Determining Who’s In Control Velez Market Law #1 The Law of Motion During MOVING market environments, stocks and other tradable items tend to follow through or continue the most recently completed color-coded bar, 80% of the time. Sir Isaac Newton: “An object in motion tends to stay in motion.” Different ways to communicate the law: 1) After a Green Bar, expect another green to follow at least 80%; 2) After a Red Bar, expect another red bar to follow at least 80% 3) The bigger the green or red bar, the higher the odds of follow through, meaning you’ll see continuance closer to 90% of the time. Winning Bars High High Open Close Open Low Bulls Win Close Low Bears Win What color bar is next? The 55% Entry/Stop Rule High High 55% 55% Low Low Bulls stay winners as long as they maintain most of the green Bears stay winners as long as they maintain most of the red The Open After Strength High High Open 55% 55% Open Low The open is always neutral. You don’t buy until you get some green. Low The open is always neutral. You don’t short until you get some red. Enter on Green with a 55% Stop High Buy High 55% 55% Stop 1 Stop 1 Low Once a bit of green materializes, the trader can confidently buy with a stop at the 55% mark of the prior bar’s green. Low Short Once a bit of red materializes, the trader can confidently short with a stop at the 55% mark of the prior bar’s red. Use a 100% Stop Adjustment High Buy High Stop 2 55% Stop 1 55% Stop 1 Stop 2 Low Short Low Once there is enough green in the current bar, protect it with a raised stop to the low of the current bar. Once there is enough red in the current bar, protect it with a raised stop to the high of the current bar. Move to a new 55% Stop High Stop 3 55% Stop 1 Buy High Stop 2 Stop 2 Low 55% Stop 1 Short Stop 3 Low If the green of the current bar grows substantially, protect a little less than half of it with a new 55% stop. If the red of the current bar grows substantially, protect a little less than half of it with a 55% stop. The 10 Colored Candles Least Bullish 5 Neutral Bull Normal Bullish 4 8 9 Neutral Bear 2nd Most Bearish 7 Normal Bearish Most Bullish Most Bearish 6 3 10 Least Bearish 2 2nd Most Bullish 1 The first set of bars is won by the bulls in varying degrees, with the last bar being an actual loss. The most bullish is at the left, the least is at the right. The same goes for the bear wins. The most bearish starts at the left, the most questionable is at the far right. Page 17 The 3 Non-Color Candles 12 13 All red was lost Draw All green was lost 11 Sellers dominate this entire area Bottoming Tail (BT) Buyers dominate this entire area Tip: While technically no one wins, due to the open and close being even, the last group in control of the stock is considered the winner. Bar 1, is completely a draw, Bar 2 is won by the bears and Bar 3 is won by the bulls. Topping Tail (TT) Bottoming tails (BTs) and Topping Tails (TTs) offer VCM Traders some incredible trading opportunities, which we will see shortly. Page 18 Absolute Control High High 55% 55% Low Bulls in absolute control Low Bears in absolute control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Full Control High High 55% 55% Low Bulls in full control Low Bears in full control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Good Control High High 55% 55% Low Bulls still in control Low Bears still in control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Weak Control High High 55% 55% Low Bulls’ weakening control Low Bears’ weakening control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Lost Control @ 55% High High 55% 55% Low Bulls lose control to Bears Low Bears lose control to Bulls Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Lost Control @ 55% High High 55% 55% Low Bulls lose control to Bears Low Bears lose control to Bulls Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Totally Over @ 100%!! 100% ALL COLOR HAS BEEN ERASED 100% Bears in permanent control Bulls in permanent control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Lost Control Forever!! 100% 100% Bears in control forever Bulls in control forever Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Full Control High High 55% 55% Low Bulls in Control Low Bears in Control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Good Control High High 55% 55% Low Bulls still in control Low Bears still in control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Weak Control High High 55% 55% Low Bulls weakening control Low Bears weakening control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Lost Control @ 55% High High 55% 55% Low Bears back in control Low Bulls back in control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Lost Control @ 55% High High 55% 55% Low Bears back in control Low Bulls back in control Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. There is No Difference 55% 55% 55% 55% 55% 55% Totally Over @ 100%! High 100% Bears in control forever 100% Low Bulls in control forever Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win. VCM Trading Tip: However, if more than half of any color is suddenly erased, the law of follow-through is greatly diminished. We use the 55% Retracement mark as the turning point. Remember this, as it is the basis for may VCM Trading Tactics. Single Bar Sell Triggers Single Bar Buy Triggers Stop 55% Sell Short Buy Long 55% Stop Stop 100% Buy Long or Add Sell Short or Add 100% Stop Dual Bar Sell Triggers Dual Bar Buy Triggers Stop 55% 55% Buy Long Sell Short Stop Stop 100% Buy Long 100% Sell Short Stop Three Major Moving Average Locations 1) 8-period Moving Average (8ma) Best when Trending 2) 20-period Moving Average (20ma) Best when Trending 3) 200-period Moving Average (200ma) Best when Flat VCM Buy Locations VCM Sell Locations Declining 8ma or 20ma Buy near here Short near here Rising 8ma or 20ma Flat 200ma Below Flat 200ma Above Short near here Buy near here Single Bar 55% Triggers Declining 8ma or 20ma 55% Rising 8ma or 20ma Flat 200ma 55% Flat 200ma 55% Stop 55% Single Bar 55% Triggers 55% Buy Declining 8ma or 20ma Stop Stop Rising 8ma or 20ma Flat 200ma 55% 55% Flat 200ma Stop Buy Stop Short 55% Short Single Bar 100% Triggers 100% Buy Declining 8ma or 20ma Stop Stop Rising 8ma or 20ma Flat 200ma 100% Short Flat 200ma Stop Buy 100% Stop 100% Short Dual Bar 55% Triggers Buy 55% Declining 8ma or 20ma Stop Stop Rising 8ma or 20ma Short 55% Flat 200ma Flat 200ma 55% Stop Buy Stop 55% Short Dual Bar 100% Triggers 100% Buy Declining 8ma or 20ma Stop Stop Rising 8ma or 20ma Short 100% Flat 200ma Flat 200ma 100% Stop Buy Stop 100% Short Buy 1 Buy 2 Buy 1 Buy 2 8 Red bars Note: 3 Red bars and 4 lower highs. VCM Buy Set-up (VBS) VCM Trade Opps Prior High Resistance (PHR) 20ma 5-Red Bars 200ma Prior Day’s Close (PDC) Circles show VCM Trading Opportunities Charts Courtesy of VCM Trader Pro® 40.11 8 NH Velez Law # 3: If a stock fails to make a significant new low, after a series of lower lows, it WILL make a new high! Taking the 8 Train Charts Courtesy of VCM Trader Pro® Taking the 8 Train 8 Train Full of Apples Charts Courtesy of VCM Trader Pro® Name the Entries Charts Courtesy of VCM Trader Pro® VCM Mini Quiz 1) Location Item? 2) Entry? 3) Are you still in? 4) Where is your current stop? 1) Location Item? 2) Entry? 3) Are you still in? 4) Where is your current stop? 200ma Resistance 200ma 13 20ma 20ma halts price 13 5 Chart Courtesy of VCM Trader Pro™ 8ma What Location Item are your playing off of? Which Entry Tactic did you use, 55% or 100%? Are you still in this trade? One VCM Trading Strategy The VCM Buy Methods: 1) Buy 55% and 100% retracements of former red bars at or near the rising 8ma 2) Buy 55% and 100% retracements of former red bars at or neat the rising 20ma. 3) Buy 55% and 100% retracements of former red bars at or near the flat 200ma. The Sell/Short Methods: Everything mentioned above applied in reverse. APPLY IN ANY TIME FRAME
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