How to Survive & Profit in Today’s Markets

Part II: Advanced Trend Trading, Risk Management & Self Discipline

Know When to Trade, What to Trade and How to Trade. Develop Patience and Discipline.

Colin Twiggs

Presented by Colin Twiggs

This course will equip you with essential skills needed to analyze markets, identify investment opportunities, trade trends, manage risk and adhere to your trading plan.

Beginners: This course should only be attempted after you have completed Part I of How to Survive & Profit in Today’s Markets.

Experienced Investors: We strongly recommend that you complete Part I of How to Survive & Profit in Today’s Markets before attempting Part II. While much of the material in Part I will be familiar to you, there are subtle differences in our approach, and emphasis, that are likely to cause you to flounder if you attempt to dive straight in to Part II.

AUD 1,295 (includes GST)

Sessions 32
Length 6 weeks
Skill Level All levels
Language English

About this course

Published 10-Jul-2016

The key to successful trading and investing is to only trade with the trend. That includes not only the trend on individual stocks but also market and sector trends which account for most trading and investing profits.

Many of you will be familiar with the saying “a rising tide lifts all boats” but it is also true, in a market crash, that even the best stocks get sold.

Part II of How to Survive & Profit in Today’s Markets extends market analysis beyond Dow Theory into a holistic approach that considers key measures of the economy. This section should leave you with an understanding of how to adapt your trading and investing to changing market conditions.

Next, learn how to identify investment opportunities to improve your chances of success.

Part II also goes beyond managing trade risk to risk management techniques needed to protect your capital and limit draw-downs when markets turn against you.

Finally, we examine how to develop the personal attributes needed to adhere to your trading plan.

On completion of this course you should know When to Trade, What to Trade and How to Trade.
This includes:

  • Identify Market Phases in Bull & Bear Markets using Price-Earnings and Growth
  • Identify how Financial, Transport and Manufacturing sectors impact on growth
  • Understand the relationship between Employment, Earnings and GDP
  • Understand the impact of Oil & Commodity prices on the global economy
  • Understand Volatility and how to use it to gauge market risk
  • Identify investment opportunities with Twiggs Money Flow & Twiggs Momentum
  • Set regular Stock Screens
  • Use Sales & Earnings data to evaluate investments
  • Use Risk Management techniques to protect your capital
  • Draw up a Trading Plan
  • Develop Patience and Discipline

You will need:

  • A computer with Windows operating system or equivalent
  • An Internet connection
  • A subscription to Incredible Charts

Beginners: This course should only be attempted after you have completed Part I of How to Survive & Profit in Today’s Markets.

In Part I you learn how to interpret stock behavior and trade trends. Part II focuses on identifying what stocks to trade and when to trade them — that is, how to trade with the market and not against it. Part II also develops further risk management techniques to protect your capital and identifies the key personal attributes — patience, organization, and discipline — needed to stick to your trading plan.

Experienced Investors: We strongly recommend that you complete Part I of How to Survive & Profit in Today’s Markets before attempting Part II. While much of the material in Part I will be familiar to you, there are subtle differences in our approach, and emphasis, that are likely to cause you to flounder if you attempt to dive straight in to Part II.

Curriculum

Section 1: When to Trade – Trade with the Trend

Session 1: Welcome

Welcome to Part II of How to Survive & Profit in Today’s Markets.

This course is divided into six sections under three main themes:

  1. Know When to Trade
    • Trade With the Trend – identify the primary trend and market phases
    • Trade With the Market – use economic and volatility indicators to identify market risk
  2. Know What to Trade
    • Identify Investment Opportunities – how to screen for the right stocks
    • Advanced Trend Trading – including how to use fundamental data to evaluate investments
  3. Know How to Trade
    • Risk Management – how to protect your capital and draw up a Trading Plan
    • Self Improvement – how to develop patience and discipline

Even if you know how to trade, you take a huge risk venturing into the markets without a clear strategy to protect your capital and adapt to changing market conditions.

Session 2: Time Frames

Analyzing stocks in one time frame conveys only part of the picture.

Learn how to analyze trends using Daily, Weekly & Monthly time frames to help you make informed trading decisions.

Session 3: Market & Sector Trends

We re-visit Dow Theory, with primary Bull & Bear markets, Stages and Market Phases.

Learn how to apply this to Market & Sector indices.

Session 4: Price Earnings & Earnings Growth

Market Price-Earnings Ratio and Earnings Growth are invaluable tools for identifying Market Phases.

Learn how to use Price-Earnings Ratio and Earnings Growth to make better decisions about Primary Market Reversals.

Quiz 1

Test yourself with these 6 questions.

Exercise 1

Apply what you have learned in the following 5 exercises.

Use Incredible Charts to add comments identifying key attributes on selected charts. Then save the charts and submit them to us if you want feedback on your analysis.

Section 2: When to Trade – Trade with the Market

Session 5: The Yield Curve

The relationship between long-term and short-term interest rates is normally depicted by a yield curve.

Learn the different yield curve patterns, a quick and effective measure of the yield curve, and how to identify danger signals that threaten a monetary contraction.

Session 6: Monetary Conditions

Tight monetary conditions are a leading cause of economic recessions.

Learn how to identify tight monetary conditions and their link to market risk.

Session 7: Financial Stress

Financial stress, including liquidity and solvency issues, in the Banking/Financial sector is a leading cause of market down-turns.

Learn how to use Credit Spreads and other Financial Stress indicators to identify Market Risk.

Session 8: Transport & Freight

Charles Dow used Railroads as an important barometer of economic activity. The Transport Average has declined in significance over the last century but there are a host of other indicators that we can use to gauge economic activity.

Learn how to use Freight and Transport Indexes and bellwether stocks to warn of changes in the economic cycle.

Session 9: Manufacturing Activity

Manufacturing indicators like the PMI Composite index are a bit more erratic, but still useful indicators of the level of economic activity.

Learn how to use the PMI Composite and Leading Indicators to identify potential market down-turns.

Session 10: Employment & GDP

Employment and Earnings are inextricably linked to Gross Domestic Product (or GDP) and one of the key indicators of economic health.

Our aim is not to teach you economics but to demonstrate the relationship between Employment, Earnings and GDP and show how you can use this to identify potential economic down-turns.

Session 11: Oil & Commodity Prices

Spikes in Crude Oil prices have had a profound effect on the global economy over the last half-century.

We examine the history of crude oil prices and their relationship to economic recessions. We also examine the relationship of Commodity Prices to the global economic cycle and their impact on developed and emerging markets.

Session 12: Volatility

Volatility is a two-edged sword. Either embrace it or fight it.

Volatility indicators are extremely skittish and tend to over-react to shocks to the global economy. On their own, they are often unreliable but can be used to confirm other leading indicators of market risk.

Quiz 2

Test yourself with these 12 questions.

Exercise 2

Apply what you have learned in the following 7 exercises.

Use Incredible Charts to add comments identifying key attributes on selected charts. Then save the charts and submit them to us if you want feedback on your analysis.

Section 3: What to Trade – Identify Investment Opportunities

Session 13: Twiggs Money Flow

I developed Twiggs Money Flow to identify buying pressure (accumulation) and selling pressure (distribution) but it has proved over the years to provide useful divergences ahead of market reversals.

Learn how to use Twiggs Money Flow to identify investment opportunities.

Session 14: Twiggs Momentum

Twiggs Momentum is another proprietary indicator developed by me for the purpose of identifying fast-trending stocks.

Learn how to use Twiggs Momentum to identify fast-trending stocks and, most importantly, how to compare trending stocks to identify the best investment opportunities.

Session 15: Stock Screens

Learn how to screen the market for stocks that display strong Money Flow and/or Momentum.

This will save you a vast amount of time and effort, allowing you to hone in on the best opportunities for further analysis and avoid relying on stock tips where the motives of the provider may be suspect.

Quiz 3

Test yourself with these 4 questions.

Exercise 3

Apply what you have learned in the following 2 exercises.

Use Incredible Charts to add comments identifying key attributes on selected charts. Then save the charts and submit them to us if you want feedback on your analysis.

Section 4: What to Trade – Advanced Trend Trading

Session 16: Entry & Exits - Revision

We revise what you have learned in Part I of the course regarding Trend Trading and Entries & Exits.

Session 17: Fundamentals

Combining fundamental and technical analysis can improve your trading/investing performance.

Learn how to evaluate investment opportunities using:

  • Sales;
  • Earnings; and
  • Debt Ratios.
Session 18: Competitive Advantage

Most of you have heard of Competitive Advantage or a company’s Economic Moat.

Learn what this means and how it can be a used to evaluate investment opportunities.

Quiz 4

Test yourself with these 5 questions.

Exercise 4

Apply what you have learned in the following exercise.

We will provide you with a spreadsheet and ask you to evaluate a list of stocks.

Section 5: How to Trade – Risk Management

Session 19: Risk & Reward

Almost any investment offers a unique combination of risk and reward but arbitrage activities in markets normally ensure that Risk and Reward have an inverse relationship: the higher the Reward, the greater the Risk.

There are exceptions, but if they were easy to find they would soon be arbitraged out.

Before entering any position, you need to understand the expected Risk & Reward of the investment. Failing to do so can do serious harm to your investment performance.

Learn how to assess Risk and Reward for each investment opportunity.

Session 20: Win-Loss Ratio

Win-Loss Ratio is another key attribute of trading systems. Strategies with low Win-Loss Ratios may be highly profitable but recurring strings of consecutive losses can be psychologically damaging and can test the resolve of even the most hardened traders.

Learn how Win-Loss Ratios are used to evaluated trading systems and how you can use them to monitor and improve your own investment performance.

Session 21: Position-Sizing

I cannot stress this enough: Position-Sizing is the most important element in successful trading and investment, especially in strategies with relatively low Win-Loss Ratios.

Learn how to use position-sizing to protect your capital from strings of consecutive losses.

Session 22: Debt - A Cautionary Tale

Be very careful about using debt to leverage your position. Not only margin loans, but derivatives such as Options (ETOs), LEAPS, Warrants and Contracts for Difference (CFDs) may prove traps for the unsuspecting.

Most leverage increases Risk (Volatility) faster than Reward. Learn why this happens and how to avoid it.

Session 23: Trading Plan

Most of you are familiar with the adage Fail to Plan….Plan to Fail.

One of the key attributes of successful investing is adherence to a trading plan. Formal or informal, most successful investors and traders use a structured process for evaluating investments.

Learn how to identify the key criteria and Draw a Trading Plan.

Quiz 5

Test yourself with these 6 questions.

Exercise 5

Apply what you have learned in the following exercise.

Draw up a simple Trading Plan and calculate Position Size in each of the four examples.

Send us the results by email if you want feedback.

Section 6: How to Trade – Self Improvement

Session 24: Caution

Too often, people throw caution to the wind and buy stocks on a hope and a prayer.

Learn why its imperative to use caution with every trade or investment.

Session 25: Patience

Don’t chase after trades, let them come to you.

Investors often make the mistake of thinking they need to be busy to be profitable…..and over-trade to the detriment of their investment performance.

Confidence in your process and in your ability will help you to exercise patience when it’s needed most.

Session 26: Discipline

Confidence in your process and in your ability will help you to develop the discipline to stick to your trading plan. Self-discipline is needed to act decisively — to cut losses, enter a new position, or sit tight — as required.

The key is not the profit or loss you make on a single trade. Good trades sometimes lose money and bad trades sometimes end in profit. But having the discipline to stick to your process and only take trades with attractive risk reward ratios will help improve your investment performance and protect your capital in the long term.

Session 27: Organization

Organization and structure is essential to cultivate the correct trading and investing habits and produce consistent returns.

Learn how to organize and structure your trading and investing activities to improve your performance.

Session 28: Feedback is the breakfast of champions!

If you want to improve something, measure it.

Learn from your mistakes. Regularly review your trading and investment performance to identify possible weaknesses in your approach and/or implementation of your trading plan. Then develop strategies to improve them.

Session 29: Bringing it all Together

In this session we review everything you have learned so far and bring it all together into a cohesive plan.

Quiz 6

Test yourself with these 16 questions.

Exercise 6

Apply what you have learned in the following 6 exercises.

Submit your answers if you want feedback on your analysis.

Session 30: Further Development

We don’t suggest that you go out and read 50 books on Technical Analysis and Trading. That is likely to provide you with plenty of confusing and contradictory advice. But there are some key resources that we recommend that you use for further development.

Session 31: Practice Makes Permanent

Practice doesn’t make Perfect, but it does make Permanent.

We recommend that you practice your newly-acquired skills on a regular basis to develop them further and acquire the instinctive responses needed to become an expert trader or investor.

Session 32: Summary & Closing Thoughts

This brings Part II of the course to a close (for now).

Thank you for enrolling and for putting your trust in Tony & myself as your coaches. Please let us know how you fare and feel free to contact us if you encounter any difficulties in applying what you have learned.

We will continue to develop the course by adding new resources and study materials. Send us an email if you have any suggestions as to how we can improve or new topics that you think we should cover.

You should now be equipped to successfully trade and invest in trending stocks. However, we recommend that you start slowly and never lose sight of your primary objective: to protect your capital. In the words of Larry Hite from Market Wizards:

I have two basic rules about winning in trading as well as in life:

  1. If you don’t bet you can’t win;
  2. If you lose all your chips you can’t bet.

My advice to you would be not to focus on developing your capital, focus on developing yourself. Your ability to grow and protect your capital is directly related to your progress along the path of self-development.

Ed Seykota was asked what a losing trader can do to transform themselves into a winning trader. In true Obi-Wan style he replied:

[Nothing]. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do.

Take care. And we look forward to seeing you again. Hopefully on one of our other courses.

Sincerely,
Colin Twiggs

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