Jake Bernstein
Trading Webinar
jake@trade-futures.com
My 6 BEST Timing Triggers + 2
And h o w t o u s e t h e m
Dallas MoneyShow Make-up Bonus Session
© 2017 by Jake Bernstein
jake@trade-futures.com
800-678-5253 * 831-430-0600
www.jakebernstein.com
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Before we begin…
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A few critically important items
I do not have perfect for you today
We all make stupid mistakes keep them at a minimum
This will work for you if you’re consistent and begin with
sufficient capital
This will not work for you if you drown yourself into much
information and micromanagement
Do not mix methods or time frames other than as I show you
The tyranny & triumph of track records: important!
Find your place and trade within that place. How?
Better to do a few things really well than many things poorly
Don’t know how deep a hole is until you stand in it: what the
hell does that mean?
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Today we will show you the following
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MOVING AVERAGE CHANNEL: all rules of application will be reviewed including
the five bar pattern, the MA breakout, the swing trade, the one day and two day
CMC patterns, widening channel and the narrowing channel. The profit
maximizing strategy and best applications will be reviewed and detailed.
SEASONALS: I will review all rules for finding and implementing seasonal trades
with specific entry and exit dates and profit maximizing strategies in stocks,
futures, and spreads. I will show two new ways to search for valid seasonal
trades.
DIVERGENCE: momentum divergence will be explained in detail with all
applicable rules for entry exit and profit maximizing strategy including the rules for
MACD, CCI, and detrended oscillator.
888: I have heard from many traders who really enjoy and do well with this
method that I developed. I have some new things to show you about the eight OC
which will make it even more applicable with short-term trading. All rules will be
reviewed I will show a new profit maximizing strategy.
3 X 3 CHANNEL: this short-term method has been improved dramatically by the
addition of a new filter. If you’re using the 3X3 channel you may find this feature to
be very helpful. If you’re not using the 3X3 channel, you may decide that it’s the
right thing for you when it comes to short-term swing trading.
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GAP TRADES: have become very popular again because of the large
opening gaps, particularly in stocks. I will review all rules for gap trades
and profit targets, and I will show you a new entry trigger.
NEW! JBVT: I will introduce my new Jake Bernstein Volatility Trigger
which I developed in order to take advantage of very short-term, intra-day
and 2 to 3 day market swings. The indicator has been coded for Genesis,
and will be available for other platforms as well.
NEW: JBCOTT: many markets are now on the verge of major moves to
the upside. Many of these moves have already started, consistent with my
forecasts in the annual forecast I gave at the end of 2015, and my
Midyear Forecast Because the COT is very important in forecasting these
moves, I have developed a new way of looking at COT in order to get the
most valuable information for assessing long-term moves. The Jake
Bernstein COT Trigger is designed to do just that.
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Introduction: critically important concepts
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What is a TIMING TRIGGER?
Timing triggers, timing indicators, objective methods
and trading systems
Why most timing triggers and indicators don’t work
Separating market myth from market reality
Patterns, predictions and profits
Importance of a TRADING MODEL
Why do so many traders lose?
How do traders win?
Review of my S – T – F trading model
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My 2% (F, F) and 5% rule (S)
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If a futures or 4x trade you are in makes a move
of 2% or more in your favor (5% in stocks) from
the close trading one bar high of the next bar (if
long and vice versa if short) then implement a
trailing stop equal to three period Moving
average of the low for long position and a three
period Moving average of the high for short
position. This trailing stop is a close only stop.
(see next slide)
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2% TS example
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1.The Moving Average Channel (MAC)
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Use 2 simple MA’s
MAH = 10 periods of the high MAL = 8 periods of the low
TWO complete consecutive price bars above MAH is a buy pattern (use
confirmation for a trigger)
TWO complete consecutive price bars below MAL is a sell pattern (use
confirmation for a trigger)
Confirmation is required using the AD/MA
Use Williams AD with simple 57 period MA of Williams AD
USE: all time frames
PT1,PT2
Profit maximizing
SWING TRADE
Cmc1 cmc2
Meaning of 5+ consecutive bars
Positive aspects
Negatives aspects
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MA Channel
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MAC moves from bullish to bearish
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MAC intraday CMC2, swing trade
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cmc1
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MAC and confirmation in FOREX
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Stops, targets, profit maximizing
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Stop 2x channel width
PT 1 2x channel width
Swing trade buy MAC retracement
PT1 other extreme of channel moving target
5 bar pattern PT range of 5 bars
BEST USES
Suggestions: look at chart first
Let’s look at one
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CMC defined
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1 day CMC buy: in MAC defined up trend buy
MAC if one complete bar below MAC low
1 day CMC sell: in MAC defined downtrend
sell if one complete bar above MAC high
If back in channel next day exit part of
position and use TS on balance. Exit another
part on move back to other channel extreme
HOLD last with TS
If next bar does NOT go back into channel
you can hold with 2nd bar as 2 bar CMC
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CMC trade: rules
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Summary MAC
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Use with confirmation
Use risk management / profit target
Can use in all time frames
The big $$$ is in the big moves
Do not use other indicators to confirm
Do not compare different time frames
Use trailing stops to maximize profits
Trade multiple positions
CAN use options but only at or in the money or high delta
CMC Trade (CMC1 and CMC2)
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2. Divergence
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Use 28 period Momentum, 9/18 macd. Dto 7. cci 49
Look at last 60 price bars
Bullish divergence – new high in price for last 60 bars with
NO new high in MOM
Bearish divergence – new low in price for last 60 bars with
NO new low in MOM
My Power Momentum Manual
Set up A, B, C and D points
See example
Look for TRIGGER point at E – see example
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Bullish divergence set up
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Setup and Trigger Rules
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A B C D setup pattern
E trigger point
Step by step process
Use 60 time unit window
6 time unit minimum to form setup
Let’s look at a few
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Or the computer can do it for us!
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Lets go back in time on AAPL
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Divergence MACD SNAP
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Divergence TradeStation
RadarScreen
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PT1 PT2 PT3 stop
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PT1 = 50% range D-A
PT2 = 100% range D-A
PT3= 200% range D-A
Or 2% futures 5% stocks 3MA rule
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My conclusions about divergence as a
trading and timing method
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Leading indicator
All time frames
100% objective
Best method for spotting tops and bottoms
Not subject to same limitations as moving averages
Available on all trading platforms
Also known as rate of change (ROC)
Can easily be calculated by hand
Can be used in all markets including 4X
Can be used as confirming indicator
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3. 8 Open vs Close now 888
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Use 8 period MA of close
Use 8 period MA of open
In a bull market most closes are > than most opens
In a bear market closes are usually lower than opens
The 8OC takes advantage of this important relationship
When 8 close goes above 8 open MA buy setup
When 8 close goes below 8 open MA sell setup
Triggers 2 tics – 3 bars to trigger
Several exit strategies: 5 bar decision
Hold part of position for the big move – VERY important
Trade ACTIVE markets only – VERY important
See examples
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8 close / open in bear trend
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8 close / open in weekly bull trend
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8 close / open – 5th bar pattern
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8 open close with 5 bar pattern
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Review of 8 open close rules
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Buy trigger 8c > 8o
Sell trigger 8 c < 8 o
Exit strategy 5th bar partial profit or reversal
Use only in active markets
Pt1 and initial stop largest range bar of last 10
Use only in large price range markets
Hold part of position for bigger moves
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888 Gold Daily
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888 Silver Daily
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4. Seasonals
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Imagine…if you knew…
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Which stock or commodity to trade
Whether to buy or sell that markets
The EXACT time to buy or sell short to within one minute or less
Your odds of success
Your average profit and your average loss over many years
Your stop loss or risk as well as your first profit target
The profit / loss ratio of your strategy
The complete track record of your strategy as far back as you can
acquire historical prices
Your average profit and loss in points and %
The largest profit or loss this strategy has ever produced
The maximum drawdown (to be defined)
The maximum upswing (to be defined)
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13) The number of consecutive losses
14) The number of consecutive profits
15) The accuracy of your strategy in %
16) How to minimize your potential loss
17) How to maximize your potential profit
18) When to move your risk to an effective “zero” risk stop loss
19) When to EXIT your position
Imagine also…that
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EVERYTHING about your strategy is 100% objective
Crystal clear at all times – no opinions – just facts
NOT subject to interpretation or opinion
Proven valid and reliable
Adaptable to stocks, commodities or spreads
Adaptable to YOUR level of risk tolerance
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Step by step process
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Search and find seasonal setups (several ways)
Use timing trigger as needed (TBD)
Enter MOC on date or next open (15% trigger leeway)
Trade units of 3
Exit pt1 avg profit per trade
Stop loss initially % close only
Initial stop no longer valid after pts
Stop position 2 break even; 3rd position 75% trail and use 2% rule
for futures 5% rule for stocks
If not stopped out by exit date but at a loss exit all moc
If not stopped out by exit date and pt 1 not hit exit 2/3 and ts 3rd
position 3ma rule
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How I find the best trades
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Seasonaltrader.com
75%>, PL 4>, <=25
Futures spreads 75%> pl 5> 10>
CHART METHOD DEMO
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Finding seasonal setups
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What do the numbers mean?
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Why use them?
How to use them
When to use them
Examples
Use in profit maximizing strategy
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The reality of seasonals
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Seasonals are a valid trading tool that you MUST know and use
They are NOT perfect
They are NOT used by most traders which is why they are not
discounted before the fact
Most traders lack valid seasonal information
Most traders lack the discipline to use seasonals
Most traders do not have a solid 3 part (STF) strategy for seasonals
Most traders do not manage risk with seasonals
Most traders do not know how to maximize seasonals
Most traders take small profits and big losses
Most traders do not have a sufficiently long seasonal history
Too many traders use deep out of the money options with seasonals
for stocks and futures
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Profit maximizing strategy
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3 units (3, 6, 9, 12; 300 shares, 600 shares. 900
shares etc
PT1 avg profit per trade (2% on stocks)
PT2
Exit date and followup
Trailing stop: 75% or 3MA low/high or parabolic:
examples in next session
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The Danger Zone Concept
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Every trade must have a first target
When target is hit raise stop to break even
Take profit on part of position
The more often you can get out of the danger zone the
more profitable you will be by eventually catching the
major moves
Most traders use trailing stops that are too close to the
market
Volatile markets require larger trailing stops
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5. OPENING GAPS
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Definition and Characteristics of GAP Opening
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Gap Trade: an opening price above the daily last price bar
high or below the last bar low
A gap is caused by news, reports, fundamentals, political
factors, even technical signals and “expert” commentary
Bullish news usually results in a gap up opening
Bearish news usually results in a gap down opening
A gap can be the start of a BREAKAWAY GAP and a large
move in the direction of the gap
A gap can be the start of something small but very accurate
move in the opposite direction for a day trade
Some of the largest one day moves in history have started the
day as gap days
Gaps are caused by emotional reactions
Emotional responses are often wrong responses
Professionals take advantage of emotional reactions to news
to trade in the opposite direction
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Additional Gap Trade Characteristics
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Some of the most profitable gap sell trades (gap up
openings and triggers) have developed in bull markets
because of panic selling by the public and liquidation
by professionals and vice versa for buy trades in bear
markets
Gaps not necessarily related to underlying price trends
Gap days tend to produce large trading ranges
Gap days tend to be pivotal – by this I mean that many
important tops and bottoms occur on gap days in stocks
and futures
Gap days tend to be high trading volume days
Gap days tend to CLOSE on the extreme of the day
Does “24” hr trading produce gaps? No – why not?
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Looking at a Gap Lower
Open
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Gap Higher Open
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A Few Gaps up and Down
Gap up open
Gap up open
2 gaps in a row
Gap down open
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A Few more Gaps
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7 Gaps
5 Profits
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Exit strategies long gap trade
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Exit at stop loss
Exit at profit target 1 or 50% of previous day’s
range
Exit at profit target 2 or full range of previous day
Exit on CLOSE or
Exit on first profitable opening
Combined strategy on multiple contacts
Exit one at profit target 1 and raise stop to break
even
Exit one at end of day (MOC)
Exit one on FPO
LOSING TRADES MUST BE closed out at end of
day
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Buy Gaps and Profit Target
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Conclusions and Summary
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Gap trades can be very profitable tools
You must always use a stop loss
Change stop to break even as soon as possible
Take first profit and/or change stop after trade has made
a profit of 50% of previous daily trading range
TRADE MULTIPLE POSITIONS for best results
Units of 3 or 4 is best (i.e. 3 contracts or 300 shares)
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6. 3x3 ema swing trade
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Use 3 ema high
Use 3 ema low
Trend defined by mom 14 close > OR < 0
If defined trend is up BUY ma low last completed bar
If defined trend is down SELL ma hi last completed bar
Stop 2x ma channel range
Big move is in multiple positions
See examples
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7. COT TRIGGER (LT)
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3 Major groups of futures market participants
Small traders, large specs, commercials
Shows % of contracts held by each group as
long or short and changes from last report
Delayed by at least one week
To understand COT you need to know the goals
and accuracy of each group
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The Small Trader
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Assumed to “always” be wrong: NOT TRUE
Can actually be right for extended periods of time
– not a reliable indicator of short term price
swings
Tend to have largest position at major turns
I do NOT use the COT small spec data as a tool
in market timing
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Large Speculators
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Are trend followers
Their COT positions follow the markets
Due to late data you can do better tracking prices
with traditional moving averages which ARE NOT
good indicators
I find no value in using COT large spec data
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Commercials
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Are producers, end users or brokers between
producers and end users
Examples: farmers, mining companies,
petroleum companies, airlines, trucking
companies, bakeries, meat processors, cattle
ranchers, grain elevators, etc
Their job is to buy at wholesale and sell at retail
or vice versa
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Commercials normal behavior…
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Is to show as “short” on the COT but are they
really short or are they hedged?
A hedge is not a short position if they own the
product
Commercial LONG positions tend to precede
major rallies but the time lag can be large
Commercials LONG is a set up for a bull market
but a TIMING TRIGGER is needed
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VERY Important Points about the COT
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The large speculator is not always right
The small speculator is not always wrong
Commercials are most often right BUT they have huge capital and
average into positions as well as out of positions
Commercial data is often opposite from the existing trend
A “short position” by commercials is NOT really a short position but
rather a HEDGE
Commercials have the only near “sure thing” results possible due
to the nature of their business!
Commercials usually act many months ahead of trends and trend
changes
You can use COT in 2 ways: Objective methodology or analytical
interpretation which can be somewhat subjective – there are pro’s
and con’s to each major method. Of these two I prefer the
OBJECTIVE
approach since it is the most consistent and not subject to being
misinterpreted.
MAJOR ISSUE: can we trust the data? It isn’t timely but is it
accurate?
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8. JB VT Index
Logic explained
code
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MovingSum (IFF (Close > Open , .5 , 0) + IFF (Close < Open , -1.25 , 0) + IFF
(Momentum (Close , 3) = Highest (Momentum (Close , 3) , 3) , .5 , 0) + IFF
(Momentum (Close , 3) = Lowest (Momentum (Close , 3) , 3) , -1.25 , 0) + IFF
(Close >= Low + (0.95 * Range) , .5 , 0) + IFF (Close <= Low + (0.05 * Range) , 1.75 , 0) + IFF (Low > Highest (High , 5).1 , .5 , 0) + IFF (High < Lowest (Low ,
6).1 , -1.75 , 0) + IFF (Close > Close.1 And Low < Low.1 And Close > High.1 , 1 ,
0) + IFF (Close < Close.1 And High > High.1 And Close > Low.1 , -1.5 , 0) + IFF
(Close >= Low + (0.95 * Range) And Close.1 <= Low + (0.05 * Range.1) , .5 , 0) +
IFF (Close <= Low + (0.05 * Range) And Close.1 >= Low.1 + (0.95 * Range) , -2 ,
0) + IFF (High > High.8 , 2 , 0) + IFF (Low < Low.8 , -1 , 0) + IFF (Low > High.8 , 2
, 0) + IFF (High < Low.8 , -2 , 0) + IFF (Low = Lowest (Low , 8) And MACD (Close
, 4 , 9 , False) > Lowest (MACD (Close , 4 , 9 , False) , 8) , 2 , 0) + IFF (High =
Highest (High , 8) And MACD (Close , 4 , 9 , False) < Highest (MACD (Close , 4 ,
9 , False) , 8) , .5 , 0) + IFF (Low = Lowest (Low , 8) And Momentum (Close , 5) >
Lowest (Momentum (Close , 5) , 16) , .5 , 0) + IFF (High = Highest (High , 8) And
Momentum (Close , 3) < Highest (Momentum (Close , 3) , 8) , -1.5 , 0) , 0 , 0)
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Conclusions and Summary
TRADE MULTIPLE POSITIONS for best results
 Units of 3 or 4 is best (i.e. 3 contracts or 300 shares)
 Try the methods out BEFORE you use them
 NOT ALL METHODS ARE RIGHT FOR ALL TRADERS
 I can be reached at 800-678-5253 or 831-430-0600
 Email me if you have questions: jake@trade-futures.com
 chris@jakestradingstrategies.com
 www.seasonaltrader.com
 www.jakebernstein.com
 www.jakestradingstrategies.com
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Jake Bernstein
© 2017 by Jake Bernstein
800-678-5253 * 831-430-0600
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