More Proven Trading Strategies from Legendary Trader Rob ...

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The Traders Expo Las Vegas, October 14-16, 2015

RAW UNEDITED TRANSCRIPT: Thursday, October 15, 1:30 pm - 5:30 pm More Proven Trading Strategies from Legendary Trader Rob Hoffman Rob Hoffman Download Audio File: http://webcast.moneyshow.com/audio/lvot15moreproven.mp3.zip ROB HOFFMAN: Alright, let’s go ahead and get going. Let’s catch my breath for a minute; as you know I’ve been; normally The Money Show has me do one talk for them on like Thursday, one talk on Friday and stuff like that. Here it’s been live trading competition, talk, talk, talk and now the grand finale for the next four hours here and then of course tomorrow all of you, even those as you are officially student members of mine; how many of you are actually officially student family members of mine here? Okay, great, so a lot of you. All the rest of you though, I appreciate you being here today with me. The strategies I’m going to share you got see a little bit. The inventory retracement bar strategy was the one I showed in the last class. It’s extremely important; now remember I was looking for Colorado John. Turns out unfortunately his wife’s credit card was stolen and so he had to run off and deal with that issue. Colorado John, raise your hand there real quick. Colorado John for all of you that in my live trading room; he’s one of my great student family members. He came to me back about two years ago now. We should also, Robert Isconie (SP?), Robert you’re in the back right? Wave your hand there. These are two guys; these are great stories. What I’m going to try to do today; I’ve got four great setups I want to show. A couple of the setups in particular are fan favorites of Colorado John. He’s got a great story and I want to share those stories with you because I think it’s real important for anybody who’s serious about their trading here. Actually before we even get started with that just so I get a feel, how many of you do some sort of or have some interest in day trading? If you will raise your hands. Okay. How many of you are strictly swing traders and investors. Okay, alright, so a few there. Alright, great. It’s important for you guys to understand. I think some of you guys came to some of my talks earlier, especially on the swing trading side. All four of the strategies I’m going to show today will be applicable to the swing trading side. Actually very powerful because the profit opportunities are of course greater typically on swing trades but of course in the world we’re living in right now China wanting to blow things up, Russia wanting to blow things up, North Korea wants to blow everybody up; Iran, whatever, you pick your poison. Seems like everybody is made at everybody right now and it’s a very dangerous world. God forbid but if we have another 9/11 situation or something just imagine if you’ve got a bunch of long positions in the


market and here we go with the markets all electronic now here we go, another flash crash so it’s a very dangerous world. It’s really nice; I’m spending more of my time right now focusing on intraday trades just because of the world we live in. When I wake up in the morning it’s the world’s greatest feeling knowing I’m flat and no matter what bad thing happened the night before we go ahead and have this great opportunity to benefit from that. Then as we go ahead and from there though I said swing trading on the options, equity side are all going to be very powerful. Since the vast majority other than the three of you are day trading we’ll spend a lot of time on that and a little bit of time on the swing trading side but make no mistake, make no mistake at all, every strategy I’m going to be sharing today is not only viable on the intraday basis it’s viable on the end of day basis; can’t emphasize that enough. With that being said what I want to do is talk; these two gentleman here, Robert Isconie (SP?) and Colorado John, both great stories because they’re both actually assisting me now even in my trading room. Robert Isconie (SP?) 10 months ago; do you mind if I tell the story Robert; some of the people aren’t students but do you mind if I share the story? Okay. Colorado John, do you mind if I share your story. Okay that’s it. Robert Isconie (SP?) 10 months ago called me up and said Rob I want to buy this course but then it’s like I really can’t have my wife find out about it because he had lost a lot of money and wasn’t doing real well so he wanted to get better so there was a course of mine he wanted to buy but there were problems with his wife over how he was trading. He actually was having to lie to his wife about his trading. We’ll flash forward; we were able to help him, we got him all fixed up, spent a lot of time working together and now here he is 10 months later. He’s sitting there taking these great trades that he learned from me and he’s actually showing people in the trading room how he’s doing that as well. It’s just fantastic to see that downslope or 10 months ago he was having to lie to his wife and now he’s gleefully showing her his daily profit and loss and he’s recording all of his trades; we share a lot of those trades in the trading room as well and then of course he takes live trades in my trading room. Colorado John, another great story. I met him two years ago at a trade station event. He actually came to that event to voice anger. He had gone through a program with another trading firm. Everybody here will recognize I’m sure; it’s a three-letter company. He spent $48,000 because they get you with this small class and then they charge you more money for the next class and the next class and they’ve got this extended learning track. Well they got him for $48,000 and then all 28 of the students in that class, right, had bombed out. They all blew up and moved on. He went to a trade show and said how can you recommend this company. In the process he actually heard me talk first and so it was like; skip these guys, that guy is the real deal. I’m going to go sign up with him. He joined me two years ago and he was in the process of phasing out of his insurance business. He had 5000 clients in the insurance business. I don’t know if anybody is in the insurance business here but that’s a ton of clients and basically the insurance company notified him they wanted to get rid of him and get two young bucks in there; so he knew he was kind of on the way out. That’s pretty much the long and the short of it, isn’t it John? So here he


was $48,000 in debt from this three-letter company. We had to start from scratch because of course their psychological damage; you’re losing $48,000 in tuition; you’re seeing other 27 people in your 28 person class drop out; we had a lot to do with him. Here he is now two years later. He officially finally retired 50 days, 55 days ago? COLORADO JOHN: About 50 days ago. ROB HOFFMAN: About 50 days ago and, I’m sorry . . . COLORADO JOHN: INAUDIBLE ROB HOFFMAN: I don’t know if you guys could hear that but basically he had $18,000 a month was it you were still paying off on the debt? COLORADO JOHN: I had $18,000 to pay off. ROB HOFFMAN: He had $18,000 of debt still to pay off of that $48,000 when he first met me. Now here he is, flash forward, he retired 50 days ago and he’s grossing about $2000 a week. COLORADO JOHN: $2000 to $3000. ROB HOFFMAN: Yeah, so it’s been I’ll call it $2500 rather than low ball it. $2500 a week he’s grossing; he’s in my trading room sharing some of this knowledge. The setups I’m going to share today are all the variations of the trades that he likes to go ahead and do. The point that I’m making to you is these are real world strategies. I’ve used these to win trading competitions. I also use them in my live trading room in front of people and of course Colorado John, Robert Isconie (SP?) was seeing some fantastic success with them. Just like the live trading competition. How many of you were at the live trading competition this morning? Maybe I better ask that the opposite way. How many of you weren’t at the trading competition this morning? Okay, still so about a third, maybe a little over a third there. I was fortunately enough to win my tenth domestic trading competition this morning. It was a fantastic event. It was a sidewise market and that’s the real test of metal for any trader. It was a great event; I was able to make hundreds of dollars with one lot trades. My challenger who I think the world of; I like her a lot, went ahead and had $5000 or $6000 shares worth of different trades that she put in stocks and was about break even. It was a great event. The market wasn’t moving so we did the best we could and I was fortunate enough to win again. For you, the benefit you, me winning does nothing for you on the face value but it does everything for you behind the scenes because I’m not just talking about trading, I actually do it and I do it live and generally speaking I do it forward. These are real world trading strategies. For those of you that aren’t student family members; for all of you that are student family members of mine you of course know and see these each and every day in the trading room and now you’re going to get a lot more detail that you don’t normally necessarily


get in one big infusion of this information. This big infusion; Colorado John went through private mentorship with me, this big infusion; the submersion process was the defining moment for Colorado John. I hope that between today all of you are going to learn a ton and then tomorrow you’ll join me back at my booth because I’m doing something a little bit different this year. I’m going to be at my booth all day tomorrow and I’m going to be working with you guys answering all your questions. Hopefully a lot of you will take this work home tonight, look at it on charts, study it and then come back and say, hey okay, I saw what you were talking about here but I’ve got a question about this and I’m going to be able to pull up live charts. We’ll have live data at the booth tomorrow for you so you can go ahead and ask questions. We can look at it as a group. That’s why I’ve got a big double wide booth this year to fit you all in and it’ll help you guys in that one-on-one group type basis. Does that make sense? I’ve dedicated my whole day to you guys tomorrow. While other guys are off doing business meetings and working out future networking agreements and that; as my student family knows; is it fair to say to all of my students here I always try to take care of you guys first; is that a fair assessment? I’m here for you guy tomorrow; I’m not doing a bunch of business meetings. Let’s go ahead and get going here. Obviously I’d like to remind people trading involves risk, not just reward. People sometimes get blinded by the fact like wow, he made all that money, he did all this, but you have a big risk of loss too especially when you mishandle your trades and your investments. Let’s just remind people if anybody has any questions about that, what that actually can mean to them of course tomorrow I’ll be at the booth; I’ll be happy to answer those questions for you. We will be talking about how we can use this in relation options today as well. There’s a great website to explain all the different types of options risks that are associated with various types of options strategies. With that being said I want to thank you guys. How many of you did not get to see any of my presentations earlier? Anybody not get to see any presentations? Wow, wow, okay, alright, well then we’re going to go through the ropes. There are some things I think you need to understand. It’s reinforcement for those of you that are students of mine. For those of you, about half of you there it looks like didn’t get to go to the live trading channel; that’s unfortunate. I think it would have been really great for you guys to see that. I also did a presentation free signal and I did a presentation for well The Money Show. You missed a couple of setups. The good news is, the good news is with the exception of the eSignal one everything that I did earlier is covered in more detail here. That’s actually that’s a good thing. Of course after winning this trading competition again this morning and since I did this event last year in Vegas, won several more. It’s a great time to be here with me. I’m going to do the same thing for you guys that I did for everybody else. You guys will all have little cards; I’m doing that drawing throughout the day. I’ve done these a couple of times. Somebody is going to win that little three part course here, this really little awesome DVD. It’s got our logo; it’s pretty cool. On there is a three part course and one of you guys is going to win that today. If you guys want to fill out; take your time, we’ve got four hours together. Fill that little card out that has your information on it.


We’ll do a drawing at the end. One of you guys will win that a little bit later in the session. What’s nice it says it’s one setup that everybody needs; actually it’s multiple setups. It’s the primary setup and variations of it so it’s pretty cool, three part trading strategy video. I think you guys will like that a lot. With that being said of course this is my website; it’s exciting and we added to that today. I’ve won more domestic and international trading competitions on site than anybody else in the world. What does that mean to you? It means you’re probably in the right place to learn some real world trading strategies. Okay. This of course does not include today’s win. As I said earlier I think that would have been pretty darn presumptuous to put it up there in advance. That’d be terrible of me to do and probably bad Karma. These are the trades up until now. I started doing these in 2011. I was asked to do it because I had done a lot of really cool performing things in the industry and The Money Show caught wind of that and so they asked me, hey why don’t you come up here and go up against this guy who had won some before. I beat him and then they started saying okay we want you to do these regularly. I did that for him and then the Infinity Futures had one with John Carter and Hubert Centers and a handful of other people from around the world. I won that one and then I did more of the domestic ones. Then in 2012 they had caught wind of me winning all these competitions. No American had won the one in Paris, France before. Actually John Carter had gone before me the year before and unfortunately it’s a pretty tough group over there. They pretty much dispatched us Americans pretty regularly before. I went over there in 2012 for the first time and I actually won the competition. That was pretty cool because I became the first American to ever win that, representing our country. Pretty excited about that. Then I went back to a couple more years and won it again. Pretty excited about that. Then in Italy they invited me over this year. That was a whole new experience of course. I was able to win the most money made there. Foreign and international competitions, so pretty exciting. I’m just like you; I like to remind people especially since half of you haven’t even heard about this yet; I’m just like you guys. I’m a family man; I’ve got two children which we’ll talk about in a minute. I started off just like you, reading really cheesy books and trying to learn how to do it. Those are my actual books; those are the physical books I checked out when I was a kid, back in my teens. How to Read

the Wall Street Journal. I still laugh, every time I look at it I still laugh. Yeah Isconie (SP?). ISCONIE (SP?): When are you going to return it? ROB HOFFMAN: Yeah, okay, the truth is there’s a very real story, my wife’s laughing. I went back to the library after having this international status. I said hey I won these awards and I’m kind of popular in the world and I’m doing this institutional stuff and I’d like to have these as part of my archive. I got all this other stuff that for the most part I’ve just burned in the next cold winter, and but these kind of mean something to me


because these were the books I had. The lady said well, if you go ahead and you check them out and you lose them you’re going to have to reimburse us. She kind of winked at me because I’m just like can’t I just buy them. No you can’t do that but if you check them out and you lose them you’ll have to pay us for them. When I checked them out I lost them, I paid the library and then I found them again. There they are, part of my permanent library. Also I was in law enforcement. I worked two full time jobs for the Sheriff’s department and one part time at a Podunk police department. Meanwhile I was trying to raise this guy right here. I was kind of a single dad and very proud of him; he’s a United States Marine. You can imagine how proud I am. He’s on American soil helping Americans actually with the most recent hurricane that we just had on the East Coast. Pretty happy that he’s helping Americans on our soil. This is my daughter. I love these pictures of her. That is my lovely wife Sarah who’s still in the back. Say Hi Sarah. She’s awesome. I’ve got an awesome wife. We’ve got this lovely little girl. I love these pictures of here. This was five months ago, so it was about eight months ago and every time I see these photos, even Sarah smiling; every time I see these photos it’s like; especially she just does the darnedest looks. I’m pretty excited about that. Now this is her. We just got two German Shepherds at home. Now of course, each German shepherd is like twice the work so we’ve got two German Shepherds so it’s like four times the work so it’s like we’ve got five children at home. She actually barks at the dog. She’s 13 months old, barks at the dogs and they’ll listen. It’s amazing. They’re all _____ 3:38:44; they’re puppies, but boy she barks and they listen to her. Sarah’s got a great video on her phone she could show you, maybe tomorrow at my booth. Then here is her with her grandpa. Always pushing past big kids; it’s like get out of my way. I’ve got things to do. I’m in movement. This is what my wife is terrified of as she’s already just setting her own path, trailblazing away. I know we’re here today because of the trading competitions. That’s why all my events were packed this morning. I just want to let you know I’m really just like you guys. I really am. If you guys notice there’s a lot of people taking photos with me this morning and that and I just put my pants on, the underwear, the socks just like you guys do. Okay. The first competition in France back in 2012 I grossed; actually the funny part is, real story. Nobody knows this but a little story for you. It says $3992.50; that’s not actually true. Here’s what happened. It’s actually more than that. The DAX over here, we wrote it down because two of the other ones were in American dollars but the DAX is listed in euros. When they asked for the full P&L we put it up there; they put it up there as $3992 because if you look that’s what it adds up, $3992.50 but in actuality the DAX was in euros and back then it was like $1.30. I actually made more than that, not that it really matters but in the interest of accuracy and kind of a little funny thing I don’t normally tell people it’s actually more than $3992.50 gross. Then in 2013 I went back over there, made $2400 gross but they only had three rounds. The internet was dead on one of those rounds and actually some of the trades I took we’re going to talk about today. I’m going to teach you little strategies. Then last year it was fantastic, the market kept giving


and the strategies I’m sharing with you today were basically the primary ones I used to win the competition last year. This is pretty cool stuff. I grossed about $4837. I did that in 18 trades over there, the six hours of actual trade time, 12 hour event, six hours of actual trade time. Normally you guys in my live trading room I don’t normally do 18 trades. I’m pretty conservative with that but here the market just kept on giving with these strategies I’m going to be teaching you today which is pretty cool. This is what these competitions look like; you’ve got a bunch of referees back there and of course a whole audience. You’ve got these trades who are all hand-selected to be there representing their countries. You take a look; you guys notice that I only did one screen this morning. I had one laptop, right, and I was still able to win that competition. You notice I had one laptop right here but a lot of my competitors brought multiple laptops and even 24 inch monitors. I’m trying to keep these strategies simple for you guys today. They’re extraordinarily powerful but simple nonetheless is the focus that I want to have with you guys today. These are all just pictures of these different events. They get pretty intense when it’s down to the final two. You’ve got three judges standing over you. Over here the other guy had two, I had three. I guess the American had to be extra watched. Pretty intense there. Here in Italy that was kind of an interesting one and the reason why we’re talking about this is because of pressure. When you need to make trading decisions fast for all of you day traders which is virtually all of you except for about three or four, you need to be able to make trading decisions fast. When you’re under pressure, this is what happened in Italy this year when I was over there. They got me there late to the event. The organizers picked me up to take me over there which was very nice of them but it was raining out and so they got me to the thing late. The contest started; everybody else was already trading. I had to set up my computer, get going and then get into the competition. That was pretty stressful as you can imagine. First time over there, not knowing what I’m doing, not knowing anything about anything and I’m already late to the competition. That was pretty stressful. Ask my wife. I called her and like I can’t believe this, oh, oh. I was very stressed. It was seven rounds back to back with the biggest break being 30 minutes and guess who had to talk during that 30 minute break because everybody wanted to hear about it. Me. I just didn’t really get a break. It was a loud, noisy event. Cameras, they were filming this internationally. It was a live broadcast which was pretty cool. It was a brand new trading platform. The broker required me to trade off of their platform. I had never executed a tradeoff that platform. Now what does that mean to you? How many of you have ever switched brokers? Anybody ever switch brokers? Yeah, okay. Isn’t it kind of stressful learning a new broker, new order entry system, new charting system? Don’t you find that stressful? Now imagine me; I just show up, my first time ever using this platform is right there when I’m trading there live. No stress, right? That’s a pretty big deal as well. I had to have super simple setups and strategies that would carry me through because I had to put all my mental energy into now which button do I click. It was pretty stressful. I wasn’t able to trade some of my usual instruments because I was an American citizen and their broker rules over there since it was a European broker didn’t allow me to trade certain instruments over here. I had to trade the ones I’d be allowed to trade as an


American citizen. It was the Friday before Memorial Day in a new country we’d never been to in a contest I’d never participated in and I had bacterial bronchitis because I had just done a six; this was all part of a six country in six weeks tour. I was in Dubai India, Hong Kong, back to Las Vegas Money Show and then over to Italy and Spain. In Hong Kong I got; it’s very humid over there and I was over there for some extra days doing a lot of presentations, institutional clients and I got sick. It was just a terrible time. Then there was my leg; I won’t bother you with the picture too much but needless to say I had a real nasty spill and bruised up my leg pretty bad so I wasn’t very comfortable. I had to be in loose clothing. During this event; it’s pretty interesting. What ended up happening there; it’s kind of the boxing ring kind of thing. Here are all these broadcasters and that sitting right next to me of course; how lucky was I? What happened from there is then people could come up and in fact you can kind of see some on the side over here but what people would do, they’d come up there and they’d start talking to me; hey what are you trading? Hey, what are you in right now? How much money are you making? Of course the screen is right up above and gives that information if they’d look but they’re talking to me while I’m trying to do the trading competition. Of course it’s a very well attended event too. Fortunately, by the way this is my equity card and this is why this is all important to you. We talked about discipline today. I’m extremely disciplined. These were the; what I did is I made a lot of money early on in the European session; then I made good money and then I made a lot of money as we got into Friday before Memorial Day, right. Now what do you think of the American session that was like trading. That was terrible. Does that make sense? It was absolutely terrible. What happened is we got into the American session and I started taking some trades and they just weren’t moving so I took very small profits. I did that once, then I did it twice and I was like I’m done. I actually, the last round of the competition. Even though I could have lost the entire competition for doing so I went ahead and I said I’m not trading. The trades stopped working at that point because the market went dead. I said look, I’ve made all this money; it’d be breaking my rules to take another trade at this point. So I stopped. I risked losing the entire competition for doing so. In the end my competitors were doing stuff like this. They’d make some money but they’d give it all back because it got really ugly. They’d make some money; they’ve give it all back. That’s not what we want to do. In the end I was fortunately to win that most money award, very exciting. The moral of the story before we get into this is that you need superior setups, superior strategies that even in these crazy environments, trading a new platform, trading in a country I’ve never been in, trading in a new contest, getting to the event late, you name it, bacterial bronchitis, all these crazy things I’m still able to go and win a competition. Does that make sense? That’s why I’m showing this to you so you guys understand. Today and tomorrow are going to be two fantastic days for you guys to learn and build upon things. Of course this is the last one; I have to show this. This is my lovely daughter. What was happening was after I won, Sarah’s in the back there with some nice people that were in the back holding my daughter and they were like holding their fists up, cheering me on, stuff like that and then like congratulated me as a thank you for


winning and so she started repeating that behavior. What ended up happening was she kept doing this the rest of the afternoon so we had to take a picture of that of course. As we get into the setups now, let’s go ahead and talk about; we’ll be talking about several different setups today. First of all we have full spikes, half spikes and we’ll talk about variations I call the mini. I’m going to talk about inventory retracement bars and reverse inventory retracement bars. We’ll be talking about a lot of different strategies today and again the culmination of those four that I want to share with you today, the bulk of what I was doing to have the profitability for these trading competitions over here. If you were at my last presentation you already got introduced to this but sometimes people the first time they hear this kind of get glazed, dazed and amazed and have to hear it again. This is a great opportunity for this to sink in and then we’re going to talk about the reverse inventory retracement bar of this. I know about 50% of you hadn’t been in the other presentation so this will be brand new to you. The other 50% hopefully this could be a huge reinforcement. In fact, Colorado John, John, do you have your bag and your notebook with you here? COLORADO JOHN: Yes I do. ROB HOFFMAN: Colorado John is grossing approximately $2000, $2500 plus a week. He’s taken all this work of mine, he listens to it, he hears it; he’s got this stack of notecards and what he does is he’ll take these and he’ll add information to them. Are you pulling them out right now John? Yeah, and so what he’s done is he has this stack of cards; what he does as he hears me, sometimes even though he’ll hear me say something he’ll hear me talk about it again and he’ll hear me say it in a slightly different way where he has an aha moment and then he’ll add to those index cards of his. Then he’s got a book of photos of all these different setups and the strategies in that. This is something I implore a lot of people to do; wup, well it was a good book while it lasted. Go ahead and you can hold it up there. He’s got the book of setups there of my work. I would really encourage you guys to do that. The more you hear from my work the more it will sink in and then maybe you’ll become the next Colorado John. This is one of the ones that actually; you’re using this one a lot right now, the inventory retracement bars. This and stochastic spikes. John said that’s money right there. This is a great one. Let’s review it again. The 50% of the room that’s the first time hearing it; the rest of you maybe you’ll build some questions, maybe what you saw a little bit earlier. What is this? This is a price action base breakout trade. It’s most effective in trending markets, even better when tied to strong fundamental analysis. Most of us are traders here. If you’re trading on intraday charts you’ll see this trade happen a lot. I’m going to show examples from the trading competitions and I’m going to show the reverse of this because the reverse is really powerful too. It basically doubles the number of trades you get which is really cool. Whether you’re a day trader or you’re a swing trader; that’s really cool. What happens for the three or four or five of you that were investor oriented


what happens is if you could take a great fundamental story and then wait until you get this technical breakout you’ll save yourself a lot of headaches; sitting on dead money for months, especially in the current environment we’re in. Time is risk all the time but time is risk really bad right now with Russia, China, all these different things that we have going on right now. Right now I’m very happy to make as money as I can intraday right now and then try to remain as flat as possible in the overnights. I still do equity trades, still do options trades but I’m much more cautious about that now than I am before a lot of things in the world blow up lately. Looking back over the last 20 periods for bars where the open and the close are approximately 45% or more off their high in an uptrend or 45% or more off their low in a downtrend, as yourself how much wick is showing. In a downtrend and would you guys do me a favor? If some of you guys are stepping out doing phone calls and stuff would you guys maybe gently close the door just so it doesn’t disturb everybody else if you guys have to go out? That would be really awesome. I feel it’s distracting all the bang, bang, bang. I know periodically you have to take phone calls. I completely understand; it’s still a business day and what not but try to quietly shut the door if you don’t mind. With the accumulation in a downtrend what we’re looking is we’re looking for a trend. Basically that can be a 20 period, 19, 20, 21 period exponential or simple moving average. I’m looking at the last 20 bars of data; that’s something I didn’t mention in the last presentation. I’m just looking at the last 20 bars of data for that trend quality. Is our last 20 bars approximately a 45 degree angle downtrend that’s what I’m looking for. Now I’m going to tell you a little secret. I didn’t talk about this in the last class. One of the things to watch out for with this; I had a gentleman from California. I did an event for Trade Station two or three years ago now. He came out; he’s a programmer so he programed this system in. All of a sudden he called me one day, he says Rob, this was working great and all of a sudden it’s not working. I’m like well I don’t understand I’m still using this and I’m winning and I’m making money. I don’t understand. I log into his screen, I take a look and all of a sudden I look at the 20 period exponential moving average and it was practically flat. I said what’s going on here, what’s happening. What he said was well you said 45 degrees but I found that it was working at 40 degrees. It was working at 35 degrees. It was working; and so he kept finding trades even though he was making a shallower and shallower trend. The problem is what’s important to go ahead and understand there is that it can work in more shallow trends but the more and more shallow you make the trend statistically speaking you’re going to go ahead and reduce your probabilities of success on the trade. Does that make sense to everybody? I really want to impress that on you because I promise you if you go build this into a program you will find really good success even at 40%, 35%, even maybe 30% but the more you shallow out that angle of the tech; part of the key to success is this is a trend trade. You’re trading with the trend, okay. What happens though as you try to get greedy to get more and more trades and shallow out the angle more and more you’re more likely to get more stop losses and then suddenly that great P&L you had before isn’t likely to be so great anymore. Does that make sense to everybody? That’s a common flaw that I see that people do in the interest in getting greedy and try to


maximize their profitability rather than taking the same great setups and maybe using more size. If you were to use this with 100 shares, maybe doing 200 shares; if you’re using it with 1000 shares maybe go into 1500 or 2000 shares and so on and so forth. Going ahead and just trying to take more and more risk by shallowing out the angle, that’s a big problem. Keep that in mind. In a downtrend I’m looking for bars from the high to the low the bottom 45% is basically wick. Each of these are four individual examples and so what’s happening is each one; it doesn’t matter whether they’re green, whether they’re red all that matters is that the open and the close are both in the top 60% of the bar from high to low. I want the open and the close to both be in the top 55% and bottom 45% is wick. The reason; what’s so important about this is in a downtrend; think about this as an Apple; it’s always a great way, everybody can related to that; it’s so liquid. When Apple stops on a dime as the market is going down, down, down it stops and it gets driven back up. It’s not you, it’s not me that’s doing that. That’s very institutional. Even the 1000 share blocks of Apple that I like to do a lot when Apple was still a $500, $600 stock that 1000 shares never, ever once, never, ever once can I ever recall move me off the bid or the offer. It takes a lot more than that to do it. That’s institutional in nature. What I want to do is I want to find out where that one or more institutions that temporarily stop the market from going down and actually drove it back up that and now it starts to roll back over here again . . . AUDIENCE: Inaudible. ROB HOFFMAN: You know better than that; I sure can’t. Hi Buddy, how you doing? See you later. Hubert Center’s gang. Always a good laugh. As we go ahead and we look the market stops, goes back up, rolls back over and then I’m looking to break down because once the market is free to resume the original trend when that one or more institution is gone it usually accelerates to the downside or accelerates to the upside. We’re going to look at lots of examples of that because I want you to understand the front side of this and then I’m going to show you the reverse inventory retracement bars and it’s basically going to double the number of trades whether it’s a daily chart or an intraday chart; it’s really cool. In an uptrend I’m looking for the opposite. From low to high I’m looking for the open and close to be in the bottom 55% down here, so all this has got to be the bottom 55% the open and the close. In other words the top 45% needs to; or more needs to be wick. These are four individual examples. Sometimes people confuse this. They don’t realize that these are found individual examples. This isn’t part of some sort of really super-secret pattern that you’re looking for. These are four individual unique examples. What you’re looking for in this case is one more institutions to sell the market back down and then you’re looking for the market to go ahead and break back above the high by one tick or one cent depending on whether you’re looking for a stock or you’re looking for a futures contract. That’s what we’re looking for, that’s how we identify them. We’re going to look at lots of


examples of that and then we’re going to talk about the reverse inventory retracement bar next. Where’s my entry? It’s typically one tick or one cent above or below the signal bar. These are the signal bars that fire off. Now as long as we break within the next 20 bars below this level I’m willing to take that trade. If I’m looking at a two minute chart if it breaks down below the next 20 bars; of course a little secret there the sooner it breaks down the better from my perspective. Yeah Russ? AUDIENCE: Does it make any difference on the other sect that you talked about; this open straight down; and then it comes back. ROB HOFFMAN: Okay, the other stuff here is the; you’re talking about the got you bar that I showed at eSignal earlier? Okay. So, no, this particular one does not and so that’s why it doesn’t matter whether it’s green or whether it’s red. That doesn’t matter because of the fact that; what matters is how it closes. What matters is how it closes. Does it close with 45% or more off the low or 45% or more wick off the high? That’s the real thing that matters here. How it gets there doesn’t matter, only the close and is it 45% off the high or off the low. Good question. Where is the exit? I’m a big fan of trailing. I’m going to show you trailing again today. This morning was a sideways market so I trailed a little bit more aggressively. In a trend you’re a little bit more free to let it go, especially if your target is further away; whether it’s a daily chart, two minute chart. On an intraday basis usually targets I use, common charts, would be like daily pivots, weekly pivots, monthly pivots will be common intraday targets. On an end of day chart a lot of times it’s a round number, support or resistance level. Where is the stop loss? The stop loss on these trades; when the market is coming down and we’re 45% off the low, remember we’re going short, one tick or one cent below the low of this bar. That’s where we’re taking the entry. The stop loss is one tick above the high of that bar. I’m going to tell you another dirty little secret that I didn’t tell the group in the free class. The truth of the matter is normally it won’t even go more than 50% back up. If it goes more than 50% back up. So you’re shorting down here if it goes more than 50% something’s probably pretty wrong. Katoni (SP?)? AUDIENCE: INAUDIBLE. ROB HOFFMAN: I’m sorry Buddy, you’ve got kind of a soft voice, go ahead Buddy, speak a little higher. AUDIENCE: If you’re bringing a trail that’s up why do you put in the stop loss exit? ROB HOFFMAN: Well, the question was if you’re going to trail the stop why have a stop loss. Well because the trailing stop kicks in when you have a profit on board. A stop loss is if you never obtained profitability. Make sense? Because the potential, especially in a bar like this and we’re going to talk about this in a minute, this concept


called rocket fuel. If it went all the way down here, comes all the way back up there well now wait a minute my short; to take this short is way down here that means it’s got to come all the way back down there based on this particular setup before I’m going to enter the trade. The problem is now what happens if it runs out of energy and starts pushing right back up again. I want to make sure I’m not going to get stopped, have a huge stop loss. What happens though is just to get back to this concept most of the time it won’t even go back 50% of the bar. It’s real important. In other words for those of you that like to keep your stops a little bit tighter, a little secret is you could probably put your stop at 50% in my opinion because most of the time it shouldn’t even get there. When this trade works like it’s supposed to it’s usually going to do what I call whooshing which as soon as it breaks down below that level, when those iceberg orders are done, when all that inventory is filled for that institution or institutions that was temporarily holding that market up; remember we’re in a downtrend and they’ve got orders out there. As their orders are getting filled they’re getting eaten away and they’re getting eaten away and they’re getting eaten away. Once all that inventory to buy is gone and the market’s still got that downward trend, that downward pressure now the market’s free to go whoosh and start just nosediving to the down side. It’s like letting the air out of the tire. Just keep that little tip in mind. I didn’t share that earlier in the public event. Usually it shouldn’t even go back 50%. If it does you might want to even consider taking your stop loss there because it really shouldn’t go past that 50% mark. Occasionally it’ll come back 25% bar; it’ll get short; it’ll pop up a little bit and then roll back over and die its horrible death. 50% something’s probably wrong. I’m trying to share some of the things we didn’t share earlier because we’ve got more time to expound on them than that. When it’s happening with this this ties in well with some of those strategies I taught earlier today. Since this is the first time for about half of you hearing this today what I want you to understand is a lot of stuff that’s going on against the retail trader here; this is an important slide. I would encourage everybody who hasn’t already done so to take a picture of this. A lot of us having a victim mentality and it’s fostered, it’s taught to us by educators and stuff like that; yeah the market’s out to get you so buy my $10,000 course and I’ll teach you how to beat the market. The reality is that there are some things that happen with the various setups and I’ll show you how this relates to the setup I’m showing here as well as like the stochastic spike ones and the things we’re going to cover a little bit later. What’s happening here is this; from a buy side perspective here is the buy side mistakes that are happening. Did everybody get a picture of this? I want you to understand this; this slide will help you develop more of a predator mentality versus victim mentality. If you understand what’s happening with the price action and why it’s causing you not to take certain trades and getting you in to other trades right at the perfectly on time before the market goes the opposite way against you; if you understand this slide you can then be thinking ahead, oh I see what they’re doing to those retail traders and that’s what I do every day in my trading room, isn’t it gang? I tell you live what’s happening to the retail traders and then I say this is what I’m waiting for to enter. Is that not correct? Go ahead and say yes if you’re . . . yes. What we’re trying to teach you to do is understand okay this is; and that’s the


whole secret to my success. People say Rob when did you become successful. When I became successful was when I took all the trades where I used to take and lost money and actually developed systems and methodologies the opposite way. Right when I used to go ahead; I used to be the guy who would buy up here and then watch it pull back. I used to be the guy when it would pop up and then also and start pulling back I wouldn’t take the trade and then 10 minutes later I watch it be at all-time highs or new highs on the date I’m like I knew it was going to go that way. That was me. What I did was said how come this keeps happening every time I trade. Anybody ever have that feeling? You take a trade, how come every time you go long or every time you go short it seems like they move it the opposite way. How many of you have that feeling? It’s like they’re watching you. They’re out to get you, right. That’s what it feels like. There are some very ongoing systematic things that are happening in the market here and that’s why this is so important. Let’s review that. In an uptrend how they’re sticking it to the buyers. What they’re doing is, the buyer buys the top because we all like those pretty green bars to go long. Then when it pulls back they get stop lost. The sellers who sold short down below well they start seeing it come back down, they’re like, yeah, go back down, go back down, I need to keep going so I could get out of this losing trade. Then the people who were thinking about buying went ahead and watched it pull back against them and so they’re like oh; I thought it was going to be the other way, those losers, good thing I didn’t take that trade; I better go look for another stock. How many of you honestly because this is a good group, many of you are my students, not everybody here, so let’s be honest amongst us in this group if we can. I always tell you what I do right, wrong and could have done better. How many of you when you get into a trade if it starts kind of going against you and you start showing really any sort of negativity in your P&L you get a little bit of oh no is this going to be another one of those losers. How many ever feel that way. Okay, thanks for your honesty. What happens is then as soon as we start saying wow, good thing I just avoided that loss, now I better go look for another instrument because this thing will have caused me a loss. I should stop looking at it; that’s what we do but what we should be doing if you start thinking now like the predator instead of the prey now what you’re going to do; go ahead take that picture and then I’ll move on. Got it? The gentleman was taking a photo. So now what I’m trying to do here is when I see a good trend and it pulls back now instead of saying ooh, good thing I didn’t take that trade I better move on to the next widget; I’m going and staying focused on this and saying okay, now if it pulls back one tick above the high there I want to get in that trade. Now Colorado John, you’ve been using this quite successfully here and this is one that you really like to take. Is there anything else you want to add about it before I move on? Your feelings about this trade or why you think it works for you because you’re doing extraordinarily well with it. COLORADO JOHN: The only thing that I particularly look at is assuming that two minute; INAUDIBLE, five minute to make sure that confirmation is going in that direction because sometimes it INAUDIBLE.


AUDIENCE: What he said was for you folks in the back that may not have been able to hear that, what he says is the one thing he wants you to remember from his perspective is he looks at the next higher timeframe up so if he’s taking the trade on the two minute chart he likes to see what the five minutes also trending and not necessarily like if you’re looking to go short and not an oversold condition because if the five minutes do for retracement back up even if you get a good sale at two minutes also know you may have to sit through five minutes of pain as the market’s going back up and some of the setups I’m going to show you in a little bit and so what he’s saying is make sure that the five minute agrees with what the two minute is saying. If you trade on a 15 minute chart I usually use the hourly as the next higher timeframe. If I’m trading a daily chart I like to see what the weekly is doing. That’s was John’s thought for that. On the sell side it’s more or less the opposite. Here’s what’s happening on the sell side. On the sell side when it comes down here; it comes way down here people get short and so it’s had this big move down, now the risk is it pops back up so it’s sticking it to those sellers and likely going to stop them out. When the market still goes as it’s coming down that starts popping back up the people thinking about shorting stop thinking about shorting. It’s like oh maybe this was the bottom. Maybe I should be thinking about bottom catching. Then those are the kind of things that are happening there. Then also what that’s doing is it’s giving buyers who bought up above false hope because yeah, yeah, go back up, go back up; I’m losing money, go back up. You guys remember those ugly feelings of cheerleading a position. That’s what’s happening. Then as soon as it rolls back down and starts to accelerate to the downside now there are fresh orders being taken by automated systems. There are all the people who were long up above who were hoping it was going to come back up and at least allow them to scratch the trade now suddenly watching this thing go boom, boom, boom, boom to the downside and now they’re having to get stopped out with an even bigger loss. Usually that’s where the market is when they’re being liquidated. That just adds to the volatility. That’s why you get the whoosh on the back end of this trade. Let’s look at this; by the way this is going to be really cool. This slide is going to come up a lot today because all the setups that I’m going to teach you are going to appear all over this thing such as full stochastic spikes half stochastic spikes minis, this is that reverse inventory retracement bars. Everything I’m going to show you today you’re going to see just on this chart and that’s the point with this. The point is that the four setups I’m going to give you guys today should allow you plenty of day trades and/or swing trades. Let’s start off with inventory retracement bars and we’ll start working our way through this process so you start seeing all these really cool trades. With the inventory retracement bar what we’re looking for is we’re looking for that trend. Again you don’t want to pull out a rule, compass or any other instrument of mass destruction. You just want to go ahead and ask yourself objectively looking at the last 20 bars am I basically in a downtrend. That’s what you’re looking to do. Usually a 20 period exponential or a 20 period simple moving average is great. I do have these other


indicators down below but as I said even with this group, even though half of you are already my students and have these indicators today I’m going to focus, because there are still 50% that don’t; I’m going to go ahead and we’re going to treat this as if you don’t have those tools. At the booth tomorrow of course all of you that are students that have those we can talk about specific needs at the booth. If that’s okay with you guys. For the 50% of you that aren’t students that don’t have my proprietary stuff and if it’s okay we’ll just keep it real simple and stuff that you can do for free at home. Is that alright? Okay. As we go ahead and we look here we’ve got the 20 day exponential; this is a weekly chart so it’s actually a 20 week exponential moving average; this is a 20 day exponential moving average. What we’re looking for is we’re looking for bars that the wick is 45% or more so the bottom of the wick is 45% or more off the low. That means that the body of the candle from open to close is in the top 55%. Same thing right over here. Now what we’re looking to do; so here’s what happens. The signal bars fires off; do I short that bar. No. What I wait for is for it to pull back up and then roll back over and break down. What I’m looking to do is go short one tick below the low, in this case one cent below the low of this weekly bar here. You’ll notice what it did; it dropped $30 after that that week. Now this is why it’s important to trail and not just leave an open profit target because what can happen is it can turn around and go back up thereafter. You only get a nice whoosh down then that leads into a whole new world of bottom fishers, bottom catchers that then try to catch bottoms. What happens is I trail it. If you guys watched my trading competition this morning I took those trades and I just trailed, trailed, trailed until I eventually got my profits. Then right over here; here’s another great example of this. Again there are other setups that I’m going to be showing you off of this later but we’ve got four of them to work our way through so just be patient. Here’s another one of these setups right here. We’re 45% or more off the low. What happens is I’m looking to go short one tick or in this case one cent below the low of this previous, this weekly bar right here. Now where is my stop loss? Who can remind me of where my stop loss is? Russ? AUDIENCE: One tick below the top of the bar. ROB HOFFMAN: This is the signal bar so you’re saying one tick above the high right here? Would everybody agree with that statement? AUDIENCE: Yes. ROB HOFFMAN: That’s right. Then what were you saying? AUDIENCE: Of the second bar 50% of that. ROB HOFFMAN: Okay, now, so you said 50%. So yes, you can use the 50% of that bar as well. You could either use the 100% or the 50% or let’s just say because this is a


weekly chart; let’s just say that’s $30 up or just for more drama let’s say it’s $50 range but you’re trading plan says you can only lose $2.50 or $2 a trade. What other choice do you have besides cutting this in half or losing a stop up above? AUDIENCE: Avoid the trade. ROB HOFFMAN: Avoid the trade. I can’t emphasize this enough because I promise you by the time you let me get through this presentation with you today and you see these four different setups you’re going to see how many trades are actually just even in this one chart and then you’ll be like okay, wow, I can just be patient. I could just wait for the next trade. We don’t have to chase trades. We don’t have to take trades that are outside our risk and comfort zone. The next good trade is right around the corner. Does that make sense? Okay. Yes? AUDIENCE: Inaudible. ROB HOFFMAN: No, so, that’s why it’s good that you listened and hear these things over and over. The entry is one cent below the low of the signal bar. The stop loss is one tick above the high of that bar. Stop loss is up here, entry is here. Go ahead if you have a question. It’s important you understand this. You’re going to be really lost with all these other great setups if you don’t understand that. AUDIENCE: Inaudible. ROB HOFFMAN: Just above the current bar. AUDIENCE: Inaudible. ROB HOFFMAN: Okay, so you’re welcome to go ahead and do that. Then you’re just not really giving it any breathing room at all because remember what’s going to happen is you’re going to go short one tick below the low here, alright. Now in this case you’ve got some breathing room but depending where that bar opened for the week that may have opened right at this entry level now what are you going to do. Now you’ve got no room for a stop whatsoever. That’s awfully aggressive and you’re going to probably find yourself getting a lot less stopped out a lot more. Does that make sense? Take it from the guy who’s actually used it and making money with it, not a good idea. Fair enough? I’m just giving you the real world of this gang. I’m making money with this. I’m making money. Colorado John over here is making money. The thing is there’s a really up; I’m winning trading competitions with a lot of money on the board. This is real world trading and swing trading strategies so it’s important you ask questions and we learn from this. Bruce did you have a question? AUDIENCE: Inaudible.


ROB HOFFMAN: If it’s a tall bar yeah. Part of that is your risk trading plan. If that’s a tall bar and that’s why I use an exaggerated example if it’s $50 that’s a real tall bar so it’s like $50 back would be your stop loss. You always have the choice of not taking the trade. If you guys just let me get to the end of the presentation you’ll see just how many trades are on this board by the time I get through with all four strategies. Go ahead Steve. AUDIENCE: Inaudible. ROB HOFFMAN: Here’s the daily break and yeah so there’s very little room and oh then right here if the entry is right here so at your stop loss you put it right back where the high you’re not giving yourself a lot of room. I personally don’t use the high of the current bar I use the actual signal bar because that’s where the institutional activity was. Now what we’re going into is uncharted territory of where now the market is free to move to and I want to give it enough room to do that. If you guy watch, you guys notice my trades this morning? They were very well timed. I took those trades and all of a sudden they started going boom, boom, boom, boom and I started trailing, trailing, trailing. That’s what I’m looking for. I’m looking to get in there and then hopefully have it work right away like it did this morning but if it wants to pull back up a few ticks I’m not going to be phased by that. Stephanie did a great job with that. She took like five or six trades this morning, 1000 shares apiece; two or three of those trades she held onto like for an hour or more. They didn’t go wildly against her. They didn’t go ahead and; they didn’t do anything crazy, the just didn’t move very much. You understand what I’m saying? The thing is that I need to give it a little bit of room to be successful. You understand what I’m saying? Let’s move on because I think we’re getting lost on that one question which is not really necessary. Let’s go ahead and let’s take a look at more examples of this so we can move on. I’ve got lots of these to share with you. Right now the trade that we’re looking for here; here is the bar, it’s 45% off the low. I’d actually back in my wide trading video; my free nightly videos I had actually talked about this one. That’s why I still like to show it because I was like hey, we talked about this in advance of it happening. What we’re looking for is the bar is in a downtrend. We’ve got a 45% off the low and then for three more days see how it stayed right there at that level? Why did it stay there for three more days? Right there where those inventory retracement bars are. Why did that happen? AUDIENCE: Futures were still buying. ROB HOFFMAN: There was still inventory, exactly Dave. There was still inventory. Notice what it did. It kind of came toward the bottom there, popped up. Came toward the bottom there, popped up. Came toward the bottom there, popped up, then it finally broke down one tick below the low and what did it do? Whoosh to the downside. Now what’s really cool is I’m jumping in because I can’t wait to show you this. It’s one of the trades I never show publically. It’s called my reverse inventory retracement bar. You’re


going to see multiple reentry opportunities. It’s like so many entries and reentries; it’s really cool. I’m getting ahead of myself. I’m just excited about it because it’s a fun one. They’re just as powerful if not more powerful than this first one I’m showing you. Then what happens is you take your first trade, it pops back up, you’re trailing down, you get stopped out. Is the day over? No, the day is not over. As long as you still have a quality trend if another one of these signals presents itself you can go ahead and take the trade over and over again. In fact somebody came up to me at the end of the presentation and said what happens if it shallows out to 10%, 5% in there. I was like no you can’t take those trades those are really trends anymore are they? He said as it’s bottoming out can I take the trade and the answer is no. Once the moving average is flattened; so let me ask you a question. Let’s take a look right over here. Do you guys see that right over there? Isn’t that 45% off the low? We didn’t talk about this in the last class but you see that one right over there? That’s 45% off the low and it did go down below. Is that actually a valid setup? AUDIENCE: A trend? ROB HOFFMAN: Look what happened to that 20 period exponential moving average; it flattened out didn’t it? No, I don’t want to take that trade. Now in the interest in full disclosure the trade worked but a broken clock is right twice a day. What we’re focusing on here is the statistical probability and the statistical probability does not favor going ahead and taking the trades once the trends are sideways. I promise you you can make money with them but not nearly as much and you’ll take a lot more losses and since the average trader tends to take larger losses than they do profits that can get you in trouble. ROB HOFFMAN: Let’s go ahead and look at the trailing stop methodology, let’s review that again and for those of you this is your first class with me let me make sure you guys understand. What I do, like on an equity; on an equity I’m typically picking a round number support of resistance level or looking at daily, weekly and monthly pivots, particularly weekly and monthlies on swing trades. I’m picking a number; in this case like this back when Apple was here we’re up to $420 we were looking for the break, well $400 is the key major support level below. My concern is everybody is going to be looking at that number. When we get down toward $400 I want to aggressively trail up my trade underneath that number. Why? Because what’s more likely to statistically happen at that point? Is it more likely just to keep going or statistically is it more likely to bounce off that level? It’s more likely to bounce, exactly. If you guys; you’re sure. In this case it did go about $10 through it, closed back off about $5 off the low and then shot right back up. I’m sorry? AUDIENCE: Inaudible. ROB HOFFMAN: Yeah, it hung out at $400. That’s what I’m saying because at that point they’re aggressively accumulating this thing. They’re covering their shorts and


then fresh bottom hunters aggressively accumulate. It’s a logical round number support level. It’s kind of like back in the days, you guys remember, for those of you that have been trading long enough back when Dow hit 10,000 or was approaching 10,000, man oh man, remember those days? It’s like all you could hear, we’re down 9200, could we see Dow 10,000. It was all about Dow 10,000. Then it was about Dow 11,000; these big round numbers. Even to this day you’ll still a lot of excitement, Dow 18,000 these kinds of things. What we’re looking at trailing then, I identify that level whether it’s a key support or resistance level, a round number level or a weekly or monthly pivot, whatever the case may be or in many cases it’s a long-term moving average, particularly like 200 a day moving averages are big ones for me. The 89 period and the 133 period moving averages, so as long-term ones when we see key support resistance there that’s a big deal. What I do is once I determine what the target is as we approach the target what I’m doing is I’m initially locking in 50% of the anticipated profit. People often ask me do I scale out of the trades. Typically I do not unless I have a really huge size and a really thin market. Then I’ll start taking some off at a time but typically I’m all in, all out on the average trade. What’s happening is in this case there was one contract, you’re looking at this, the target is up here, that’s the monthly pivot. As it goes up I’m initially going up 50%. Why? Because we’ve all laughed and we’ve all joked about it earlier today in various presentations but how many of you have had a profit on the board only to turn around and watch it become a loss? Let’s see those show of hands because I know about 50% of you are new today. How many of you honestly, one hand. You see pretty much most of us here. It’s a sickening feeling isn’t it? It’s frustrating because then we really get ourselves in trouble because then we say, well it went up to there and then it turned into a loss; well I just want you to go back up there and then I’ll get out this time. What does it do? It bounces back up a little bit, doesn’t get up to where you were then it rolls over again and then it becomes a deeper loss. We accelerate that loss. What I want to do is I don’t want it to ever get to that point. A small win is still a psychological win. Vince, go ahead. AUDIENCE: Inaudible. ROB HOFFMAN: Let me go ahead and show that to you right now. As we go ahead we’ve determined where the target is. We’ve determine where the target is, that’s right there, right Vince? You with me? Okay, so now what happens is as we approach that level where I’m about 80% of the maximum anticipated profit from the trade I’m moving up to that 80% mark. Then what happens from there; I’ll wait until Vince writes that down and then I’ll move to the next slide. You got it Vince? Then what happens is now it’s touching my target so I move it up to 90%. Why? Let’s be honest, the market has been shooting up here. After the entry what’s more likely to happen when it hits that major resistance? Is it more likely just to keep barreling through or is it more likely to stop and reverse? It’s far more likely to stop and reverse isn’t it? Good assessment? Okay. How many think of you it’s actually just more likely to keep on going? Anybody honestly think that? Okay, that’s good. I didn’t know if we were going to have to have a conversation. The reality is it’s far more likely statistically to stop and reverse. The truth


of the matter is only about one out of 10, one out of 12 times what it’ll do, it’ll go ahead and pop up a little bit more through, get some break out traders in there and then it will roll over and die. Does that make sense? As we go ahead and take a look then, then when it hits the price and it’s not continuing to go up; I’ve had it at 90%, it’s not that one out of 10, one out of 12 times where it keeps on going, then what I just do is I trail it right into price with the absolute intention of doing what? Just being taken out of the trade. Does that make sense? I’m intentionally knowing I’m going to get out, why? Because I want to maximize every tick. It’s not the one out of 10, not the one out of 12 times so them my anticipation is it’s going to stop and reverse so I want to maximize every dollar I can. Yes sir? AUDIENCE: This can be done with multiple bars; it doesn’t have to be one bar? ROB HOFFMAN: On no, no, yes, thank you for asking. My apologies if I; no this was, in fact if we go here this was actually multiple bars. This is one bar, now you see a new bar is formed. Can you see that? That is a new bar. In fact you hope it’s going to be. We want that object in motion to stay in motion. Does that make sense? Very important. We want that to happen. We want it to be multiple bars. Great question. Yeah, because some of the bars; there were some strategies I shared with you guys earlier today where you want to get in on the same bar; it can then run for multiple bars but you want to get the entry on the same bar. Here we’re talking about the exits and we hope it’s many bars into the future. Great question. At this point now we’re taken out of the trade. Let’s look at lots of examples of this and then we’ll go on to its sister, the reverse inventory retracement bar. This is Tesla weekly chart and daily chart. What you’ll see here is lots of different entries on Tesla here; this was a weekly chart so it was about 45% off the high in the uptrend. It went parabolic so it really even just kind of distorted. You can see the original uptrend but then of course it went parabolic afterwards. The interesting part though is and I remember this clear as a bell when it was happening because there were all these retail traders that were like I can’t get in any more. I can’t get any more, it’s gone too far; it’s already doubled, I can’t get into this anymore. I remember saying to myself because every time it would pull back there would be this mad rush for people to want to buy. It was all over Chapwood’s; it was people in my trading room that were new to me asking me questions about this. Then it pulls back and then like, yeah I guess it’s over, now it’s going to tank, watch it go back to zero. Well what happened though, look what actually happened instead. As soon as it would break out above that inventory retracement bar gang look what happened. It started to take off again. Now that pullback did not go ahead and break down below the low here and then it would take off again. Look at the daily chart. Look at how many signals just in this one snapshot of time there were with this. You see some of these happened right away. The signal fired off here and then it went up. Others fired off signals and then took 10-12 bars to take place. Others even went out almost to 20 bars. See there’s the signal right there then it kind of cup in handled and then broke out. For those of you,


anybody who likes the old CAN SLIM model, anybody here like the CAN SLIM mode, IBD, one person, okay, alright. Usually, especially in Scottsdale if I ask that question almost everybody is saying it. The thing to understand there is of course basically it’s a cup and handle type pattern almost. You can combine it with other traditional technical patterns there. What happens is; then you’re looking to; the entry is one bar above the high though. You can see the entries. Various entries. If you got stomped out on pullbacks with your profit, and this is the hard part for people to understand, the next big trade is right around the corner. Everybody is trying to maximize every dollar on every trade but the next good trade is right around the corner. You don’t have to chase. Russ, do you have a question? AUDIENCE: Why didn’t you get in on the green bar in the box? A little higher than; you’re one tick and you’re going to enter, one tick and you draw your line all the way to the next red. ROB HOFFMAN: Yeah, right, that’s the next major signal there. Everybody see, this is 45% off the high. AUDIENCE: That’s the signal? ROB HOFFMAN: That’s the signal bar and then the setup . . . AUDIENCE: You broke a tick above on the green; why didn’t you keep . . . ROB HOFFMAN: Broke a penny on the green one, which one? Not here, not here, not here, not here. Right, that’s the entry. AUDIENCE: That’s the . . . ROB HOFFMAN: That’s where I pointed to. AUDIENCE: Oh, I (inaudible). ROB HOFFMAN: Well sir are you going to be my problem student today? Where is Honlee (SP?)? Where is your wife? She hiding somewhere? She sends you to do her dirty work huh? Okay, okay. Do you understand? That is the entry right there. Yeah, okay. Yes, Katani (SP?), I’ll answer your question sir, back behind there. Go ahead Katani (SP?). AUDIENCE: Inaudible. You have that first signal and then right after that you have the second signal? ROB HOFFMAN: That’s right.


AUDIENCE: Do you try to (inaudible). ROB HOFFMAN: Basically yes. When we use the word discard what you’re doing is you’re looking to take the entry off the nearest signal. In other words yes this fired off but then this one fired off but didn’t actually trigger off the buy. Initially it had to go down here and so then this one actually traded off a signal. That’s actually the first buy. Now over here this is actually the first buy. The one that’s closest to you that fires off is the one you trade first. Good question. Sir, you had, yeah, go ahead. AUDIENCE: Can I ask a question first? ROB HOFFMAN: No, this is a one per customer thing; I’m sorry. AUDIENCE: Inaudible. Is there a time limit, in other words if there is trailing movement for a certain number of bars . . . ROB HOFFMAN: Yes, yes. Excellent question. What is the; the question is I don’t know if everybody heard him but if you can’t the question was is there a certain amount of time or some sort of limitation of what you’re looking for? The answer is absolutely yes. In fact gang, sometimes you’ve seen me take this trade in the live trading room. I’m like I expected it to whoosh but all it did was kind of thud, so I’m just going to take the quick profit on this and move on. The thing is the expectation with these trades is whoosh. Once it breaks through that inventory whether buy side or sell side once it breaks that that inventory retracement bar, the setup bar the expectation is it’s going to start driving that direction; all those people start realizing it’s not going where you thought it was it’s going against you and then that adds a whole plethora of short covering or the buy as it may be depending on which side of the trade you’re looking at and so the expectation is things are going to start getting really aggressive really fast. Does that make sense? In other words to answer the question there usually, I mean like on an intraday trade I’m not very patient with it. I’m usually only giving it literally a few minutes, maybe two, maybe five if I’m being really generous because what you have to understand, you have to understand the expectation once that inventory level is broken through what we show there is Honlee (SP?); we were just talking about you a minute ago; it was all his fault though. The expectation is that once we get through that inventory level it should start spiking up; it should start taking off. That’s what we expect. It should start moving up. The trading competition ones you saw it started whooshing to the downside. Yeah, we’re not going to give it a lot of time. On a weekly basis usually if it’s the end of the week and then all of a sudden Monday it’s breaking into the new one you would hope by the end of the Monday that it would start already whooshing into your favor. If it finally starts to break down let’s say on Wednesday well by Wednesday afternoon you would expect it start to pick up in acceleration. Once it breaks those key levels gang, once it breaks that level where all those inventory, where those iceberg orders were, once that inventory is gone the expectation is it’s really going to start driving hard into the original direction of the trend. Remember this is a trend


continuation trade in its finest. It’s a trend continuation trade that has a short-term institutional pullback in the opposite direction sticking it to those three different categories of people in each group that we talked about and then the market is free to go back on board the original correct direction. Good questions. Let’s look at some examples of this here. These were actual trading competition trades that I used to win the competition over in France. Here is the bar that I identified; it’s 45% off the low. The next bar it broke one tick below the low and then within four minutes what did it do? Whoosh to the downside. Everybody see it? Dropped about $500 a contract right afterwards. Go ahead and take your picture, John. Got it? Alright. So then here are more examples of this. Here we have a downtrend in place, hopefully you can see the channel it’s a 35 period moving average channel, very important for me for trend determination in additional to the 20 period exponential moving average. Here you see the 20 period moving average this black line was coming down, the channel was coming down. Here is your bar 45% off the low and then look what happened when it went one tick below that low gang. What did it do? Whoosh. I’m sorry, yes sir? AUDIENCE: Inaudible. ROB HOFFMAN: Can I explain the channel? Well there’s not much for purposes of today to explain, but in simple terms the 20 period exponential moving average is a very close proximity tool that I use to determine trend plus everybody’s got access to a 20 period exponential moving average on their charts so it’s a really nice, easy way to determine trend but to be a little bit more scientific with my trend determination I use a 35 period moving average channel of the high, low and close. 35 periods of the low, 35 periods of the high, 35 period moving average of the close; fantastic, offers a lot of trades and a lot of trade opportunities. We’re not going to be discussing those today but what is important is when I’ve got not only the 20 period exponential moving average in a downtrend but I’ve got the last 20 bars of the 35 period moving average channel also in a nice trend this is really important if you swing trade. If you swing trade I highly recommend it. In fact how many of you guys get my nightly swing trading videos? All my members here, yeah, a lot. We talk a lot about the 35 period channel in relation to swing trading don’t we? Yes or no? AUDIENCE: Yes. ROB HOFFMAN: I was going to say you better answer yes. Very important from a swing trading perspective. If you want to come by the booth tomorrow I’ll show that more. I’m going to be with my students all day and I consider everybody in here a student to take the four hours out to be with me I appreciate that so I’m happy to help you with that, but very important from swing trading as well. We use it very heavily intraday as well.


What we had here was the 35 channel and the 20 period exponential moving average coming down. We came 45% off that low, it broke through and what did it do? Whoosh. That’s what we expect. That’s what we expect. That’s why I say I don’t have to give it very long. If it’s an intraday chart, a two minute, five minute chart I should be getting results “almost instantaneously”. If it’s a daily or weekly chart I should be getting results later that day that it breaks through. The weekly chart ideally that same day that it breaks through as well. Once you’re at those institutional levels you should start seeing results pretty quickly. At least enough to put a short-term profit stop in there and then see if it will continue to run. Again, what this strategy is designed to do is take advantage of all the places where I used to lose money back in the 90s where I wouldn’t take the trade because it would pull back down after it was going up. I’m like that’s a nice trend. I think this is going to continue going up; I’m going to take a trade. Well wait, oh, it’s pulling back, this would have been another one of those losses; I’m so glad I didn’t take that trade. I better go ahead and move on to something else. Then I come back and look at it a few hours later for my day trades, a few days later from my swing trades and it would be way higher. I’m like after a couple of expletives I was very frustrated. I kept seeing that pattern over and over and over again. When I was short and I would see the markets going up but I was already short and then I’d start to see it come back down I would be the cheerleader, yeah, go back down, go back down only to watch it break above the high of that bar and start taking off even higher and then I was the guy who had to go ahead and take the loss. It’s like why does this keep happening. I journaled, I journaled, I journaled, I journaled, I took screen shot after screen shot after screen shot; did what Colorado John here did, took all these notes. I still have a lot of these notes; it’s like mad scientist stuff looking at it now from back in the 90s when I was just a kid and to look at it now it’s kind of funny but it’s so important and it’s been very helpful for Colorado John. The current is, identifying where I used to lose the money, turn that frown upside down and start thinking like the predator versus the prey. That’s why I told you this slide is so important because if you take this slide and then you line it up against all my indicators you’ll see almost all my strategies, all my setups take advantage of the short-term and balance against the retail trader and then the resumption back into the direction of the original intended direction. Yes sir? AUDIENCE: Inaudible. ROB HOFFMAN: Great question. Great question. I love this question. Okay, thank you for bringing it up. Here’s what I want to say to you about volume. AUDIENCE: Inaudible. ROB HOFFMAN: No, no, I heard, I was just messing with him; I like him. He’s one of my students. I’m sorry. It’s just my sense of humor gang, I’m sorry. I like to have fun with my student family. The question was about volume. What he was saying was you haven’t mentioned anything about volume as it relates to this. Is that a factor? It’s a great question. Now let’s go back and take a look at these trades. Picture if you will this


particular bar happens to be on super high volume. Well, there’s a lot of activity going on there. Isn’t that when a lot of volume comes in at that level but then it breaks down below that low even after all that heavy volume? Isn’t that kind of a powerful signal in itself? Would you agree? I saw you kind of nod your head so do you agree? Now, let me play devil’s advocate. If this popup that came up off here was on super light volume, nobody was trading to the downside at that point. It just happened a handful of institutionals have 10,000, 20,000, 50,000 shares that are contracts that they wanted to put on there so is this light volume? Now it breaks through there, well isn’t that just as meaningful because it means there was even less institutional participation at that level and it’s even easier to break down through that level. In other words what I’m saying to you on this setup I don’t use volume. Either way when it breaks down through the level where the institutions whether with super high volume or super low volume when it breaks down through that level it’s very likely to go ahead and go whoosh either way. Now, let me tell you, I’ve gone ahead as Sarah knows; we’ve traveled around the country, actually even in Europe with some guys that talk about volume very heavily. Either way the strategy works equally well whether you put in; because here’s what’s going to happen. If you have super high volume because it’s actually a bottoming formation what it probably not going to do in the first place? AUDIENCE: Break through. ROB HOFFMAN: Break through, who said that? Steve. Exactly. Not break through in the first place. It’s more likely to be a bottoming pattern instead of V spiking back up. Does that make sense? If it’s a true bottom? Are you with me? You have a question? AUDIENCE: What if it does break through? ROB HOFFMAN: If it does break through whether it’s high volume or low volume it doesn’t matter; it’s a very powerful signal. It doesn’t matter. Go back to your hotel room tonight; take a look at this chart. Put you volume up underneath of it and take a look at it and see the ones that were high volume that broke back down through and that were low volume break back down through and then come see me at my booth tomorrow morning; let’s talk about it. No, it’s a great question but like I said I can make the argument either way, high volume or low volume. I understand there are some very hard core students of volume. I’ve traveled around with people that teach volume. This particular setup I’m here to tell you either way, high volume or low volume I can play devil’s advocate about why it works when it breaks through. Great question. Let’s go back over here; now here we are hopefully now as we revisit this picture and look back we’ve got a trend. We’re looking for bars that were 45% or more off the low and we’re looking for breakthroughs. We’ll go to him first and then I’ll get to you Hon. AUDIENCE: Inaudible.


ROB HOFFMAN: Trend signal bar? The signal bar becomes; can it become reversal? AUDIENCE: Inaudible. ROB HOFFMAN: Are you talking about the reverse inventory retracement bar. I’m going to teach that in a few minutes; we haven’t discussed that yet. Hon, you had a question? AUDIENCE: Inaudible. ROB HOFFMAN: Ross you know she’s got a soft voice, what was that? AUDIENCE: She’s talking about (inaudible). ROB HOFFMAN: The traders? We’re not talking about those today. Honlee (SP?) we’ll talk about those tomorrow at the booth. I don’t want to get into a discussion on this because 50% of the room doesn’t have these indicators. I want to focus on the stuff that you guys can take home even if you’re not a student of mine and don’t have my indicators and use it today. About more of that stuff with the indicators, let’s do that at the booth tomorrow. I want everybody to feel like they get a lot of value today whether they have the indicators or not. Is that fair? Let’s go ahead and move on over here. Here is Apple again, these are all very important charts because I’m about to teach you the reverse inventory retracement bar and you’re about to see this thing light up like a Christmas tree because of the sheer number of trades that there are. Here is traditional inventory retracement bar, so what do we have? We have our trend in place, then we go ahead and we have our bar, it’s 45% or more off the high and then we’re looking for the breakout above it; breakout above it; breakout above it; breakout above it. That’s what we’re looking for. This is a swing trade on Apple. This was late last year where I was going ahead and talking about Apple, about why I thought it was going to go to $120 if you guys recall for those of you that watch my free nightly videos; I even talked about it there. As we kind of take a look here is the actual trade that I took over in Barcelona Spain. I did a class. I was in my live trading room. I did this trade here. This was actually a stochastic spike which we’re going to talk about in a little bit gang, but actually if you look what happened; if you missed the stochastic spike, this green bar here, you didn’t short at the close of that bar what’s the very next bar behind it? AUDIENCE: Inventory retracement bar. ROB HOFFMAN: It’s the inventory retracement bar isn’t it? So in other words if you missed your initial entry did you have to chase the trade? No, the very next bar was an inventory retracement bar that would allow you to get in if you missed the stochastic


spike first. I’m trying to really impress that upon you guys. I see too many traders lose way too much money trying to force their way into trades. That they miss the original one or they frankly didn’t miss it they just didn’t have the honest confidence to take the trade. They wanted to see; how many of you being honest about it here, kind of, you have an idea which way the market’s going to go but you kind of want to see it actually start going that way before you take your trade. How many of you are kind of like that? Okay, I appreciate your honesty, thank you very much. The thing is, what happens here is now you’ve got this trade but now it’s really starting to go your way then you’ve got to ask yourself well did I just miss the move. What’s nice is in a situation like this even if you miss the initial entry or the stochastic spike which we’re going to be talking a lot about in a little bit then the very next bar after it gave you a confirmation; yeah, we’re going to sell. I want to be looking to short one tick below the low of that bar. Can you see the 20 period moving average in a beautiful downtrend? You’ve got a stochastic spike sell signal on the green bar. If you didn’t short there then the very next bar locked in the trading strategy I’ve just been sharing with you. You’ve got two sell signals back to back. I’ll get you next Katani (SP?), Russ go ahead. AUDIENCE: Is there any size limitation relative to the previous bars; like if there’s a really short bar so that you’re using that low entering and the stop? Is there any point at which you go at least 45% of low bars (inaudible)? ROB HOFFMAN: Well yeah if it’s that small; I mean if we’re talking about a stock and it’s a couple of cents but the thing is just remember though tight bars with; a tight bar being 45%, 50% or more a tight bar is still called a what? Who said that? Doji star. Exactly doji star. Now what’s a doji star? It’s a period of indecision. Once the market has decided I want to break down below that 45% level well that’s a good reaffirmation for you that the market’s deciding which way it wants to go. Don’t completely discount doji stars but yeah, I mean if it’s so like for instance a great place I tend not to take this trade in like US stock index futures, like Russell, Dow even the S&P for that matter is during the European session. During the European session it’s very thin in the US stock index futures. The S&Ps aren’t terrible but the Russell, Dow and NASDAQ are virtually nonexistent. Look at liquidity. If you’ve got gaps in your charts in overnight trading; you guys know what I’m saying? You ever see your overnight charts and you see lots of gaps and pock marks where it says barely trading; it’s trading a couple of contracts, gold, crude oil, you’ll see like pock marks of jumping and skipping. That might be a good time to avoid using this particular strategy because this strategy really relies on and focuses on actual institutional buying and selling, not just nobody’s trading it so it’s making little hash marks in the middle of the night. Does that make sense? AUDIENCE: What timeframe are you looking at? ROB HOFFMAN: What timeframes? This particular one here, this is a two minute chart right here. With my live trading room I tend to do a lot of two minute and five minute chart trading because the live trading room in the morning is about two hours, a little


over two hours each morning. I want to make sure I can enter and exit my trades before the close of the live trading room because as my room will tell you win, lose or draw, you always know exactly how much money I’ve made before we leave the room. Is that fair gang? AUDIENCE: Yes. ROB HOFFMAN: The thing is if I take a trade off an hourly chart I may never see the full fruition of that before the time is up in the morning and so that’s why I tend to focus more on those but make no mistake these can be used on the higher timeframes. I hope I’ve emphasized that. Yes? AUDIENCE: Inaudible. ROB HOFFMAN: Yeah, the short answer is yes. That is the short answer but you’re right. I tend not to like to add in. Adding in to the position even if it’s a winner sounds great in a textbook. Sounds really great in a textbook but the reality is the trend is your friend until the bend in the end and in the markets we live in in these days there’s a lot of bends in the end real fast. How many times in the last several months have we seen; whether you’re looking at a daily chart or you’re looking at an intraday chart have we seen these spikes where gold is spiking down for a couple of days or crude oil is spiking down for a couple of days and then it V spikes right back up? The Euro, individual stocks; it seems like in the last month where there has probably been at least five or six, maybe eight days where we had V spikes after the US Open. You start getting yourself more and more heavily weighted in this position because you’re making money but then also there’s a V spike against you, now you’ve got this heavy position weighted toward the bottom and it’s starting to go against you. Suddenly your great trade can turn into an ugly one really fast if you mismanage it. AUDIENCE: Inaudible. ROB HOFFMAN: Yeah, yeah, yeah, and then remember so remember gang I hope you’re understanding say you take the stochastic spike trade here and then you trail down the profits and you get stopped out on this very next bar can I go short again with a fresh position as soon as we break down below the inventory retracement bar? Yes or no? Yes. Now if your mentality is well I really don’t want to do that because then I’ve got to pay a second commission; look if your trading is that sucky that you’ve got to worry about a difference between a $3 and a $4 commission or something like that we’ve got bigger problems. I’m serious. You know what I’m saying. We all want to get the lowest commission possible but we’re not talking about; at least not in the United States, I know in Canada it is a little bit different but in the United States here we’re not talking about $10, $20 execution fees anymore. Most are getting $3, $4, $5 and if you’re not come talk to me I’ll get you brokers that will. A commission should not be the number one reason you’re taking a trade. That’s bad. That’s bad.


Now, let’s keep going if you guys don’t mind because I’ve got a lot of great stuff to show you here. If it’s okay. How are we doing on; let’s see; I’ve got what, two and a half hours or something like that or until they kick me out right? Two and a half hours or so? Okay, great. Let’s go ahead and keep going here. This is a picture of me using this live. I was getting ready to take off for a speaking engagement. I took a couple of these trades. It’s hard to see this screen I’m sure for you guys there but what I did was I made about $590 US dollars just with small out trades because we started breaking down below these levels. I started shortening and sort of whooshing down. Then I got into another short and it spiked right down; I just trailed it down. In fact the second spike spiked down so fast I didn’t even have a chance to trail. I was hitting market exit because it went off my screen; it just; that was here and it just spiked off the screen so I just used a market exit on the trade. Again, that strategy was very powerful in helping me with these profits because this trading competition in 2014 again the market was pushing down, pulling back up and then rolling back over and a lot of those bars were inventory retracement bar were breaking down below to get me the next entry. I do want to look at some more examples here. I just want to show you variations of the trade. You see trends up here and then you can see all these bars highlighted with the purple, the magenta and you see breaking above, one tick above those. These are multiple timeframes here, the two minute, five minute, 15 minute, hourly and daily examples of these. This is the Russell here. Then if we take a look over here this is the Russell again. Obviously I’m a big fan of the Russell, make a lot of money with it. These days it’s just been fantastic. Right here the two minute, five minute, 15 minute, hourly and daily. You see here these points where we had the 45% or more off the low. You’re welcome to take pictures; I’m trying to go slow enough that you guys can do that if you’re doing that. What happens is we break one tick below low and do you notice; do you notice how many times after a breakdown below those mark levels it had wide range moves to the downside. Do you see it? How many of you see it? How many of you see the whoosh? How many of you do not see the whoosh? Okay; I just want to make sure you do. That’s good. I mean if you don’t let me know, be honest with me or at least come see me tomorrow at the booth and you’re like hey I just didn’t want to say anything in front of anybody else but I still need a little help here. See me tomorrow. That’s why I’m going to be at my booth tomorrow. I’m going to be with my student family all day and I consider all of you to be part of my student family in some capacity at this point now that you’re here today. Just see me tomorrow if there’s something you’re missing. I’m more than happy to answer it for you today. More examples here, what we have here just I’m showing different examples, less than perfect because why am I showing this? Why am I showing some of these like right here and right here? Why do you think I’m showing these? Why do you think there’s a question mark over there? The trend. Look what happened when it broke above even without a trend. A monstrous whoosh. This is the US dollar. What’s the moral of this story? That even at 10%, 15%, 20%, trend angle of attack on a 20 period exponential


moving average you’ll see a percentage of those that will work. If you really want those good 85, 90 plus percent probability trades try to keep that 20 period exponential moving average or period simple, whatever your poison is, try to keep that in that 30% to 50% angle of attack range. That’s why I’m showing that. Here are more examples over here. Here is a little bit about what I was talking about. This is the dollar in the middle of the night. You guys see that more thin activity? For you traders, how many of you trade the European session? A handful of you. You’re probably accustomed to seeing this on certain markets, especially certain US markets. I said Russell, NASDAQ, Dow, Dower; a lot of these are going to look like that in that early European session. What we’re just looking at here I’m just showing more uses because here’s something I want you to think about. I’ve been telling you now about this inventory retracement bar and how great it is once it breaks down but what is it; whether it’s an uptrend or whether it’s a downtrend until it breaks that level what is it actually still? Until we break it we’re not trading it and there’s a reason for that. Why are we not trading it until it breaks it? AUDIENCE: Inaudible. ROB HOFFMAN: It’s still support a resistance. There are still orders out there. Until the market proves that institutional buying or selling is gone then there’s still more institutional buying or selling to be had there. Until it breaks through those key supporter resistance levels they are key supporter resistance levels. Let’s take a look at what I mean by that. Look right here; there’s your bar 45% off the low but look what happens when it gets back into this level. It touches into the range there, bounces right back off, way up there, comes all the way back down, touches the bottom end of it. There’s still inventory. It bounces up again. You see what I’m saying here? It’s support until actually broken. Show me that all those orders have been liquidated and filled. Do you understand what I’m saying? Until they do it can just keep bouncing off that area. This area like right here is a big supporter. Until it breaks below I don’t want to trade it. Why don’t I want to trade it? Because there’s still inventory in there. Right over here, look what happens. Here is your bar. Look what happens to the next bar, dips down in there, comes right back up, dips down in there, comes right back up. Now this bar is coming back in there. Am I going to take the trade short yet? No, because it hasn’t broken through there. It could stop right here and bounce right back up again. Until it is broken it is still key support. In an uptrend until it is broken to the upside it is key resistance. Does that make sense? Yes? AUDIENCE: My question is does it make sense but I just wanted to say that and when we say at least has an inventory we won’t sell and then they sell and then it bounced up and so there’s still inventory _____ okay but when the stocks are up there must be somewhere else maybe another institution or not like a retailer or more traders like me so they say bar is; I can buy. When they buy so the price is up and then the buyer has the buy/hold it only seems the inventory the institution . . .


ROB HOFFMAN: Yeah, but what you’re not taking into account is; so gang Ming wants or a short way of saying is for the buyer there’s a seller. That’s basically what he’s say to make a long story short there; let’s just cut to the chase, which is very true. What’s the objective of the new holder and let me actually back up for a moment and be even more clear. Any hedge fund managers in here. Okay, nobody is really not admit they’re a hedge fund manager I guess I should say, well because I usually do get them. I’ve got a lot of money managers that are clients of mine. Let me be very clear. A lot of these hedge fund managers; they’ve got millions of dollars under management, does not mean they’re actually good traders. What it actually means is a little Bernie Madoff. That was just a big Ponzi scheme. He was basically just a good talker. I see a lot of people and the funny part is it’s an evolution for some people. They spend years trying to learn the markets. They understand the concept of the markets very well so they could talk a good game at a bar-be-que but they can’t trade their way out of a wet paper bag. The thing is they go to the bar-be-que with all their buddies that are doctors, lawyers, pirates and so on and so forth and they’re all sitting around the bar-be-que like well hey, Jim, Jane, I know you, you trade the market all the time, what do you think of this? Well basically because of the fact doing this, blah, doo, blah that thing is going to do this. It’s like geez, you know I’m so busy being an oral surgeon I don’t have time to go out and make this mess, you want to manage the money for me? So now Jim or Jane go out and open up a hedge fund and they get a whole bunch of their buddies to give him $500,000 apiece, $250,000 apiece, $200,000, the next thing you know they’ve got a multi-million dollar hedge fund. That’s how a lot of funds are started. I don’t know if you guys know it but most funds close up in the first year. Between all the accounting and liabilities and legal counsel, it costs millions of dollars to run a fund these days. What I’m trying to say to you is the point with that story is there are a lot of people out there managing millions of dollars that don’t have any more real statistical advantage than you or me. They may be a big buyer or seller because they happen to have some money under management but that doesn’t mean they’re making good decisions. Have you guys ever looked at the actual performance of a lot of hedge funds? No I mean I’m serious, how many of you have actually tracked the performance of a lot of the hedge funds out there? AUDIENCE: Huge difference. ROB HOFFMAN: Isn’t it pathetic what some of the returns of investment or the negative rates of return are on a lot of these companies? It’s terrible. My point is someone has got inventory but you don’t know what their objective is. All I care about is who had inventory that stopped the market from the current trend. Once that market is stopped and the current trend goes temporarily the opposite direction then breaks back down, once they made the stupid mistake, maybe they were trying to catch the bottom like a lot of retail traders but the trend is down that’s all I care about, is it going right back down into that trend. Does that make sense? Regardless of what the reason is that this company or that company took that particular trade remember what I said to you guys earlier. I told you they’re all out for themselves. They’re all out for their performance


numbers. Why ask the question, how many of you have tried trend performers. A lot of you answered the question yes. They know you’re checking. They’re all trying to outdo each other. It’s not like they’re all conspiring. Just because somebody starts buying here alright, well that doesn’t mean that every institution is buying there, every institution is selling there. Make sense? Your question is somewhat muted by my response that it doesn’t really matter what the other one or two or three hedge funds that’s taking an opposite side position because what matters to me is the quality of trend. I don’t care who buys at the bottom, who buys at the top in the trend. I care when that short-term buying or selling is overcome and now the market’s moving back in the direction that everybody else thinks the market is going in and that’s what leads to the . . . AUDIENCE: Whoosh. ROB HOFFMAN: Whoosh, thank you. Make sense? Are you with me? Yes sir? AUDIENCE: Inaudible. ROB HOFFMAN: I’m sorry I couldn’t hear, can somebody play telephone that question up to me? AUDIENCE: Inaudible. ROB HOFFMAN: You take a trade one tick below the breakout level . . . AUDIENCE: Inaudible. ROB HOFFMAN: If you went above; depending on the stop loss used. If it went above 50% of the signal bar if you’re being more conservative with your money management or if you’re being more aggressive the high of the signal bar then you shouldn’t even have to wait until the end of the day. If it goes back above that level you’re out; you don’t have to wait until the end of the day to see that it went above that level. If it goes above that level something’s wrong. What you should see if when the support is broken it whooshes to the downside as I demonstrated with many of the slides that we’ve seen. Let me keep; I’ll give you Ron one for you and then I’m going to move on. I’ve got three more setups that are important to show you so we can talk about this one all day and try to expose the other ones and then you guys could ask me questions tomorrow at the booth. Go ahead Ron, I’m here for you. AUDIENCE: I’ve got this second box, wouldn’t that qualify as (inaudible). ROB HOFFMAN: The question is; you’re saying this bar here, this wouldn’t qualify because it’s past 20 bars. The answer is I will still use this into the future as key support and resistance. I may not go ahead and take a trade if it’s past 20 bars I may not take a trade but make no; see here’s what I’m doing with this; what I’m doing is and I whether


or not the Las Vegas Trader’s Expo here last year using this version of the technique. Here’s what’s happening gang, this is key support; let me find key resistance for you; here we go. This is key resistance now when these bars come up on top. When it comes back up into this area I’m afraid it’s going to hit that area and roll right back over. See this bar here? Then it rolls into that and then it came down. Last year I won the trading competition by going ahead and getting in down here and then I had an inventory retracement bar that formed up there and we came up to that level. What happened was we came up, we pulled back, I took a retracement trade, it went back up into the inventory retracement level and I announced to everybody in the room, I said gang I’m going to get out here because this is an inventory retracement bar and what that means to me is that’s a big level of resistance and so I’m going to go ahead and put my stop right up under the price here because I’m afraid it’s going to stop and reverse. What did it do? It got up into that level, it stopped, reversed. I made a bunch of money and I won the trading competition. In other words what I’m saying to you is the support levels and resistance levels until broken are really powerful support or resistance levels. Does that make sense? AUDIENCE: Yes, yes. ROB HOFFMAN: Okay, let’s go on. This is just another example, this right here, you can see it, here’s the inventory retracement bar, this is very similar to the trade I did last year actually. It went ahead and popped up, the inventory retracement bar, it pulled back down. It pulled back down for my trade in the trading competition a little deeper so I took a retracement trade and then it popped back up, got up into that area and I said I’ve got to go ahead and trail up the stop because I’m afraid that it’s now resistance or still resistance so I’m afraid it’s going to stop and roll over and that’s exactly what it did. Just like this bar right here, it stopped and rolled over and died a horrible death. This is an hourly chart of the Russell here. That’s a trade actually I used to win the competition last year against Meer, a professional trader. It was a bunch of proprietary trading firms. Let’s just go ahead; I’m going to move forward here because the; just based on the level of questions we got a little bit, these are just more examples of what I was showing on this side. I’d really like to get to more of the setups. I’ll show this to you it’s another really great example, this in action. You see the market went ahead and had the inventory retracement bar; look at how many times the rest of that session, this is gold; it had the initial inventory retracement bar and look at how many times it tried to get through there and every time it popped up they just kept selling it right in that same zone. You see it? Over and over again, popped, popped, popped and then just died. That resistance level isn’t just an area I want to break above to go long it’s a level I want to go ahead and respect as resistance until broken so like right here. This is a trade I’ll take a lot of times; you guys will see me take it. It’s a stochastic spike which we’re going to learn about in just a little bit. I’ll take a stochastic spike buy _____ looking for it to pop back up and when it gets to the bottom end of that range, the end of resistance I’m going to trail the price right up underneath there, the profit right up underneath there because


that’s the resistance, that’s the target, that’s the area I expect it’s going to hit and possibly reverse and roll right back over again. Does that make sense? I’m showing you how to use the inventory retracement bar. If you’re really listening to me here I’ve just showed you how to use it for an entry and also I’ve just shown you how to use it for an exit. Does everybody understand that? This is very powerful; Colorado John is using this quite successfully. Other students are using this quite successfully. I would encourage you to spend a little time working on your charts tonight looking at this. Let’s go ahead and I’m actually going to move past this. These are just more examples. I want to get to the next trade. This is the Hoffman reverse inventory retracement bar. This really awesome gang. This is effectively going to double the number of trades. It’s really important you take a picture of this slide. I’ll give you a second to do that. You guys taking a picture or making a home movie? I thought I was a bad photo taker. Seriously, you guys doing good? I think I’m seeing most cameras down, everybody good? Okay. Alright, let’s go ahead and take a look at this now. This is a very powerful trade; it’s very important that you understand this one. The reverse inventory retracement bar; this a mentorship level strategy and a fantastic one. It basically doubles the number of trades you get. It’s a price action based continuation trade. That’s the same as before. It’s most effective in trending markets, even better when tied to fundamental analysis, same as before. Here is where it starts to go ahead and change. Looking back at the last 20 plus periods bars where the open and the close are approximately 45% or more off their low in an uptrend or 45% or more off their high in a downtrend. It’s effective the opposite and super powerful. Ask yourself how much wick is showing; just that part is just like before. The stuff in red is the identical before. The stuff in blue is what’s different. Now, I want to simplify this process today just based on the experience level of the group. What I’m going to say is for the entry; go ahead and consider; I feel like in the interest of honesty and integrity I have to show you my entry on this but there’s a lot of students that choose to do it a slightly different way so I’m going to expose you to what they do but I’ll expose you to what I do and I’ll let you decide which one you want to use. Typically the entry for me is at the close of this bar. Or what a lot of my students do is one tick or one cent above the high or below the low of the setup bar. Everything else on this screen is the same. If you don’t mind, in the interest of time I’m not going to rehash all this stuff in red because we already did that for you earlier. The stuff that’s different is this, 45% off the low in an uptrend, 45% off the high in a downtrend. This is going to be really cool when I explain to you what’s happening here. Now, let’s take a look at these bars. Before we went ahead and now what we have is an uptrend. Before we were looking for accumulation in a downtrend. The market was coming down; the market was coming down here and then we came back 45% or more off the low and then we looked to short going back down. We’re in a downtrend, it popped back up, we left the short below the low, correct? Everybody with me so far. I hope so because we spent a lot of time on it. If you’re not, it’s okay, I want to help you, so please let me know. Now, I apologize, I’m drinking a lot here. Between the air being arid and doing all these presentations since 7 o’clock this morning I just want to make sure I have a voice for you guys tomorrow at the booth.


What we’re looking for now; this is really cool and very powerful, so it’s so important you understand this. Now we want an uptrend and now we want it to open; we want it pull back and then go back up. It’s very similar to what gang? The gotcha trade I taught you guys earlier at the eSignal booth. What’s the difference? The difference; I’m sorry? AUDIENCE: Inaudible. ROB HOFFMAN: The difference is that what we’re looking for is this. We just need to close to be more than 45% or more off the low in the uptrend whereas in the gotcha bar it absolutely had to open up, trade back down through and then go one tick above the open earlier. That’s where the intra bar on the gotcha trade. On the reverse inventory retracement bar we want to wait until the bar actually closes and then we just see that it’s 45% or more wick on the bottom in an uptrend. What’s happening here? I want you guys to all think institutionally. I hope you guys took your pictures earlier and now I want you to get in the mindset of an institution. We’re in an uptrend. What do we naturally, most of us, unless we’re counter traders and we’re going to lose a lot of money, what are we thinking about doing? We’re in an uptrend. Find. What normally happens to stick it to us as retail traders. It opens up and it does what? Goes down first making us not want to do what? Buy. Exactly. You’re getting it. Now if we went ahead and were short down below when it opens up and it goes down first if we were short it gives up hope that it’s going to keep going back down and hopefully allow us to not lose money. Those were a couple of things. You see how the same rule applies on the institutional side with this strategy it’s the same thing; it’s sticking it to them. What happens is what we’re looking to do with this trade now when this bar closes that’s where I take the entry. I go long at the close of this bar. I go long at the close of this bar. I go long at the close of this bar. Once again, I go long at the close of this bar. That’s where I, Rob Hoffman, in the interest of honesty and integrity take the trade. Now, for my students, especially that are new to this and are starting to use this setup and this strategy I prefer that they actually wait until it breaks one tick above the high. Not because I want them to get in later but because if it breaks above the high it’s far more likely than that object is motion is likely zoom and whoosh back into the direction of that uptrend. When I’m taking it down here there’s a possibility it may dip down a little bit further before it ultimately comes back into the direction of the trend. Why do I share that? Are you recording this or are you taking a picture? No, yes. AUDIENCE: Inaudible. ROB HOFFMAN: I’m sorry? I’d prefer not to because things wind up on the internet and then my attorney has to make a very nasty phone call. I apologize but there are some groups over in China that unfortunately do a lot of pirating and so we have an attorney that looks for that stuff on the internet. It would be better not to. This is a private mentorship group that you guys had to pay money to. I don’t even make any money off this. I don’t know if you knew that but The Money Show takes all the money from this.


You can imagine; I’m not even getting paid for this. I’d prefer that this super important stuff that I only show my mentoring students stays with the people that paid for it. Does that make sense? No disrespect intended of course, but I’d be happy to if you have questions answer a lot of questions for you at the booth tomorrow too. I don’t mind individual photos but then recording the whole thing becomes a little bit of a problem. With all that being said, my apologies. What’s happening is by having it go back into the direction one tick above the high; remember how on the opposite side with the regular traditional inventory retracement bar we’re looking for the whoosh when it broke down below. We’re more likely to get the whoosh once this opens up, sticks it to those retail traders who are thinking about going long, now don’t want to anymore; the retail trades that were short down here that now are hoping it’s going to keep going down and then it also turns right around and goes back up and then what happens is, remember we’re in an uptrend now so now that object in motion is free to keep going into the direction. Does that make sense? I take the trade here; I have to tell you that. I’m a little bit more aggressive with the entry. My retail traders there are a lot of them that have been battered by the time; by the time they ultimately come to me, the Colorado Johns who spent $48,000 with some big name education companies and Robert Sakani (SP?) who had to lie to his wife about trading results so they’re really battered by time they come to me. I’m trying to give them things that will hopefully work quicker and faster and so the downside is yeah you lose a few extra ticks, the upshot is you gained a lot higher probability entry. You’re sacrificing a few extra ticks to get a higher probability entry. It’s the tradeoff but it’s a smart tradeoff for traders that are looking to gain probability and increase their statistical results. Yes, Russ and then Steve and then I want to keep; this is an important strategy I want to share. AUDIENCE: Inaudible. ROB HOFFMAN: Say that again. AUDIENCE: Are you going to get to go fishing with stops on both sides of the boat because you’ve got the people who are short _____ the opportunity to go long. ROB HOFFMAN: No, I’m not playing games here. I’m a . . . AUDIENCE: Inaudible. ROB HOFFMAN: Well, remember there are a lot of black box systems, a lot of mechanical auto trading systems that feed off of that volatility back and forth. You watch the S&P; it’s like watching paint dry. Why? It goes up a few ticks, goes down a few ticks, goes up a few ticks, goes down a few ticks and so you have market makers going in looking to make that spread back and forth in there. In auto trading systems these days. That’s not what we’re trying to worry about here; it’s not even relevant to focus on


that. I know how your mind thinks Russ, I get it but I want to keep this simple. The more you overthink this strategy the more you’re really hurting yourself. When you’re trying to get too deep into what do black box systems do and how are they trying to make a tick back and forth. That’s just renting space in your head; well it is, it really is. It’s starting to clutter your mind. You start getting this complex; everybody’s out to get me instead of thinking like a predator you start being the prey. How are they out to stick it to me; no, how am I going to use what they’re doing to other people to my advantage. That’s why I win all these competitions around the world against top traders because I’m the hunter, not the hunted. I’m trying to get you guys into that mindset today. What I’m looking for, I take the entry where gang? AUDIENCE: The close. ROB HOFFMAN: The close. Where do I recommend my new students who are trying this to start out taking the trade? AUDIENCE: Above the high. ROB HOFFMAN: Above the high on this particular setup. Now let’s go to the next one. Now I’m in a downtrend. I’m in a downtrend. The market opens up, goes down, comes way back up here, ultimately close here. The close is 45% off the high in a downtrend. Where am I looking to go ahead and take the entry on this trade? AUDIENCE: The close. ROB HOFFMAN: The close of the bar. As long as it’s 45% off the high the close of the bar. Where do I recommend in my opinion my students that are starting out with us to take the trade? AUDIENCE: Inaudible. ROB HOFFMAN: Say what you’re going to say with confidence; let me hear it. I heard you. AUDIENCE: Inaudible. ROB HOFFMAN: Originally you said well, right. I want to hear you say it; I want you to say it with confidence. One tick below the low. That’s where I want traders to start with the entry process when they’re initially doing this. The reason being is because what can happen is in a situation like this it can go up a little bit further, make a stochastic spike which you’re going to learn about in a little bit then start to roll over but you may have such a tight stop you’ll get stopped out of the trade before it rolls back over. I’d rather have it show that the object in motion has stayed in motion. It’s at least a more higher probability of trade and frankly when a lot of traders come to me the first thing


they need is a series of wins because they’re so battered, they’re so broken. Has anybody here honestly been in a situation where you’ve had so many losses or maybe it’s one or two big losses you were just afraid to pull the trigger again? It’s like is this going to be another loss? Who wants to be honest enough to admit it? It’s kind of an icky feeling isn’t it? Is this going to be another one of those losses? Am I going to trust myself to get out when I need to? It is going to be a big loss because I don’t get out when I’m supposed to. The first thing I want to do is get people a series of wins to rebuild their confidence. Yes Steve, sorry. AUDIENCE: Inaudible. ROB HOFFMAN: Yeah, no, when you’re entering this you have the ability because here again what should be happening with this is once it breaks down below it should start whooshing back into your favor. It shouldn’t come back 50% or more back up. There is that opportunity. I’m going to promise you occasionally, occasionally you’ll get stopped out and then it will roll back down your way but the number of times that happens versus the number of times you wait for it to go all the way back up here and then take your stop loss statistically you’ll be a lot happier and financially you’ll probably be a lot happier taking the stop loss at 50% versus waiting for it to go 100% stop loss because usually it won’t even get back to there before it works. It’s not supposed to. We’ll take a lot less losses at 50% than you would at; the cumulative amount of 100% losses. Does that make sense? Yeah, there is a way to kind of cut your loss sooner there. Of course Steve, for you, I talked to you and your lovely wife; I would encourage, well all of you for that matter I encourage you to start this training on a simulator. Show me that you can do it when money doesn’t hurt you when money doesn’t count, then move to one lot, 100 shares, move to something small. A small denomination of real money before you start leveraging up on those positions. Now let’s go ahead and look at these positions gang, this is where it gets cool. Everybody remember this chart from earlier? You can take a picture but it’s the same one you took a picture of earlier. It’s okay, you can take a picture if you want it’s just it’s the same one you took a picture earlier. Now here’s where it gets interesting. It’s going to get even more interesting in a little while but here’s where it gets interesting. Check this out. See all the reverse inventory retracement bars that just got highlighted in blue? Do you all see them? Opened up, went up, came down 45% or more. I go short here. You guys look at going short one tick below the low here or you can short like I do. I said I’m being honest with you telling you why I do it, but you guys make the decision for yourself. It’s one of those weird things. I have one way of doing it but this is one of those where I actually have a more aggressive way so I feel like I have to share that with you but then there’s the more way for the average retail trader in my opinion. It’s one tick below the low for the average retail trader. Right here opens up, goes up, comes back down, closes here. I go short right there at the close of that bar. You guys look to go short one tick below the low of that bar. Are you seeing it? It basically effectively would double the number of trades that you’ll ultimately get because you’ll see this. Well


thank you Phil. Maybe later we’ll all do that together. But basically; I know Phil likes to trade so he’s one of those guys it’s like the more the merrier. Right Phil? That basically is it. How do I get more? He followed me to Utah; I did a speaking engagement in Utah in the beautiful mountains of Snowbird Utah this weekend and we were sitting there at the Oktoberfest together and he’s like how do I get more trades. Well let’s do this; that pretty much how that conversation went. Now let’s go ahead and take a look over here. Check this out gang. Now here’s the same chart you saw earlier; here’s the same chart you saw earlier but now look, there’s your bar 45% off the high; there’s your bar 45% off the high, 45% off the high. All those trades can be entered one tick below the low for you or if you want to take it like I do right at the close of the bar, close of the bar, close of the bar. Let’s go ahead and move on. You saw this chart earlier. This is the classic; Kirsten you already took shot earlier. I know, I know, I know. I was waiting for somebody to finally say yeah I’m trying to keep them in sequence. That’s how my mind thinks too. This is the chart you saw earlier. This is the classic inventory retracement bar. Look at all these. Here are the classics. I’ll let you take a picture of that first; lots of photos taken so I’ll give you guys a second. Now, here look at all those new trades with the reverse inventory retracement bar. In other words I want you to think about this in a different way. Look at how many times in an uptrend they stuck it to the retrial trader who was thinking about buying, dropped it first so they stopped losing their will to want to buy only to drive it right back up to higher prices. Is everybody here seeing that? Because look at that, 45% off the low, 45% off the low, 45% off the low, 45% off the low, 45% off the low, 45% off the low, 45% off the low, 45% off the low, you’ve got 1, 2, 3, 4, 5, 6, 7, 8 more opportunities in addition to the original 1, 2, 3, 4, 5. We went from 5 to 13 on the exact same chart. Does that make sense? It’s pretty cool. It’s using the same methodology in reverse. You’re looking for an uptrend and you’re waiting for the market to pull back breaking the will of the trader who’s thinking about going long. This is a daily chart of Apple. I kept comments; if you guys go back to my free nightly videos back to November of last year; I see Vincent’s writing that down; you guys can all write it down; it’s super secrets out there for free gang. I talked to you guys in my nightly videos that any and all of you guys can receive about this as this was happening. The point is that what happen is you had the classic breakout trades to the upside and then you had the reverse offering you several additional entries, 13 entries, 13 entries off the same chart. That’s why, give me one second here, that’s why what I was saying was if you miss a trade it’s okay the next good trade is right around the corner as long as you have that trend. Does that make sense? What was your question? AUDIENCE: Inaudible. ROB HOFFMAN: I’m sorry you have a soft voice, could you speak just a little louder? AUDIENCE: Inaudible.


ROB HOFFMAN: You’re saying can you use the same strategy on a two minute chart? Yes you better believe it. The trading competition examples I showed you earlier were all on two minute intraday charts in the competition in France. I couldn’t trade off of hourly charts; I couldn’t trade off of daily charts. Each round of the competition is only 90 minutes; I’d be in big trouble. In my live trading room, gang I’m primarily taking these trades off of two minute and five minute charts. A couple people. Yes, primarily taking these trades off the two minute and the five minute charts intraday. Yes, what I’m trying to show, the reason why I show this on a swing trading basis is there are some traders that have to just see it. I say it until I’m blue in the face that this is just as powerful for swing traders and I show it in my swing trading videos but when I do a public event for some reason every once in a while I get people like, well that’ll look great on the intraday trading stuff but how will that work for swing trading. I’m like I just spent half an hour showing you. I feel like I have to repeat it, repeat it to make sure I’m driving that into people’s heads because what’s the same thing you could do with this gang if you’re an options trader? How many of you are options traders here? Okay, I’ve got an uptrend on 45% off the low so now I’m betting the market is going to go up what kind of strategies can I use? AUDIENCE: Inaudible. ROB HOFFMAN: Buy calls, right. If I’m a buyer of options I can buy calls or I can; if I’m a writer of options I can sell puts, depending on the risk profile you want whether you want defined risk or unlimited risk. Actually I did something like this back with an options trade. Apple options were fund. Weren’t they fun back when they were a $600 stock. You could go $60 out of the money and still collect a buck premium on things. I mean it was wonderful back in the day. Now at $100, $110, $120 it’s not so hot. The thing is when you’re betting it’s going up you can take this not just with the underline instrument, not with the futures, if you’re a futures trader obviously not with the Apple but you can, if you’re trading the option you can bet you’re going long either by buying the options and find out where your target price is, your overhead resistance or above. Like when I was doing this I was talking about this going to $120 and you can set your target prices out there for our strikes and what not but I just want you really to sink that in for a moment. All those additional trades that you just got just by taking this bar and reversing it. Let’s go ahead now; let’s look at that again. Here’s Apple; now we see the core traditional inventory retracement bars and now you see the addition of the reverse inventory retracement bars. Gang, you’ll see this happen a lot. It’s fantastic. It’s a powerful strategy. All you need is a trend. Then you just wait for these things to start setting up. As I said when you’re doing like a two minute chart it’s almost like shooting fish in a barrel because you’ll see these trades happen a lot. If you’re trading a weekly chart you may have to wait potentially for a while for them to go ahead and set up but once you’ve got a good trend going on just like here you saw this is a daily chart so you’re going to see lots of different setups once you get that good trend going. Because


the market is designed to go on board the correct direction with as few traders as possible. How do you keep everybody from getting into the trade? You keep shaking it out. You keep shaking it out. You keep shaking it out. Break the will of the trade who’s thinking about getting it by making it dive back the opposite way. They stop thinking about going long, they go on to look at the next stock and the next thing you know they come back a few days later and shoot, it’s even higher highs. Most of you in this room already agreed earlier you’ve experienced that. Which you should have because that’s how it works. What I’m trying to do now is get you to think about like when you start seeing it pull back against the trade you were hoping to take then you start saying from now on, hey, I remember that screen where Rob showed me how the retail traders are thinking about this the wrong way. I’m going to pull that out. Okay, I know now that I’m looking for this to start going back up in that opposite direction and looking to actually take the long. Make sense? Any questions on that? Good. Let’s go ahead and keep moving along here. How are we doing on time? Got about an hour and a half or something like that? Let’s just keep driving through. Do you guys need a bowel break? How many people really need a bowel break? Otherwise I’ve got a lot to share; I just like to keep on driving through. Let’s see if I’ve got; I’ve got a few more slides on this topic; can I buy five minutes, you guys need a quick bowel break or the people want to stay? Otherwise I’d like to keep driving through. I’ve got two more setups to share with you guys. You’re not going to want to miss those but I can try to buy you five minutes; either hurry up and run and get back here. If that’s okay with you guys. You guys paid to be here; I’d rather just give you more value than fill it up with a bunch of potty break time. I’m holding mine. I just want to keep going for you guys. What I’m going to do I’m going to keep going. I’m going to keep going. What I’ll do; let me go ahead and show you a couple more examples on this and then while I buy a few minutes of time for people. We’re going to talk about the stochastic spike trade here in a few moments but what I want you to see up here; does everybody see this original chart that I showed you earlier, take a look at this. Everybody see that bar right up there? What kind of bar is that? I’m sorry? AUDIENCE: It’s a reverse inventory retracement bar. ROB HOFFMAN: It’s a reverse inventory retracement bar isn’t it? We’re in a big fat downtrend, it opens up, goes up, comes back down. Is that 45% off the high in a downtrend? You better believe it is isn’t it? Then you see two more examples right here and right here. Let’s go ahead and let’s take a look now at Tesla. We looked at Tesla earlier as a classic inventory retracement bar. Let’s go ahead now and look at it a reverse inventory retracement bar. Do we see any reverse inventory retracement bars here? Let’s take a look. Is that a reverse inventory retracement bar? Say it out loud gang, I want to know you guys get it or you don’t get it. Right here? Yes or no? AUDIENCE: Yes.


ROB HOFFMAN: Yes, this one? AUDIENCE: Yes. ROB HOFFMAN: Yes, right here? AUDIENCE: Yes. ROB HOFFMAN: Well you say close. AUDIENCE: Inaudible. ROB HOFFMAN: Good call John, good call. Okay, right here? Yes, okay. Right here? Get John’s magnifying glass, yes it is and then right here we were talking about doji stars earlier here are doji stars. These are as well and then this one right here. The point is; right here, here’s a reverse inventory retracement bar right here. There are several of them. This one inventory retracement bar did not break back above the high. It had to come down to the 20 period. In fact you remember this what I’m talking about when we talk about that extra risk that I take that I’m not necessarily asking you guys to incur. Right here, so here this bar, I go long at the close of this bar right here, you would go long one tick above the high so you wouldn’t have had to sit through this pullback back to my TC 20 trade is what that’s called; trend continuation 20 trade; you wouldn’t have had to sat through that to ultimately be profitable. You wouldn’t have taken that trade because it didn’t break back above the high. See what I’m saying? I wouldn’t have gotten stopped out, you know me I’m a TC 20 trade; I would have added it into the position right there because I’m still fully in the trend. I would have brought my cost basis down there and been back for that rally. You see me do that in the trading room all the time. Yeah, Steve? AUDIENCE: You’re saying to look forward because the other (inaudible). ROB HOFFMAN: I’m sorry? AUDIENCE: Do you go forward the same amount of bars (inaudible). ROB HOFFMAN: Yeah, you can look forward with this. You can look forward to it. I really prefer that it gets right back on the horse with the reverse inventory retracement bar. I’m really looking for it to immediately pop back into that direction versus with the key because this isn’t like this is a big key support of resistance level like the traditional one is. The traditional one is a big fat inventory support of resistance. What this is it’s a stick it job. It’s a stick it job where it’s just dropping down rapidly, making everybody stop having the will to buy it and then it goes right back up again. It’s not really a key support level; it’s just a stick job. What I’m doing with that is I really then want it to very quickly see it drive right back into that direction. Yes sir?


AUDIENCE: Inaudible. ROB HOFFMAN: Yeah, so what you heard me say was I’m intentionally taking this trade right here as a small opt detail trader if you took that trade you better have your stop in my opinion one tick below the low there or at the 50% level. I’m an institutional level trader. I trade hundreds of contracts. Big block shares, 1000 share blocks when Apple is $600. I’ll do hundreds of contracts in the futures markets. What I’m doing is for me I’m intentionally taking the trade there. As I told you earlier specifically with the intent that I may have to take some heat back to my rising support. This is a real life example of that where right there is the entry for me. You’d look for the entry here so you wouldn’t have gotten into the entry there but the entry is right there for me and then when it pulls back to my rising support; this is a classic trade of mine called a TC 20; we’re not discussing that one here today because there are a lot of rules and parameters around it but it’s a trend continuation 20 trade so it pulls back to my rising 20 period moving average. I get a stochastic spike buy which we are about to discuss in a few minutes. I get the buy. I bring my cost basis down to price and then ride the pop back up; he said. Do you understand? That’s why I’m saying that’s the extra risk that you as a retail trader incur if you want to buy it before it actually breaks out. This is exactly a real life example of that. That’s why I tell you I’d prefer you show me you can make money with it the student way first before you worry about delving into more advanced strategies. I had to be honest with you because I always tell you just like my room people will tell you I always tell you what I do right, what I do wrong, what I can do better. I’ll tell you what you need to hear, not what you want to hear. Yes? AUDIENCE: Inaudible. ROB HOFFMAN: You’d like to take this setup but only if it’s near the 20 period moving average? That’s fine. Not really necessary though. You’re going to miss a whole bunch of great trades but if that’s your poison then that’s fine. I’m going to be taking a lot more trades and probably have a lot better P&L at the end of the year than you will truth be told. Because you’re going to really limit the number of trades because now, now none of these trades count. You’re not going to take any of these trades. You’re going to miss them all because you’re not pulling back to the 20. You’re going to miss an entire several month move. I don’t know about you but that doesn’t sit well with me. Make sense? It’s a good question. I just wanted you to get in my mind to understand my thinking there. Don’t forget to fill out those cards. We’re going to keep driving ahead. Hopefully you guys did. My team will collect them in a little bit and now what we’re going to do is we’re going to talk about full spikes and half spikes gang. Colorado John, I know this is a personal favorite of yours. In fact up until recently you were using this way more than the inventory retracement bar, now you’re kind of playing mix and match. You’re going ahead and playing; you’re doing both. You’re kind of catching the rabbit at both ends I


guess; you’re kind of playing both sides of this. This is great. This was actually the first trade I took in the; so it’s kind of a nostalgic one for me too. It’s one of the first trades I took in the International Trading Competition 2012. In fact that is the actual first trade that helped get me through the first round of the trading competition back in 2012. Now remember no American had ever gone ahead and done that before. In fact the other well-known Americans that had gone before me got blasted out in the first round where they cut them from 16 traders down to 8. This was the first trade that I took in 2012 that helped me cut through to the other rounds. Let’s go ahead and talk about these. They’re very near and dear to my heart. Excuse me? Oh I thought I heard . . . AUDIENCE: Inaudible. ROB HOFFMAN: What slide? Of all the setups? AUDIENCE: Inaudible. ROB HOFFMAN: That’s all my strategies. Seriously Russ? That wasn’t the rules; that’s the strategies. I’m going to get to the rules. Hon, you need to keep your man in check there. You really are that one in the crowd today aren’t you Russ? Okay, alright. You’re giving Californians a bad name, you know that right? Alright. Let’s go to it. Bottom line is I use this a lot. You see a lot of stochastic spikes even on these charts that I use to win these competitions. A lot of stochastic spikes that I use to win this competition in 2013. Then in 2014 every time it popped back up; they’d have a stochastic spike I just shorted it again. Let’s take a look. This is actually fun. You’re in the London Money Show I don’t know if you guys know this but do you even notice here at the Las Vegas Traders Expo not very many people are trading live. Anybody actually notice that? How many of you actually noticed that? Isn’t it amazing for a live trading event, an international live trading event wouldn’t you expect more people to trade live. It kind of makes you wonder doesn’t it? I know I sound like a tool for saying it but I always tell it like it is, win, lose or draw so you can respect me for that so we have that relationship. Gang, that’s why, what did I do this morning. First thing you saw me do was go win a trading competition live with real money. Now that’s 10 live domestic ones, 10 live real money international ones, oh, sorry, four international ones, it’s 14 total. But anyway, here I was in the London Money Show last year and it was supposed to be a live trading challenge. The challenger backed out, not the first time it’s happened. Then I basically like well, my challenger is gone but I guess I’m just going to trade for myself with you guys if that’s okay. I went ahead and just started trading live with the group in London. I was the only trader in the entire show, the only trader that traded a live account. Most of them didn’t even trade simulated; that’s how bad that was. Anyway this was a trade I took. Here’s what I’m looking for with this. We’ll get to the rules in just a second. In fact the next slide is the rules. I just want you to see it conceptually. What I’m looking for is I’m looking for that proverbial downtrend again. Then I’m looking for the stochastic for a


short, for a short to start from below the 20 level ideally, pop up to or above the 80 level on the stochastic and then I’m looking to take the short at the close of that bar. This is a classic Rob Hoffman trade. It’s become a classic John Norton trade there, Colorado John. In fact I mean I know right now you’re doing a lot of inventory retracement bars but of that $2000, $2500 gross you’re making a week how much of it over the last several weeks would you say traditionally is the stochastic spikes versus the inventory retracement? I know lately you’ve been doing a lot more of inventory retracement as you’re getting more and more comfortable but how would you say it breaks down proportionately of that $2000, $2500 gross a week. COLORADO JOHN: I would say (inaudible). ROB HOFFMAN: The thing is I don’t want them to learn about flat stochastic spike trading today so let’s just forget what he said. I love you John. I have strategies to trade this strategy in a sideways market too but what I’m trying to leave you guys with today is the absolute highest probability trades in this four hour period of time. I’m looking for things that are 90% plus probable in my opinion and so I want to take this trade with the trend. I don’t want you guys, so today just don’t even think about how you could trade this sideways, please. Think about how you use this in a trend. What happens if we have a downtrend, the market spikes from below to 20, at or above the 80? The real key thing is that it’s moving back basically 60 ticks of range on the stochastic. I’m going to give you the stochastic setting in just a moment so bear with me; you guys pull out your cameras. What happens then is as this bar closes I take the trade at the close of the bar and I’m looking for it to roll over. That’s actually a live trade that I took at the London Money Show. Taken tons in my live trading room too but I just thought it was kind of interesting that I was the only person that traded live in the entire London World Money Show and if you really think about it here how many of the people did you see trade live besides me and Stephanie? Kind of crickets isn’t it? Kind of sad. That’s why so many of you are here with me. Let’s talk about the strategies. Start getting your cameras out, you’re going to want to take pictures of this. When I see all the cameras down I’ll know I can go ahead. I think we’re about there. Let’s talk about what this is. It’s a short-term; I don’t know why it’s popping all of a sudden, I hope that’s not the battery going dead but I guess we’ll do the best we can with it. It’s a short-term wide range stochastic pop against the trend. When do I use it? In trending markets. I do use it in sideways markets too but for the purpose of this group and sticking with super ultra-high probability trades I’d like for you to focus on this trade and you can come learn in my live trading room or something more advanced sideways trading strategies but I’m trying to focus on something you can go home and hopefully not screw yourself up. In trending markets, now I did nothing different. I’m not sure if the microphone is going bad or what’s happening there. Can you guys still hear me okay in the back? Alright, well I moved it around a little bit, maybe I’ll take a jacket off or something soon. How we calculate it. It’s the percent K4, percent K1 and percent D1, like on Trade Station it’s known as the fast stochastic on Trade


Station. In eSignal for instance it’s like just known as stochastic. Like Toss I can’t remember if it’s called the slow stochastic or if it’s called the fast one on Toss or it’s just called stochastic but each broker is different. The way you’ll know that’s the right one most of them will only have two inputs. You’re looking for the one that has three inputs. You’re looking for one that has 2% K inputs and 1% D. That’s how you’ll know you’ve got the right one. There are my settings for it, 411. Classic stochastics tend to be more like 1433; I’m basically just fractionalizing that because I’m looking for a much more responsive stochastic spike. You use the classic 1433 you’re going to have a much different result that my results. Where is my entry? I’m looking; here’s what I’m looking for. I’m looking for a close of a bar where it came from below the 20 and went to above the 80 or starting from above the 80 and went below the 20. Where is my exit? This is a trailing stop trade. This is a trailing stop trade. Pretty much all my entries are effectively trailing stop trades and yeah, you know what, I see everybody is having to walk back and give the cards; if you guys just raise your hand I can have Anna come up and get it from you so you guys don’t have to walk around. I want you focused on this, not having to miss what I’m saying because this is important. This is a money maker and I’ve said this has helped me with these trading competitions. This is also from a swing trader perspective; one of my favorite swing trading entries. You’ll often hear me talk about pullbacks to that 35 channel that I was telling you guys about earlier with a stochastic spike. It’s a very high probability trade. For my swing traders and options traders a word to the wise. Now where is my stop loss? Trades past your own preset stop loss number basically in a trading plan or is it a key level such as on the 20 period exponential moving average. The reason why this varies is because where the initial entry is it may already be past the 20 period exponential moving average. I’m going to show you examples of that of what I mean in just a few minutes. Yes sir? AUDIENCE: Inaudible. ROB HOFFMAN: Yes, excellent question. Excellent question. The question if anybody didn’t hear it properly was do I use the 411 as the stochastic setting for all timeframes. Very good question and the answer is yes I do. This is the exact same setting for my daily and weekly charts and it’s extremely powerful as you’ll see. Great question. A couple of things; know your exit, scale out, stop out points in advance. Best trades start from above the 80 level on the stochastic and fall below the 20 level or start from below the 20 and go up above the 80. Kind of which trend we’re in. We’re going to look at lots of examples of that in just a moment. The other thing I want you to note best trades I want to add to that is it usually happens within three or four bars. After five bars if it takes five bars to get from below the 20 back up above the 80 or from above the 80 to below the 20 what might be actually happening to the market? AUDIENCE: Reversing. ROB HOFFMAN: It might be reversing, exactly. The perfect trade is like you saw earlier; it starts at or below the 20 and immediately when a bar spikes up to the 80 level


then you’ve got a great downtrend. Those are the ones that are most likely to immediately shoot right back the opposite way. If I get it in one bar that’s the most favored; two or three bars pretty darn good. After three to five bars I’m starting to get a little nervous, like well is this a trend change. I might go in with lighter size, tighter stop loss, a couple things like that. The faster that it responds the better. Now, and then using the direction of either my professional pack of indicators or the 20 period exponential moving average for the purpose of today. This is just how you do it on like Trade Station here. You see here it’s listed as; you put in certain analysis technique and then you go stochastic fast and that’s when you stop. You see there’s a stochastic slow but that’s going to be the wrong one. Look for the one that has what? How many inputs? AUDIENCE: Three. ROB HOFFMAN: Three inputs, very good gang. Very good. You see here this has the stochastic length and then the smooth in lengths so you have two more inputs there. That’s the one that you want. Let’s go ahead and look at this. We’re going to talk about half spikes; I’m sorry, full spikes and we’re going to talk about half spikes. Here’s what we’re looking for. We’re looking for a trend. Then I’m looking for us to come from above the 80 level ideally down to or below the 20 level on the stochastic. Just so you guys understand what you’re looking at here this is a gold daily chart, a gold hourly chart, a gold 15 minute chart and a goal five minute chart. I’m showing you different timeframes, different examples and different timeframes, again trying to cater to the swing traders. Sometimes it’s like I win all these trading competitions and people say well that’s great for trading; huge, unintelligent mistake. This stuff is just as powerful if not more powerful for swing trading. Now just to give you a little preview half spikes are basically spikes that start from up above that 80 level and come down here into the mid-range and then minis are spikes that start up from above the 80 and only pull back down to about the 75 level or above. That’s like this one right here. There are three different types of trades, half spikes, full spikes and minis. Lots of great trading opportunities from those. We’re not going to talk about half spikes right now; we’re going to do that in the next section. What we’re looking for for the purpose of a full spike is to start above the 80, come down to or below the 20 in an uptrend. Now where are we taking the trade? We’re taking the trade right at the close of the bar, right at the close of the bar that locks in the stochastic spike. I’ll tell you the good trade right there when that locks in a stochastic spike on your pullback. Over here; there is a 60 minute chart here. What we have here; here this was below the 20 level this was a zero level here. It shot up all the way up here to the 80 level, right here this is the 80 level; that’s 60, 50, 40, 20. It going to the 80 from the zero. It went up 80 ticks of range, not just 60. When it got up to that 8 tick level right there look what happened on the very next bar. What did it do? Rolled over and died a horrible death. Exactly. That’s what we really want to have happen with these two. Remember; some great questions came out earlier like well hey do you want this to work pretty fast or do you sit around with this one. It’s the same thing I told you earlier we really want this to work pretty fast. Because what’s happening is; think about this now


with the psychology I gave you earlier with that institutional slide. What is basically happening in the big picture here? We have a trend to the upside. What’s happening within that trend? What is it doing? Pullback. In a pullback of a multi-bar fashion is the same as if it were a one bar pullback on the trading strategies I showed you earlier. What’s actually happening gang? It’s pulling back, it’s doing what? AUDIENCE: Inaudible. ROB HOFFMAN: Okay, it can be profit to you but remember now you haven’t gotten into the trade yet. You see this great uptrend, you haven’t gotten in yet. You’re thinking about taking a trade but you start to see if pull back; it makes you want to not do what? AUDIENCE: Inaudible. ROB HOFFMAN: It makes you not want to buy. It makes you not want to buy the trade. You start seeing it pull back and you go good thing I didn’t take that trade, it’s a pullback, that would have been a loss. What do you do? You go on to the next stock, you go on to the next futures contract, the next options play and then all of a sudden you turn around a few days later this thing has spiked up like a mad trade. So what’s happening here is this is going ahead and going through this whole institutional cycle instead of intra bar on a two minute chart. End of day on a daily chart or a weekly basis now this is a multi-bar phenomenon. You still go ahead and; how far did I go here; there we go. Now instead of just being a one bar pullback and then going right back up now it’s a multi-bar pullback. It’s the same concept though. It’s the same concept. You’ve got an uptrend. You’ve got a pullback within the uptrend now I have a specific buy point using the stochastic spike strategy and then I’m looking for it to go right acknowledge up again. Does that make sense? Let’s go ahead and look at lots of examples then. We talked about that one; we talked about this one so let’s go right over here; where they’ve got this screen it’s a little hard to go to the side there. Now here’s the same thing. Comes from below the 20, spikes up to the 80 level; that’s right up here; it’s hard to see, it’s right where the line crosses in here. The short is right there at the close of that bar. By the way, by the way, please for the love of God, help me, tell me what that bar also is right there. AUDIENCE: Inaudible. ROB HOFFMAN: What kind of RIB? AUDIENCE: Reverse. ROB HOFFMAN: A reverse inventory retracement bar. How perfect is that. You get a double sell signal on the same bar. Is that not a high probability trade? Not sure why it keeps doing it, there’s a ghost in here. What’s happening here is; why are we having the malfunction; there we go, okay. What’s happening here is you’ve got a downtrend.


You’ve got a bar that opens up, that goes up, comes 45% or more off the low and you have a stochastic spike, you’ve got a double sell signal, you’re going ahead and shorting right there at the close of the bar if you’re doing it the way I do it; you’re going short one tick below the low of the bar if you do it the way I indicated for small outreach trades to start this out with but either way great entry point and a double sell signal. Now you’re starting to see we’re starting to put some different concepts together. What you’re seeing is I’ve been taking you through this journey. I’m now showing you three different strategies. You’re also looking at how many of these different bars. You can just start going back and look at some of the other bars and start seeing reverse inventory retracement bars, the classic inventory retracement bar breakout. You start to add on and that’s what I’m trying to do is build this for you over and over because this is the point that Colorado John over here has gotten to. He took all these notes and as soon as he had notes; I won’t ask him to hold it up, he dropped it earlier so I won’t ask him to hold it up but he went ahead and he had a great binder, he had that big stack of notecards. He’s taken these; he’s learned these; he’s added to them. When he hears me say something new in the trading room he’s built upon it now and now he’s actually trading these live and that $2000, $2500 isn’t funny money, it’s not simulated money; that’s real money, gross. I said it’s actually got as high as about $3000 or so but I’m lowballing it. The point is that he’s using the stochastic spike trade and the inventory retracement bars as his primary trades to make that money. Maybe you guys can; I’m using it to win international competitions. You saw the kind of money I was making in those so maybe this is something you guys might be able to use as well. Steve, yes? AUDIENCE: So you’re talking about the stochastic activity with multiple bars and _____ to take the IRB entry instead of the stochastic entry for a small _____ trader? ROB HOFFMAN: Well having the; first of all having the; if it takes more than five bars I’m going to be nervous no matter what kind of strategy it is. Even if I’m doubled up with the inventory retracement bar and the five stochastic rate because how do you know that? If it’s taken more than five bars how do you know this isn’t part of a V spike that’s getting ready to form in here. It’s taken that long to come down, come down, how do you know it’s not part of a bigger reversal back to the upside? I would prefer to have it be clean and have it be one to three bars; I’ll tolerate up to five bars but that’s a much more aggressive risk profile. Again I prefer one to three bars for you guys to start this out. There will much more likely be higher probability faster. You guys can choose to listen to those little tips or you can choose to do it the hard way but that’s up to you. Steve, hopefully that answers that question for you. Good question. Let’s go ahead and take a look right over here. Same thing. It starts at the 20 level, spikes up to the 80 level here, nice, clean, right away, happens very fast, right there it goes ahead and gives the sell signal at the close of that bar and what does it do? Rolls right back over. Once again now let’s go ahead and take a look at this. I showed this to you. I kicked off this presentation showing this to you so now hopefully trades like this will start jumping out at you. If you guys do a really good job and want to overachieve


here hopefully some of you or all of you will go back to your rooms tonight and look at these on charts and be like wow and then come back to me tomorrow; let’s talk about any questions you have or the successes that you can already see with it. Again, what is this doing? That’s why I keep coming back to this slide, keep telling you over and over how important this is because what’s happening here? What’s happening? What’s happening is this, you’re going ahead and when it pops back up; so the market is going down, it pops back up like that. What is that popup doing to you? It’s making you want to sell? AUDIENCE: Inaudible. ROB HOFFMAN: It certainly isn’t making you want to sell when you go ahead and it’s down here and all of a sudden has this big spike yet you’re like, oh that would have been a loss. Is this the bottom? What happen is that’s that pullback that sticks it to the potential seller. Plus if you’re long from up above that big green bar makes you say yes, yes, go back up, go back up, come back my way. All these retail things I keep telling you about, all these soul side mistakes over here plus the retail traders who watched it go down and go down and of course you get that big red down bar, now you really want to short but you’re not quite convinced so it’s got to dip a few more ticks below the big red bar just to make sure. You’ve got all the confidence in the world. Do you need to take that trade? Then what does it do. It turns right around and just takes you out. It’s sticking it to the traders who didn’t take trades up above; by the way we haven’t gotten to half spikes yet but take a look over here, there’s a half spike right there. We’ll talk about those in a little bit. Right about by my 20 period exponential moving average; for the gentleman that asked about that earlier. There’s where you did have an opportunity to get a double sell signal at the 20 period moving average but if you don’t take these other ones you’re missing all these other ones that we talked about. AUDIENCE: Inaudible. ROB HOFFMAN: That’s a great question, thank you very much. I was a little worried about you earlier; you were kind of taking a little bit of a nap earlier. I was; not that I was going to make fun of you or anything; oh wait, I just did. Sorry. But seriously, all kidding aside, it really is a great question. What I want you to understand; the question was gang, and it’s an important one, it’s a good one; the question was does a 20 period moving average have to be outside the 35 period channel? The answer is no, it does not have to be and in fact as John kind of gave away earlier I actually have trades where the 20 period is going back and forth inside of the channel and now we’re taking stochastic spikes back and forth in a sideways, trendless market. We’re not talking about those today. So the strongest trends are going to be the trends that where the 20 period is below and is in a downtrend where the 20 period is below the low of the 35 period low. In an uptrend where the 20 period is trending above, you see how it’s railroad tracking here. It’s railroad tracking with the 20 period being below the 35 low which is superb for a nice trend to the downside. The opposite is true to the upside.


The 20 period being above the 35 period channel high in an uptrend is superior. That’s one where those objects in motion are likely to stay in motion. That’s a great question. In other words when you’re trying to; I’ll get you in a second sir, when you’re trying to go ahead and increase your probabilities of success that’s one of the best ways to get your probabilities jacked up higher. Great question. Yes sir? AUDIENCE: Inaudible. ROB HOFFMAN: If I’m going to try to stop loss set once again yes, okay. What happens is; let’s see if I have the slides; I don’t have it there. We’re going to have to go back gang, sorry. Go way back. You take an entry; before you’ve taken that entry you’ve determined a target price, could be a key daily, weekly, monthly pivot. It could be a rising support of resistance level. It could be any number of targets that are important to you. Could be a round number, support of resistance level like we talked about earlier. What happens is you initially identify that target into space. From there once we get about 50% of the way to that target I start trailing up by 50%. Now, what happens is as we get then toward the target from where I entered to where it’s at when we get to about 80% of that then what’s happening is I’m trailing up about 80%, so I’m basically locking in about 80% of the move. Within the anticipated range I’ve gone now from 50% initial trailing as I’m getting closer to the target I’m locking in 80% of that target. Then as we approach the actual target I’m locking in 90% because sometimes, have you ever noticed it’ll get real close to a key support of resistance level and stop in advance of it. You know a classic example of that is, the 20 period exponential moving average. So many books got written about the 20 period exponential moving average back in the 80s and the 90s, that why I actually have; do you guy see this little green line in front of the black one; does that show up for you. Let’s see if we can find a chart. See the green line in front of the black one? That’s an 18 period exponential moving average. You know why I have that on there? Two reasons; number one, the more what that I see between the green and the black the stronger the trend is; and number two, sometimes when you get retracements back up it gets front ran and stop near the 18 period instead of back to the 20 itself because so many people anticipating the 20 people start shortening in advance and then it stops early. Some little trivia for you. Anyway, what’s happening there is it’s running up here and then as we hit the resistance; there’s only a 1 out of 10, 1 out of 12 chance it’s actually going to have a little pop through that level, not worth the risk to be right. If I told any of you guys here I want to be right 1 out of 10 times does that sound very sexy to anybody here. Not me. Bottom line is I’m just going to assume it’s going to stop and reverse at that level so I’m going to move my stop right under price. That’s how I go ahead and I trail. Let’s go back here; we covered a lot there. Here are more examples. How am I doing on time here? AUDIENCE: 4:30.


ROB HOFFMAN: 4:30, okay not too bad. Can I give you guys some homework tonight. You know what, it’s worthwhile. If you’re seriously here to be a student of the markets and trading, I know I’m being philosophical but look gang, you guys are with a real champion, 14 time domestic international trading champion, more than anybody else in the world, you’ve got real live students of mine that are just doing fantastic stuff with these markets. You guys have an opportunity now the way I’ve set this two day structure up; I’ve never done this before, to go back to you room, study these things and I’m treating you all in this room like you’re my students. You’ll be able to come over to my booth tomorrow and work with us. I’m going to be at the booth all day. I’ve got a 30 minute talk for Trade Station we’re literally going to start the room at 9:45 when the doors open; we’re going to start my classes at my booth at 9:45. At 10:30 we’re going to walk over to Trade Station; I’m going to do a 30 minute presentation for them because they were mad that I did one for eSignal and not them; okay. I’m going to give them some love and then we’re going to go ahead and go right back to my booth and I’m there for the rest of the day. What a great opportunity for you to spend time. Look at these things tonight and then have a followup day with me; so it’s like two days of mentorship here and I hope that makes a lot of sense and you guys will take me up on that offer for your own financial benefit. Let’s look at more examples. Here we have a downtrend in place. Now do you remember a little bit ago; this is important; do you remember a little bit ago I mentioned about the 20 period exponential moving average could be the stop off point but what happens if the trade initiates above the 20 period moving average. Here you go, you spiked up here. Here’s the first spike; that’s this one right here. Then you have a second one but that one is above the speed lines. I can’t use the 20 period exponential moving average as a stop loss we’re already above the 20 period exponential moving average. That’s why I said about the predetermined loss value; where is it here; stop loss, here we go. If you surpass your own preset stop loss such as a key support of resistance like the 20 period moving average but this will vary because the initial entry may be taken past the 20 period exponential moving average. Here’s that real life example of that in action. I’ll tell you when trades start way down below and they go all the way up through a 20 period moving average that’s usually a pretty good trade that’s going to roll back down, especially when you get a nice; you see stochastic started below the 20, rapidly shot up in a bar above the 80 and remember we said that was what we like to see. As we go ahead and take a look here at the next one over here, now you’re probably going to notice, there’s a bunch of these half spikes. I haven’t talked to you about those yet; I’m going to. Let me ask you a question, what about this one right over here. It went from here up to here but it’s not marked but it’s a perfectly good stochastic spike trade. Why didn’t I mark that? AUDIENCE: Inaudible. ROB HOFFMAN: It’s not trending. I know it worked and they usually will. I’ve got some great strategies around sideways stochastic spike trading, Colorado John gave that


away but we’re not sharing those today because I just want you to focus; not because I’m holding out on you, please don’t misunderstand that but there’s more to; because effectively what you’re doing in that case is called channel trading and channel trading for any of you that have ever done that when you get into channels too late you run the risk of widening your stops, widening your stops because you keep thinking it’s going to come back, it’s going to come back because and then about the time you have your stops get hit it rolls back into the channel. Then the next time it comes back farther out of the channel you widen your stops like they’re not going to get me again so you widen your stops and then it rolls right back and you get stopped out and it rolls right back into the channel. Then all of a sudden it pops back up again and uh-uh I got stopped out two times and every time it keeps coming back I’m not going to put a stop in and what ends up happening? That ends up being the big loss. Anybody ever have a big loss like that where you widen your stops, you let your stops move, you removed your stops and it became a big loss. That’s how that can happen. I need to get traders really disciplined in stop management. Do you think the average small out retail trader is super highly disciplined in that when they first come to me? Not so much. That why they usually have to come to me because they lost a lot of money not having that discipline. That’s why it’s a more advanced strategy sell. That one on the books privately after a lot of training but really what we’re focusing on to day we want quality of trend. By the way for you, you’ll notice that quality trend got real good right about the time the 20 period started crossing down through the 35 low end of the channel. See that? Right over there, there’s your popup from down below, popped up one bar, two bars, three bars. It took about four bars total because there’s a little nook here, took about four bars for that to go and hit that and roll back over. Then right over here this took about three bars, started here to there then it went to here and down to here. It was about a three bar move. Actually this is a setup of mine called the Hoffman Faye but we don’t have time to talk about that today. You see it happened; there’s your trend. You’ve got your 20 period well above your 35 period channel high so then you’re looking for that pullback with that stochastic spike. Then right down over here same thing; you’ve got the 20 period below the 35 channel low; you get the move from below the 20 to above the 80. You’re looking to go short, looking for a retracement back over. Of course what happened right next to that stochastic spike, the very next bar launch another one of the sell signals I shared with you earlier. The point is with this setup it’s a very powerful strategy. I’m showing you multiple examples of this. Here again the 35 and I’m pointing this out now just to be clear for those that didn’t catch this earlier; that’s a 35 period moving average of the low, 35 period moving average of the close and a 35 period moving average of the high. Very powerful channel there. I got a lot of trades and setups that work around that but for today I like the question that he asked; it was actually definitely a bonus hour question because it is really a great way to increase; in fact just look at all these examples here, 20 period, below the 35 low, 20 period below the 35 low, 20 period above the 35 high, 20 period below the 35 low, notice the best trends have that 20 period trending outside of the channel and then have the best results. Yes sir?


AUDIENCE: Inaudible. ROB HOFFMAN: I’m sorry, just to be clear when you say all timeframes I just want to be really clear I’m a two minute chart trader and above. My actual timeframes that I use; were in the trading competition this morning? AUDIENCE: I was not. ROB HOFFMAN: Okay, okay, so normally it’s a two minute chart, five minute chart, 15 minute chart, hourly chart and daily. It’s all the same symbol. It’s all the same kind of a big believer in multi-timeframe analysis. In fact John made the comment earlier one thing about the inventory retracement bar if you’re looking to take on the two minute chart make sure the five minute chart, the next higher timeframe, is still with you. I really don’t trade typically on anything below a two minute chart. There’s so much noise in the system, a lot of retail traders come to me trading off tick charts because they’re trying to get an advantage over everybody else. The irony is they’re actually hurting themselves because say the hourly chart is going down, the 15 minute chart is going down, the five minute chart is going down, the two minute chart is going down but by gosh that 50 tick chart is going up and what do they do? Well I’m a day trader it’s going up, I’ve got to go long and then it turns right back down and crushes them and comes right back down. They’re like that’s not fair, the market’s out to get me. It’s like well look if you would have seen the hourly, 15 minute, five and two were all coming down you probably wouldn’t have taken the short-term little blip, you actually would have used that as a shorting opportunity to get back in but that’s not how retail traders think. Most retail traders that are using tick charts tend to be very destructive with their trading habits. You see what I’m saying? One minute charts; one minute charts with a lot of these setups and patterns that I’m using I’m looking for that 45% off the high, 45% off the low, things like that. What happens with the one minute charts, there are too many bars that all look like doji stars and stuff like that it’s kind of choppy. Not a favorite trade. All these are two minute and above. Russ? AUDIENCE: Inaudible. ROB HOFFMAN: Oh Russ. AUDIENCE: Inaudible stochastic over the 20 and absolutely any other resistance that you use, any one of the 35 channels as your . . . ROB HOFFMAN: The answers is yes. The answer is yes. Now, we’re not going to get into this big philosophical debate because there are average norms for the average retail trader stop as you know, you hear me talk about that a lot. S&P is normally six to 12 ticks, Russell is normally 12 to 20 ticks, gold and crude oil and the Euro 12 to 20 ticks, so yeah, yeah, you want to make sure that; what I do want to say is every one of you hopefully has a risk trading plan. If you don’t maybe you should come by the booth


tomorrow and let’s talk about one. You should have a finite amount you’re willing to limit and lose. The thing is if that level up there Russ, look how far away this is. This is a daily chart too. You’re at 537 on Apple, the 35 channel; the bottom end of the channel is right up there at around 557, that’s a $20 stop loss at chart to go back there. You either have to stick with what your trading plan says you want to take a loss on or what’s the other option? AUDIENCE: Stay out of it. ROB HOFFMAN: Stay out of it. It’s amazing how many people feel they always have to be in the market. Huge mistake. Again you guys saw me in the live trading competition. Kind of looked like I was going to lose this morning. Stephanie was doing an awesome job. She had like three trades on this morning, 3000 share trades. 1000 shares gang, that’s a lot. A trade even moves 25 cents in her favor bam that’s $250 a pop isn’t it. She had three trades going on but the market wasn’t moving. It was dead. She sat on a couple of trades for an hour. Now this is not a knock; I want to be very clear. I love Stephanie but my point is I sat there; we’re sideways; there just wasn’t anything happening yet. I stayed out. Even at the risk of losing my precious trading competition. I did that in Italy. I was ahead but my trades stopped working and producing the kind of results I was looking for. You saw my equity go straight through the roof. I stopped at the risk of losing the competition. That’s important. Sticking to your rules and sticking to a discipline even if it means you’re going to get your poor feelings hurt and you’re going to lose a competition. You know what I’m saying? I’m trying to instill that same discipline into all of you who don’t have to worry about competitions and that; it’s just your real money at stake. That’s pretty darn important to you isn’t it? That’s your livelihood. We’re here to focus on trading rules, trading strategy, trading discipline. I’m trying to give you guys super high probability trades which is half the battle and then now putting into a trading plan for you is the other half. Hopefully you guys will come by the booth if you have any questions on that after you do some studying with things tonight. You are like a fart in a bottle aren’t you? You’re over there, you’re over there, now you’re in the back. Oh California, you’re something. That’s great. Let’s go ahead and keep on looking at these because, hey it’s free for all. Be honest. I’m like I embarrass myself constantly, just ask my wife. We’re all fair game here. We’ve got to have some fun too because this is a very serious topic to me I’m very passionate about it obviously, but I want to have some fun with it too. Let’s just take a look at some more examples here. Coming down from below the 60, now this one got up there; sorry, below the 20, got up to the 60 level. Let me ask you a question; it started down here so it had a pretty good range of motion. There weren’t quite 60 ticks though. Could you take that trade? It went from 10 up to 60 so it moved 50 ticks on the stochastic. What did I say how much we were kind of looking for the market to move before being an eligible trade. AUDIENCE: 20 to 80.


ROB HOFFMAN: So 20 to 80 would be the equivalent of how many ticks move, 60, so I want 60 ticks of range so if it starts at zero it can go up to 60 so as we go ahead and we take a look that’s a 50 tick move, does that qualify? AUDIENCE: Inaudible. ROB HOFFMAN: This is a trick question. AUDIENCE: Inaudible. ROB HOFFMAN: I’m sorry? AUDIENCE: Inaudible. ROB HOFFMAN: The answer is this. The trend is down but this is a lower probability setup. I did this intentionally. I want you guys to focus on 60 tick range; 60 tick range. In a downtrend I want it to start down here and I want it to go up at least 60 ticks before looking at taking that trade. This is one of those things about increasing your probability of success. If it goes back at least 60 ticks it’s more likely to continue back your way. Did it work here at 50 this time? Yeah, but the probabilities went down from 90 plus percent down more to like 75%, 70%. Now I know there are a ton of traders out there that would love 70% trades but if you’re in my live trading room you guys know I’m very anal retentive about 90% probability, typically 85%, 90% or more is what I’m really looking for. This one here is a less than optimal entry. Let’s go back to the next one; how about this right over here. First of all once again my 20 period moving average is above the top end of the channel of the 35. We pulled back here. Did that start from above the 80 and wind up at the 20? Sure did. That started actually at the 100 level and wound up at the 20. Is that going to work? 80 tick spread. AUDIENCE: Yeah. ROB HOFFMAN: Yeah, yeah, 80 tick spread, I’m good with that. The close; the trade said it’s closed at that bar looking for a move back up. The next started from above the 80, went down to the 20 there. Is that 60 tick spread from here? It’s just above the 20 here but it’s well above the 80 over here. Is that 60 ticks or more? Yes it is. That 20 period is traveling well above the 35 high; that’s a hell of a trend as a trade taken at the close of the red bar here, looking for the move back up. Then over here; well this one’s kind of hard, you guys can see where it started. It started from below the 20 but you can’t see it so we won’t discuss it. Right over here though, right here the 20 went up a bar, down a bar, back up a bar to get to the 80. It took about three bars from the 20 up to the 80; is that a good trade close at the close of that bar.


AUDIENCE: Yes. ROB HOFFMAN: Yes it is. These were different timeframes and once again this is Apple daily 60 minute, five minute, two minute, showing you different timeframes kind of in action here for all of our different traders here. That’s interesting. I love technology. It’s great when it works and when something goes wrong isn’t it the craziest, the darndest thing? Let’s go ahead and look at some more. I really want to hit this with you gang. The reason why I want to hit this with you so hard; let me ask you a question. Is it easier to buy up here and sit through this big drawdown or is it easier to buy afterward with the move down, buy right there where you’re virtually making profit from the get go. Psychologically what’s a lot easier on you guys? AUDIENCE: Inaudible. ROB HOFFMAN: The second one. I’m trying to help you with the stochastic spike trade not have to sit through the drawdown. I’m trying to basically get you in after the drawdown so you’re not taking all that heat. I literally have people that if something moves just a few dollars against them all these horror feelings, these tensions come in and they panic. They start, oh my God it’s going; I’m going to lose again. I’m going to lose again. They totally lose all function. They freeze up. Let’s be honest. Who here has ever frozen up when it came time to manage their stop loss? You moved it to give it more time; you didn’t move it; you mismanaged your stop and it became a much larger loss than necessary. Yet you go back afterwards and as soon as you’ve suffered the loss you’re like why did I do that or why didn’t I do that. Why didn’t I put my stop in? I was afraid because once you take the loss the loss is real and the loss is realized. You’ve lost hope that it’s going to come back your way. There’s no debate at that point. You’re done, you’re out, you lost and you’ve got to live with that. You know what gang, when we take a loss especially; as professionals we’re going to take losses. How you manage those losses is really what defines us and makes those defining moments in our trading careers. The thing is it doesn’t make you any less of a husband, any less of a wife, a father, a son, a daughter; you’re not any less of a person if you manage your stops properly. It’s okay to tell your husband or your wife, hey, you know what; I took a trade, it was a high powered trade, it didn’t work out, took a stop loss and moved on. You know who’s a great, great example of that? Robert, raise your hand. This guy is a machine when it comes to that. In fact let’s see if I’m right. Here’s yesterday’s trading. This is yesterday’s; it was yesterday’s right Robert? Yeah it was yesterday’s trading. This is later in the videos but let me give you the back story on this from earlier. Now Robert is that poor sole who had to lie to his wife 10 months ago. Now every trade is a serious issue. You know what, it’s a serious issue. I’ve had to do couples counseling. I had one guy that was an absolute jerk to his wife because they decided she’d stay home and she’d do the trading and he’d come home and he’d stand in the doorway, so how much money did you make today. Well it was really it was a sideways market; I decided not to trade today. Oh so you were out screwing off with your girlfriends. That’s the kind of jerk he was. I mean that’s exactly how he said it to her. Then she started; what do


you think she started doing? Taking trades just to appease him. Then she lost money, what do you think he did then. Got made that she lost money. Finally I got on the phone; I’ll keep the names confidential here but I had a three hour conversation remotely. He was in one state, she was in another state on the phone with these two doing a three hours couples counseling. Swear to God, true story, ask my wife. She’s like oh my God. Normally they’re not that extreme. Hey but you know my friend Steve, let’s be honest, I did a little couples counseling for you and your wife. AUDIENCE: Dr. Rob. ROB HOFFMAN: The point is; the thing is Robert 10 months ago, now he’s able to proudly go and take his trades and even if he does have a loss or a losing day he’s able to get right back on the horse and do magic. This was yesterday. He started off in the morning; he took a trade he shouldn’t have and he knows about that. He started down $140 in the trading room. You know where he ended up for the day? Let’s go ahead and just kind of fast forward here; he was down $140 and then look where he was at at the end of the day with is close P&L, up $480. The guy’s a machine. What he does. He should be clapped for; he really should because what he does is what so many of us can’t do. We can’t realize that every trade has its own separate merits. If you made a million dollars on the last trade you could lose $2 million on the next one. Every trade is an individual trading decision. I’m sorry gang; I don’t know why it’s popping. I wonder if the cord is kind of loose there or something; I’m not sure. Every trade stands on its own merits. If you made a bunch of money on the last trade you could just as easily lose a bunch on the next. If you lost a bunch on the last one you could just as easily make it. The key for Robert is he focuses on consistency. He made a trade that he shouldn’t have taken because he was covering for me in the room yesterday which was really nice of him. He took it and he basically went wrong on one of my stochastic spike trades to the short side. Oops. Robert. In other words what we should have been doing. The market was coming down like a ton of bricks. Remember yesterday after the market opened it started going down, down, down, down. We had a gorgeous five minute stochastic spike to the sell side so of course we should be doing what? AUDIENCE: Shorting. ROB HOFFMAN: Well Robert thought we were in the middle of a market reversal off the bottom there so he actually went long. Made a mistake. Okay. But one thing Robert has learned is that okay, he made a mistake; he knew what his mistake was. He got right back on the horse, got back on my setups, not the ones he creatively took but he got back on his setups; I’ve picked out much worse than this back 10 months when he was lying to his wife so this is nothing. Right Robert? I’m like you’re lying to your wife. You can’t fricking do that. We had this conversation. This is nothing. So now what he’s doing is now he’s like okay, I made a mistake, stepped outside of the box, stepped in some do-do. I just got to get back to what I know Rob’s work is. He turned it right around. No crazy trades, all fantastic setups. All the kind of trades that he should be


taking here and he wound up here plus $480. Robert records his trades for me every day. He records his trades for his wife every day. She gets to see everything, win, lose or draw and I’m proud to say he’s doing a hell of a lot of winning. Really turned it around. The point is that you can take a bad trade, you can take a tough trade, get right back on the horse if you’re disciplined and get back to what you know. The last trade we took does not define the future trade unless we let it. If we take it out of fear, we take it out of greed; we take it out of anger because that’s not fair. I was up $200 and now I’m down $500 because I didn’t take my profit earlier, well that’s not the market’s fault. Then for you to rush back in and say that’s not fair the market owes me $500 that’s some stinking thinking. That’s going to get you in trouble. Just some key points there. I just wanted to kind of put up this from yesterday since we’re talking about Robert and consistency and husbands and wives and stuff like that. Sorry gang. Here’s a great example. You guys tell me is this a good trade or not a good trade? That’s the 100 level, that’s the 40 level. Is that a good buy signal or not a good buy signal? AUDIENCE: Inaudible. ROB HOFFMAN: I think I heard 60 tick spread; that’s a good trade. Is that what I heard? Does anybody disagree with that? Well you’re all right. Sometimes when I say that they think it’s like oh maybe I should raise my hand. It’s good. I appreciate you guys holding your ground. That’s what you need to do. You need to stick to your convictions. Right over here you can see more 80 down to 20, 100 down to about the 10 level, all these trades, especially those trades that had the 20 period exponential moving average outside the channel really strong worked really well. Now let’s go to this fun, cool chart that I started off the day with. Now let’s go back and take a look. We started this off with just that simple inventory retracement bar but now; and then we added the reverse inventory retracement bar. Now, and somebody asked me; it wasn’t one of you it was actually a friend of Stephanie’s who came to my last talk at the Trading Pit. She came up and said hey, couldn’t you take a trade up here. I said well actually yes I’ve got a great setup on that I’m going to talk in my next event. Here it is gang. There’s the stochastic spike sell, starts from below the 20, goes up above the 80 in this case it basically started at zero, went to 100; there’s a beautiful short. There’s my 20 period moving average and 35 was above it. The 20 was below the 35. You don’t see it here but it was. Then right over here; I know I’m jumping ahead but I’m about to show you half spikes and you’ll see a couple more in just a few minutes. Go ahead I’m just kidding you, go ahead. AUDIENCE: The entry on the (inaudible). ROB HOFFMAN: Yes, so the entry is at the close of this bar which is when the stochastic spike happens. You’re taking it. If it’s a daily chart you’re taking at the close


of business today because sometimes what will happen is, many times the next day it’ll just open up with a gap down and you’re going to miss part of the profit and then you . . . AUDIENCE: Inaudible. ROB HOFFMAN: These are stochastic spikes. We don’t wait for the reversal; we want to be part of the reversal. Yeah. AUDIENCE: Inaudible. ROB HOFFMAN: Yeah, so if it’s a daily chart; let’s say this is; today is Thursday right, so let’s say that this was happening now, it’s 2:55 Central time so 12:55 local time here and we see that we’re clearly in five minutes going to walk into a stochastic spike that’s closed to the pit session so I short at the close, just before the close of today because the next morning a lot of times they are just open. In this case it didn’t. In this case we opened up it went up a few ticks and came down. Especially when you’ve got a down trending market like the stock index futures are going down the next morning the sucker is going to open up down here and you’re going to be missing the party and you’re going to feel like you’re chasing, which you would be at that point. If it’s a week chart; let’s pretend it’s a weekly chart; actually this is a weekly chart no pretending involved. This chart here, this is Friday afternoon at 12:55 local time here and you’re taking that trade right before the close of the week, going into the next week. On a two minute bar you’re taking it right at the close of that two minute bar. I took the clock off of here but during the day I actually have a trading clock on here. In fact if you guys saw the trading competition this morning did you guys notice there was a clock on there. I was watching and then you remember I said oh, hey, the two minute chart just locked in an M pattern sell with a stochastic; I’m going to go ahead and short here. I was watching the clock to see when the bar was getting ready to close, took my position so that I was situated so when all their computers come in a few seconds later when they officially recognize the trade at the close of that bar then they’re going to drive that thing down which if you noticed in my trade that’s what happened. I took a couple of those trades this morning and then right after the turn of the clock it went boom, boom, boom, boom, boom, boom and I just started trailing, trailing, trailing, smiling all the way down. Great questions. Let’s go ahead and just; I want to just bring this back to this, see how easy it is to see it now? You’ve got your 20 coming down, it’s below the 35 channel; your starting from below the 20 go above the 80; I’m looking to short. That’s a live trade that I said I did in real money show there as well. Let’s talk about half spikes. Half spikes here are very, very similar to the full spikes but go ahead and take this picture. What are you looking around for Vince? Everybody’s taking a picture but you. What’s that? AUDIENCE: My camera is dead and I’m looking for . . .


ROB HOFFMAN: Oh no, okay, alright. Charge it up tonight we’ll get you access to this tomorrow at the booth Vince. Russ, yeah. You deal with Russ; I deal with him all the time. Isn’t it great that I know my students so well? Isn’t that awesome? How many other people in this room will know their students as well in this show? Real quick piece of trivia, I just have to share. Did you guys know that I have more students at my wedding than I actually had family members at my wedding to Sarah a few years ago? Very interesting tidbit. I had more students at my wedding than I had actual physical family. Granted I don’t have a huge, super huge family like the Hatfields and McCoys, whatever but this is fine; it’s great to see so many students. You guys saw my events this morning, packed and got a lot of great people. AUDIENCE: That’s very impressive. ROB HOFFMAN: Yeah, well, come by the booth tomorrow when everybody is nice and close and knit and you’ll see I’ve got a lot of great student family. I work really hard for them. I put my heart and soul into these. The down side is I’m really passionate so sometimes I come across a little brash as I’m trying to beat a concept in their head but it’s for their own good because I’ve seen what happens. I get the Colorado Johns who come to me with $48,000 losses in net and his class destroyed. His personal wealth and his personal psychology destroyed. I met Robert I, he had to lie to his wife. I get all the horror stories and then I’m the guy tries to repair those things. I’m kind of sensitive to it; I’ve seen the destruction when people don’t listen. You know what I’m saying? I’m pretty passionate about that. The downside is it comes across a little gruff at times but trust me I promise you it’s only I’m in your best interest. I’ve traded against the best in the world; I see what it takes and I’ve seen some of the worst traders in the world so I’m trying to make you guy better. That’s why my company name, in case you guys didn’t know, is Become a Better Trader. I’ve seen all sorts of plays on my name, Become a Master Trader; and all these other things. Look, I’ve beaten some of the top traders in the world repeatedly and I still don’t consider myself a master. Why? Aren’t these markets always changing? Didn’t we stop basically all the stock pit trading? Didn’t we develop high frequency trading? Hasn’t the world changed in the way we’re trading? Ask all those pit traders who went ahead and are no longer on the floor trying to sell educational services because they can’t make it in the pits anymore. It’s not so easy. I could go on for a bit but I won’t I want to get to this. The point is, you know what from audio perspective, excuse me sir, the last half hour or so I’m getting a bunch of popping noises. I’m not sure what happened; I didn’t really do anything. I didn’t know if there was something we could do quickly that might be a fix. I don’t know if that happens when the battery is dying or something but hate to disrupt the flow of the education with pops and stuff like that, so thank you. Let’s talk about short-term medium range stochastic pop against the trend. When do I use it? This is one of the key changes right there. Everything else is the same. Same


calculation like we talked about earlier. Where is the close of the spike bar? Ideally near the 30 to 70 area so now it’s coming from above 80 down into the 70 to 30 area or for below the 20 level up into the 30 to 70 area. That’s the only other difference really. Everything else is basically the same. It goes from above the 80 to the midrange or below the 20 up into the midrange. Those are the differences. Let’s just look at that. You saw some full spikes before but here’s something really cool. Here’s something you guy should understand. While you may see full spikes near the beginning of a trend you’re actually more likely to go ahead and see half spikes first. Why do you think that might be? Why do you think you might see half spikes before you see full spikes? Who can tell me? AUDIENCE: Inaudible. ROB HOFFMAN: Closer to the channel; okay. AUDIENCE: Inaudible. ROB HOFFMAN: That’s the answer I’m officially looking for. The strength of the trend. Because when you get a new virgin trend they’re usually very powerful. What happens is that object in motion starts shooting off into the stratosphere, has a very brief pullback and then starts to shoot off really hard again. Well when you have a very brief pullback you have a very shallow stochastic spike pullback. Near the beginning of new trends you’re actually more likely to see half spikes and then as the trend matures you’re more likely to see full spikes. In other words when it’s first going up and just take a look, isn’t it interesting? This was not by design; this is just the way it happened. Take a look here, you’ll see early on in these trends, this one is later and these two are later but these ones were early on, early on in the trends here you’re seeing half spikes. Then as the market starts to lose a little bit of its energy then you start seeing full spikes. Yes Katani (SP?). AUDIENCE: Inaudible. ROB HOFFMAN: Great question, proverbial question. How do you know a half spike’s not going to become a full? There are a couple of things. Number one, Katani (SP?), let’s see how rusty you are. What kind of setup is this actually? What do we call that little notch at the end? AUDIENCE: Inaudible. ROB HOFFMAN: Hockey, what he said, yeah, the hockey stick. That’s actually a double buy signal there, isn’t it? Now another thing to go ahead and think about, do you see anything else at the same time here? I’ve got an uptrend, does anybody see anything else right here?


AUDIENCE: Inaudible. ROB HOFFMAN: Say it loud. I want to hear it. AUDIENCE: Inaudible. ROB HOFFMAN: Reverse IRBs. Anybody see the double buy signals right there? Anybody see a reverse IRB here? Anybody see a regular IRB right here? I can go right on up the chain. The point is that when you have more signals combined and I’m sorry we don’t have time to discuss hockey sticks today and all that stuff but basically this is a double buy signal right here with that over and slant. In addition to the half spike itself; that’s one thing. Now the other thing is with half spikes versus full spikes half spikes have the potential to go ahead and go down further but now this is where risk management comes in. If you’re a new and small lot trader you may elect not to take half spikes until you can identify them with other buy signals. If it’s a half spike exclusivity you may elect not to go ahead and take that trade initially until you’ve made enough money with the other strategies that you feel confident to start dipping your toe in there. Does that make sense? Now the other thing is, again as we just talked about here, when you can combine them; let me just ask you guys a question. Here’s another half spike, what’s that bar right there? AUDIENCE: A reverse IRB. ROB HOFFMAN: A reverse IRB. The point is if you see how all afternoon what I’ve been trying to do for all of you is give you four different strategies and now just these four different strategies you see how they keep popping up over and over and over within a trend? Is there anybody that’s not seeing that? Have I not demonstrated that properly to anybody here? Raise your hand and let’s talk about it because I’ve tried all afternoon to show you repeatedly how these things come together and marry up to increase your probabilities of success. For your benefit again you notice how the 20 is above the channel; the 20 is above the channel; 20 is above the channel; 20 is above the channel lending yourself to even higher probability trades like we talked about earlier. Make sense Katani (SP?)? Let’s go ahead and look at some more examples of this. Here’s another one. I swear I did not make this stuff up; I didn’t like cherry pick this or whatever, you could see this on your own charts tonight. That’s why I put out the Rob Hoffman challenge. I challenged all you guys to look at this on your own charts tonight then come by my booth tomorrow and let’s talk. Those of you in my live trading room obviously you guys get a rest because you guys see this all the time. Right here, what do you see right here? There’s a half spike, what do I see? A reverse IRB. By the way if you missed the reverse IRB, you missed half spike what’s the next trade to turn right around two bars later? AUDIENCE: An IRB.


ROB HOFFMAN: A classic IRB, exactly. See how this works. You get a trend and you just get trading opportunity after trading opportunity after trading opportunity. All you have to do is be patient enough to wait for the next setup and to hopefully have your cute little cards like Colorado John does there and his sheets where he has this ingrained in his brain now. He’s like a robot when he’s looking for these things he just boom, boom, boom, boom, boom. He’s firing off. Ron, you’re laughing about it but you know what, that’s a man you want to talk to. In fact I think you told me earlier you want to take him for a cup of coffee. That’s a man you want to talk to right there. AUDIENCE: He drives a Bentley. ROB HOFFMAN: You know what’s cool about John? He won’t tell you this but the guy also does a lot of volunteer work and that, kind of like I do, a lot of charity work in there. There’s a big, local prison next to him; I think it’s a super max isn’t it? A super max prison and he donates time over there on that. How cool is that? Sometimes he leaves after he makes a bunch of money in the trading room with me; he goes home; he makes the money in the trading room and he says hey Rob I need to head to the prison. I asked him if it’s for work release. Colorado Shelley his lovely wife might have a laugh about that. As we just look at this here what we’re; it does that; yes? AUDIENCE: Inaudible. ROB HOFFMAN: That’s true. I don’t have any tattoos either. Fortunately I’m not in prison either. I guess I lucked out on that one. As we go ahead and we take a look here; I just want to look at this. I’m trying to train your brain to start spying these half spikes and these full spikes. We keep seeing this over and over again. This is another half spike, right? What’s this right up here? Another reverse IRB. Exactly. The point is that there’s a great way to combine these indicators that I’ve shared with you today. Very powerful putting all these together. By the way did you guys all turn in your little cards to Jean? Jean I want to have you come on up here with that. We’re seeing kind of a combination here, half spikes, full spikes, just trying to train your eye here again and again you’ll notice all these trends I’m just pointing this out to help you as you’re looking for the highest probability trades. You’ll see that 20 period is below the 35 channel low or the 20 period is above the 35 high and you notice those are the ones that seem to just keep going and going and going. You got everything? There’s always one. He’s probably put all three in. Right over there. I’ll just keep putting them in. Alright, so go ahead and have Ron here; because who can ever get mad at Ron right, except for maybe his wife. We’ll let Ron go ahead and pick that. Don’t read off the name. We’ll go ahead and we’ll give that in just a few minutes. We’re going to do that. I guess we’ll do that. What other questions before we do that drawing does anybody have on the stochastic spike? Is there anything else because what we’ve done now we’ve talked about the inventory retracement bar; is it his


name? Oh you’ve got to be crapping me. I’m going to draw for somebody else. Robert won, Robert Iskani (SP?). We’ve got to do another person. Let’s do another person. You already have access to this. AUDIENCE: We’ve talked about it. ROB HOFFMAN: We’ve talked about it, that’s kind of funny. I want to be fair. Robert’s already got there, alright, here we go. Okay, very good, that’s great. Actually oh, Chicago, Illinois, Chuck McNulty. Chuck, there is back there; I’m in Barrington. Congratulations. It’s pretty cool, a little device here where it’s got a three part strategy. You can come up and get Chuck if you want or actually I guess you could bring it back to Chuck. Yeah, just give him that one; that‘s fine. Congratulations on that. Great little three part strategy. Also comes with a month of my premium newsletters, The Day in Swing Trading ones. A lot of value there. We’ve talked about the inventory retracement bar, the reverse inventory retracement bar, stochastic spike, the full stochastic spike. My challenge to you guys of course is to go back to your hotels rooms tonight and take a look at this and then come back and see me at the booth tomorrow with followup questions or praises or questions, comments, whatever it is. Anything that I can answer on the stochastic spike or half; or maybe it’s something else on the inventory retracement bar. Any questions on those things? These are the four things that we covered there. These four are directly responsible . . . AUDIENCE: Inaudible. ROB HOFFMAN: What in the world are you taking a picture of John? Are you like memorializing? These are the trades that you make money on so I’m trying to figure out what’s going on here. AUDIENCE: Inaudible. ROB HOFFMAN: I’m telling you; wow. Just goes to show you anybody can go ahead and trade. Wow. I’m not sure what to think of that John. You’re the one who’s in the class showing these off. Remember that $2000, $2500 you’re making a week and I’m seeing all these P&Ls on; go _____. AUDIENCE: Inaudible. ROB HOFFMAN: Oh, is that what you traded? AUDIENCE: I think $2500 is not my goal, $5000 a week is my goal.


ROB HOFFMAN: Oooh, oooh, okay. Alright, big man on campus. Well you’ve got some work to do. Remember it’s a progression. Be slow, steady and consistent. Well that’s true, he is quite seriously; he’s a proverbial studier but he’s doing a great job with that all kidding aside. We’re having some laughs back and forth but that book he’s made you guys could learn a lot from the book he created and the note cards that he created from my work. If you guys could do something similar it would probably rapidly accelerate your learning curve as well. A couple of other things; these setups right here are directly responsible for the majority of the trading competition wins; frankly a lot of the trades we do in the live trading room of course; these are all very important. Now what are you doing John? You playing show and tell? AUDIENCE: She wants a card. ROB HOFFMAN: She wants a card. She’s starting her first one; oh well, congratulations. That’s good, that’s good. She’s going to start her first card. Just be a Colorado John. Hopefully that’s your first step to making a couple thousand dollars a week too. The bottom line is gang, all kidding aside, just for a moment seriously, these trades are ones I use quite regularly for myself. These are the actual trades. I showed you examples throughout this process from the eSignal event this morning, the live trading event this morning, the midday presentation I did earlier and then back to here; I showed you actual trading examples with like the IRBs and everything else. This is real world work. This isn’t theoretical. It isn’t feel good, looks good on a PowerPoint stuff. This is stuff that I actually use. It’s really important that you guys understand that. That’s why I spent so much time on these to make sure you understand them and then put that challenge out. You had a question. AUDIENCE: Inaudible. ROB HOFFMAN: Katani (SP?), I can’t hear her, I’m sorry. She has such a soft voice it doesn’t project. AUDIENCE: Inaudible. ROB HOFFMAN: Oh you wanted to put; the rules for the IRB? Okay, tell you what I’ll put that up in just a moment here at the end for you here because we’re going to go way back on that. Russ you are here, these trades that I took, this combination of trades. I don’t normally do 18 trades in six hours but when that trend was going down that 20 period was below that 35 channel like we talked earlier and I had stochastic spike after stochastic spike; I had inventory retracement bar, reverse inventory retracement bar, some of the gotcha trades I taught you guys earlier at eSignal event earlier today. It just kept happening over and over and over and you even saw with something; when I put that Apple chart up earlier once we combined inventory retracement bars, reverse


inventory retracement bars, full stochastic spikes and half stochastic spikes there were tons of trades even in those isolated timeframes. You could see how then when we get a good trend on an intraday basis how I could wind up with 18 trades and all this real money profit. This is all real money, not simulated. Go ahead. AUDIENCE: Inaudible. ROB HOFFMAN: Trading stocks around earnings? I know there are people that have all these different wild, trading strategies, some options strategies, we’ll just cut to the chase instead of worrying about what everybody else does and just tell you my world of theory. Do you guys remember in the trading competition for those of you that were there? We went ahead and had earnings on crude oil because it got pushed forward a day; pushed back a day. It was supposed to be on Wednesday but because of Columbus Day we pushed it back to today so we had the crude oil earnings right in the middle of the trading competition. Do you remember I said I am not going to take a trade; I am not going to take a trade here because it could whipsaw back and forth. How many of you heard me say that this morning? Now, I love Stephanie so I don’t want this to be misinterpreted as something bad but what did she do right after I got done saying that? She took a trade in US Oil and what did she do? She took a loss. Again, this isn’t about Stephanie. I want to be extremely clear because I love her to death, she’s great but my point is when you’re trading right before or right after news you’re effectively gambling. You give me two months in a row of the same crude oil report, the same numbers, the same inventory numbers, the same bullishness, the same bearishness, one month it’s going to spike up and then the next month all of a sudden it’s spiking down off the same exact type of inventory news. CPI put unemployment numbers two months in a row, housing numbers; that’s always a fun one. You give me the same reports, statistics two months in a row, one month it rallies, one month it sells off. I’ve been doing this now for well, more than half my life. I have yet to go ahead and figure out successfully news related trading. I’ll just tell you right now that the average retail trader blows up and most of the trading rooms and people with trading strategies around news don’t intend to trade live on the screen in front of people or they trade on a simulated account and the options trades around it you can make some money with earnings around options but as far as consistency depending on the type of strategy you’re using you could lose a lot of money in earnings too. When you expect that it’s going to stay; everybody agree with that statement? Anybody here who lost a lot of money around earnings? Okay. Or news releases? Depending on the strategies you use when you try to bet the market is going to stay within X standard deviation which is what a lot of people try to do around earnings announcements and stuff you really get hurt. For me personally just to summarize that I am not a news trader. I don’t generally speaking I don’t like to trade; I try to allow myself a few minutes before the news releases, a few minutes afterwards for the market to absorb it. With crude oil I actually said it’s 15 minutes. If I’m trying to trade crude oil proper and then Stephanie took that trade like two minutes after I said that and I’m like oh, Steph, and then sure enough it became a loss. In part it cost her the competition. The thing is I would encourage you


guys if I can’t figure out after all these years; that doesn’t mean I’m smarter than you; if I can’t figure it out you can’t but the reality is I just don’t see most people making any money on it. I travel all over the world. I teach all over the world, institution, retail and the like. Yeah there are some institutionals that make money. You know how they make money on it? They take the trade and they just hold onto it and then add in more leverage down and then when it swings back up; the problem is you can’t do that. Do you understand what I’m saying? You can’t sit there and just let it go and go and go. Does that make sense? You have to take the loss. You can’t let it go to infinity because unlike them that can keep pumping your 401(k) money into it you can’t do that. While Goldman Sachs can walk away quarter over quarter without a loss on the books because they just hold it until it eventually turns around and they add to bring their cost base down and turn around you can’t do that. I think for the average retail trader it makes a lot more sense to abstain from news related trading. AUDIENCE: Inaudible. ROB HOFFMAN: The gentleman said that there are reports that are generated that are coded and trails off like a lot of like institutional activity; what do we got Jean, we don’t have anybody behind us right? Okay. I’m getting the five minute warning there. Okay. That’s alright. We’ve got time at the booth together tomorrow. Also just; I want to brag about this for a minute if you’ll allow me to. Because if all of you have American Express cards you know they don’t just hand those out like water to people. I was just voted here a couple of weeks ago 2015 member favorite by American Express. That’s pretty cool. What that means is obviously we have superior customer service and a product that’s worth something because our customers keep coming back and that’s what the award was for. They digitally analyze all these different fields and everything else and they see who people keep coming back to. I’d like to think that’s a huge testament to us at our company, the great customer support that Jean, Anna, Marissa, Sarah, everybody provides and then hopefully the quality of the award winning information I have that’s why you guys keep coming back to us. For all of you that didn’t win the little DVD here; if you guys want that it’s a three part series on one of the setups you guys can get that from our booth or something. With that it has a conservative trade, aggressive trade, specific trade stops, just a lot of great stuff from day trades, full time and part time entries. It’s got a lot of stuff there. Again, I just want to end with the thought that I try to give you guys really valuable information today. If you have any questions for me or Jean we’re still here, it will take me a few minutes to tear down. I’m happy to have you guys come up now but I really need to ask you to take that Rob Hoffman challenge tonight. I really do passionately implore you to go back, study these four setups tonight. I can’t imagine you won’t see it for yourself if you took copious notes today and if you didn’t that’s even more reason you need to be with me tomorrow at my booth so I can clarify some of your questions that you may have. I want to thank you guys for being with me. Thank you. Thank you. Thank you, I appreciate that. We’ll see you at the booth tomorrow. Ron, what I’ll do for you guys, we’re going to have all the students actually pool together tomorrow so it’ll be great to ask them because members, there are


several that will be there tomorrow morning that weren’t here tonight. We’ll ask them tomorrow. Thank you everybody. Thank you very much.

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