Thomas Wood | MicroQuant Divergence Trading Workshop …s3.amazonaws.com/workshopResources/...Day One presented by Thomas Wood | MicroQuantSM Real Life Fibonacci Trading & ... –2-3

Divergence Trading Workshop

Day One

presented by

Thomas Wood | MicroQuantSM

Real Life Fibonacci Trading & Dynamic Targeting with MQ Trend

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)

U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN.

About Me… Dave Aquino

• 1995 Graduate of Vanderbilt

University

• Full Broker at Age 23 with Merrill Lynch

• 12 Year Senior Advisor Vanguard Asset Management Service

• 39 months in Stocks & Options Live Trading Room

Fibonacci Trading & Dynamic Targeting (MQ Trend)

• Fibonacci Fundamentals

• Fibonacci – Real-World Application

• MQ Trend “Dots” : Setup & Settings

Fibonacci Trading & Dynamic Targeting (MQ Trend)

• Powerful Combo - Fibs & MQ Trend Dots

• Real-World Trade Setups you can Trade

– Intra-Day Reversals on range-bound Days

– 2-3 day Swing Trades

– Big Fish Move Setup

• Let’s look at LIVE examples

- Fibonacci Trading -

Fibonacci Fundamentals

Fibonacci Trading


• Fibonacci analysis is based on a series of numbers developed by Italian mathematician Leonardo Fibonacci in the 12th century.

• 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 …..

Fibonacci Trading


• These Fibonacci numbers and how they related to each other repeatedly show up in naturally occurring patterns.

• St. Thomas Aquinas, conceived of the

relationship as a perceived relationship of

proportions and our idea of beauty

Fibonacci Trading

Pyramid of Giza

Fibonacci Trading

Golden Section of a Rectangle

Fibonacci Trading

Translated into Proportions & “Beauty”

Fibonacci Trading

Logarithmic Spiral in Mollusk Shell

Fibonacci Trading

* Practical * Use in Trading

• Fibonacci Numbers are favorite numbers to use for Moving Averages & Time/Tick Frames

• 5, 8, 21, 34, 55 (50), 89 (90), 144

Fibonacci Trading


• We use their “fractional” forms for Fibonacci Retracement and Extension levels. 23.6% 38.2% 50.0% 61.8% 78.6% (76.4%) 127% 162%

Fibonacci Trading


-- There are two primary ways that I use Fibonacci analysis in my trading:

• One is to identify or confirm support or resistance levels

• and the other is to help identify price targets

- Fibonacci Trading -

Real-World Application

Fibonacci Trading


• Reversals

Point of Inflection

Fibonacci Trading


• Reversals

Point of Inflection

Fibonacci Trading


• Reversals

Point of Inflection

(GO LIVE) – how to find them / draw them

Fibonacci Trading


• Reversals

– Single Tops/Bottoms

– Double Tops/Bottoms (Divergences)

– Triple T/B : H&S, Inverse H&S

Fibonacci Trading

Double Top

Bearish Divergence

Fibonacci Trading

Triple Top

Head & Shoulders

Fibonacci Trading

Double Bottom

Bullish Divergence

Fibonacci Trading

Triple Bottom

Inverse

Head & Shoulders

Fibonacci Trading


• Reversals

• Imagine you are driving a Southbound car,

– 20 MPH

– 55 MPH

– 85 MPH

Fibonacci Trading


• Reversals

• Imagine you are driving a Southbound car,

– 20 MPH (single)

– 55 MPH (double)

– 85 MPH (triple)

Fibonacci Trading

TradeStation settings

Fibonacci Trading


• We use their “fractional” forms for Fibonacci Retracement and Extension levels.

23.6%

38.2%

50.0% (HIGHEST Probability – #1 Target)

61.8% (Purest “Fib” Level - #2 Target)

78.6%

Fibonacci Trading


• GO LIVE on TradeStation Charts

Fibonacci Trading

Think or Swim settings

(default is fine)

Fibonacci Trading


• GO LIVE on TOS Charts

- Dynamic Targeting -

MQ Trend indicator & Settings

Dynamic Targeting

MQ Trend Indicator

• Originally developed Microquant as a “trend following” indicator

• Green is Bullish Trend

• Red is Bearish Trend

• Based on Chandelier algorithms

• Not Parabolic SAR

Dynamic Targeting

MQ Trend Indicator

• Provides a variable Support/Resistance Level

• Adapted (DOTS) use as a “Dynamic Target”

• When use with Fibonacci Levels, can provide a very high level of confidence in profit target.

• Maximize Profits, Reduce Risk

Fibonacci Trading

Default

setting

Fibonacci Trading

DOTS

Setting

drawn on

primary

chart

Fibonacci Trading

Fibonacci Specific / Trading Room Settings

Fibonacci Trading

MQ Trend

Dots

Support/

Resistance

Fibonacci Trading

MQ Trend

Dots

Dynamic

Targeting

- Real World Trading -

Combination of Fibonacci Levels & MQ Trend “Dots”

Dynamic Targeting

Combine Fibonacci Levels & MQ Trend DOTS

• Fibonacci Levels : Provide levels of Support & Resistance

• Use 50% Retracement Level as the #1 Target

• Use 61.8% Retracement as the #2 Target

Dynamic Targeting


• Overlay (MQ Trend DOTS) use as a “Dynamic Target” – imagine dots as a moving “bullseye” that will gradually settle on or nearn one the Fib Levels

• MQT DOTS provide a very high level of confidence that, that Fib level will the “Target” level – adjust profit taking to Maximize Profits

STEP 1 :

• Watch chart for a 12 – 20 Bar / directional move

– 3 minute : 30 – 45 minute move

– Hourly : 2 – 3 day move

– Daily : 3 week move


STEP 2 :

• Identify the START and END points of inflection

– This will reveal the Fibonacci Levels


STEP 3 :

• Locate the current MQ Trend DOT distance

• Is it near a Fib Level?

• Is it moving?

• Assume that the current price will move to that price at the end of its retracement (End Goal)


STEP 4 :

• Plan your EXIT / Profit taking Strategy

• If MQ Trend DOTS, far away – hold longer for more

profit and/or sell slower and let more contracts run

• If MQ Trend DOTS, near by – take profits sooner, move may not go very far, but leave on a “runner”, it may breakthrough!


Dynamic Targeting

Combine

Fib Levels

&

Dynamic

Targeting

- Real World Setups you can Trade -

Real World Setups

Morning Daily Range - IntraDay

• Chart : 2 or 3 minute Intra-Day chart

• Start Time : 9:30AM eastern

• Watch for first 60 minutes for “run”

• If possible, identify High / Low

Real World Setups


• If possible, identify High / Low Prices

• Are they point’s of inflection? Still Trending?

• Single/Double/Triple

Real World Setups


• If answers are yes,

• Follow the Steps 1 – 4 in the Fib/MQ Trend Combo instructions.

• Usually get 1, possibly 2 quality retracements

Real World Setups


• GO LIVE

Real World Setups

2 Day Swing Trade

• Chart : 60 minute chart

• Morning Trading session, Afternoon session

• Look at a minimum 5 Day period

Real World Setups

2 Day Swing Trade

• Watch for Trending Run of 12 – 15 bars

• Look for “Starting” point of run

• Watch for “Reversal Pattern”

Real World Setups

2 Day Swing Trade

• Take the Trade according to the Steps 1 – 4 in the Fib/MQ Trend Combo instructions

• You can trade it with stocks or options (directional or debit spreads)

Real World Setups

2 Day Swing Trade

• GO LIVE

Real World Setups

Big Fish Setup

• Chart : Daily chart

• Watch the Indexes first for “Trending Run”

Real World Setups

Big Fish Setup

• Watch for Trending Run of 12 – 15 days

• Look for “Starting” point of run

• Watch for “Reversal Pattern”

Real World Setups

Big Fish Setup

• Identify a Big Fish Stock making the same pattern.

• Take the Trade according to the Steps 1 – 4 in the Fib/MQ Trend Combo instructions. Trade the Index or the Stock.

• You can trade Big Fish Move in stocks or options (debit spreads/swing trade timeframe)

Real World Setups

Big Fish Setup

• GO LIVE

Thank You for your Attendance

Dynamic Targeting

Combine

Fib Levels

&

Dynamic

Targeting

Real World Setups

Intra-Day Scalping

• ES

• SPY

• Individual Stocks

Documents

Thomas Wood | MicroQuant Divergence Trading Workshop …s3.amazonaws.com/workshopResources/...Day One presented by Thomas Wood | MicroQuantSM Real Life Fibonacci Trading & ... –2-3