Thomas Wood | MicroQuant Divergence Trading …workshop+SLIDES.pdfDivergence Trading Workshop Day One presented by Thomas Wood | MicroQuantSM The Launchpad Strategy Risk Disclaimer

Divergence Trading Workshop

Day One

presented by

Thomas Wood | MicroQuantSM

The Launchpad Strategy

Risk Disclaimer

Trading or investing carries a high level of risk, and is not suitable for all persons. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. This content is subject to change at any time without notice, and is provided for the sole purpose of education and assistance in making independent investment decisions. ValueCharts.com has taken reasonable measures to ensure the accuracy of the information contained herein; however, ValueCharts.com does not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or from an inability to access such information or any delay in or failure of the transmission or the receipt of any instruction or notification in connection therewith. Any past performance results are shown for illustration and example only, are hypothetical and as such have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Past performance is not necessarily indicative of future results.

CFTC Rule 4.41 (Hypothetical Disclaimer)

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About Me… Formal info

• 1995 Graduate of Vanderbilt

University

• Full Broker at 23 with Merrill Lynch

• 12 Year Senior Advisor Vanguard Asset Management Service

• Over 4 years - Stocks & Options Live Trading Room

Divergence Trading Workshop

Day One

presented by

Thomas Wood | MicroQuantSM

The Launchpad Strategy

• Question :

• What makes up a price bar? Candlestick Bar?

Launchpad Strategy

• Question : What makes up a price bar? Candlestick Bar?

• Answer = Smaller Bars

Launchpad Strategy

Launchpad Strategy

Launchpad Strategy

Launchpad Strategy

• Price acceleration in particular direction occurs first in a Small timeframe.

• If acceleration is great enough, price action then begins to affect an Intermediate time frame.

• If Price acceleration is great enough in the Intermediate timeframe, price action then begins to affect a Larger time frame.

Launchpad Strategy

LaunchPad Multi-Timeframe Momentum Theory

Launchpad Strategy

• small scale large scale “domino effect”

• small Medium LARGE

• We can follow this “small scale large scale” domino effect, by watching multi-timeframe changes in momentum direction & strength.

• We do this by simultaneously watching price and momentum direction in 3 – 4 timeframes simultaneously.

Launchpad Strategy

Launchpad Strategy

LaunchPad Timeframes

LauchPad – Daily chart – End of Day trades

Launchpad Strategy

Daily Chart

• Short (Red) line – 45 minute bars

• Intermediate (Yellow) line – 90 minute bars

• Long (Green) line – 180 minute bars

Launchpad Strategy

LauchPad – 60 min chart – Swing trades

Launchpad Strategy

60 Minute Chart – Swing trades

• Short (Red) line – 8 minute bars



Launchpad Strategy

Launchpad Strategy

LauchPad – 3 min chart – Intraday trades

3 Minute Chart – Intraday trade

• Short (Red) line – 30 second bars



Launchpad Strategy

LauchPad – 3 min chart – Intraday trades

Create your own Launchpad Workspaces

• 4 Columns Chart workspace

• 1 Primary T.F. Chart : Open-High-Low-Close bar

chart (OHLC) or Candlestick chart + momentum indicator (MQ momentum or MACD)

• 3 Lauchpad subset charts / emphasis on MQ momentum or MACD view. Change color of indicator line to Red/Yellow/Green

Launchpad Strategy

LauchPad – 60 min chart – Swing trades

Launchpad Strategy

• Directional Channel Breakout with a “Squeeze”

• Reversal Swing Trades at Support/Resistance

• Launchpad Credit Spreads

• End of Day Launchpad Trade

Launchpad Strategy

Practical Trading Strategies

Directional Channel Breakout

with a “Squeeze” (VBT)


• Please note that the MQ VBT is the preferred indicator of this trade as it is a more sensitive indicator, and has a built in Volume signal.

• Free “squeeze” indicators on various platforms can be substituted in place of VBT.

Launchpad Strategy


• Many times a significant increase in rapid, directional price movement follows a time of market compression (Squeeze / quiet price movement)…

• One of our favorite ways of trading a squeeze is by setting up a “breakout channel” by drawing up near-term support and resistance lines.

Launchpad Strategy

Directional Channel Breakout with VBT

Launchpad Strategy


Launchpad Strategy


• One of the advantages of using the Launchpad strategy instead of waiting for the squeeze “fire” signal, is that we can often enter the trade earlier and know the direction early in the beginning of a move.

Launchpad Strategy


Launchpad Strategy


Launchpad Strategy

Watch for “Yellow Signal Dots” on VBT

Setup up Support/Resistance or Trendlines

Use the appropriate Launchpad workspace; look for the Short (red) and Intermediate (yellow) lines to identify direction of breakout, just before the Long (green) line.

Launchpad Strategy

Look for opportunity to enter position based on direction of the Launchpad signal (Short & Intermediate line direction)

Watch for VBT to “Fire” the squeeze as a confirmation signal, and verify strength of Volume

Launchpad Strategy

Reversal Swing Trades at

Support/Resistance Levels

Swing Trades are some of the most practical trades to take.

• They take place on intermediate time frame (60minutes)

• Allowing for multi-day sized moves (more $$$)

• plenty of time to enter and exit trades

• Increased number of available trades to take.

Launchpad Strategy

Swing Trades are some of the most practical trades to take. • By using Launchpad as a “screen” you can go

through a list of 30-50 securities every couple of hours and you’ll always be aware of up-coming Swing trade opportunities.

• Watch the Short & Intermediate signal lines for changes in direction at Daily & Weekly support & resistance levels.

Launchpad Strategy

Reversals on Support/Resistance Levels

Launchpad Strategy


Launchpad Strategy


Launchpad Strategy

Identify Support/Resistance on Daily chart

As price approaches levels, begin to watch on Swing (60 minute) Launchpad workspace

Watch for proof of “bounce” off level - look for the Short (red) and Intermediate (yellow) lines to rebound off level, just before the Long (green) line rebounds off level

Launchpad Strategy

Look for opportunity to enter position based on direction of the Launchpad signal (Short & Intermediate line direction) in the “rebound” direction.

Launchpad Strategy

Launchpad Credit Spreads

Launchpad signals are directional in nature. Using the Short & Intermediate line alone is an early entry signal

When you wait and get directional confirmation from all (3) signal lines – Red/Yellow/Green, is a significant indication of direction.

Launchpad Strategy


When you wait and get directional confirmation from all (3) signal lines – Red/Yellow/Green, is a significant indication of direction.

This is also the best time to sell Credit Spreads “AWAY” from the price levels, preferably opposite side of support/resistance level or behind an area of price congestion.

Launchpad Strategy



Launchpad Strategy

Watch for potential Squeeze breakout trade or Reversal trade at Support & Resistance.

Upon Launchpad signal of breakout or reversal, wait until all (3) signal lines confirm directional move.

Launchpad Strategy


Upon (3) signal lines confirmation, identify area on “Opposite side” of support & resistance level or “Opposite side” of area of price congestion like a Channel area or Pennant area.

Identify suitable Short strike price level for an aggressively priced Credit spread premium ($.40-.$50) with expiration date of less than 5 trading days

Launchpad Strategy



Launchpad Strategy


Launchpad Strategy


Launchpad Strategy

Launchpad End of Day Trades

For those that can’t trade during the day, Launchpad signals can assist on making After-Market Hour trades.

Identify suitable trading securities – large individual stocks, futures, or (my favorite) ETFs, either based on Index or Sector.

Launchpad Strategy

Launchpad End of Day Trades

Use the Daily Launchpad workspace chart.

Identify potential areas of support and resistance.

Use either the Directional Breakout or the Reversal at S/R trades to enter at the beginning of the Launchpad move.

Launchpad Strategy

Launchpad End of Day Trade

The entry is the break of the previous daily bar’s High or Low price…

If the Launchpad signal is Bullish – enter your order to BUY (bullish) a position upon the break above the previous day’s HIGH.

Set stoploss at the midpoint of the previous bar’s high/low.

Launchpad Strategy

Launchpad End of Day trade


Launchpad Strategy


Launchpad Strategy

If the Launchpad signal is Bearish – enter your order to SELL (bearish) a position upon the break below the previous day’s LOW.

Set stoploss at the midpoint of the previous bar’s high/low.

Launchpad Strategy



Launchpad Strategy


Launchpad Strategy

TIP : Watch that the GREEN signal line of the Long sub-chart stays consistent with the trend you are trading. If it starts to flatten & reverse, consider exiting the trade.

Short and Intermediate signal lines can fluctuate. The Long GREEN signal line is a better indication of the daily trend.

Launchpad Strategy



Launchpad Strategy

Launchpad Strategy

Questions & Answers

Launchpad Strategy

Thank you for Attending

Thomas Wood | MicroQuant Divergence Trading …workshop+SLIDES.pdfDivergence Trading Workshop Day One presented by Thomas Wood | MicroQuantSM The Launchpad Strategy Risk Disclaimer

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