Video Instructions to Help You Follow The Rules In The Honest Guide To Stock Trading

The following videos will explain how to set up the watch-lists, charts and correlation tools that are explained in The Honest Guide to Stock Trading.

Template spread-sheets, Excel Add-ins and pre-written Prorealtime and Amibroker code are also available in the downloads area beneath the relevant video.

Want to learn more advanced Strategies and Amibroker/ProRealTime formulas?

Please read the following document for a thorough performance analysis of the Flagship Trading Course quantitative momentum strategies since they were first released to the public.

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If you have enjoyed the book and video series I would be very grateful if you were to leave an honest review over at Amazon.com. Please click this LINK.

Thanks in advance!

Welcome

My name is Llewelyn and I am the author of The Honest Guide To Stock Trading.

The Honest Guide To Stock Trading Cover

This video series is a step-by-step guide to preparing your research tools and desktop so that you are ready to follow the trading rules in my book.

I recorded these videos to help you cut your research process down to just a few minutes a day and I also wanted you to have a visual reminder of the rules in The Honest Guide To Stock Trading.

If you have any questions regarding the book or videos, please feel free to leave a comment at the bottom of the page.

I hope that you enjoy the videos and that the downloadable content helps you to speed up your research processes.


110 Comments

  • Derrick Rosborough

    Reply Reply June 3, 2014

    Do you use the thinkorswim platform for trading?

    • Llewelyn

      Reply Reply June 3, 2014

      Hi Derrick,

      I don’t. My platform of choice is Interactive Brokers. However, I have heard good things about thinkorswim. I would suggest that it boils down to how much you value customer service (I,ve been told that IB are not the greatest in this regard, although I am yet to have any problems), whether you intend upon using margin (IB has lower rates) and perhaps more importantly, how active you are going to be.

      If you are a very active investor and use margin, you will probably find that IB are the cheaper option. If you aren’t very active, from what I gather you might be better served by thinkorswim because of their flat fee structure and lack of non-activity charges.

  • gansoro

    Reply Reply June 5, 2014

    I just finished your book… excellent! Thank you for sharing so generously.

    I am watching the training videos now. Again, very well done! In the video about setting up the stop loss indicator on the charts, you indicate that the “Trailing Stop-Loss Indicator Code” can be download from the website. However, I can’t seem to find it anywhere. Can you please let me know where I can download it?

  • gansoro

    Reply Reply June 5, 2014

    Never mind… found it. 🙂

  • Gary Bowerman

    Reply Reply July 1, 2014

    I am trying to build the weekly breakout strategy. I am having trouble finding Revenue growth Q/Q > 0 item in FINVIZ screener. Can you help?
    Thanks,
    Gary Bowerman

    • Llewelyn

      Reply Reply July 1, 2014

      Hi Gary,

      Many thanks for buying the book and getting in touch.

      On the Finviz screener page ‘revenue’ is referred to as ‘sales’. Rest assured that they are the same thing. Hope this helps.

      Regards,

      Llewelyn

  • Gary Bowerman

    Reply Reply July 1, 2014

    That is what I thought revenue is referred to as sales, but I was not sure.
    I also wanted to say I am enjoying your book and videos.

    Thanks for you quick response.

  • Jim Marshall

    Reply Reply July 28, 2014

    Howdy Llewelyn,

    Just finished my first read of “The Honest Guide to Stock Trading” An excellent book and for the price by far the most valuable market book I’ve ever read.
    I do have one comment, and let me say that I don’t want your offer of a refund of purchase price. It’s too good a book.
    I took your challenge to flip a coin 200 times. I got 200 heads:) You might want to add a specification that the coin used is a fair one with a head and a tail.

    Best,
    Jim

    • Llewelyn

      Reply Reply July 28, 2014

      Hi Jim,

      Many thanks for your kind words about the book.They are most appreciated.
      I admit to having a chuckle at your coin-flipping comment. Not stipulating that the coin was fair is a glaring error on my part, I will re-edit the offer at once!

      All the best,

      Llewelyn

  • Bruce Bickham

    Reply Reply August 1, 2014

    Llewelyn, thanks so much for writing a meat & potatoes book and keeping the price inexpensive. I can’t tell you how much money I have wasted over the years on “tuition”. Thank you for being so generous with your hard-won knowledge. I am going to pursue your approach with earnest and I’m on my second reading. A question – have you ever used Trade Navigator software?

    • Llewelyn

      Reply Reply August 1, 2014

      Hi Bruce,

      Thank-you for your kind words. I’m glad that you are finding the book useful.
      Regarding Trade Navigator Software, I have never used it I am afraid. In fact, the only thing that I have read about it recently was this comment from Andreas Clenow’s site when he was asked what he thought of it….

      “TradeNavigator: Never heard of it. Doesn’t look promising from their own marketing: “Unlike other analysis platforms that use Pascal, C# and Java, Trade Navigator uses English and simple math symbols to allow for easy implementation of strategies”. That seems to say “We think you’re an idiot who don’t understand computers or simulations”. – See more at: http://www.followingthetrend.com/2014/05/why-i-prefer-rightedge-for-strategy-modeling/

      Although I think that basic testing is better than no testing, I agree that if you want to get serious it is vitally important that you learn to write some form of code. As I point out in my book, when you make a trade it is possible that the person taking the opposite side is a quant mathematician, statistician, nuclear physicist, rocket scientist etc.

      You have to be asking yourself whether these incredibly clever people know something more than you do, and if they do, how? I’d argue that their superior knowledge is likely a result of being able to accurately code and test a multitude of trading strategy/portfolio management rules on a multitude of markets.

      I can tell you from experience that I only really started to make good money when I learnt how to write code. I am no expert either. It might look daunting to begin with, but the time invested is well worth it and once you get the hang of it, it is far less complicated than it looks.

      I wish you the best of luck!

      Regards,

      Llewelyn

  • James Stocker

    Reply Reply August 8, 2014

    Llewelyn: Awesome, straight to the point book. I know I will have further questions, but the one I have at the moment is relating to Amibroker. I followed your video to the tee, but when I click the backtest button to test the code on either the individual stocks or for the whole list nothing displays. It just tells me “No symbols matched Apply to/filtering criteria.” Could you tell me what I am doing wrong?

    Thanks so much.
    Jamie

    • Llewelyn

      Reply Reply August 8, 2014

      Hi James,

      Many thanks for buying the book, I’m glad that you’re enjoying it. Regarding Amibroker: The most common reason for the message you’re getting is that you haven’t sent the formula to the analysis page. I just watched my video again and noticed that because I had already loaded it prior to filming, you wouldn’t have seen me upload the code (My bad!).

      So I hope this is all that you need to do….When you are on the analysis page and open the box which contains your code, you will see a little button with green,yellow and red squares. If you hover over the button it’s called ‘analysis’, press this button. Now make sure that you have the correct list of stocks selected in the define filter tab if testing a portfolio of stocks or make sure that you have selected a stock and clicked ‘current’ in the ‘apply to’ drop-down box which is found on the analysis page too. now start your back-test and all should be fine.

      If it isn’t, please don’t hesitate to get back in touch.

      Regards,

      Llewelyn

      • James Stocker

        Reply Reply August 11, 2014

        Llewelyn: I am sure you have better things to do, but I am usually pretty good with getting things to work. However, I can’t get the back testing to work, I open Amibroker and the open AmiQuote. I put in four symbols, download historical pricing and save the file. I go into into Amibroker – click on List 9 and import this file. I then go to Analysis -formula editor and paste the formula code you provided. I then save the file and it automatically puts the file into the formula bar (I also click the 3 color squares button as you mentioned above). I use the filter – highlight the list 9 and input From To dates and click back test – Nothing! Any other tips or is there another back testing software with code that you recommend?

        Thanks Llewelyn. Jamie

        • Llewelyn

          Reply Reply August 11, 2014

          Hi again Jamie,

          Better things to do than watching ‘Curb your Enthusiasm’ re-runs!?, Nope!

          Regarding your problem, it is hard to diagnose without being there but I’ll try my best.

          A few things, and forgive me if these are obvious, I in no way intend to patronise but going through all steps is usually the best solution.

          Firstly, are the tickers populating the charts? I just want to make sure that the data has imported properly. Secondly, in the analysis settings, are you using daily or weekly periodicity? Also, have you made sure that the starting equity is sufficient for the test? Another thing, is the setting ‘positions’ set to long mode?

          Finally, is there an error code or does it seem like the backtest is running but you get no results?

          • James Stocker

            August 11, 2014

            Hey Llewelyn: Your first suggestion did the trick. I realized that when I clicked on the symbol, it did not display in the chart (not enough bars or something). So, I went back to AmiQuote to auto-update and then the charts starting populating. I went to back test and viola – IT WORKED!!!

            Thanks so much for your help. I will shoot you another Email later on some other items. Take care. Jamie

          • Llewelyn

            August 11, 2014

            Hi Jamie,

            I’m glad that I could help. Have a great week.

            Regards,

            Llewelyn

  • Dale Cassidy

    Reply Reply August 16, 2014

    Excellent book. Thanks a lot! I’ve read a lot of books along the way and had some aha moments. Your book is a consolidation of a lot of those aha moments of many books I’ve read. Thanks!

    • Llewelyn

      Reply Reply August 21, 2014

      Hi Dale,

      Thanks for buying the book. I’m glad that you’re enjoying it.

      Keep in touch and let me know how you get on.

      Regards,

      Llewelyn

  • Derrick Rosborough

    Reply Reply August 20, 2014

    Do your strategies work on assets other then stocks like, mutual funds and 401K investment options?

    • Llewelyn

      Reply Reply August 21, 2014

      Hi Derrick,

      I can’t speak as to whether they work on mutual funds because I don’t invest in them. They do however work on futures and forex.

      Sorry that I can’t be more help than that. My advice would be to test the strategies on the markets you’re interested in and see how they fare.

      All the best,

      Llewelyn

  • James Stocker

    Reply Reply August 21, 2014

    Hello again Llewelyn: How are you? Question – in the video, you left the Average True Range for the Daily Breakout Model at 14. Shouldn’t that be 20 per your book? Please advise and thanks for all your assistance.

    Jamie

    • Llewelyn

      Reply Reply August 21, 2014

      Hi James,

      I couldn’t see which video you’re referring to. However you are right that the setting desrcribed in the book is 20. Having said that, the difference between 14 and 20 shouldn’t make a great impact to the strategy performance over the long-run.

      You’ll find that the results of the strategy can be improved when analysing different ATR multiples as opposed to different ATR lookback parameters.

      Cheers,

      Llewelyn

      • James Stocker

        Reply Reply August 22, 2014

        Thanks for the update Llewelyn! It must have been the Daily Strategies video as the weekly uses 13 days. Also, the daily screener is looking for more established stocks to trade while the weekly screener is looking for low-priced stocks (for lack of better phrase) that might be gaining some steam, correct? What is is your feeling regarding trading stocks that are on the lower side of trading volume (200k – 500k)? Is that worrisome in any way to you?

        Thanks.
        Jamie

  • James Stocker

    Reply Reply August 25, 2014

    Good evening Llewelyn: How many stocks on average does the Daily Watch list (new high) produce? I have been running the watch list, but nothing is being generated? I would like to actively trade. Excluding the shorts, overbought, oversold, is the New Highs the only other daily list to run? Your input in appreciated.

    Jamie

    • Llewelyn

      Reply Reply August 25, 2014

      Hi James,

      If you’re looking for a greater number of signals might I suggest that you lower the thresholds in your screener. I.e. 10% eps and sales growth. Positive ROE, etc etc.

      Remember too that the fundamentals are a supplementary addition to the actual system rules. Fundamentals provide a trader with more confidence in a technical signal but as the test results in the book illustrated, profitable trading strategies can be exclusively technical.

      To your other question regarding the average volume. It is a matter of timescale, account size and actual strategy rules. For example, I want far more volume when trading short-term strategies because slippage becomes a greater drag on performance (in percentage terms) if we are only targeting small but frequent gains.

      When a strategy is more long term in nature and we are targeting large and prolonged profits, slippage becomes less and less of a drag on our overall profitability.

      Clearly if you are trading size then you would also want more liquidity. To give you an example, I am currently trading a mean reversion strategy that has an average profit per trade of 0.70% and an average holding period of 4 days. I only trade stocks with an average daily volume of 2 million shares traded for that strategy.

      My general advice would be to treat the rules in my book as a building block from which to create your very own watch lists, entry signals, stop-loss rules etc. As the famous turtle experiment illustrated, even when given same set of rules, different traders will often get different results.

      Why?

      I’d argue it’s because different traders have different personalities. It therefore makes sense for you to modify the rules in my book to suit your own personality.

      Hope this helps,

      Llewelyn

  • James Stocker

    Reply Reply August 27, 2014

    Llewelyn: I ran the daily new high list and the ticker OME came up? Did your run result in anything else. Also, SPY quarterly performance is 5.18%. Where do we want the quarterly performance to be for industry for which OME belongs to consider a purchase?

    Thanks.
    Jamie

    • Llewelyn

      Reply Reply August 27, 2014

      Hi James,

      I actually got OME, WRES and EDU. Having said that, I am currently more interested in trading counter-trend at the moment.

      Furthermore, none of the aforementioned stocks meet the industry filter for the time being. (I am currently interested in industries which are up at least 9% for the Quarter and preferably up during the Month as well).

      Regarding the current lack of signals being found in the new highs watchlist – it is frustrating if you want action but ultimately it is telling you something. When there are less signals, you can infer that there is less strength in the broader market. It is like we are looking under the market’s hood.

      This is also confirmed by the current lack of new highs as I reported in my email yesterday.

      When I ran the screener during the writing of the book, the new highs watchlist would get 10+ signals a day (as evidenced by the screenshots that I published in the book). The market is up 8.70% since then.

      Nowadays we are getting far fewer signals which to me suggests that the market is getting ahead of itself.

      I could be wrong, and annoyingly it is very hard to quanitatively test strategies using fundamental data. But experience has taught me over the years that when the new highs watchlist begins to find less stocks, the market is probably due for a correction – or at the very least a period of consolidation.

      Hope this helps,

      Llewelyn

  • Rafael Reyes

    Reply Reply August 27, 2014

    Hi James
    I would like to thank you for sharing your knowledge. The first book I have read that provides an easy and honest way to understand stock trading right at the start. Moreover it is easy to read and your sense of humor made me smile frequently!
    Thanks
    Rafael
    Alicante
    Spain

    • Llewelyn

      Reply Reply August 27, 2014

      Hi Rafael,

      That’s very kind of you to say. I’m glad that you are finding the book helpful.

      I also noticed that you left a review of the book an Amazon too, I really appreciate it!

      Many thanks,

      Llewelyn

  • James Stocker

    Reply Reply August 28, 2014

    Good morning Llewelyn: Great, detailed answer. Thanks so much. I was thinking the same. I am wondering why my run of the Daily Watchlist only produced OME. Thoughts on that?

    Also, I would love to hear more about your mean reversion strategy!

    Take care.
    Jamie

  • James Stocker

    Reply Reply September 1, 2014

    Hello Llewelyn: I ran the daily list today and came up with a potential candidate that exceeded SPY quarterly performance by 4%, Avago (symbol AVGO). The other candidate did not exceed by 4% and was deleted. AVGO met all the criteria to buy except for the fair value calculation. It released earnings of $1.26 at the end of last week. The stock also closed on Friday at $82.09. I calculated fair value as follows: ($1.26×4)*$14.57 (average industry P/E)=$73.43. Being there is not 20% upside (stock price is currently exceeding fair value), this would not be considered a Buy – correct? Do you keep an eye on it?

    Thanks Llewelyn.
    Jamie

    • Llewelyn

      Reply Reply September 1, 2014

      Hi Jamie,

      While I am not in position to give you specific investment advice, I would say the following…

      I included a chapter in my book about fundamentals because a lot of readers are interested in them. When you see the talking heads on t.v saying things like “The market valuations are getting out of hand”, many people don’t really know what that means.

      The fair value calculation that I wrote about is a quick and dirty method for us to gauge for ourselves whether we think a stock or industry is over-valued.

      However, one of the tenets of trend-following is that a stock, currency, market, whatever, can go considerably higher than any value calculation suggests that it should. I find it easier to hold onto winning positions when there is further upside as per the fair-value calculation, but many trend-followers would simply buy the stock as per the breakout rules irrespective of the P/E ratio etc. Remember that the strategies tested in my book had no fundamental criterias included at all.

      I also say in the book that each of my rules should be expanded/modified on by the reader.

      Whether to include a fair value calculation in the system is one of the many choices that should be made by the reader theselves. Do you trust the system enough to buy AVGO after the gap up last week? Do you feel comfortable buying the market at all in light of the declining A/D ratio? Or do you think that you’d be more comfortable sticking to your rules if you only buy stocks which are trading at a lower PE ratio? These are the types of questions which will have different answers depending on the individual trader.

      One thing that I would say is that you have understood each of the rules from the book and that your calculations are correct.

      Sorry that I can’t be more help!

      Regards,

      Llewelyn

  • James Stocker

    Reply Reply September 1, 2014

    Llewelyn: I understand that you can’t provide investment suggestions. I do want to tap your expertise. In tweaking things and making them my own, I do not like the gap up due to quarterly results and the fact that I believe it is pricier than what fair value suggests. I have also been looking at some counter-trends, but I am not finding too many here as well. It may just be the market giving suggestions that it may be reversing trend.

    Have you put out other writings if your trading ideas?

    Jamie

  • Thomas Benner

    Reply Reply September 2, 2014

    Hello Llewelyn, thank you very much for the absulute geat book and the content you share here. Another thank you for the detailed email you wrote me. I will come back to that in a few days after some backtests.

    I tried to follow the steps in the correlation matrix video but had some trouble with the plugin (your version and that at google developer). It seems not to work with the German Excel 2010, the range fields are blocked. If somebody else has the problem. http://investexcel.net/importing-historical-stock-prices-from-yahoo-into-excel/ seems to be a only a little less comfortable alternative..

    Thomas

    • Llewelyn

      Reply Reply September 2, 2014

      Hi Thomas,

      You can also create a correlation matrix with Amibroker. Simply create a watch-list of the markets you are interested in, sort the watchlist alphabetically and make sure to choose the watchlist from the ‘define filter’ dropdown box. Then click explore using the following formula:

      // CorrMatrix.afl
      WLNum = 113; //Choose the watchlist number here
      CorrPd = 60; //Choose the number of days to use in your correlation analysis here
      list = GetCategorySymbols( categoryWatchlist, WLNum);
      SetOption(“NoDefaultColumns”,True);

      Filter = DateNum()==Status(“rangetodate”);
      AddTextColumn(Name(),”Corr(“+NumToStr(Corrpd,1.0)+”)”,1.0,width=30);
      Ticker1= Name();

      for( Col=0; (Ticker2=StrExtract( List, Col))!= “”; Col++)
      {
      Var2 = Foreign(Ticker2,”C”);
      Corr = Correlation( log(C/Ref(C,-1)), log(Var2/Ref(Var2,-1)), CorrPd); //for absolute value use ABS (…) at begining of line.
      Color = IIf(Corr>=0.8, colorRed, IIf(Corr>=0.6 AND Corr<0.8,colorOrange,IIf(Corr>=0.4 AND Corr<0.6, colorYellow,IIf(Corr>=0.2 AND Corr<0.4,colorLime,IIf(corr>=0.0 AND corr<0.2,colorPaleGreen,colorPink)))));
      Color = IIf(Ticker1==Ticker2, 1, color);
      AddColumn( Corr, Ticker2, 1.2, 1, Color,width=38);
      }

  • Thomas Benner

    Reply Reply September 2, 2014

    Hi Llewelyn,

    thats absolutly great!!! Thanks a lot. With the afl is makes fun to create the matrix.

    Thomas

    • Llewelyn

      Reply Reply September 2, 2014

      Glad that I could help.

  • Mark

    Reply Reply September 4, 2014

    Hi Llewelyn
    I’m thoroughly engrossed in your book, it resonates with me so much that I’m going to use it as my bible for the stockmarket!
    I have a question concerning the weekly strategy, in particular the yoy notes this is the paragraph/s I’m confused about..

    ‘All else being equal, the company with a (yoy) comparison of 0.01 to beat next quarter is much more likely to get an attention grabbing headline than a company which is running up against the (yoy) comparison of 0.05. From my current list, only one stock is growing its earnings each quarter and has a relatively safe upcoming (yoy) comparison of 0.06:’

    I don’t understand what I is meant by ‘…a yoy comparison of 0.01 to beat the next quarter’.
    Nor do I understand what is meant by a company with a comparison of 0.01 beating a company with a comparison of 0.05 for media attention

    Would you explain what it is I’m to look for when comparing companies with yoy comparisons

    Cheers
    Mark Taylor

    • Llewelyn

      Reply Reply September 4, 2014

      Hi Mark,

      Thanks for buying the book and getting in touch. regarding the earnings comps, I can see why you are confused because I have made a typo in the book. (I just changed it and thank-you for bringing it to my attention).

      The book says “0.01,0.03,0.04” has an easier YOY comp next quarter than “0.05,0.03,0.04”

      What it should say is ” 0.01,0.03,0.04,0.04″ has an easier YOY comp next quarter than “0.05,0.03,0.04,0.04” …..I missed a quarter in the original draft.

      Lets presume that the above numbers are 2013 Q1,Q2,Q3,Q4. The next YOY comp will be Q1 2014 compared to Q1 2013. If Q1 2013 EPS were 0.01, it is an easier beat than if Q1 2013 EPS were 0.05. All else being equal.

      Example:

      Company XYZ sells mobile phones and in Q1 2013 they posted 0.01 EPS.
      Company ABC sell mobile phones and in Q1 2013 they posted 0.05 EPS.

      Now both companies report for Q1 2014.

      Company XYZ posts 0.10 EPS
      Comapny ABC posts 0.10 EPS

      If we look at YOY (e.g. Q1 2013 to Q1 2014) we see that Company XYZ has posted 1000% EPS growth wheras company ABC has only posted 100% EPS growth. Quadrupe digit EPS growth is the type to get the message boards,twitter feeds and media outlets buzzing.

      Coversely, if you had a company which posted 0.20, 0.01, 0.02, 0.04… you would be wary of the YOY comps coming up next quarter because you’d be coming up against what looks like a one-time earnings event (the unusually high 0.20 EPS).

      The next YOY EPS growth rate will probably be negative in such a scenario. When trading low float stocks, you need to realise that it is momentum we are seeking. negative EPS growth (even if justified) is simply unlikely to induce the momentum that we seek.

      I hope that this has clarified the issue and not confused you further!

      Best regards,

      Llewelyn

  • Mark

    Reply Reply September 5, 2014

    Hi Llewelyn

    Thanks for the detailed explanation, I understand it now!

    Mark

  • Mark

    Reply Reply September 8, 2014

    Hi Llewelyn

    I have a question concerning the fair value calculation. We need the stock’s most recent quarterly earnings to calculate the run rate. Is this most recent earnings obtained from barcharts ‘diluted EPS from Cont. Ops’ or is it finviz’s stock details ‘perf quart’ figure?

    Apologies for appearing so ignorant!

    Regards

    Mark Taylor

    • Llewelyn

      Reply Reply September 8, 2014

      Hi Mark,

      You can access the quarterly EPS numbers by entering the stock you’re interested in at finviz.com and scrolling down to the news item links. Look for any articles pertaining to include ‘quarterly results’. I’ve recently noticed that Barchart has some delays and/or bugs when it comes to accurate EPS data.

      The ‘perf quart’ figure that you refer to has nothing to do with EPS. It is simply the price performance of the stock during the most recent quarter.

  • Jianning Meng

    Reply Reply September 24, 2014

    Hi Llewelyn,

    I am a new trader and I found your book very informative and very helpful in terms of getting rid of my confusions – it’s like spotting light in the darkness. Now I have a question about how to choose a stock. In your book, you have very strict rules, after the overall market evaluation and industry check, like EPS growth Q/Q >20% and Sales growth Q/Q >20%. I did a quick check and most stocks don’t satisfy these requirements, like Apple (6% and 19.6%) Home Depot (22.6% and 5.7%), etc. Then does it mean there are not that many stocks to choose from and you may lose your opportunities of a life time?

    • Llewelyn

      Reply Reply September 24, 2014

      Hi Jianning,

      Thanks for buying the book. I’m glad that you enjoyed it.

      Regarding your question, the rules are there to help you ONLY buy stocks which present the opportunity of a lifetime. For example, the rules don’t allow you to buy Apple today…But in Dec 2009, the QQ Sales and EPS growth of Apple were 32% and 47% respectively. The shares have since appreciated by 253%.

      Would you have preferred to buy the shares then, or now?

      You also don’t need to follow the fundamental screeners at all if you don’t want to. They increase the odds of a successful trade and they improve your confidence in the technical signals, but you can trade just the technicals if you so choose.

      The point of the fundamental rules is to alert you to stocks that have the same revenue and earnings growth characteristics that HD and AAPl had before they went up 1000% +

      Another example, Home Depot had QQ Revenue and earnings growth in July 1991 of 36% and 30% respectively. The stock rose 200% over the next 18 months.

      Yes, you can’t trade HD and AAPL now if you follow the rules to a tee…but you could have traded them many times during their history if following the rules…often before their most profitable moves.

      I can’t post images in the comments section, otherwise I would show you countless examples of stocks that rise in tandem with sales and earnings growth. Zacks research have also done extensive work on the topic and have conclusively discovered that stocks with strong earnings and revenue growth have typically outperformed the market by many percentage points.

      Sadly, including fundamental data in a backtest is hard to do, but an example of a trade that met the rules since releasing the book was AVGO. The earnings and rev growth were 42% and 24%. We bought the breakout in May and are still long for 300% gain on our risk.

      One final thing, If you do want to use fundamental data but would like more signals….focus on strong earnings growth but lower the sales growth filter…Earnings have a more direct correlation with a stocks performance than sales.

      Hope this clarifies a few things,

      Best wishes,

      Llewelyn

  • Jianning Meng

    Reply Reply September 25, 2014

    Hi Llewelyn,

    Thank you very much for your quick and thorough reply. Your points are so well made that it clarifies all the clouds in my head around this topic at the moment. Before reading your book, I felt about trading pretty much the same way I felt about gambling: almost always worrying. Now your book tells me that I actually can control the risks (through stop-loss), which will for sure give me a peaceful mind during trading – that is priceless, and critical to make good decisions. I can’t thank you more for sharing your strategies with the rest of the world.

    Sincerely,

    Jianning

  • Pawel Krzanik

    Reply Reply October 15, 2014

    Hi Llewelyn,
    Very, very interesting the strategies explained in your book (I read it already 3 times).
    I already saved all the web sites you refer in your book in my favorites 🙂
    Actullay, I have a specific question about the back testing with AmiBorker (I read several very positive opinions about them in other books).
    I tried to back test with their free tool but the historical data are quite limited (I follow all the needed steps).
    I made several tests with their different sources (yahoo or google) and different stock exchanges proposed in AmiQuote.
    Do you think there are some limitation because of the free version ?
    I am wondering to purchase AmiBroke but I wanted first to test it (more deeply).
    Thank you in advance !
    Regards
    Pawel

    • Llewelyn

      Reply Reply October 15, 2014

      Hi Pawel,

      Thanks for buying the book and getting in touch. There are some serious limitations when using the trial version. The biggest one being that you can’t save data. Furthermore, scans and explorations are limited to five tickers at a time.

      I am a big fan of Amibroker but I would suggest that you should only buy it if you are also happy to purchase some high quality stock data. I use NorgatePremium data which I am very happy with.

      You can purchase the entire history of stocks since 1985 (with survivor-free index data) for a paltry $90. A subscription to the end of day updates is only $420 per year. I get no compensation for recommending them. I just so happen to think that they are a great data providor.

      Once you have a good data feed, Amibroker makes stock analysis and system testing a breeze.

      Hope that helps, Feel free to get back in touch if you have any further questions.

      Regards,

      Llewelyn

  • John Bier

    Reply Reply October 28, 2014

    Hi Llewlyn,

    Excellent book and I have read many trying to decide if the industry was for me and if so how to find the stocks and then the strategies to use. Your book has provided both. I have read it through 3 times before actually setting up the sites and searches as you have outlined but I do have some questions if I may.

    1) While browsing this site I found the “Simple Trading Plan Template” and the strategies discussed are different from the book? Are these to enhance and use with the book strategies or entirely different ones?
    2) When the Bear market starts taking over the Bulls do you have an outlined strategy to search for equites and implement the trade for short positions?
    3) I would like to trade forex as well. Do the daily and weekly breakout charts work with currency pairs or is there a slight modification to them.
    4) Finally is there a MAC compatible forex tester like the Forex 2 if not does anyone know if it works well through Parallels.

    Sorry for all the questions but I want to have a clear direction and practice done by the end of the year so I am ready to go live as they say in 2015.

    Again your book is the best I have read for folks like me trying to make sense of the industry and I like I’m sure many others are very grateful.

    Thank You,

    John Bier

    • Llewelyn

      Reply Reply October 28, 2014

      Hi John,

      Thanks for buying the book and getting in touch. I’ll try to answer your questions one at a time:

      1) The simple trading plan template is different to the strategies in the book because I want to make it clear that there are numerous methods for trading the markets. I also want to make it apparent that I don’t sanction a ‘single’ method. Unlike many other trading book authors, I don’t profess to have the secret to market riches! I have a multitude of systems on tap which all help me grind a profit. By mixing up the systems that I write about, I hope to illustrate that more is better. Also bare in mind that the trading plan template is an example only.

      2) I do have short only systems, although they tend to be geared towards single issues. Developing profitable short sytems is harder to do than developing long systems. Further, I prefer buying puts when it comes to shorting the market as opposed to simply borrowing the shares. Another key part of my screening process when it comes to bear markets is that I want to be short stocks which have a high number of recent negative earnings revisions.

      Bear markets are notoriously difficult to trade and it is during a bear market that diversification of both assets AND strategies becomes paramount over any specific system rules. Bear markets are typically characterised by a high degree of internal correlation… Which is why going to cash can be a perfectly reasonable thing to do….Assuming that you are ready to get back in-to the market when conditions improve.

      The trend following guys who made billions during 2008 are always touted as prime examples of how to make money during a crash. What isn’t often reffered to is that they were betting on 100s of markets. Short financials was but an element of a fully diversified portfolio of assets and strategies. Yes, they knew when to go all in..but they were short in the first place becasue they trade so many markets simultaneously.

      3) My focus is the stock market. If I were you I would test the strategies on the markets which you intend to trade. My gut feeling is that the strategies won’t work on forex. Having said that, whether a strategy works or not is quite a subjective thing to answer…All strategies contribute to the whole. A slightly profitable strategy can be a wonderful thing if it helps to smooth the overall returns of a portfolio of strategies. Only you can know if one system will positively contribute to your others. My strong advice is to develop many strategies and to constantly analyse the relationships between the seperate equity curves…Incessant analysis of your portfolio volatility and appropriate position sizing is key.

      My book is intended to be a starting block for beginners who were tired of the same old “follow my system and live on a beach sipping martinis” type of trading eduction that is so prevelant. I state many times in the book that the strategies should be adapted by the reader.

      4) I do not know of a MAC compatible forex-tester, Hugh Kimora says something about using VMware Fusion to get his forextester working on a MAC http://www.tradingheroes.com/how-to-run-metatrader-and-forex-tester-on-a-mac/

      I enjoy building my own PCs though, so I am not the man to ask about anything MAC related!

      To summarise, If there is one (o.k., three) key take-away(s) from the book which I would want all readers to recognise:

      Beating the market is hard.

      Beating the market becomes easier if you learn how to properly develop your own systems.

      Beating the market consistently becomes easier again when you have developed a portfolio of your own systems and learned how to follow them without hesitation!

      The work never stops as they say. I wish you the best of luck.

  • John Bier

    Reply Reply October 28, 2014

    Sorry Llewelyn, Typo above and misspelled your name.

    • Llewelyn

      Reply Reply October 28, 2014

      No problem…Simply recognising that my name is Llewelyn and not James is a vast improvement over many!

  • John Bier

    Reply Reply October 28, 2014

    Llewelyn thank you very much for your response. You have driven home the three key points and I look forward to following your blog and any information you feel we can use.

    Thank you again,

    John Bier

  • Mike Gilmore

    Reply Reply January 2, 2015

    I’m about 55% through the book and the “SPY” term keeps cropping up rather annoyingly because it is a term which, as far as I can see it has not been defined in the book. Every other term is clearly defined on the first occasion it appears (SPY appears 34 times). It first appears in the para before Earnings Per Share (EPS) growth. Could someone please oblige me. Thank you.

    • Llewelyn

      Reply Reply January 2, 2015

      Hi Mike,

      I’m sorry to have caused any annoyance. The “SPY” is simply the ETF which tracks the S&P500 stock market index.

      It is the most actively traded ETF in the world with an average daily dollar volume of about $20 billion traded.

      I’ll get my editor to add the relevant definition in the book. Thanks for bringing it up.

      Best regards and a Happy New Year,

      Llewelyn

  • Travis Smith

    Reply Reply January 14, 2015

    Hi Llewelyn,
    I loved your book. I’m on my second time through. I have a question about the Dondhian Channel however. My trading platform that I use for charting doesn’t offer a Donchian Channel. They do however offer lots of alternatives. Is it simaler enough to something like Bollinger bands to substitute?

    Thanks
    Travis

    • Llewelyn

      Reply Reply January 15, 2015

      Hi Travis,

      Thanks for buying the book and getting in touch. I’m glad that you’ve enjoyed it.

      To answer your question quickly, yes you could use Bollinger Bands instead of the Donchian Channels. Just so long as you know that they measure completely different things.

      The Donchian Channel simply plots the X day HIGHS and LOWS. You could do it yourself to be honest but it would be quite cumbersome if you’re monitoring lots of markets.

      As for the Bollinger Bands, I could explain but it would be easier for me to point you here for an explanation.

      Irrespective of the difference in calculation, the basic premise remains the same. If we only buy stocks which have closed above the Upper Band (Donchian or Bollinger), we are buying strength.

      I just did some tests of the strategy from my book whereby I swapped the Donchian channel for the Bollinger Bands.

      These tests found that setting the Bollinger Bands to anywhere from 100 to 250 for the MA and either 1, 1.5 or 2 standard deviations produced the most similar results to when using the Donchian Channel.

      If you’re curious, the best Bollinger Band settings during the past ten years have been 250 MA and 1.5 SD. (Buy when price closes above upper Band).

      As always, I would urge you to do some tests and paper trading of your own before committing any money.

      Hope this helps,

      All the best,

      Llewelyn

  • Ali Duale

    Reply Reply January 16, 2015

    Hi Llewelyn,

    I really enjoyed your book and i have two question to ask you.

    1) I have £500 to use for trading and i noticed that when i’m trying to calculate the number of shares i could buy, i’m only allowed to buy 1 or 2 shares. Is the amount of money i’m trading with is too small or should i stop leveraging?

    2) What type of trading platform would you recommend to someone who is a beginner and only wants to trade a few time a week?

    • Llewelyn

      Reply Reply January 17, 2015

      Hi Ali,

      Thanks for buying the book and getting in touch. I’m afraid that £500 is too little to properly implement the strategies from my book. Having said that, you could use the lessons in the book to make a longer-term investment in a single company. Just be aware that you’ll have none of the benefits provided by diversification. Also, if you try and trade actively with a small account then the commission drag will be very prohibitive to your returns.
      Better advice would be to save up some more money (at least £5000, preferably £10,000), while in the mean time trading a demo account and becoming more familiar with the rules and how you might improve them.
      Before the Swiss Franc debacle this week I might have even suggested that you open a retail forex account which allowed the trading of micro-lots. You’ll understand why I wouldn’t want to personally recommend that now either!
      I can only talk from experience, but my first foray into trading (over a decade ago) I probably started with about £500 too. To leverage my money I used a spread-betting account. Needless to say…I lost the lot!
      Hopefully you’ll understand why I don’t want to recommend anything that might cause you to lose the lot too.

      I’m sorry that I can’t be any more help than that.

      All the best,

      Llewelyn

  • Chad Maricich

    Reply Reply January 17, 2015

    Llewelyn,
    Chad here from Escalon CA USA.
    Great book. I plan on reading candlestick patterns soon. The best part of your book for me is turning us on to your list of websites for all of this information. Of all of the other stock trading and investment books that I’ve read this is 100% the most straightforward. The idea of something as simple as letting the reader know where to go to set up screeners etc. seems to eluded a lot of other more famous authors.

    I do have a couple of questions though:

    1) When looking at fair value for a stock-Any ideas what to do with a stock with a negative EPS?
    2)I’m struggling with quarterly comparisons of SPY vs. a particular stock vs. the performance of the industry that the stock is in.
    Is quarterly performance on finviz a rolling 3 month? Or is it, for example, January 1st through March 31st?
    If it is the latter, It makes more sense to me to use a rolling three month price performance especially when the date gets deeper into a quarter.
    Do you know where I can find industry performance based on a rolling 3 month %?

    Look forward to your response
    &
    Great book

    Chad

    • Llewelyn

      Reply Reply January 17, 2015

      Hi Chad,

      Thanks for buying the book, I’m glad that you’re finding it helpful.

      Regarding your questions:

      I will tend to avoid companies that have negative earnings. Although there are companies (namely startups, Biotechs, etc) which have negative EPS and might still be a worthwhile investment, I’m of the opinion that unless you know the business inside out and can calculate what future earnings might be it’s a going to be pretty darn hard to know whether you’re paying a fair price.

      With so many stocks to choose from, I prefer to keep things simple and not have to worry about trawling through company statements and analyst reports trying to work out when/if a business might start turning a profit.

      One exception being when a company has negative earnings but those earnings are indicating a steady trend towards profitability. So penny stocks to watch are those which have EPS numbers such as -0.10 Q1, -0.06 Q2, -0.03 Q3, -0.02 Q4, -0.01 Q1, ??? Q2.

      In such a scenario, it might be worth taking a small position in the hope that the nest quarterly EPS happen to be positive. When a company moves from turning a loss to turning a profit, you can often see some short-term momentum come into the stock.

      I can confirm that Finviz quarterly data is based upon a rolling 3 Month calculation.

      Hope this helps,

      Llewelyn

      • Chad Maricich

        Reply Reply January 21, 2015

        Thanks for the reply.

        One other question:

        Do you use Diluted EPS from Continuing Ops in for run rate calculations? You mention this in the book for looking at earnings trends for the Weekly Breakout and it got me thinking if this is the EPS # you use for fair value??

        Thanks Again.

        Chad

        • Llewelyn

          Reply Reply January 24, 2015

          Hi Chad,

          Yes, the diluted EPS is the figure that I will often analyse when calculating fair value.

          Regards,

          Llewelyn

  • jim grass

    Reply Reply February 8, 2015

    Llewelyn

    Is there a way to change my password you gave when I signed up to a simpler one?

    Any chance that you will hold awebinar for your subscribers?

    jim

    • Llewelyn

      Reply Reply February 10, 2015

      Hi Jim,

      I have added a form to the members login page which should allow you to change your password. Please let me know if it works.

      As for a webinar, I have no plans to host one for the time being although I’m sure that one could be arranged.

      I’m curious, if I were to host a webinar – what topics would you like me to cover the most?

      Best regards,

      Llewelyn

  • Alex Kennedy

    Reply Reply February 12, 2015

    Hi,
    I’ve just purchased your book, very interesting. I’ve started to use Real Pro and have set the daily chart up as per your video, saved the template, however when I enter a new symbol the screen comes up as per the template but also with some additional trend and other lines. Are these defaults of the application or do I need to delete something?

    • Llewelyn

      Reply Reply February 12, 2015

      Hi Alex,

      Most probably your charts have automatic trendlines enabled. You can disable them by pressing the buttons in your chart settings which look like squiggly lines with a green and red lower and upper border. The chart settings are found at the top left border of your charts.

      Hope that helps,

      Llewelyn

  • Kurt allan

    Reply Reply February 14, 2015

    Llewelyn,

    Great book – really enjoyed it. I esp. like the detailed links and examples of how to actually use and follow your strategies. Same with the videos. One question – I’m new to technical indicators and want to make sure I follow exactly how to use them. In the Daily Breakout Strategy, one of the criteria is that the closing price for the stock is above the upper Donchian Channel (40 day). Is this the same as saying the closing price for the stock is the new 40 day high? Since if we wait a day and the stock stays the same (or goes down) at the end of the next day the upper Donchian Channel should move up to include the new “high”. Do I follow?

    Thanks again – very informative and helpful.

    Kurt

    • Llewelyn

      Reply Reply February 16, 2015

      Hi Kurt,

      Thanks for buying the book. I’m glad that you enjoyed it.
      As for the Donchian channel, you are absolutely correct that the stock closing above the upper Donchian channel (40 day) is the same as the stock closing higher than the highest price of the previous 40 days. The Donchian channel is displaced by a day to avoid situations whereby the only time that we actually close at a 40 day high is when the closing price is also the absolute high for the day.

      I hope that makes sense!

      Best regards,

      Llewelyn

  • Cedric Duchesne

    Reply Reply February 15, 2015

    Hi,

    Great book and very practical with the setup of finviz and prorealtime. Funny… I’ve found your book because I was searching on YouTube to setup screener with prorealtime and I ended on your video explaining how to setup a trailing stop loss with prt

    I will need to read it again and more carefully the backtest. I have left a comment on amazon

    Thanks again

    • Llewelyn

      Reply Reply February 16, 2015

      Hi Cedric,

      Many thanks for buying the book and leaving a review on Amazon. It is most appreciated. If you have any further questions about the book please feel free to get in touch. For a quicker response please email me at llewelynjames@hotmail.co.uk

      Best regards,

      Llewelyn

  • jim grass

    Reply Reply March 1, 2015

    Geez I am beginning to think I am cursed. lol. I cant get the SPY in Finviz. I keep getting the SPY ETF. Geez such a simple task has turned into rocket science. Whats the solution ?

    jim

    • Llewelyn

      Reply Reply March 1, 2015

      Hi Jim. The SPY is the SPY ETF.

  • jim grass

    Reply Reply March 1, 2015

    LMAO… as always thanks

  • Mathew Lewis

    Reply Reply March 15, 2015

    Hi Llewelyn,
    I am new to trading and have found your book to be very useful.

    I have recently had a couple of weekly breakout that met the trading criteria however they don’t appear on my trading platform.
    I trade from Australia.

    Can you please confirm the following?
    When you invest is a share are you actually buying that share through a broker or are you trading CFD’s ?

    Are there any broker websites you could recommend ? do they need to be specific to the county you live in ?

    Any information you can provide would be great.

    Thank you

    Mathew

    • Llewelyn

      Reply Reply March 25, 2015

      Hi Matthew,

      Sorry for such a late reply to your question. I trade the actual shares as opposed to CFDs. Having said that, I have previously traded stocks through a spread-betting account which is not too dissimilar to CFDs.
      I am based predominantly in the UK and use Interactive Brokers to place the majority of my US equity trades. However, I can’t speak for Australia because it is one of the great countries of the world which I’ve still not had the pleasure of visiting!

      Regards,

      Llewelyn

  • Ray Hutchison

    Reply Reply March 19, 2015

    Hi Llewellen,
    Have bought your book-a good read.
    However cannot find link to writing the amibroker code for the weekly breakout strategy.
    Would you kindly direct me please
    Thanks,
    Ray Hutchison

    • Llewelyn

      Reply Reply March 25, 2015

      Hi Ray,

      Sorry for the late reply.

      I don’t want to publish the weekly breakout code because I don’t want to confuse the fact that the weekly breakout system should not be traded without doing the requisite amount of fundamental analysis first. It is the one strategy from the book whereby I place more emphasis on the fundamental data rather than the technical signals, hence why I didn’t present any back-test results. (It is very hard to accurately back-test rules which include fundamental criteria).

      With that said, you can search for the technical signals using the following code…

      TimeFrameSet(inWeekly);
      index = Foreign(“spy”,”c”,True);
      indexfastma = MA(index,13);
      indexslowma = MA(index,39);

      WeeklyBOsignals = C < 15 and V > 250000
      AND MA(C,13) > MA(C,39)
      AND C > Ref(HHV(H,13),-1)
      AND V > (1.5 * MA(V,13))
      AND indexfastma > indexslowma;

      Filter = WeeklyBOsignals; //Select most recent bar and Press explore after selecting the database you are interested in searching

      ///////////////////////////////////////////////////////////////////

      Regards,

      Llewelyn

      • H Yardley

        Reply Reply May 15, 2015

        Hi Llewelyn,
        I enjoyed your book very much and greatly appreciate the very practical information provided on the website and videos. I tried using the code above for the weekly technical signals (pasting it into the ProScreener in PRT) but get error messages on the first two lines. Any help/suggestions would be greatly appreciated.
        Thanks,
        Herb

        • Llewelyn

          Reply Reply May 20, 2015

          Hi Herb,

          Thanks for reading the book and getting in touch. Regarding the code, it is correct but sometimes strange things happen when copying and pasting from MS word or WordPress sites into ProRealTime. The easiest fix is usually to make a note of whichever lines are causing an error and then to delete them before manually rewriting them. Please let me know if that works.

          Best regards,

          Llewelyn

          • H Yardley

            May 20, 2015

            Thanks for the reply. Unfortunately, your suggestion didn’t work. When I try to execute ProScreener, I get the following error message about line 1:
            Syntax error: line 1, character 13 One of the following characters would be more suitable than “(“: – “,” – “=”

          • Llewelyn

            May 20, 2015

            Hi again Herb,

            It just occurred to me that you might be trying to using the Amibroker code in ProRealTime. This won’t work as both platforms use different languages. As I mention in another blog post, I do ask that people donate a small sum to the International Red Cross in exchange for the ProRealTime code. I have sent you the code in an email.

            Best regards,

            Llewelyn

  • Larry Johnston

    Reply Reply March 20, 2015

    Hello, Thank you for all your hard work, I’m almost done with trading stocks and am looking forward to the candle sticks. I’m new so I have been taking notes. I have all three strategies written down step by step. Am looking forward to implementing them and build my wealth. I will be starting the videos soon. Thank you so much again for your insight and tools you gave.
    .

    • Llewelyn

      Reply Reply March 25, 2015

      Hi Larry,

      Thanks for buying the book and getting in touch. I appreciate your feedback and look forward to hearing about your future success!

      Regards,

      Llewelyn

  • maritime4life

    Reply Reply March 25, 2015

    Hi Llewelyn,

    I had a quick question for you. I watched your video on creating watchlists using Creating Watch-Lists Using Finviz Screening Tool on how to make your Daily Breakout and Counter-Trend strategy watch-lists and noticed that you selected “Relative Volume over 1.5” on the Descriptive Tab. I bought the kindle version of your book, and it does have “Relative Volume over 1.5” listed. It only has 9 filters in all while your video has 10.

    I was not sure if I should or should not include “Relative Volume over 1.5” on my Daily Breakout and Counter-Trend strategy watch-list. If I should include it, that line is missing off the Kindle version of the book, FYI. If you want a screen shot of the kindle page just let me know.

    By the way I think your book is really amazing. I really do appreciate the effort you put into it.

    Regards,

    Mike White

    • Llewelyn

      Reply Reply March 25, 2015

      Hi Mike,

      Thanks for buying the book and pointing out the discrepancy between it and the video. Regarding the “Relative Volume over 1.5” tab, I think that I probably added it to the video as an after-thought because I realised that some people might not have access to a technical screener which would return breakout accompanied by volume that was at least 1.5 times the size of average volume. I.E. pretty much the same thing as “Relative Volume being over 1.5”.

      So in other words, you needn’t include the “Relative Volume over 1.5″ criteria if you are screening for stocks which meet the technical rules first. If you are studying the fundamentals first, you’ll save time if you do include the “Relative Volume over 1.5″ criteria when you’re looking at breakout stocks.

      I hope what I just said makes sense!

      Kind regards,

      Llewelyn

  • Ray Hutchison

    Reply Reply March 28, 2015

    Thanks very much for your reply,Llewelyn

    Regards,
    Ray Hutchison

  • Ken Jennrich

    Reply Reply March 30, 2015

    Hi Llewelyn

    Great book, thanks for sharing. Can’t wait to get started. Can you tell me where I can find future Earnings Report dates for a given stock?

    • Llewelyn

      Reply Reply March 30, 2015

      Hi Ken,

      Thanks for buying the book. I’m glad that you enjoyed it.

      Regarding Earnings report dates:

      You can sometimes get that data from Finviz. I.E. enter the ticker symbol and on the screen which provides the EPS data, ROE%, P/S ratios etc, you will see a cell which is called “Earnings”. The corresponding data will tell which date that the next report is expected and whether the report is expected before market open (BMO) or after market close (AMC).

      Sometimes, you might find that the earnings data on Finviz is not updated…In which case, you could look at http://biz.yahoo.com/research/earncal/today.html

      On that page you’ll be able to see what earnings are due on any particular date, or you are able to search for the individual stock that you are interested in.

      Finally, I should point out that Future earnings report dates (as listed by the above sites) are sometimes subject to change…It is prudent to keep checking that the date which the report is scheduled for has not been changed.

      I hope that helps,

      Best regards,

      Llewelyn

  • mike alderson

    Reply Reply April 21, 2015

    hello, Llewelyn.

    I read the honest guide to candelstick patterns first, wow. probably should have read the stock trading book first, anyway both great, and ive read quite a few. Doesnt mean I have any idea of how I was going to trade, until now. Question, why do I see on youtube both finviz, and PRT V10.2 ? Do you use both, or is one free and the PRT V10.2 your creation?

    Anyway, thanks for the help,

    Mike

    • Llewelyn

      Reply Reply April 21, 2015

      Hi Mike,

      Thanks for buying the books and leaving a comment. I appreciate it. Regarding Finviz and PRTV10.2, neither are my creation. The reason that you see videos for both is that I wanted the readers of my books to know where they could access fundamental and technical stock market data without paying for a subscription. Finviz is a good place the fundamental data. PRTV10.2 is one of the better charting packages which provides free end-of-day data and the ability to create custom scanning criteria and indicators. Knowing how to use both sites will allow the reader to scan for technical trading signals and then also to analyse the fundamentals of any company which has produced a technical signal.

      Best regards,

      Llewelyn

  • Brian

    Reply Reply April 23, 2015

    Just wanted to say thanks for the excellent book and the hard work you put into it. Please know it is much appreciated and it closed the loop on a lot of issues for me understanding how to approach the market. I also wanted to say thanks for answering all these questions, please keep it up!

    • Llewelyn

      Reply Reply April 24, 2015

      Hi Brian,

      Thanks for your kind words. It’s great to hear that you’ve found the book helpful.

      Kind regards,

      Llewelyn

  • Brian

    Reply Reply April 28, 2015

    Do you recommend we execute our exits manually once a stop loss is hit? My broker offers the option to enter a trailing stop loss, should I use that?

    • Llewelyn

      Reply Reply April 28, 2015

      Hi Brian,

      When using a trailing stop-loss I tend to exit positions manually when the price closes below my stop order. Having said that, there are a number of occasions whereby I could have substantially limited a loss on a trade if I had placed an actual stop order with my broker. Furthermore, some people find it hard to sleep at night if they don’t have actual orders placed with their broker. If that’s you…I wouldn’t want to dissuade you from using them.

      Regards,

      Llewelyn

  • Brian

    Reply Reply May 7, 2015

    Is it normal to go several days to weeks without finding a setup that meets all the rules of the daily and weekly breakouts?

    • Llewelyn

      Reply Reply May 7, 2015

      Hi Brian,

      I might have covered this in a previous post but if you are trying to meet every single criteria (both fundamental and technical), it is not uncommon to find periods whereby no stocks will meet all of the rules. In fact, one of the benefits to applying fundamental criteria to a predominantly technical strategy is that you might avoid buying stocks when the market is over-valued or if earnings or revenues begin to disappoint, etc etc.

      If you’ve not bought any new positions in the past couple of weeks, you might be glad about it…the chances are that you would be experiencing a bit of heat.

      Having said the above, NLS triggered a technical signal on Tuesday and happened to tick nearly all of the fundamental boxes. It was also up 2.00% today while the average Russell3000 stock could only manage a gain of 0.06%. Take that as you will.

      As I’ve said elsewhere, if you want more signals to trade you can begin to relax the fundamental criteria. Please appreciate that when writing the book I wanted to cover as many topics as I thought important. My advice would be to hone in on the topics which you personally have the most interest in and develop a strategy which is more suitable for your preferences.

      Hope that helps.

      Best regards,

      Llewelyn

  • Brian

    Reply Reply May 7, 2015

    Yes that did help….I apologize if you’ve covered that before. I’ve read through a good portion of the posts and didn’t see that one. Thanks as always for the prompt reply.

  • Tom Warneke

    Reply Reply May 19, 2015

    Hi Llewelyn,

    I just stumbled upon your book on Amazon yesterday while seeking a book on Trend Trading. I am about 1/2 way through it. I really appreciate how you get to the point and avoid all the fluff that many investing authors create to fill pages that add no value! I look forward to finishing the book and perusing your web site. My impression so far is that you provide good advice at a tremendous value.

    I have an investing blog as well, at the-objective-investor.com, if you would like to visit. I’ve been investing since 1991, using primarily fundamental strategies for managing my watch list, and employing some simple technical analysis for entry/exit points.

    BTW – the floating share buttons on your blog site are not obtrusive on a laptop or desktop screen, but on a smart phone, they overlay the content your readers are trying to read.

    Best regards,
    Tom

    • Llewelyn

      Reply Reply May 20, 2015

      Hi Tom,

      Thanks for reading the book and stopping by. I appreciate you kind response and hope that you haven’t changed your opinion of the book after reading the second half! I look forward to checking out your blog and would also like to thank you for pointing out the issue with my share buttons. I’ll get them fixed as soon as possible.

      All the best,

      Llewelyn

  • Tom Warneke

    Reply Reply May 20, 2015

    Hi Llewelyn,

    Thank you for your reply. I am still enjoying the book and learning a lot.

    I have a couple of questions, if you don’t mind.

    Regarding the fast (20 d) and slow (120 d) moving averages used as a buy condition, have you tried alternatives, such as 10 / 60? I tend to think (right or wrong, I don’t know) that the more recent past is more indicative of potential near term price moves than earlier data would be.

    Using ATR is a fascinating way to consider position size and stop loss values. I’ve found it is supported in Thinkorswim and have added that to my repertoire. As I understand it, the ATR is the difference between the high and low for a given day, and this is averaged over a number of days. You mention 17 weeks in the book, and I couldn’t find a number in your ATR code that indicates how far back your average goes. 17 weeks would be 85 trading days, so is that the number to use? It would be interesting to consider highs/lows over a broader range, say 5 days.

    For stops, I have typically set a percentage value from opening price, then adjust manually for trailing updates. ATR factors in the variance based on historical price so that you don’t get stopped out by normal market action.

    I’ve use the 5d moving average of the highs, minus lows as a percentage of the mean (H+L/2) to calculate a volatility factor and that works pretty well to screen for swing trades. Plotted on a chart, the moving averages of highs and lows (I use 5d) provides a channel to visualize the “normal” price range.

    Best regards,
    Tom

    • Llewelyn

      Reply Reply May 20, 2015

      Hi Tom,

      I have tested many different parameters, many of which work better than those which are presented in the book. My intention was never to say…”these are the best settings”, it was rather to present a basic set of rules which incorporated many of the concepts which I wanted to write about. E.g. How to follow long term trends, how to use volatility adjusted position-sizing, etc.

      The above partly explains the ATR settings that I used. The 17 which you refer to was used in the initial example regarding Apple stock. For the actual strategies, I specified that I was using a 20 day ATR for the daily strategies and a 13 week ATR for the weekly strategies. Once again, these parameters were not optimised. They simply reflect about one month’s worth and one quarter’s worth of trading days respectively.

      As you have indicated, there are many other ways that one could calculate volatility, it’s just that the ATR was a simple way for me to explain the concept in the book.

      Best regards,

      Llewelyn

  • richard climie

    Reply Reply July 23, 2015

    Hi Lllewlyn like so many other people I thank you for writing this excellent book
    You must get tired of all the questions
    Mine is quite simple
    I am using Interactive Brokers
    2 nights ago I bought ANGI for about $6.10 and pot a trailing stop loss of 10% and stop of $5.50
    The next morning Australian time I checked and they had sold for $4.60
    I rang ib and they said I had been stopped out as price out of hours opened at $4.70 so my trailing stop became a market order
    So how can I stop this happening again?
    I find all the different order types available with IB confusing and at times misleading
    Your advice would be greatly appreciated
    Best wishes- Richard Climie

    • Llewelyn

      Reply Reply July 23, 2015

      Hi Richard,

      Thanks for buying the book and leaving a comment.

      It seems to me as though you might have preferred to use a trailing stop limit order.

      What happened to your position is that your trailing stop market order would have been at $5.50 when the market closed. When the stock opened at $4.70, your trailing stop price had been hit (i.e. the price was trading below $5.50) which turned your trailing stop order into a sell at market order.

      If you wanted to avoid that from happening, you would have been better served using a trailing stop limit order. This works in the same way as a trailing stop market order, but when your trailing stop price is hit, your order becomes a sell limit order instead or sell market order.

      If your trailing stop price was at $5.50 when the market closed, when the stock opened at $4.70 your trailing stop price has been hit. With a trailing stop limit order, you would now have a sell limit order at $5.50. This means that your sell order will not be filled unless the price trades at $5.50 or better.

      The important distinctions to understand are between a market order and a limit order.

      Assuming that we are only referring to long positions which we want to sell. A market order will simply sell at the market price. A limit order will only sell at your specified limit price or better.

      Market and Limit order types can be applied to trailing stops, On Open orders, On Close orders, you can even submit a market-to-limit order which will sell your position at the market price but if your order is only partially filled, the remainder of the order is cancelled and re-submitted as a limit order with the limit price equal to the price at which the filled portion of the order executed.

      So to actually answer your question, the way to avoid getting stopped out at any price is to use a limit order (because a limit order will only get filled if the price trades at your specified limit order price or better).

      But you must be aware that if the price suddenly trades lower than your limit price, as it would have if you’d been using one with your ANGI position, you will not get filled and could end up holding a position which keeps falling in price.

      I would urge you to read the full explanations of all order types on this page…

      https://www.interactivebrokers.com/en/index.php?f=4985&ns=T

      I hope that helps.

      Regards,

      Llewelyn

      • richard climie

        Reply Reply July 24, 2015

        Thanks so much Llewelyn your generosity with your time and expertise is amazing.

        • Llewelyn

          Reply Reply July 25, 2015

          Cheers Richard. Glad that I could help.

  • Francisco Tejeda

    Reply Reply August 3, 2015

    Thanks for you book…!
    Very Honest,,,by the way…!

    • Llewelyn

      Reply Reply August 4, 2015

      Thanks Francisco. I hope that you enjoyed it!

  • Ed

    Reply Reply September 27, 2015

    I’ve recently become active in the market and am searching out all of the education I can find. Even after many videos, blogs, books, seminars, etc., I had many a questions on how to hone a strategy and select stocks for potential purchase. This book answered many of those questions, and quite directly. Thanks for your work putting this together. This blog is definitely on my favorites list. Thanks again!

    • Llewelyn

      Reply Reply September 28, 2015

      Thanks Ed, I appreciate it.

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