Transcript Document

Risk Disclaimer

Trading or investing carries a high level of risk, and is not suitable for all persons. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. This content is subject to change at any time without notice, and is provided for the sole purpose of education and assistance in making independent investment decisions. SmartSetups.com has taken reasonable measures to ensure the accuracy of the information contained herein; however, SmartSetups.com does not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or from an inability to access such information or any delay in or failure of the transmission or the receipt of any instruction or notification in connection therewith. Any past performance results are shown for illustration and example only, are hypothetical and as such have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Past performance is not necessarily indicative of future results.

Hypothetical Risk Disclaimer

U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN.

Mark Helweg Background ● Private trader since 1989 with Stocks, Futures, FOREX, and Options.

● Professional Hedge Fund Manager for almost 20 years ● Author of “Dynamic Trading Indicators” ● Top New CTAs 1998 Futures Magazine ● Two Time Managed Funds Star Search (2003 & 2008) ● Developed Patented ValueCharts®

Market Theory

1. Psychology 2. Trading Framework 3. Filters for ORBs

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Market Theory

Psychology

Market Theory

Common Types of Traders

Casual Trader

Avoids the Hard Work “This trader wants to experience the thrill of making money in the markets without the hard work and commitment that professional traders rely on to succeed.” www.smartsetups.com

Codependent Trader

Lacks confidence “This trader is tends to second-guess their own judgment and often depends on other traders to make trading decisions for them. If they speak to another trader who holds an opposite position in the markets, they often exit their trade.” www.smartsetups.com

Holy Grail Trader

Searching for the Perfect Strategy “This trader seeks to find the perfect strategy that always makes money. They jump from one strategy to the next and are often lured by too good to be true performance results.” www.smartsetups.com

Obsessed Trader

Unbalanced Life “This trader eat and drinks trading 24/7. They lack balance in their lives as they work toward a future payday when they can begin to live life on their terms.” www.smartsetups.com

Perfectionist Trader

Has difficulty with Losing “This trader does not see losing trades in the proper perspective. They view losing trades as a failure of their strategy or a failure of their efforts.” www.smartsetups.com

Sympathy Trader

Likes to Talk about Losing “This trader establishes their identity as the person who just can’t win. They like to tell others about their losing war stories.” www.smartsetups.com

Market Theory

Cognitive Biases

“Way of the Turtle”

by Curtis Faith

Cognitive Biases

Loss Aversion:

The tendency for people to have a strong preference for avoiding losses over acquiring gains.

Cognitive Biases

Sunk Cost Effect:

The tendency to treat money that has already been committed or spent as more valuable than money that may be spent or acquired.

Cognitive Biases

Disposition Effect:

The tendency for people to lock in gains and ride losses.

Cognitive Biases

Outcome Bias:

The tendency to judge a decision by its outcome rather than by the quality of the decision at the time it was made.

Cognitive Biases

Recovery Bias:

The tendency to weigh recent data or experience more than earlier data or experience ("it is different this time").

Cognitive Biases

Anchoring:

The tendency to rely heavily or "anchor" on easily available information.

Cognitive Biases

Bandwagon:

Believing something because many others believe the same thing.

Cognitive Biases

Believe in the Law of Small Numbers:

Drawing unjustified conclusions from too little information.

Cognitive Biases

Gains versus Losses:

Research suggests that losses impact emotions at a much greater level than their positive counterpart, that being gains.

Market Theory

Keys to Success

Keys to Success

Self-Awareness:

Understand your own strengths, weaknesses, habits, and biases.

Keys to Success

Humility:

“Stay humble or the markets will do it for you.”

Keys to Success

Be Teachable:

Great traders are lifelong students.

Keys to Success

Framework:

Develop a framework to make effective and consistent trading decisions.

Keys to Success

Risk Management:

Don’t put too much bait on your hook.

Keys to Success

Consistency:

You must have discipline and consistency to achieve results over time.

Keys to Success

Gut Feel:

“In general, trading is as much art is it is science. This only comes with hard work!”

Keys to Success

Persistence:

Success is partly a function of who wants it the most.

Keys to Success

Experience:

“Clues abound in the markets.” Steven Shobin

Keys to Success

Anticipate:

Analyze potential scenarios and believe the market can follow through.

Market Theory

Framework

Framework

1: Outlook (longer term) 2: Setups (Higher Probability Entry Points) 3: Signals (Manage Trading Positions)

Outlook (“The direction of the main current”)

● Fundamental Analysis ● Technical Analysis ● Trend Following Indicators ● Trend Following Strategies ● Cycle Analysis ● Long-Term Momentum

Setups (“Improve your odds for success”)

● Bullish Divergences ● Bearish Divergences ● ValueCandlestick SM Patterns ● ValueBars SM Patterns ● Support or Resistance ● Trendlines ● Momentum Patterns

Signals (“Manage you trades with logic”)

● Rule-Based ● Discretionary ● Value Range Trading ● Pattern Recognition ● Support and Resistance ● Trendlines ● Momentum

Market Theory

Filters for ORBs

Guppy MMA

The Guppy Multiple Moving Average (MMA) was developed by Daryl Guppy and is fully described in the book Trend Trading. The GMMA was introduced in Trading Tactics in 1997. Source: www.GuppyTraders.com

Daryl Guppy

The market is complex, but solutions for breaking into it need not be. Simple tools give us access to good profits in the markets.

Source: www.GuppyTraders.com

Daryl Guppy

One of the most incorrect common misconception about market success suggests we need exclusive information, or exclusive systems, or exclusive techniques for success.

Daryl Guppy Source: www.GuppyTraders.com

Guppy MMA

Strengths

Effective analysis of the Trend Environment Better understanding of Trend Strength Evaluation of uncommon price movements, such as Dips and Spikes Identification of Trading Activity and Price Behavior

Weaknesses

Not good when applied to Non-Trending Markets Not suitable for all Markets Not a Moving Average Crossover Alert Source: www.GuppyTraders.com

Reading the Guppy MMA

● Trend Strength or Weakness defined by Degree and Nature of separation in the long term group ● Nature of Trading Activity defined by Degree and nature of separation in the short term group ● Character of the Trend defined by Degree and Nature of Separation between the Two Groups of Moving Averages ● Compression communicates agreement on Price and Value ● Compression of both groups indicate Major Revaluation of Market and potential for Trend Change ● Trade in the direction of the Long Term Moving Average Group ● Relationships between the groups provide information about Nature and Character of the Trend ● Do not use as Moving Average Crossover System Source: www.GuppyTraders.com

ORBs Review

● Buy Entry ● Stop Loss ● Buy Target #1 ● Buy Target #2 ● Sell Entry ● Stop Loss ● Sell Target #1 ● Sell Target #2

Guppy Setups

① Long-Term Guppy MMA ② Short-Term Guppy MMA ③ Wait for trade setups in the direction of the Guppy MMAs ④ Use ORBs levels for Entries & Exits

Entry after Trend break Confirmation

Guppy MMA

Rally in Downtrend Compression Agreement on Price and Value Trend Strength Trend Strength Rally in Downtrend Frequent Trading Activity

Questions & Answers

The End