Investor Business Daily Lists

[whitegaye]

Matt

I am following with interest your daily MTPredictor Risk Report, thank you for the work you are doing on this.

You mentioned in your report, that for US stocks you are taking the Weekly List each Friday from IBD. Could I ask a couple of questions on this please?

1. Are you referring to the IBD 100 list?

2. If so, do I need to subscribe to IBD to get the list you refer to or can I download the IBD 100 list of stocks free from their list's tab?

3. If not the IBD 100 list, which list?

4. Is there a thread on MTPTrader where you discuss your report and questions that might arise?

Many thanks Matt.

Regards

Gaye

[Matt Bowen]

Hi Gaye,

Thank you for the kind words. I'm glad you are enjoying the report.

1. Are you referring to the IBD 100 list?

No, I'm using the IBD "Your Weekly Review" list. Almost all of the IBD-100 list are included in the "Weekly Review List". Most of these stocks are being accumulated by Mutual Funds and they are holding between 1 - 3% of the stock in their portfolios.

2. If so, do I need to subscribe to IBD to get the list you refer to or can I download the IBD 100 list of stocks free from their list's tab?

and

3. If not the IBD 100 list, which list?

You can get the list by either subscribing to the paper or just pick-up the Friday edition of the Investors Business Daily newspaper. Each Friday IBD gets the list from William O'Neil & Co. (this is O'Neil's institutional company that does all the research for Hedge Funds and Mutual funds: http://www.williamoneil.com/

If you want to just get the IBD go here: http://www.investors.com/

4. Is there a thread on MTPTrader where you discuss your report and questions that might arise?


No, but it could always be added as a topic here if we see the need.

Thanks,

-Matt

[mcdirt]

I read somewhere on the IBD site that the "Your Weekly Review" list is available only in the printed paper, not available on the site. I thought it strange, perhaps I'm wrong.

Anyway, enjoying the addition to the reports.

rgds McDirt

[mcdirt]

Here it is - "exclusively in the print edition". Doesn't do us folks overseas much good :(

[Matt Bowen]

Hi McDirt,

One solution might be to try a free subscription to their eIBD version:

http://www.investors.com/subscribe/eibd.asp

This is a .pdf (Adobe Acrobat) version of Investors Business Daily that goes out early in the morning.

Try is free for 4 weeks, clicick on the link above.

All the best,

-Matt

[whitegaye]

Matt

Re your US stock scans in your report

What settings are you using in MTP? I notice you are not using the standard trade settings.

Many thanks

Gaye

[Matt Bowen]

Hi Gaye,

As per your request, here are the settings:

I will also post the settings I use for the Stocks and Commodities in today's report. It seems this question comes up once a week... "How do I use this?" Very simple, this scan is designed to show you all the possible setups inside MTPredictor and it will NOT allow you to miss any moves. The scan setting here will produce a larger list, but you will never miss a move. I don't look for pristine setups. In all of my years of trading, many of my biggest winning trades looked like they were sloppy and would go nowhere...this is also why I never prejudge a stock because it doesn't have a perfect setup.

In addition, I've noticed a high correlation in "perfect" traders, (those who look for perfection and get "anal" about their setups) generally miss some of the best moves. Think about, if trading were based on picking out the "perfect pattern" then the perfectionist would all be rich... Trust me, I don't see this being the case. Picking out patterns is only part of what is needed to become successful trading and you don't need to be perfect. Use the scan settings below and you will not miss any moves. I should also add that you still need to apply the rules of "Part-2" in the MTPredictor trading course before taking ANY trade to make sure it is still a valid setup.

Hope the helps,

-Matt

[Angel]

Hi Matt, Hi all,

GREAT, it's very kind of you for sharing......:)

Last question concerning your settings. Why don't you use the new ABC feature in the "advanced" tab ?

Thanks

Have a nice week end all

Rgrds

Angel

[Matt Bowen]

Hi Angel,

Why don't you use the new ABC feature in the "advanced" tab ?

I'm trying to keep this simple and not use Advanced techniques. I want to keep it simple and show people what they can do just using the automatic (easy) setups.

Thanks,

-Matt

[Matt Bowen]

As an addendum to my post # 7 above let me clarify some points...as these might taken out of context by others reading post # 7.

First off, my trading reflects using MTPredictor in a more personal way. I'm using it to trade more contracts than just the front month futures, I'm also using MTPredictor to produce some incredible returns as I will be glad to share with current users in the MTP risk report. This report is free to all customers and covers IBD- Your Weekly Review stocks as well as Commodity/Futures.

Second, I'm trading my rules NOT what is posted in the "Part-2" of the trading manual. However, they are very close. Now, don't jump to conclusions that this is a good thing or a bad thing. It's simply the way I'm trading the portfolio. I do think NEW traders should follow Steve's rules that are presented in "Part-2" of the MTPredictor trading course. When I first started using MTPredictor I did follow Steve rules and it helped me learn the how the program works. It also help me develop my own trading plan to achieve my own personal goals. If you really look at how I'm using MTPredictor you will see that I'm keeping it very simple with the least amount of rules. I always find it hilarious when I see a trading system with 10 different indicators on the screen and the indicators have to line-up or confirm each other...it's like who developed this a paranoid schizophrenic? Let me give you a little secret before you buy your next trading system: The more rules and veriables (5 or more) used to calculate the system, the less robust the performance.

Now, before I get into this discussion...a reminder to the IBD-Stock traders that I'm using the same screening scans to trade the "Your Weekly Review" Stocks as I am to trade the Commodity Futures listed below. The discussion below answers the "How and Why" of my scans and what I look for in a setup. As many of you know the IBD "Your Weekly Review" list is usually about 150 to 200 stocks, so turning the restrictions off is not really a big deal because we can scan 200 stocks in about the same amount of time it takes to scan all of our commodity contracts, which is a about 20 seconds.

When you trade a basket of commodities you are really only trading about 45 different commodity/futures at any given time. (see the list below)

http://www.mtptrader.com/Futures.gif

So, unlike stocks where you might have about 9000 stocks to scan from with many possibilities, on the Commodity/futures I have limited opportunities because I'm on looking at 45 issues.
Therefore, if I want to increase my available number of trades I need to do two things:

1.) Turn off the restrictions and not look at "pristine" or picture perfect setups.
2.) Take a look at the deferred months (those contract beyond the front month).

Now, the reason I'm turning the restrictions off is because I want more trading opportunities. Does this mean I'm ignoring Steve's rules? No, by turning the restrictions off I'm creating more work for myself, but I'm also allowing myself to see those opportunities that are not "Perfect setups". Why would I do this? Because, there might be a GREAT trade that does not have a "height X's 2" filter on or maybe it spiked or is slightly above/below the WPT level and closed ok, but the scanner would avoid it because it's not perfect.

Don't get me wrong...I think every trader when they are starting out should have all the filters turned on and focus on the "perfect setups" until they are comfortable using the software. This will also limit the amount of trades they get and allow them time to concentrate on trading the patterns correctly.

Steve will be the first to tell you that this is not a black-box...if it was, we would not even be having this discussion because the software would look at everything as YES or NO. Heck, there would be no reason for even having this bulletin board if we had black box system. Black box trading systems can make money, but in my experience, nothing beats or even comes close to a professionally designed discretionary system. I honestly believe if you put me head to head with a mechanical trading system, I could beat it every time. In fact, if any vendor reading this wants to take me up on the challenge, I'll be glad to put my day trading hat back on and prove how effective MTPredictor is as a discretionary product.

Ok, back to what I said earlier and I'm sure many people will ask: "Why do you want to trade deferred months?" I know this question is going to come up as I've probably already answered it, but it's worth noting again. Many commercials and hedgers use these differed months to do Intramarket Spreads or what spread traders call a calendar spreads Basically where you are long and short futures in the same market, but in different months. Another example of how commercials and hedgers trade these deferred months is Intermarket Spreads going long futures in one market, and short futures of the same month in another market. I have actually seen an increase in this type of trading as more institutions are using these programs to spread the indices. For example, they might buy the Dow futures and sell the NASDAQ futures. Trust me, there are companies out there doing this with stocks and It's better known as "Pairs trading".

The spread trader is a trader who takes positions between the speculator and the commercial/hedger. Rather than take the risk of excessive price fluctuation, he assumes the difference between two different trading months of the same futures, the difference between two related futures contracts in different markets, between an equity and an index, or between two equities.

Why do trading companies trade spreads? Because it's very profitable and it reduces much of the risk that institutions incur with outright positions. You have to realize that institutions/funds this includes Commercials/hedgers make up 80% of the trading volume on the Exchange. Most individual traders don't even know what spread trading is, but the point I'm trying to make here is that these institutions are using spread trading to move huge amounts of volume and open interest...and most people are not even aware of it. Let me give you an example. Take a look at the chart below.

http://www.mtptrader.com/vol.gif

This shows Crude Oil the front month in (yellow) and all the deferred months in below. Notice that there was more trading volume in the deferred months almost 160,000 contracts versus the 111,000 contracts in the front month. Now, you can understand why I look at more than just the front month. Looking at the chart again if you look at the MARCH, APRIL, MAY and JUNE contracts, all of these were over 10,000 contracts providing more than enough liquidity for the small trader to get in and out of a trade. If you take a look at MARCH and APRIL trading months you have over 122,000 contracts traded and we are not even looking at the front month...so I hope this is clear now as to why I trade more than just the front month and why my restrictions are turned off. :)

All the best,

-Matt

[jtrade]

Very interesting post, thank-you, Matt - I had no idea there was so much volume that far out on oil. A question, please : say next week you get a signal on June oil : would you really take the trade that far out, or would you actually enter on the front month ?

J.

[Matt Bowen]

Hi JTrade,

say next week you get a signal on June oil : would you really take the trade that far out, or would you actually enter on the front month ?


Well think about that for a minute... Your getting a trade setup from the scanner on the June Contract, but you not getting a trade setup on the front month. Why is that? Well for starters the risk reward might be horrible on the front month or the ABC might not have completed or it's nowhere near the WPT level. One of the most important things that people forget about MTPredictor is that it keeps you out of losing trades or setups that are not completed or premature. Remember, it's just as important to stay out of the markets when things are not clear as it is to be in when risk is low and the reward is unlimited.

Now, back to the question... "Would I take the trade?" If it is within the trade entry rules, absolutely. Like I've said many times before, have no idea which trades are going to work, that's why we put so much focus here on money management and position sizing.

Once people truly understand position sizing they can stop putting so much focus on being right 90% of the time...because it no longer matters. When I finally figured this out it was like getting an 800 pound gorilla off my back. The need be right all your trades is mentally draining. Seriously, I know people who have to take Xanax before they trade because they can't handle the anxiety (nervousness) of trading...talk about pressure. Trust me, position sizing can help very much in this area.

All the best,

[jswin]

Matt,

Firstly, I have not purchased MTPredictor yet, but I will do so in a couple of months once I return from a holiday to Australia.
Nevertheless, I just wanted to let you guys know that I have learnt more about trading from your ever-drummed Risk/Reward philosophy, Steve's daily reports and your comments on this forum than I had in the previous four years of wild, directionless self-driven trader-training, which included spending loads of money on endless systems and tutelage but always left me with more questions than answers.
Thanks for a comprehensive product which leaves no stone unturned (and which, if I am lucky, might just make me some cash!).

[Matt Bowen]

Hi Jswin,

Thank you for the kind words and the compliments. Yes, I tend to sound like a broken record at times, but the questions keep coming and the answer will always be the same. I spent the early part of my career getting my "teeth kicked in" trying to learn to trade. Believe me when I tell you that the best teacher is experience. I only wish there was a product around like MTPredictor when I started, it could have saved a lot of money and the mental anguish that went along with losing.

I had a buddy of mine who graduated from Case Western Reserve University with honors in Engineering and also had an MBA from Harvard. He spent 30 years building a very successful book binding business. In the early 1980's he sold the book binding business and bought a seat on the CME, he spent the next 15 years learning how to trade. Now mind you, this guy was no idiot and he was very street smart. He told me after 15 years of trading, he said: "This is the hardest thing I have EVER had to learn" He went on to say: "Learning the mechanics of trading is not the hard part, it's the psychology that tears you up, because as educated people we are not taught how to lose, we are only taught how to win." He added: "To succeed at this game you must get rid of the idea of being a perfectionist, most of what I learned in school did not help me learn how to trade".

I've been blessed to have been able to work with some of the best minds and I'm glad I'm able to help others. Thank you for the note and I look forward to helping you in the future.


Best regards,

[riccja]

I signed up for the 1 month trial f or eibd....Is there a method to get the weekly review in a spreadsheet format. The ibd100 list can be exported to excell but havnt found a way to do the same with the weekly review

[AndyvB]

Let us know when you have figured out a way to get the weekly Review into a spread sheet, other than typing it in manually. Actually it is not that bad, this week there were 149 on the list. I believe it is also only available in the print edition as mentioned in other posts here on the forum.
Thanks Matt for all your hard work and the posts that you put up here on the forum to help educate us all.
Andy

[Matt Bowen]

Hi Andy,

Let us know when you have figured out a way to get the weekly Review into a spread sheet, other than typing it in manually.

You can do this now with the Daily Graphs: http://www.dailygraphs.com/

They have an export function that allows you to export the list from their Daily Graph custom screen wizard...once you run the scan, then you can export the list into an excel file (It does this automatically for you). http://www.dailygraphs.com/tours/csWizTour.asp

The demo does not show this but, the fuctionality is there.

All the best,

[mcdirt]

Matt,

It has not been stated (I don't think) but it's fairly obvious that your IBD/MTP portfolio must be long only? No point in trying to go short on the strongest stocks. Just making sure.

Regarding margins - what is the maximum margin that you allow your leveraged accounts to go to - I noted a few weeks ago that your futures portfolio got to quite a high level of margin. I did not calculate what the % was but I recall I thought it quite high at the time.

I use "Initial margin" for all my calcs and have 70-75% as a maximum myself but that is just what I thought I'd be comfortable with, it's not based on science. It may be too high or low, I don't kow - what sort of figure do the pros use?

rgds McDirt

[Matt Bowen]

Hi McDirt,

Very good question... As for Margin, I will answer you based on my brokerage at Open-E-Cry www.openecry.com

First, I would want to be trading with an FCM Futures Commission Merchant rather than an IB Introducing Broker.

It has been my experience, that you may experience price improvement difference using an FCM over an IB. However, in recent years with electronic trading the spread here has been closed. Now, I'm not saying an IB automatically gives you bad or worse prices...it's just what I personally have found FCM's to provide ME with better fills.

The FCM maintains the floor operation and the IB maintains the relationship with retail clients. This is efficient because the work of a floor operation vs. the work of maintaining relationships and meeting the needs of retail customers have different requirements. Another way to think of an IB is that of a segmented firm. The IB is not a middleman, but is in a partnership with the clearing firm. The clearing firm manages the floor and back office ops, and the IB is free to concentrate on his/her customers and their trading.

Having said that, if you have 50,000 dollars in your account and you have 10,000 in profits, you are free to use the 10,000 in open profits to open new orders. So, yes, you might see the account use 60% or 70% of margin or possibly even higher. Keep in mind the broker may cap the account which means that they may not let the trader go over a certain amount of contracts unless they have an agreement. In other words, say a trader opens up a $50,000. account and the trader is only doing E-mini contracts at $500. (day trade margins) it makes sense to cap the account at a certain level to control risk.

McDirt, this is actually a great question because it shows why a personal account can rack-up huge gains versus say a hedge fund. Think about, running a hedge fund is like and "Oil Tanker" whereas a personal account is like a "Cigarette boat" or a Jet-Ski, you can't turn an Oil tanker on a dime, but you sure can on a Jet-Ski. Also, a hedge fund will probably limit the portfolio to 20% margin at any given time whereas the individual account is moving assets in and out of positions with more margin. There is a huge advantage to trading your own account "If you know what your doing".

[mcdirt]

Matt, thanks for the reply.

I'm with MAN and have no idea if they are an IB or FCM. What I do know is they are expensive compared to what you guys can get in the US.

I had no idea that Hedge Funds only used about 20% margin, that seems low. If it pays to be small, then I have a HUGE advantage. I'll stick with a maximum of 70% or so for now.

rgds McDirt