on telechart so her charts gridlines are consistent.

Everything she is talking about is long on a daily chart unless she specifies short.

You can see that before it pulled back there was a loss of momentum. This pull back is almost 33% at this time. You do not want to hold thru that. Look for other confirming information such as support and resistance. There are times that it will shrug off a small pullback but why take the risk. You can always get in. Also that shooting start at the top was a great indicator. To her swing trading is about getting her entry, riding the move and then getting out as she pulls her stop up to protect her profits. She doesnt want to let it hit her stop due to slippage in the fast decline.

This is why entering for this to be a breakout trade you can be down a huge amount without much of a move. If she wants to nail an entry in a volatile stock basing like this she will monitor is closely and enter at the bottom of the range. PRICE MOVEMENT Charles Dow recognized that rends provide the key to anticipating price movements. Dow observed three distinct types of market trends which he categorized by their duration. These classifications of trend duration have been widely accepted in technical analysis. Long term Trend (primary trend) - a trend in effect for six to eight months or longer. Intermediate term Trend (secondary trend) - a trend that lasts from a few weeks to a few months. Short term Trend (minor trend) - A trend that lasts from a few days to a couple of weeks. You will read that the primary trend is a year of longer - she thinks it is 6 months or longer.
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Most intermediate are 1 - 3 months long. The minor trend is a swing (thus the term swing trade). 3-5 bar runs are common. These are the ones she wants to trade.

The last weeks the market is in an intermediate correction - now you need to determine if the correction is over so now it is precarious for longs. Here you can see the short term moves within an intermediate trend.

You need to monitor short term trends within the intermediate trends - this is where the trades are. Stocks can swing when the market is not trending. And you can find tradable swings within a trading range. But remember a perfectly formed trading range is not that easy to find. Many times the market scribbles outside the lines. Also realize that by the time you recognize it is a channel it may be almost over. The first two swings just look like a double top so you do not usually see them until the third or forth swing.

There are usually a few bars within a swing and a few swings within a trend. Do not bank everything on one bar. It can be a reversal bar but you would need some confirmation.

She is talking about 3-5 bars or the equivalent. 2 wide range bars can be the same as 4 small range bars. There could be a catalyst (e.g. news) that causes this effect. She like to trade probabilities. She does not like the low probability part of the swing.

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On the chart above we have two candles up and then 2 with the topping tails show that the swing is slowing. There is no need to exit the entire trade if you are a bull trend - but take some off and protect your profit. She remembers watching CNBC and the talking heads were talking about the NQ making its eighth day up in 3 years - this is how often the eight bars happen. Reversion to the mean is a statistical concept which suggests that a value eventually moves back toward the average, or mean. Lets apply this concept to price. As a general rule, price does not deviate too far from the average, and when it does it becomes vulnerable to a change in direction. I pay attention to the proximity of the current price to the 20-period simple moving average. When price swings away from the moving average (I call this catching air), it may become overextended and the likelihood (probability) increases that price will change direction,(ON A SHORT TERM BASIS) at least temporarily, rather than continuing to move farther away from the average. At the right edge you do not know if it is consolidation or a pull back.

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The overextended condition needs the release of pressure so, short term traders taking profit causes the pullback and that relives the pressure so that the move can continue. It will not always bounce off the 20 so do not bank on it.

Why gut it out on a pullback when you can get out with profit and reenter or move on to another stock.

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Where does a swing start and end - that depends on who you talk to. There is some subjectivity in charting. Note the shadows that form at the lows and highs. Do we use it or clip it off? Many traders like to clip them and she understands that because they are extremes. But, it matters depending on when you got in. There was someone buying here and it was probably an amateur.

If you add volatility to a poor entry and you have a bad entry - this is the greater fool phenomenon. To them, the shadow makes a great deal of difference. So if you using a swing high as a target clipping the target is probably a good thing. But do not discount them as they are the turning point and the beginning of a swing but intraday they are a trend. IGNORE THE SHADOWS OR NOT? Some traders will argue that the shadows at the top and bottom of a price swing are not important and one should focus on the closing high of the upswing rather than the very high or the closing low of a downward swing rather than the very low. This is a valid argument because the closing price is typically considered to be more important than the extremes at the upper and lower shadows. However, if there is a shadow at the end of a price swing, it provides some important information.
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Consider this: a short-term swing on one time frame is a longer trend on a lower time frame. Thus, the top of the upper shadow at a swing high is the reversal point of an uptrend intraday, and vice versa. Then she talked about wanting us to review the recording of this webinar. You need the repetition and you need to put in the work in order to be a successful trader. She has sat thru a 3 day video course 17 times so watch this presentation again. Repetition is good. Alan Farley The Swing Trader is a great book but there is a lot of information and you can probably not ingest it all the first read through. You can only absorb things when you are ready for it. Keep repeating and practicing. Here is a gravestone doji and then a 21% decline. If you had tried to hold through the decline your stops would probably taken you out anyway. So you just made a profitable trade - red. The cardinal sin of trading is letting a green trade turn red.

She uses alerts instead of stops because she is disciplined enough to take the stops but if you are not just use stops. The good thing about alerts is that they can help you avoid manipulation in the market.
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END OF SWING WARNINGS If you have not learned about the morning gap - DO SO! - they are important.

What is important is how often these gaps tend to fill. Active trader had an article showing a number of instruments with back testing. Something like 70 % fill with most filling in the first 60 min of the day. So with her swing trading style if she is long a stock that it is overextended and then it gaps up she would get out as fast as she can. The flat top candle is a shaven top where all the sell orders were dumped at the open of the market. She will usually get out premarket with a limit order so she does not caught in the rush to sell. That one little article in one magazine was a major impact on her trading. Also morning gaps are often the start of a candlestick pattern. The one on the left - dark cloud cover and the right is a bullish counter attack line. The gap up is her chance to get out with more profit (a bonus). Can it go further up - yes but the probability is that is will fill and she trades on probability.
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At the end of swings you will see signs of loss of momentum. When you see shadows or smaller bodies at the end of a swing it is a warning that it is running out of steam. Can it go further - yes - but the probability is not. Reaching for a top

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SOME IMPORTANT SWING TRADING TIPS. Pay attention to the market averages. A rising tide raises all boats, and vice versa. Adjust your trading to the broad market and incorporate sector analysis into your routine. If it is an intermediate up leg -in a term bull market - she will take partial profits on a warning and let some ride. Or if it is choppy or if she is in a long position in a bear trend (which she does very rarely and with only a specific setups) the warning will get her out immediately. Use protective stops (or alerts if disciplines enough) to keep losses small. Take at least partial profits at swing targets. Be on the alert for warnings the price swing may be losing strength.

She loves the idea of selling part because she can ring the cash register and still let her trades run - the best of both.
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Check for the earnings release date before entering a swing trade. She does NOT hold trades through earnings releases. You can do it but you might as well go to Vegas. Unless it is a core position and then protect your money with options or a reduced size. She writes down earnings dates in her trading journal BEFORE she takes the trade. Develop a strategy with written rules and guidelines. As you begin executing a strategy, you will discover things you had not planned for and will have to build guidelines for those situations into your strategy. You should be constantly learning and growing in your strategies and style. She has an e-book about this presentation on her website. She wants to give us value that we can use immediately without trying to sell stuff to us. It is important to learn the terminology so that you can categorize things. You need to know WHY things happen - such as WHY the morning gap fills. Do not just throw yourself at the market - learn about it. Do not chase the thing that is on the run - wait for an entry. Why does morning gap fill - because they are market orders that are stacked up because they cannot fill a market order in premarket. So when they dump them in at the open it collapses the bid and the slippage starts. Math doesnt lie! 72% fill. She has a strategy for stocks that are trading lower in premarket than yesterday, and it is going to gap to a floor she plays a gap into support play. Wall Street isnt going to give money to those who have not paid their dues!!! Tina Logan

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