ETF Mastery Breaking New Ground

ETF MasteryBreaking New Ground in Your Trading

By Robert Roy

Neither Better Trades or any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk.

Also Better Trades personnel are not subject to trading restrictions. I and others at Better Trades could have a position in a security or initiate a position in a security at any time.

Helpful Tips For Tonight's Workshop Have a pen, paper & calculator ready

Grab a water, coffee, etc., Before we start

You should have already received your workshop manual (check your junk folder). If not contact support for help

To keep the workshop moving, please keep the text chat to questions related to the material we are discussing

We have a large group, so to keep things moving I will take questions at the end of each section

There will be a short (3-5) minute break around 9 p.m.

Open your mind to learning & have fun tonight!

What Is ETF MasteryA Short Term Traders Advanced Level Training Course


The Process of the workshop is:Start off using ETFsLearn the Strategy Creation System (SCS)Review Trade Setups


The Process of the workshop is:Start off using ETFsLearn the Strategy Creation System (SCS)Review Trade Setups

In the back of the manual are the Bonuses, make sure to review themTrading PlanTrading MantraExtreme Charts 821 Moving Average FilterTrading Psychology Test / Test ResultsBlank ETF Fact Sheet

ETF FactsAn ETF is an Exchange Traded Fund. They are trusts that track a basket of stocks.

ETFs trade just like a stock does

Many ETFs are optionable

Many optionable ETFs have options with $1.00 strike prices

They trade with less whipsaw than most individual stocks do

Some ETFs track a stagnant basket of stocks (SPY tracks the S&P 500). Others track a managed basket of stocks.

Some ETFs trade inverse to the market while others trade in multiples to the market.

Not all ETFs are created equal. Some have huge volume while others have almost no volume.

Why Start With ETFs

Using an ETF to start developing a Strategy Creation System gives the trader benefits that are not available to traders of individual stocks such as:

Why Start With ETFs


The news effect

Why Start With ETFs


The news effect

Controlling a basket of stocks allows for less whipsaws to take place.

Why Start With ETFs


The news effect

Controlling a basket of stocks allows for less whipsaws to take place.

Using Highly Qualified candidates may give the trader an edge over other traders unaware of these benefits.

ETFFact

Sheets

The ETF Fact Sheets ETF Fact Sheets are created to keep track of all of the details on that particular ETF.

Not all sheets will have all of the same information, some details are not available on a specific ETF.

They are meant to be a starting point, not an end all.

These ETFs were chosen as examples of trading opportunities because of their potential tradability. They are not recommendations.

ETF Fact Sheet Ticker Symbol: Primary Benchmark:

Short Selling Allowed: Gross Expense Ratio:

Inception Date: Exchange:

Weekly Options: Option Increments:

Dividend Yield: PE Ratio:

Average Daily Volume:

Top 5 Holdings: Holdings ETF Weighting:1-2-3-4-5-

SPY Fact Sheet #1Ticker Symbol: SPY Primary Benchmark: S&P 500

Short Selling Allowed: Yes Gross Expense Ratio: .09%

Inception Date: 1/22/93 Exchange: NYSE

Weekly Options: Yes Option Increments: $1.00

Dividend Yield: 1.95% PE Ratio: 13.57%

Average Daily Volume: 150MM

Top 5 Holdings: Holdings ETF Weighting:1- XOM 3.55%2- AAPL 3.29%3- CVX 1.89%4- GE 1.85%5- IBM 1.70%

QQQ Fact Sheet #2Ticker Symbol: QQQ Primary Benchmark: Nasdaq 100

Short Selling Allowed: Yes Gross Expense Ratio: 0.20%

Inception Date: 3/10/1999 Exchange: Nasdaq




Top 5 Holdings: Holdings ETF Weighting:1- AAPL 14.03%2- MSFT 8.49%3- ORCL 6.28%4- GOOG 6.03%5- INTC 5.18%

EEM Fact Sheet #3Ticker Symbol: EEM Primary Benchmark: Emerging Markets (USD)






Top 5 Holdings: Holdings ETF Weighting:1- Samsung Electronics 3.02%2- Gazprom 1.83%3- China Mobile 1.74%4- Petro Brasileiro 1.57%5- America Movil 1.46%

IWM Fact Sheet #4Ticker Symbol: IWM Primary Benchmark: Russell 2000




Dividend Yield: NA PE Ratio: 35.3%


Top 5 Holdings: Holdings ETF Weighting:1- HS 0.33%2- NETL 0.31%3- SFSF 0.30%4- CLH 0.27%5- INT 0.26%

SLV Fact Sheet #5Ticker Symbol: SLV Primary Benchmark: London Tix Silver (USD)

Short Selling Allowed: Yes Gross Expense Ratio: 0.50

Inception Date: 4/21/2000 Exchange: (Ishare)


Dividend Yield: NA PE Ratio: NA


Top 5 Holdings: Holdings ETF Weighting:

SLV Holds the physical Silver Bullion

XLE Fact Sheet #6Ticker Symbol: XLE Primary Benchmark: S&P Energy Select Index






Top 5 Holdings: Holdings ETF Weighting:1- XOM 19.24%2- CVX 15.18%3- SLB 6.71%4- COP 5.02%5- OXY 4.66%

XLB Fact Sheet #7Ticker Symbol: XLB Primary Benchmark: S&P Materials Select Index



Weekly Options: No Option Increments: $1.00



Top 5 Holdings: Holdings ETF Weighting:1- DD 10.64%2- MON 9.44%3- FCX 8.77%4- PX 8.06%5- NEM 7.47%

XRT Fact Sheet #8Ticker Symbol: XRT Primary Benchmark: S&P Retail Select Index






Top 5 Holdings: Holdings ETF Weighting:1- WINN 1.88%2- SVU 1.16%3- RDK 1.14%4- CVS 1.14%5- CASY 1.12%

GLD Fact Sheet #9Ticker Symbol: GLD Primary Benchmark: London Fix Gold (USD)




Dividend Yield: NA PE Ratio: NA

Average Daily Volume: 12.5MM

Top 5 Holdings: Holdings ETF Weighting:

GLD Holds the physical Gold Bullion

DIA Fact Sheet #10Ticker Symbol: DIA Primary Benchmark: Dow Jones Industrial Avg.




Dividend Yield: 2.12% PE Ratio: 12.79

Average Daily Volume: 9.1MM

Top 5 Holdings: Holdings ETF Weighting:1- IBM 11.36%2- CVX 6.57%3- MCD 6.20%4- CAT 5.60%5- XOM 5.24%

StrategyCreationSystem

Strategy Creation SystemThe Strategy Creation System (SCS) is a method for taking a trading system from conception to completion.

The SCS steps are: Conception

Stock Setup

Paper Trade Testing

System Results Tracking

Funded Testing

System Creation

Strategy Creation System

ConceptionCreating a system starts with an initial thought, the birth of the idea. The initial idea does not usually make for a good representation of the end product. The way you envision the trade setup in the initial stages changes as you go through the subsequent steps.

You will need to come up with:Strategy Name: Give the strategy you are creating a name.

Strategy Description: Write out a detailed description of the strategy you are creating. This is the place to get all of your thoughts onto paper.


Stock SetupThis is where you will list all of the details about the particular setup you are birthing. You will list any technical details involved with the system.

List any:

Technical indicators needed, along with their settings

Chart patterns used

Fundamental data required

External news resources you are relying on


Paper Trade Testing PhaseThe testing phase is one of the most crucial stages of the entire process.

Back Testing Using the details in the Conception and the Stock Setup sections above you will look at historical charts and test the system you have described. It is extremely important to take good notes on the results of the trades The back testing should go back at least one year; use more if the pattern you are testing does not show up very often.

Forward Testing Once you have completed the back testing phase it is time to Forward Test your strategy. Set up a paper trading account that will only be used for this strategy. Test the system moving forward for at least three months. Continue taking notes and making observations about the trade setup.


System Results TrackingThis section is a continuation of the back and forward testing phases already covered.

Take note of all entry and exit details (including the day of the week)

Record the number of days you are in the trade

Keep a good record of any anomalies you notice about the system

Track the number of winning and losing trades, as well as the systems P&L

Look for better results at specific times of the day as well as the days of the week


Funded TestingOnce you are satisfied with your results from both back and forward testing, it is time to consider placing funded trades.

How to get started: As you place your first funded trade, start out very small. With options, only trade one contract to get your feet wet. It doesnt matter if the commission wipes out all of the profit, what does matter is that your are training yourself how to react while in the trade with green money.

After you are comfortable with one contract it is time to add a second one to the mix. You should be trading one contract for a few weeks before increasing the number of contracts. At a minimum you should enter a few trades with one before going to two contracts.

Continue with the above process as you are doubling your contracts (on entry) until you have reached your desired quantity.


System CreationIt is now time to tie together all of the loose ends on your system. From the back testing phase forward you will be working on this section. All of the notes you have taken will aid in the steps of the final system

Details Needed: All entry criteria such as patterns, indicators and their settings, etc.

Your risk management criteria, how much are you willing to put at risk in each trade, what is the drawdown you are comfortable with, the number of contracts traded, etc.

Where and how are your initial stops are to be set

Will your stops need to be adjusted and, if so, how and when

How will the trades be exited, will it be in one exit, will you scale out, etc.


Tying It All TogetherKeep in mind that this is a fluid document. You will always be looking for improvements to your system.

This is a never ending learning process. NEVER EVER GIVE UP THE GOOD FIGHT!

ETF Mastery Trade Setups Fibonacci 50 Trade

Roman Candle Pivot Point Trade

Power Hour Setup

Gap Fade Frenzy

Gap FAR (Fill and Reverse)

821 Moving Average Trade Setup

Fibonacci50

Trade

How To Draw Fibonacci

Look for the most previous trending move on the position.

The move should be the most recent major move the position has made

Using the Fibonacci support / resistance tool draw the Fibonacci.

If the trend is moving higher, then start from the lowest low in the run and draw to the highest high of the run.

If the run is bearish, start at the highest high to the lowest low of the run.

(The following examples are conducted using the Extreme Charts program. If you use another program, your charts may look different.)

How To Draw Fibonacci

Start Fibs Here

End Fibs Here

Changing Settings In Extreme ChartsAfter drawing the Fibonacci on your chart for the first time you will want to make sure that you change (and SAVE) your settings on the Fibonacci support & resistance drawing tool.

Step 1: Draw the Fibonacci using the rules on the previous page

Step 2: Right click on any of the Fibonacci lines on the chart and click edit

Step 3: This will open up a settings box. Follow the settings on the next page

Note: This is the method to set up Extreme Charts. If you are using a different program then consult with that company on how to set up the Fibonacci using my settings.

Changing Settings In Extreme Charts

Fibonacci Support / Resistance Settings

-1-.618-.382-.2720.236

.382

.5

.618

.7641

Check Off Boxes

Extend Primary Lines None Extend Ratio Lines None Test these settings to see what you like Hit save as default when you are done

Fib 50 Trade Setup Find a stock that is in a trend (bullish or bearish)

Draw the Fibonacci using the criteria on the previous pages

Allow the stock to pull back to the 50% retracement line

When the stock bounces off of the 50% line, consider entering the trade (long or short)

You may want to add additional indicators to confirm the bounce (MACD, RSI, CCI, Moving Averages, etc.

Fib 50 Trade

Once the trend runs out of steam, draw the Fibonacci.

Fib 50 Trade

The stock tends to bounce around between the .236 and 0 line.

Fib 50 Trade

Now that is looking good, you want the position to get down to the 50% line. A long entry could be considered here but waiting another day would be safer.

Fib 50 TradeTrade Entry

Fib 50 Trade

1stExit

Entry

2nd Exit

3rdExit

Fib 50 Trade ExitsSTOP Set an initial stop below the 50% line to consider exiting out of the trade

EXIT SCALING First Exit - .236 line (Scale out of 1/3rd of your position)

Second Exit 0 line (Scale out of the next 1/3rd of your position)

Third Exit (-.272 line) Scale out of the last 1/3rd of your position

NOTES After each exit tighten up your stops in case the position reverses

Fib 50 Trade

Roman CandlePivot Point

Trade

Floor Traders Pivot PointsPivot Points are known as the Floor Traders secret weapon. There are many different ways that they can be calculated, but the standard, time-tested calculations are the most commonly used.

Pivots are made up of three different types of lines, they are:

The Pivots - This is the point the stock is expected to pivot off of, it is also known as the mean or the area of normalization

Resistance Lines They are also known as R1, R2, R3, R4, R5

Support Lines - They are also known as S1, S2, S3, S4, S5

Floor Traders Pivot PointsPivot Points are derived by a mathematical formula. Before any of the support or resistance lines can be calculated, you first need to calculate the Pivot Point.

The Pivot Point Formula is calculated by takingYesterdays High + Yesterdays Low + Yesterdays Close = Add them up and divide the answer by 3.

Here is a look at the formula:(H+L+C) / 3 = Pivot Point

ExampleYesterdays High: 20Yesterdays Low: 18Yesterdays Close: 22

(20 + 18 + 22) = 60 / 3 = 20

That will make the pivot point 20 for that time period

Floor Traders Pivot PointsCalculating the Support and Resistances requires a little more math.

Calculations

R3 = R1 + (High Low)

R2 = Pivot + (High Low)

R1 = (2 x Pivot) Low

S1 = (2 x Pivot) High

S2 = Pivot (High Low)

S3 = S1 - (High Low)

The Support and Resistance lines go up to 5. For this setup you are only focusing on 1 and 2, but I gave you the formulas up to 3.


The Roman Candle Pivot Point Trade is a setup that uses these lines as support and resistance levels.

The main focus of this trade is that the stock is potentially running out of steam at the pivot, support or resistance levels.

Roman Candle Pivot Point TradeThe Roman Candle Pivot Point Trade is a setup that uses these lines as support and resistance levels.

Roman Candle Pivot Point Trade (Intraday)Trade SetupThe stock is moving up (or down) toward one of the pivot levels (R2 for the example below)

The entry came as the stock ran out of steam at R2

Entry Enter a bearish position at this point If the stock has weekly options that do not expire tomorrow, consider using the weekly for entering the trade Find a delta of 65 85 Verify there is enough open interest Use 3 or 5 minute candles for this setup

Roman Candle Pivot Point Trade (Intraday)Exit Criteria If entering the trade at R2 then R1 is your first exit point Consider scaling out at each level Use the 8 period moving average to help you with the trend remaining in place

Stops Upon entry of the trade, set your initial stop just above R2 (for this example) As the stock moves in your direction, adjust your stop accordingly. Each pivot level is a place that the stock will hesitate, so move the stops in tight to protect your profits

Notes You could use 1-minute candles if it fits your trading personality This trade potentially works best if the market and the stock are moving in different directions. So if the market is down and your stock is moving up and it hits an R1 or R2 level there is a better chance the stock will retrace.

Roman Candle Pivot Point Trade (EOD)Trade SetupThe stock is moving up (or down) toward one of the pivot levels (R2 for the example below)

The entry came as the stock ran out of steam at R2

Entry Enter a bearish position at this point For end of day setup only use monthly options, not weekly options Find a delta of 65 85 Verify there is enough open interest Use 3 or 5 minute candles for this setup

Roman Candle Pivot Point Trade (EOD)Exit Criteria If entering the trade at R2 then the midpoint between R1 and R2 is your first exit point Consider scaling out at each level Use the 8 period moving average to help you with the trend remaining in place

Stops Upon entry of the trade, set your initial stop just above the mid point As the stock moves in your direction, adjust your stop accordingly. Each pivot level is a place that the stock will hesitate, so move the stops in tight to protect your profits

Notes You need to evaluate the trade daily based on the new pivot levels and the trend remaining in place. This trade potentially works best if the market and the stock are moving in different directions. So if the market is down and your stock is moving up and it hits an R1 or R2 level there is a better chance the stock will retrace.

PowerHourSetup

Power Hour SetupThe Power Hour trade is an uncomplicated trade setup to work with. The first hours high and low of the market may give us a range for the day. The Power Hour trade allows us to potentially exploit this recognizable pattern.

Setup Criteria Using a one-minute chart, draw trend lines on the lowest low and the highest high of the stocks first hour of movement. Set alerts at those price levels

Alert Goes Off If the alert goes off, look at the 1-minute chart for the breakout beyond the lines you drew. If the stock has dropped below the low of the first hour, consider a bearish trade. If the stock goes up above the morning high, consider a bullish position.

Power Hour SetupAllow the first hour of the market to form and draw lines at the first hours high and lows

Power Hour EntryIf the alert goes off when the stock hits one of the lines, follow these criteria:

Entry Criteria Look at the chart if the alert goes off when the stock hits the low Power Hour line If the stock breaks down below the low line, that is the place to consider an entry Using a 3-minute candle, allow the candle to close and wait for the next candle to form. The second candle needs to be below the low of the breakout candle to signal an entry.

Power Hour EntryWait for the entry candle to be below the low of the breakout candle

Power Hour ExitsExit Criteria This trade is managed by using the 8 period moving average As long as the stock stays below the 8 period moving average remain in the trade When the stock closes above the 8 period moving average, exit your bearish position

Setting Stops Upon entering the stock, you will set a stop above the Power Hour low line As the stock moves up above the line, consider closing out of the trade

Notes This trade is all about management. Tight stops will result in small losses, which is what you want. If the position is moving in your direction, allow it to run until your exit criteria are met. It is normally best to avoid entry into this position from 12 p.m. to 1:45 p.m. ESTPivots can also be used to scale out of the trade

Power Hour ExitsUse the 8 period moving average to exit the position

Power Hour Trade

GapFade

Frenzy

Gap Fade Frenzy

Opening GapTrading the gap is a great way to take advantage of the volatility in the market right at the open. The Gap Trade is a purely statistical trade, meaning it is based on the numbers.

When a stock gaps up, you want to fade the gap (trade the gap in the opposite direction)

As the stock gaps up (as an example) you would want to trade the bearish side of the position. You want to fade the gap as you are anticipating the gap filling (or getting closed up)

On the following pages you have examples of trades that are analyzed based on statistical data, so you can learn to determine which gaps to possibly trade and which ones to pass on.

Opening GapSetup Criteria Based on your risk tolerance, use the gap statistics to determine which levels of gap fade you are most comfortable with If the gap doesnt meet your criteria, pass on the trade Have the pivot points, R2, R1, S2, S1 drawn on your real time charts

Entry Criteria Use 1-minute candles and watch the SPY chart from the open. If the stock gaps up, you are waiting for the stock to run out of steam and roll over; if this happens, consider entering a bearish position. Use weekly options if available

Opening GapSetting Stops The initial stop should be set above the most recent high If the stock continues to go higher, exit your position

Exit Criteria Manage the trade in the direction of your position A half gap fill is a good place to scale out of your first half of your trade Look for a full gap fill for exiting the balance of the trade

Notes Consider using the SPY to start with and, once comfortable, look at the gaps on equities For stocks, looking for trading opportunities that have an Average True Range (ATR) greater than $4.00 Use weekly options if possible Gap fade is potentially stronger if it runs up to a pivot level and reverses from there

Gap Fade Frenzy

Opening Gap Statistics

On the following pages are the Gap Statistics for:

SPYAAPLAMZNRIMM

The results are purely statistical, meaning they are based on historical evidence of the gap filling based on the rules we discussed.

SPY Opening Gap StatsGap Range # Of Not % Not %

In Dollars Days Filled Filled Filled Filled

0 - 10 40 1 39 2.50% 97.50%

11 - 20 41 6 35 14.63% 85.37%

21 - 30 34 6 28 17.65% 82.35%

31 - 40 40 9 31 22.50% 77.50%

41 - 50 25 8 17 32.00% 68.00%

51 - 60 26 10 16 38.46% 61.54%

61 - 70 12 2 10 16.67% 83.33%

71 - 80 16 14 2 87.50% 12.50%

81 - 90 11 6 5 54.55% 45.45%

91 1.00 7 3 4 42.86% 57.14%

1.00 +++ 44 35 9 79.55% 20.45%

Exp Date Trade 15 6 9 40.00% 60.00%

Mon After Exp 14 2 12 14.29% 85.71%

Monday 56 19 37 33.93% 66.07%

Tuesday 63 23 40 36.51% 63.49%

Wednesday 63 20 43 31.75% 68.25%

Thursday 62 20 42 32.26% 67.74%

Friday 61 17 44 27.87% 72.13%

Daily ATR for the sample data $1.49

AAPL Opening Gap StatsAAPL Gap Data

Gap Range # Of Days Not Filled Filled % Not Filled % Filled

0 3 0 3 0.00% 100.00%

.01 - .25 72 6 66 8.33% 91.67%

.26 - .50 79 6 73 7.59% 92.41%

.51 - .75 60 10 50 16.67% 83.33%

.76 - 1.00 56 12 44 21.43% 78.57%

1.00 - 1.25 63 17 46 26.98% 73.02%

1.25 - 150 49 14 35 28.57% 71.43%

1.5 - 1.75 35 10 25 28.57% 71.43%

1.75 2.00 26 16 10 61.54% 38.46%

2.01 - 2.50 41 15 26 36.59% 63.41%

2.51 - 3.00 31 10 21 32.26% 67.74%

3.01 - 3.50 21 1 20 4.76% 95.24%

3.51 - 4.00 8 4 4 50.00% 50.00%

4.01 - 4.50 8 3 5 37.50% 62.50%

4.51 - 5.00 9 5 4 55.56% 44.44%

5.01 - 5.50 5 1 4 20.00% 80.00%

5.51 - 6.00 3 3 0 100.00% 0.00%

6.01 - 6.50 4 3 1 75.00% 25.00%

7.00+++ 12 6 6 50.00% 50.00%

Exp Date Trade 28 6 22 21.43% 78.57%

Mon After Exp 28 7 21 25.00% 75.00%

Monday 110 34 76 30.91% 69.09%

Tuesday 121 26 95 21.49% 78.51%

Wednesday 121 38 83 31.40% 68.60%

Thursday 119 26 93 21.85% 78.15%

Friday 115 26 89 22.61% 77.39%

AMZN Opening Gap StatsAMZN Gap Data


0 2 0 2 0.00% 100.00%

.01 - .25 102 3 99 2.94% 97.06%

.26 - .50 70 9 61 12.86% 87.14%

.51 - .75 78 7 71 8.97% 91.03%

.76 - 1.00 58 14 44 24.14% 75.86%

1.01 - 1.25 39 14 25 35.90% 64.10%

1.26 - 150 30 12 18 40.00% 60.00%

1.51 - 1.75 30 18 12 60.00% 40.00%

1.76 - 200 22 7 15 31.82% 68.18%

2.01 - 2.25 15 8 7 53.33% 46.67%

2.26 - 2.50 12 5 7 41.67% 58.33%

2.51 - 3.00 20 11 9 55.00% 45.00%

3.01 - 4.00 26 17 9 65.38% 34.62%

4.01 - 500 10 6 4 60.00% 40.00%

5.00+++ 13 10 3 76.92% 23.08%

Exp Date Trade 25 6 19 24.00% 76.00%

Mon After Exp 25 6 19 24.00% 76.00%

Monday 97 32 65 32.99% 67.01%

Tuesday 109 32 77 29.36% 70.64%

Wednesday 109 25 84 22.94% 77.06%

Thursday 107 28 79 26.17% 73.83%

Friday 106 24 82 22.64% 77.36%

RIMM Opening Gap StatsRIMM Gap Data


0 - 0 6 0 6 0.00% 100.00%

.01 - .10 67 2 65 2.99% 97.01%

.11 - .25 101 5 96 4.95% 95.05%

.26 - .40 86 14 72 16.28% 83.72%

.40 - .50 72 10 62 13.89% 86.11%

.51 - .75 88 22 66 25.00% 75.00%

.76 - 1.00 67 25 42 37.31% 62.69%

1.01 - 1.25 37 14 23 37.84% 62.16%

1.26 - 1.50 23 8 15 34.78% 65.22%

1.51 - 1.75 9 6 3 66.67% 33.33%

1.76 - 2.00 17 5 12 29.41% 70.59%

2.00+ 12 6 6 50.00% 50.00%

Exp Date Trade 28 4 24 14.29% 85.71%

Mon After Exp 28 4 24 14.29% 85.71%

Monday 110 15 95 13.64% 86.36%

Tuesday 121 24 97 19.83% 80.17%

Wednesday 121 36 85 29.75% 70.25%

Thursday 119 25 94 21.01% 78.99%

Friday 115 17 98 14.78% 85.22%

Gap FARFill AndReverse

Gap FARChart SetupIntraday Candlesticks Charts 1, 5, 15 & 30 MinuteEnd of day chart (daily bars)8 and 21 Exponential & 200 Simple Moving Averages

Bullish Trade SetupThis trade can be done with stocks or options, we will discuss it using stocks. For options use the option rules in the Gap Fade Frenzy tradeThe trade setup is off of a 1 minute candle chart8 & 21 EMA are in an uptrend on the 5, 15 & 30 minute chartsIdeally the gap is in the same direction as the EMA trend (Up for bullish trades)Allow the stock to fill the gapOnce the gap is filled wait for the first green candle to take out the high of the low red candle (Normally between 9:50 and 10:00am)Buy 1 penny above the low bar highEntry is taken intra candle not on the candle close

Gap FAR Chart Setup

Gap FAR

Gap FARRisk ManagementThe trade risk is assessed on your maximum trade loss (how much money are you willing to risk on this trade).

Example: You are willing to risk $100 on this tradeDetermine where your entry is from the stop loss settingYou enter the trade at $25.00The Stop is at $24.75You will be risking $0.25 per shareMultiply $0.25 x $100 = 400 Shares to trade in this exampleRound shares to full lots (100 share increments)

Initial StopPlace a stop 1 penny below the low of the entry barThe Hard Stop stays in place until 2 consecutive bars close green (you want to see 2 consecutive bars of profitability) before adjusting the stop from the initial setting.

Gap FARStop AdjustmentsThe Hard Stop stays in place until 2 consecutive bars close green (you want to see 2 consecutive bars of profitability) before adjusting the stop from the initial setting.After the trade 2 Green Bar Rule is met then move your stop to breakevenThen use the recent 5 minute bars low as a trailing stopThe low of the previous 5 minute bar will be used as the trailing stop

Scaling OutIf using the 200 SMA as an exit (of profitability) Scale out of half of the position just below that level.Manage the last half of the position using the 2 Green Bar Rule (Above)

Gap FAR

Gap FARObservations

The 8, 21 & 200 can be used for entry and exit help

They can be used as a support or resistance level

Bearish trades have a better potential to fill because of the fear factor

On any stock you are considering draw a line at the gap

If the gap is filled and it violates line you drew watch for a reversal and a potential entry

Gap FARNotes

Consider using 3 min candles

Prior to entry of a trade make sure the market is still ok

If position hits the recent high take off half of the position

Consider scaling out in 3 portions or 2 portions based on market conditions

If a large bar forms (after you are in the trade) use the center of that bar to exit some of the position

Use 8ema as trend exits. If trade is 10 contracts and you did 2 exits and are left with 3 contracts use the 8ema violation as a last exit.

821 MovingAverage

Trade Setup

821 Moving Average TradeBullish Setup Criteria The 8 period moving average will be below the 21 period moving average. The stock is moving up and the 8 period moving average crosses up above the 21 period moving average. The 8 and 21 period moving averages are exponential.

Bullish Entry Criteria Look for the 8 period moving average cross up above the 21 period moving average on the days close

The next day if the stock continues to move up, consider entering a long position

Chart Settings3, 8, 21 Exponential Moving Averages

821 Moving Average Trade

821 Moving Average TradeBullish Exit Criteria If the stock continues to move higher, watch the 3 period exponential moving average

The stock should move above the 3 period exponential moving average

When the stock closes below the 3 period moving average, exit your position

Alternate Exit #1 When the stock closes below the 3 period moving average, allow the stock to open the next day

If the stock continues to move down, exit your position

Alternate Exit #2 When the stock closes below the 3 period moving average, scale out of half of your position and manage the balance

821 Moving Average TradeSetting Stops The initial stop would be set below the 8 period moving average.

If the stock continues to move up, use the 3 period moving average exit criteria above

Notes The most powerful crosses potentially happen when the stock was below the moving averages the day before the crossover happens.

821 Moving Average Trade

Bonus Section

109

Trading Plan

Trading Mantra

Extreme Charts 821 Moving Average Filter

Trading Psychology Test / Test Results

Blank ETF Fact Sheet

General Trading Plan Criteria* KISS: Keep It Simple Stupid.

* Be flexible to change the criteria if experience shows a better way. But you must be in total control. You must not make a change to try to fix a position. Follow the rules. The trend is your friend. Dont fight it.

* A good trader cannot predict the direction the market will go. You will have an opinion on the market direction but you must follow the direction the market decides to go. You are not a player in the game. You are only a spectator.

* Dont trade if you are not in the right frame of mind.

* Set up a trading environment that allows you to trade without distractions. Keep the trading environment clean and neat; this may help set your mind at ease. Organization in your trading environment will allow for better organization in your trading.

* Never become emotional about a trade or a position. Be objective and mechanical.

* Believe in yourself.

General Trading Plan Criteria* The most important qualities in a trader are to be patient, disciplined, able to pull the trigger, able to take a loss and be honest with myself.

* Believe in your ability to win in the long run. Do not allow a loss to discourage you.

* Never allow anyone to steal your dream.

* Trading is a battleground for testing your self-control, self-discipline and wisdom. It is also a place to better yourself in all three of these areas.

* Work on thyself by playing motivational tapes, working out and reading. These are all positive things that put you in the correct frame of mind for trading.

* Trading is not about finding the Holy Grail. It is about learning to use a system to make more than you lose.

* Find an exposure point that will allow you to trade without feeling uncomfortable.

* Know thyself; this is where the real battle will be.

1. Why do you trade?

2. What do you trade? What do you prefer trading? What are you most comfortable with? (stocks, futures, options)

3. What time frame do you prefer to trade in? (day, swing, intermediate-term, etc.)

4. What position size do you trade? (Is it too large or too small) (What percent of the total account are you trading)

Setting Up Your Trading PlanQuestions To Ask Yourself

5. How many positions at once are you comfortable trading?

6. What overall market conditions must be met for you to trade? (What conditions do you avoid?)

7. What are your trade entry signals? Are you using them effectively? Do you use a combination of signals?

Market Conditions, specific patterns, technical Indicators

8. When do you get out of a winning position? What are the criteria? Do you have any?

Setting Up Your Trading Plan

9. When do you get out of losing positions? Do you always use protective stops? What are the criteria? (Percentage, set dollar amount, support/resistance levels, volatility based, technical indicators, fear)

10. What do you do when you have a losing streak? How do you define a losing streak?

11. What specific money-management tools do you use? How much do you risk on each trade? If you were stopped out of all positions at once, what would the result be?

12. Do you trade both long and short? Do you need to? Are you comfortable with going short? What is your experience trading on the short side?


13. How do you trade the open? Or do you? Should you? What is your gap-up strategy? What is your gap-down strategy?

14. How do you create a watch list? How can you improve it? How often do you update it?

15. What is your trading style? What traders do you follow?

16. What do traders that you admire do that you dont do?


17. How much time do you spend daily outside market hours doing research/homework? What is your routine? Do you have a routine? How much better would your trading be if you were more disciplined about this? What specifically needs to be done?

18. What is your annual income goal? Break it down to daily/weekly goals (i.e. $250,000 = $1,000/day or $5,000/week) What do you need to do to achieve this goal?

The next two questions are designed for newer traders: 19. How much money will you start out with? What percent of your net worth does this represent?

20. When do you plan on becoming profitable? (if not already) How long will your paper trading period last?


When this exercise is complete, youll have two things:

1. A better understanding about yourself, and your trading

2. The basis for your Written Trading Plan.


1. Goals Long-term, short-term, daily Make them specific and realistic

2. Tasks What do you need to do to get there?

3. Trading Criteria Youll use these daily Make these very specific (This is perhaps the most important section)

For trading criteria, here are some examples to consider: I will only trade stocks with MACD crossing over. My daily goal is X. I will only trade 100 shares until Im profitable for three straight months.

Writing Your Trading Plan

Once your plan is written, its important to review it on a regular basis. This is done for a number of reasons:

-- to track profitability

-- to track how closely you are following your trading criteria

-- to identify areas that need improvement.

-- to modify it as needed (At least once a year)

Writing Your Trading Plan

Robs Personal Trading Mantra* I admit that I am powerless over the market. The market is unmanageable by me. As a trader I am not in the game, I am on the sidelines.

* I realize that I can do great harm to my familys finances in the market.

* I believe that a power greater than I can restore my sanity when in a trade (good or bad).

* I am entirely ready to have God remove all of my defects of character in my trading.

* I humbly ask God to remove all of my shortcomings in my life.

* I made a list of all of the ways that I can harm myself while I am in a trade. If I follow my system, then the market will not be able to hurt me.

* I made amends with myself for the harm that I have done to myself in past trades. I will no longer do harm to my families finances.

* I will continue to take a personal inventory and when I am wrong in a tradeI will admit it and follow my system.

Robs Personal Trading MantraMY PROMISE

I am going to know a new freedom and a new happiness in my trading. I will not regret the past nor wish to shut the door on it. No matter how bad my trading has been, I will use my experience to benefit others and myself. The feeling of helplessness and self-pity while in a trade will disappear. My whole attitude and outlook about trading will change. Fear of losing and of economic insecurity has left me. I will intuitively handle situations that used to baffle me. I now realize that God is doing for me what I could not do for myself.

SPIRITUAL EXPERIENCE

Most emphatically I wish to say that as a trader I am capable of honesty facing my problems in the light. My experience can recover, provided I do not close my mind to my trading criteria. I can only be defeated by not following my system or belligerent denial. Through experience I have found that willingness, honesty and open mindedness are the essentials of good trading.

Extreme Charts FilterYou will be able to download this filter directly into Extreme Charts for the 821 Moving Average Trade Setup included with this workshop.

What you will need to do is to go to Extreme Charts and click on the blue telephone in the upper left of the program (this is the same button you use to do the daily updates)

Click the Download Special File radio button and enter the file in there and click start.

Filter name to download: RR821EMA

Filter name in Extreme ChartsTemplate Name: RR 821Filter: RR Bearish (8MA Crosses Below 21MA)Filter: RR Bullish (8MA Crosses Above 21MA)

Trading Psychology TestThere are 30 questions on the test, answer each question and read the Test Results at the end of the section to determine your strengths and weaknesses in trading.

1. When you recall a time you were immensely drawn to someone, what was the very first thing that attracted you to them? Was it:a) The way they looked.b) Something they said to you, or that you heard.c) The way they touched you, or something you felt.

2. When you recall a particularly wonderful vacation you had, what is the very first experience you remember? Was it:a) The way the resort area looked.b) The different way it sounded to you.c) The feeling you got by vacationing there.

3. When you drive, how do you navigate?a) I look for road signs or follow a map of the territory.b) I listen to familiar sounds that point me in the right direction.c) I get a gut feeling or sense of where I am.

4. When I engage in my favorite sport, I particularly enjoy:a) The look of the game, or how I look playing it.b) The sound of the game, such as the thwack of the ball or the roar of the crowd.c) The feel of the game, such as the grip of the club or the sense of motion.

5. When I get an assignment at work, it is easier to understand and to execute if:a) It is written or diagrammed.b) It is explained to me.c) I get a sense of clarity, purpose, or correctness from it.

Trading Psychology Test6. When my problems get me down, I find it helps to:a) Write them down so I can see them clearly.b) Talk or listen to another until my problems sound easier to hear.c) Sort them out internally until they make since.

7. I find it easier to be with my friends if:a) They communicate using animation and tothe-point statements.b) They interact with me through easy-to hear and varying speech.c) They sense how I would feel if either choice came to pass.

8. When I make decisions, it helps to:a) Picture the possible choices in my minds eye.b) Hear both sides of a dialogue within my mind.c) Sense how I would feel if either choice came to pass.

9. Which do I tend to favor?a) Photography, painting, reading, sketching, films.b) Music, musical instruments, the sound of the sea, wind chimes, concerts.c) Ball games, woodworking, massage, introspection, touching.

10. During sex, I like to:a) Look at what is going on.b) Hear my lover.c) Feel every sensation.

Trading Psychology Test11. When I buy an article of clothing, after first seeing it, the very next thing I do is:a) Take another really good look at it or picture myself wearing it.b) Listen closely to the salesperson and/or have a conversation with myself giving the pros and cons of buying it.c) Get a feeling about it and /or touch it to see if it is something I would enjoy wearing.

12. On the occasions when I think of a former lover, the very first thing I do is:a) See the person in my minds eyeb) Hear his or her voice in my mind.c) Get a certain feeling about that person.

13. At the gym, my experience of satisfaction comes first from:a) Seeing myself in the mirror getting better.b) Hearing myself or others say how good I am looking.c) Feeling my body get stronger and sensing it is more in shape.

14. When I have occasion to use mathematics, I verify my answer by:a) Look at the numbers to see if they look correct.b) Counting the numbers in my head.c) Using my fingers to get a sense of correctness.

15. When I spell, I verify accuracy by:a) Looking at the word in my minds eye to see if it looks the way that word should.b) Saying the words out loud or hearing it in my mind.c) Getting a feeling about the way the word is spelled.

Trading Psychology Test16. The subject I enjoy the most in school came about primarily as a result of:a) The way it looked on board or in books.b) The sound of the subject as it was taught to me.c) My sense of interest as I learned more about it.

17. When I love someone, I get an immediate experience of:a) The way we look together through the eyes of love.b) The sound of telling him/her or being told I love you.c) A feeling or sense of warmth toward that person.

18. When I turn off to someone, I get an immediate experience of dislike:a) When I see them approach.b) When they begin talking to me.c) When I sense they are nearby.

19. At the beach, the very first thing that makes me glad to be there is:a) The look of the sand, the smiling sun, and the ice-blue water.b) The sound of the waves, the laughing wind, and distant whispers.c) The feel of the sand, the salt air on my lips, and the joy of serenity.

20. Having a conversation at a party, my whole frame of experience will change if:a) The lights get brighter or dimmer.b) The music changes pace.c) The room temperature changes.

Trading Psychology Test21. I know my career is taking a turn for the better when:a) I see myself moving into the corner office. b) I hear the chief executive say, You are really going places.c) I feel satisfaction in getting a promotion.

22. Before going to sleep at night, it is important that:a) The room is nearly dark or pleasantly shaded.b) The room is hushed or muted with pleasing background quiet.c) The bed feels very comfortable.

23. In the morning, I especially enjoy awakening to:a) Either the sun streaming in or an overcast day.b) The sound of a lively wind or rain pelting the windows.c) A warm and toasty comforter or flannel sheets.

24. When I experience anxiety, the very first thing that happens is:a) The world takes on a different appearance in some way.b) Sounds begin to bother me.c) My sense of ease begins to alter.

25. When I am very happy, my world:a) Takes on a definite and wonderful shine.b) Resonates with harmony.c) Fits perfectly within the space of my life.

Trading Psychology Test26. I get along better with people who:a) Relate to the world through the way it looks.b) Relate to the world through the way it sounds.c) Relate to the world through the way it makes them feel.

27. When I get totally motivated, the first thing that happens is:a) I see things from a new and resourceful perspective.b) I tell myself how this state is going to create new possibilities.c) I can actually feel myself getting psyched up.

28. When someone tells me, I love you, my first experience is:a) An image of the person loving me, or us together.b) A dialogue within my soul saying, This is wonderful.c) A feeling of pleasurable contentment.

29. Death, for me, is probably:a) To see no more, or to see in a totally new way.b) To hear no more, or to hear in a totally new wayc) To feel no more, or to feel in a totally new way.

30. Having rapport with someone is:a) Seeing him or her in a wonderful and easy to be with way.b) Hearing the person communicate things exactly the way I would.c) Feeling toward the person the way I know he or she feels toward me.

Trading Psychology ResultsPERSONALITY TYPES AND TRADINGWHAT YOU DONT KNOW ABOUT

YOURSELF CAN HURT YOUR TRADINGNearly 60% of the population will have A as their highest scoring trait. This indicates that a persons dominant way in which they view the world is visual. Its not really known why this is so, but experts feel it has to do with sight being our strongest sense, and that, for the majority of us, we were taught from birth to depend on our eyes in order to make our way through life. Also, in todays world, our input is largely through television, movies, computer screens and printed copyall of which are heavily dependent on the eyes.

Visual people like daylight and are extremely mobile, and its easy to find them in professions that allow them visual expression. Nowhere is this more observable than in the entertainment industry. Visual people are generally movers and shakers and like tomove fast. Visuals are drawn to this industry and its related fields as a natural expression of who they are. These types of people naturally gravitate to professions such as painting, photography, and design. They also make great marksmen, firefighters and pilots.

In terms of trading, visuals adapt quickest to this profession, as they depend largely on what is happening visually in front of them on the computer screen to make decisions. It doesnt mean they will make the right decisions, but they are most naturally adapted to the world of trading. If they are untrained in how the markets work, they will make the same mistakes as everyone else. Once they get some experience, however, they tend to be good at waiting for the charts to setup before taking their entries. Yet, only experience teaches them how to manage their exits. A visuals biggest weakness is watching the P&L fluctuate throughout the trading day. It would be better for them to cover that up (a business card taped to the corner of the computer screen works good) and just focus on the setups. Also, visuals tend to laser in on a price chart and ignore everything else, which can be a detriment to their trading. This is why it is helpful to have auditory alerts on things like high tick readings as well as listening to pit noise in the background so visuals dont get sucked into the extreme price action they are seeing on the charts.

Trading Psychology ResultsIf your highest score was B, then your dominant personality trait is auditory. My accountant is highly auditory, and Ive noticed that the sounds around the office occupy most of his attention. Auditory personality types relate to the world through the way things sound and in many respects are the more sensitive to sounds than visual people are to sight. Auditory people can be easily distracted by the most inoffensive sound, which makes it seem like they are not paying attention to you during a conversation. In reality, though, they are strong verbal communicatorsits just they hear every sound coming their way and sometimes it distracts them. They enjoy talking with others as well as just talking out loud to themselves. Because of their innate ability internally to put thoughts into dialogue, experts believe most loners have this dominant personality type. Because of their heighten sensitivity to sound, auditoriesdont tolerate harsh or disharmonic noise as well as others do. Fire or ambulance sirens are major offenders, and you can spot an auditory easily by observing who on a street corner is holding his ears as an ambulance screams past. Also, they have an incredible ability to listen so thoroughly and with such intent that data is absorbed and processed in their minds very quickly, without needing to be translated into pictures. Because of this enhances ability, auditories tend to gravitate to areas in life that permit the use of suchsuperb listening and communicative talents.

In regards to trading, this personality type has one strong advantagethe ability to sit alone in front of a computer for days at a time without going crazy. That is an important part of trading, and this ability to be patient and wait and not feel isolated is a necessary trait to have. The downside of this personality type and trading is that a chart isnt really much use to them, and they frequently miss setups from simply not paying attention. Whereas a visual can stare at a chart for hours because the red and green lights are fascinating, an auditory personality needs additional input. Audio alerts and pit noise are important tools for auditories, and I know some of these personality types who dont even look at price charts. They just listen for audio alerts and then place their trades.

If your highest score was C then you relate to the world around you by how you feel. People with this dominate personality trait long to be understood and respected for being so in touch with their feelings. They tend to like a person because of how they feel when they are around them, or like a movie because of how it made them feel when watching it. When they laugh, they let themselves go and really feel the laughter, giving the person they are talking to a sense that they totally understand and agree with what was so funny. Type C personalities are able to translate visual images and acoustical data into feelings that are pertinent to them and those around them. Type Cs enjoy conversations but not for the same reason visuals or auditories do. They use dialogue to translate words, sounds, and images into feelings. While visuals and auditories are busy communication with pictures and sounds, this type C personality is busily running through his vast storehouse of feelings and attaching sensory meaning to what the other person has just said.

Trading Psychology ResultsBecause of a heightened ability to feel, you would assume that type Cs are introverts. However, the opposite is true. Moreover,because of their superior sense of touch, type Cs make superior athletes. Any occupation that requires manual tasks is just plain easier for these types of personalities. Typical occupations that are tailor-made for them usually have hands-on or feeling parameters.Psychologists, woodworkers, potters, surgeons, actors, all types of mechanics and other feeling or sensory-based work are commoncalling.

For traders, this type of personality has the biggest struggle and usually doesnt make it until they figure out how their personality is working against them. A type C personality trader will wait until they sense when things are good or bad, or wait until they get a sense about whether what they are doing or are about to do is good or bad. They literally get into trades when it feels good to do so, and get out when they feel bad. This almost always puts them in just as a move as ending, and gets them out just as it is turning. For a type C personality, it feels bad to buy a market that is selling off into a pivot level. They would rather wait to see a bounce so that they can feel good that the trade is going to work out. Of course, by the time this happens, they should actually be closing out a position instead of initiating a new one. The solution to this is hard yet simple. If you are a type C, then just acknowledge that your feelings need to be faded. If you are excited and feel good about going long, then you should be looking at the short side and vice versa. If you are a type C dont despair. A type C who masters this will have a distinct advantage over other traders. A type C who is unaware of this will always face an uphill battle when it comes to trading.

ETF Fact Sheet Ticker Symbol: Primary Benchmark:

Short Selling Allowed: Gross Expense Ratio:

Inception Date: Exchange:

Weekly Options: Option Increments:

Dividend Yield: PE Ratio:

Average Daily Volume:

Top 5 Holdings: Holdings ETF Weighting:1-2-3-4-5-

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Neither Better Trades or any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk.

Also Better Trades personnel are not subject to trading restrictions. I and others at Better Trades could have a position in a security or initiate a position in a security at any time.

ETF Mastery Breaking New Ground

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