Wednesday, October 27, 2010

Oliver Velez, Toronto Money Show 2010

Oliver Velez works for iFund Traders LLC. Their website is at iFund Traders. It is an interesting company as they offer training for traders and also a deal to trade with their money. However, this talk was all about trading based on a technical analysis technique.

The talk was called “When to Risk it All, Swinging for the Fences in the Right Way”. The main idea is that 85% of the trading done in the US is done by institutions. The institutions are the players that make markets move. As an individual, you can take advantage of the trading by these institutions. First, he said that markets are made up of a bunch of buys and a bunch of sells. For each transaction, you need a buyer and a seller.

What a trader needs to do is jump on the trades of institutions, which is the big money of the markets. All the institutions trading leave a footprint in the market for us to use. For example, if 92% of a stock’s traders are 10 institutions, and 5 are buyers and 5 are sellers, the stock will go no where. However, if one of the 5 buyers becomes a seller, then the stock price will drop. This sort of action will leave a footprint in the market and this is how we find opportunities in the market.

What we look for as traders is transitions from fear to greed and from greed to fear. Velez says that the market does not treat cowards well. There are times to be conservative and there are times not to be conservative. There are 6 types of candles that he talks about. However, the 3 most potent bull candles are bull elephant and bull tails, and the 3 most potent bear candles are bear elephant and bear tails. See the picture below.

The bull and bear elephant candles are surge bars, to either the upside or the downside. A bull serge is when you first have a bear elephant with very small or none existent tails. This means that the stock price opened at the top of the candle and closed at the bottom. The next candle you get is a bull elephant that is bigger than the bear elephant. He calls this formation bull twin towers. This candle formation is a buy signal. What you should do is buy the stock as soon as the green candle is higher than the red candle. One point he also made is that the red candle low is seldom broken. See the picture below.

Velez also believes in using stops and you should put your stop under the bull twin towers. He says this twin tower signal is a set-up to produce a long run on a stock. That is why you would risk all your money on this signal. The other point he made is that if you get a bear tail candle after this twin tower, you should buy more.

He goes on to say there is a bear twin tower formation. This time you get a bull elephant candle followed by a bear elephant candle. This is a big sell signal and you sell when the bear elephant candle goes below the bull elephant candle. The top of the bull and bear elephant candles is the stock top prices for a long time.

Velez ends with saying that bull and bear elephant towers mark strong stock tops and bottoms. He gets people to trade and to trade all they have on bull elephant towers.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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