Reversal System - NetPicks System Training.pdf · Take note of important announcements and holidays that could impact typical trading We do not trade through earnings. We will close

Reversal System

Range Chart Calculation

1. We use a monthly chart to get the range calculation for each stock/ETF that we are trading.

2. We load up the NPOFT_Range indicator onto the Monthly chart.

3. We look at the last monthly bar/candle that has closed to get the range setting.

4. To find the range setting we open the data box and use the “Tick Range” setting from the last Monthly bar that is closed.

5. We then transfer that setting to the range charts (range charts for Ninjatrader and TOS – Momentum charts for Tradestation). We will load up 6 months worth of data for each symbol.

6. This range setting is updated each quarter.

7. You can set the charts to candlesticks or bar charts. It won’t influence the system either way.

Options Fast Track Reversal Setup

1. You will need the %R indicator on the chart (See settings on the next slides).

You will use the %R in Tradestation

You will use the WilliamsR in Ninjatrader

You will use the WilliamsPercentR in Thinkorswim

2. You will also need to add the NPOFT_ReversalCalc and NPOFT_SignalLine indicators to the charts (this step is already done for you in Tradestation and Ninjatrader. TOS needs to be done manually).

3. If you are using TOS you need to follow the chart setup instructions which are outlined on the Owner’s Site.

%R Settings

Reversal Setup Calculator Settings

Reversal Setup Calculator Settings

Signal Line

Reversal Setup – Long Trade

• Need an oversold (below 10) on the %R indicator

• Wait for a close above the NPOFT_SingalLine

• The calc will print an entry point using the high of the setup bar plus the Entry Mult which is a multiple of the range being used on the chart for that quarter.

• The calc will print targets using the entry point plus the multiples listed in the calculator. These will be multiples of the range being used on the chart for that quarter (Tgt1 mult and tgt2 mult in the calc).

• The calc will print a stop using the low of the candle minus a multiple of the range being used on the chart for that quarter (StopMult in the calc).

Reversal Long Setup

Reversal Setup – Short Trade

• Need an overbought (above 90) on the %R indicator

• Wait for a close below the NPOFT_SingalLine

• The calc will print an entry point using the low of the setup bar minus the Entry Mult which is a multiple of the range being used on the chart for that quarter.

• The calc will print targets using the entry point minus the multiples listed in the calculator. These will be multiples of the range being used on the chart for that quarter (Tgt1 mult and tgt2 mult in the calc).

• The calc will print a stop using the high of the candle plus a multiple of the range being used on the chart for that quarter (StopMult in the calc).

Reversal Short Setup

Reversal Setup – Other Rules

• Trades will cancel if price closes on the other side of the Signal Line before hitting the entry point.

• Overbought and oversold readings stay valid until crossing back over the 50 level on %R

Money Management

• 1st target is used purely for money management. We move the stop to BE once 1st target is hit (calculator does this for us on the charts).

• We initiate a trailing stop once trade gets halfway between target 1 and 2 (calculator does this for us on the charts).

• We will exit the full trade at target 2.

• You can consider exiting part of your trade at target 1 but be careful how it effects your Reward to Risk ratio long term.

Special Situations

Make sure you are careful with gap trades. If a stock gaps past your entry point you can get in synch with the trade as long as it hasn’t hit Target 1. If it has already hit target one without a pullback then cancel your order and wait for the next trade.

Pay attention to "Trade for Profit" training and the "Art of Trading/Key Level Adjustments"

The Trade Calculator provides the RAW trade set-ups before any key level adjustments.

Be aware of important market news.

Make sure you correctly calculate your range bar intervals.

Take note of important announcements and holidays that could impact typical trading

We do not trade through earnings. We will close out of any open trades no later than 24 hours before an earnings release. We don’t open new trades once we get 5 days in front of an earnings release.

Any uncertainty? Always best to walk away or not to take a trade -- every trade taken should feel 100% confident in adherence to rules and system.

We’d Love To Hear From You

• email: [email protected] • (855) 788-7881 or (214) 865-6151 • Live Chat Us at: http://www.netpicks.com