Real Estate Investor
Systems Security Engineer
For those who like to research, analyze and test, there’s a virtually unlimited amount of raw data and a wide variety of indicators and trading systems that a stock trader can use; almost all of which have sound mathematical reasoning and historical evidence to back them up.
Trading, though, is at least as much an art as it is a science, and often the methods traders find themselves drawn to are those which they feel they intuitively understand and enjoy using, rather than those that seem to have the best science or track record behind them.
For traders with this mindset, charts are not just a source of absorbing interest, but things of beauty in the patterns which they form from otherwise daunting columns of figures and challenging mathematical formulae.
Of course, there’s much more to trading success than the joy of discovering and profiting from attractive patterns. Beginning traders, in particular, will hear a lot about the need for hard work, discipline, and emotional self-control if they want to achieve consistent results.
Semi-retired economics professor, Steve Ellingson, of Chicago, had been trading options for a decade with very inconsistent results. Then he joined Total Alpha. With the guidance of Jeff Bishop and his team, Steve has already scored some encouraging wins and is thoroughly enjoying the experience of watching his small account begin to grow steadily.
Hard work, discipline, and self-control are indeed important, but as in any walk of life, focus and discipline are much easier to sustain when you’re enjoying the process.
It’s this sense of enjoyment and attraction to a particular system which professor of economics, Steve Ellingson of Chicago, highlights as one of the main reasons for the rapid progress he’s making since joining Total Alpha and Daily Profit Machine.
“I joined because I liked Jeff Bishop’s approach and his 13/30 crossover system,” recalls Steve, “And I added Davis Martin’s system too so that I can learn short-term day trades, as well. Both systems are teaching me good stuff and starting to grow my small trading account.”
“I want to learn discipline and consistency. And I definitely think these systems (Total Alpha & Daily Profit Machine) will help me become financially free. Plus, they’re fun!”
To get a little technical for a minute, Jeff Bishop’s 13/30 crossover system is an excellent example of the many methods in which traders use “moving average” indicators.
Although there’s a variety of moving averages out there, many show us how apparently complex mathematics can conceal rather simple concepts.
The so-called “Simple Moving Average” (SMA), for example, can be expressed in the formula SMA= (P1 + P2 + P3, etc.) /N. Where P = the closing price of the stock at the end of each charting time period, and N = the number of periods in question.
If that wasn’t enough, traders can also make use of “Exponential Moving Averages” (EMA), which tend to give more emphasis to the most recent average prices by applying a weighting or “smoothing” formula, calculated as 2/(N+1) where N is the number of time periods in the relevant moving average. This may be months, weeks, days, or even hours, depending on the time frame of the chart.
Now, this type of mathematical calculations may not look like fun, even for Professors of Economics like Steve. Fortunately, they’re only necessary to help traders understand the relatively straightforward ideas that underpin them.
The beauty of modern charting technology is that it can instantly translate the raw numbers of the calculations into readily comprehensible visual indicators.
For example; using SMAs or EMAs with two different time periods will produce two different trend lines on the chart and the crossing of the longer time period line by the shorter provides clear evidence of the acceleration of a trend.
Numerous popular crossover combinations being regularly traded. The upward crossing of a 200-day SMA by the 50-day, for example, is widely recognized as a reliable bullish indicator known as the Golden Cross. Conversely, a downward cross of these two SMAs is a major sell signal and known as the Death Cross.
“I joined Total Alpha because I really like Jeff’s approach and simple 13/30 crossover system. And he teaches well.”
The striking names given to these set-ups are evidence of their significance for longer-term traders, but Steve is most interested in day trading. That’s why he finds Jeff’s 13/30 system, using the hourly chart, particularly useful.
The 13/30 moving averages work very well with both stocks and options. One of the big advantages of options is the chance they offer to make large percentage returns, while risking very little capital. This can make them a great place to start for traders, like Steve, who are looking to grow relatively small accounts.
To illustrate this, Steve highlighted two particularly pleasing recent wins: “I received some decent profits from Jeff’s recent ROKU trade,” he explains, “I got in kinda late, and exited too early, but still got a 30% return in 3 days. Today, I got a fast 10% on Davis’ trade-of-the-day SPY 296.P. It took about 14 mins.”
It’s important to note that there’s much more to successful trading than simply spotting a potential set up and placing a trade. It takes skill and experience to determine the optimal entry price, and discipline to take profits, or cut losses, at the right moment.
“I received some decent profits from Jeff’s recent ROKU trade. I got in kinda late, and exited too early, but still got a 30% return in 3 days. Today. I got a fast 10% on Davis’ trade-of-the-day SPY 296.P. It took about 14 mins.”
The satisfaction of watching his favorite system produce quick, and significant profits didn’t stop Steve from analyzing his ROKU trade. His willingness to critique his entry and exit, and to note how he might have profited even more from the trade, bodes well for his future career in the markets.
“Find a system you are comfortable with, and learn it well,” is Steve’s advice to new traders. And indeed, focusing on the process as much as the outcome is an approach from which many could benefit.
Although Steve is wary of setting specific monetary targets, he does aspire to the popular goal of financial freedom and has neatly summarized the subtle interplay of strategy, learning and enjoyment which he’s confident will deliver it for him over time.
“I want to learn discipline and consistency,” he says, “and I definitely think these systems (Total Alpha & Daily Profit Machine)will help me become financially free. Plus, they’re fun!”
Success in the markets is never guaranteed; however, if Steve maintains this kind of attitude and commitment, he’ll be in an excellent position to achieve it.
Do you have a Raging Bull success story to share?
Real Estate Investor
Systems Security Engineer