2.0 ( 2 1) - s3.amazonaws.com · like dmi, adx and stochastics to refine some of this because no...

Tommy’s Revenge Trading Method 2.0 (Module 2 Part 1)

1 Copyright 2016 Hatt Publishing Inc. | Trading is Risky, You Could Lose All or Some of Your Money!



Welcome to Tommy’s Revenge Module 2 Part 1. I’m not sure how many parts will be in this

section. I think if we participate together we can make a module that’s beneficial to all of us

Be aware that anything you share with the group that I decide to share with everyone is for

the group only. Anything that you share with us, should you decide to participate in what

I’m about to ask, is just for the group only. You have my word.

I’m going to show you how to do some scans. I’m going to show you some of the things I

use. I don’t mind sorting through stocks. Although I like sorting through scans and have

got some great candidates, there’s nothing miraculous about my scans. I do know from

experience the more I try to refine my scans it prevents me from having to look through

200 stocks, the more I miss out on because the filtering process, that in which I run my list

through, eliminates candidates that are perfect setups because I was trying to do less work.

We’re going to look at Think or Swim, Stock Fetcher and throw some ideas to you. We can

really mix this up. We’ll get into scanning one time frame and scanning a different criteria

in another time frame. The best package I can hand you is the ability to make an

observation and turn it into a scan that works good enough to allow you to look through

some stocks and find what you were looking for.

We’re going to look at Moving Average Crosses and Slow Stochastics. We’re also going to

look at Slow Stochastics in multiple time frames, Bullinger Bands, ADX. All of our moving

averages that we have on the chart in Tommy’s Revenge serve two main purposes. They

give you a visual queue into the current state of price action, and tell you whether or not

low risk opportunities are likely to be present. The visual que they give you is one that

allows you to see the extended nature of a trend or a new trend is beginning.



The other thing that Tommy’s Revenge allows you to do is train your eyes and your brain to

recognize high reward, low risk scenarios at a glance. As long as you stick to the method,

you’re always getting better because you’re always seeing successful things take form and

you’re able to more easily recognize them before they happen. That’s the benefit of

focusing on a method. It’s one reason why I reintroduced Tommy’s revenge. I think the

reason Tommy’s Revenge is so successful is I don’t know if it was initially a success thing or

if people were attracted to the way the system looks on the screen. Obviously there had to

be successes for people to continue. When you have something that you can observe over

time you want to get keen at making the various observations on various time frames.

Regardless of us incorporating a Bullinger Band or an ADX indicator, dual time frame

stochastics, full or slow stochastics ultimately we still have this visual system.

On their own, these moving averages would be sufficient to find all the trades you ever

needed to make to make a ton of money, if you didn’t mind going through hundreds of

stocks every day, but that can be a drag. So in order to more efficiently identify ideal trades

we’re going to combine extreme conditions from other indicators with our various moving

average characteristics.



I want to look at a couple charts with you, make some casual observations with you and

then go attempt to build some of this stuff. Today we’re going to use Think or Swim. I’m

also going to put a video up that uses Stock Fetcher. I can’t use every platform you use, but

the principles are the same so if you have Ninja Trader or MT 4, you can do a Google search

that says, How to build a scan with MT 4 and follow some simple protocols. Most

platforms have a simple language building interface that allows you to say this is less than

or equal to more or crossing through or greater than the other on this time frame or that

time frame. Those building blocks allow you to do some scans. You might build some

dumb ones at first and I will show you that coming up, but ultimately you’ll pick up on what

that scan really required and what it didn’t need. It may serve the same purpose.

Let’s look at this real quick. Here we have price breaking through this moving average fan

right here (first circle). The only reason we know this is coming up through here is because

time has passed. We’re looking at this in past tense. We do have this series of bottoms (left

of the first circle). I want to observe this price action right here and say can we build a scan

around that. What do we see here? Look at it real close. You have a -2 period moving

average, you have the red which is 6, blue at the top with is 12. No need to do the others;

orange is 10, green is 8. What we have here is price is below the 55 and the 2 EMA is

crossing the 12. Pause this video right now and make this observation right here (second

red circle).

There’s a bunch of things you could say about what’s taking place right here (second red

circle). The question about whether or not it makes sense for a scan remains to be seen

until you really think it through because a lot of times when you put a scan together there’s

a lot of charts that will pull up that look nothing like what you’re looking at, but as you

observe them you will see why they pulled them up and that’s when you begin to develop

scans that are more efficient. The only observation I made up here is price is crossing



through the 55. Price is greater and in my case on Think or Swim, the close is greater than

the 55. We are allow to say on Think or Swim, price is crossing above so I’m going to say

price is crossing above the 55. The price high is greater than the 2 period EMA. Just for the

fun of it. The 6 EMA is less than the 55.

Once again, price crossing above the 55, price high is greater than the 2 EMA and the 6 EMA

is less than the 55 EMA. That brings price pushing through the 55 with the 2 period while

the 6 is still below the 55 so that’s going to clump everything. It’s going to be rather

aggressive because the high is greater than the 2 but that 6 period is less than the 55 which

means that’s the beginning of a trend. We’re going to build that one together on Think or

Swim and see if we can come up with anything.

The next couple I have here these are simple observations I want you to make. The first one

(left) I said price crosses through the 55 EMA. There’s nothing additional I would want to

observe here. There is some cool price action that I’m keenly aware of. We have a low

right here, price broke through and basically found support on the 55 and it’s beginning to

take off again. I’ve got price crosses through the 55, and anything else I could observe here

to a scan doesn’t really help. It would be cool if I could say we have a higher swing low, but

I don’t know how to efficiently do that in Think or Swim or any platform for that matter. I

wouldn’t even use that scan, price crosses through the 55 EMA, you just get a bunch of

passes through the 55. That would be hundreds of stocks. We need more than that. I’m

going to show you how we can use an indicator to bring a list of 500 down to 100, but

there’s other things we can do like the three-part scan.

The next one (right) is kind of cool. I’ve got the 12 EMA is greater than the 55, that’s the

bottom one, the slowest one. If we say the 12 (blue) is greater than the 55 that at least puts

our moving average fan the whole thing above, usually the 12 and everything above the 55.

That scan would mark the beginning of a trend, but we didn’t say how high above. That’s



going to bring up anything no matter how high above. I’ve got here price is greater than

the 6 EMA. The 12 is above the 55 and price is above the 6 (red). On this bar we could

have said price is below the 8 period (green) exponential moving average. I don’t know

what kind of scans that would bring up, but I want you to learn how to make these

observations. I’m going to give you my scans over a series of videos in this module. As you

begin to toy with whatever scanning you’re using and you find something that really works,

share it with me so I can share it with the group.

There are tons of scans we can do to build a “Watch-list” but only a few will put you right

on top of stuff that’s about to blow now. We don’t necessarily want to build a “Watch-List”

to watch. I know that contradicts what I said in the sales letter and what I’ve said in emails

but here’s what I mean. I know I told you we would be doing that, but the watch list I want

you to build is one where you’ve defined a low risk entry on a compliant stock and you

exited with a profit and now you’re watching that stock to re-enter. That’s the kind of

watch list I want you to have, stuff you’ve entered and then re-enter. Sure you’ll come

across the occasional “almost ready” stock or whatever you trade but for the most part

we’re scanning what’s ready right now.



I want to show you a scan I did that didn’t bring up anything, but you need to be able to do

this. Over the next few videos I will show you how to do your scans that you can follow in

Think or Swim, Step and Stock Fetcher. If you use other platforms you just take the logic

and apply it. This can be done in any platform because all we’re using is price action,

moving averages and off the shelf indicators.

If you’re in Think or Swim you just go to the “Scan” tab. Here’s the fist observation we did

(first graph). I said the close price is less than the 55 period, yet the 2 period is crossing

above the 12.

We’ll do a daily chart. I did a five minute as well. No results, and just for the fun of it let’s

go 15 minutes. No matching symbols. A lot of time when you do that you want to make

sure you’re not scanning something ridiculous, but we’re scanning all optionable stocks

with no intersection.

We’re going to build one where price is passing through the 55. Price high is greater than

the 2 EMA and 6 EMA (red) is less than the 55. Let’s build this and see what happens. Go to



“Add study filter”. It always comes up with “ADX Crossover”. You’re always going to click

there, you’re always going to select “Custom”.

That brings up this dialogue box. That’s how you start every indicator style scan.

Click the “Edit” button and we’re doing a price condition. The command is price is crossing

through the 55 so we’re going to select “ADX Cross” and “Price”, “Close”. Price close is

“crosses above”. I click the next condition and hit “Study” and I hit the “M” key and scroll

down to “Mo” for “Moving Average Exponential”.



Price passes through 55 within the last 3 bars. So price close crosses above the 55 period

exponential moving average within the last 3 bars. The next command is the price high is

greater than 2 EMA.

Go to “Add a Study Filter”.

Click the “ADX Cross” and change it to “Custom” brings up the dialogue box.

We want to do a price high is greater than 2 EMA.

Select “ADX Cross”,

“Price”,

“High”

“Greater than”

Select “Condition”

“Study”

Hit “M” for “Moving Average Exponential”

EMA is 2

Under “Within” enter 3

“Save”

The last command is a 6 EMA is less than the 55 which puts it right on top of the 55 period

moving average.

“Add Study Filter”

“ADX Cross”

“Custom”

“Edit”

“ADX Cross” then “Study”



“M” Key for “Moving Average Exponential”

EMA is 6 is “less than”

Select “Condition”

“Study”

“M” key for “Moving Average Exponential”

On Length, enter 55

Under “Within” enter 3

“Save”

“Ok”

Let’s go ahead and click “Scan”.

This is a tight filter that puts a progressive price move up and a high above the 2 while the

6 is still below the 55. This is an aggressive explosion, yet the fan is still below the 55.



We’re going to save this scan.

Click file icon (Top right)

“Save Scan Query”

Type in “Price Explosion From Thru 55”

“Click Save”

Change them all to Daily

Click “Scan”.

Now we’re on Daily. Let’s sort by volume. For some reason this only pulled up futures

contracts. Try clicking “Stocks and Options”. Under “All optionable” click on “All stocks”.

Pull up your chart. When I look at these, generally speaking. We have 1,100 scanned.

There’s another filter I’m going to show you in the second part where we add indicators



like DMI, ADX and Stochastics to refine some of this because no one wants to look through

this many stocks.

When you begin to sort by volume you will not there’s only about 100 if that. There’s only

about 20 you can look at. This is why it’s okay to get a result of 1,147 because the volume

is not there in most of it. So you just want to look at your high volume stocks. Now you

have 50 to look at. Personally a lot of times I will skip the four characters, I don’t like to

skip them, but I look for what I recognize initially.

We scan for this right here.



You will see why some of these came up even though they don’t look like what we

anticipated.

The first one we’ll pull up is NERG. A lot of times it will be a flat line. This says 234 million

shares.



We’ll go to GE. We said one to three bars ago, price is higher than the 2 for sure. It’s kind

of cool but it is down trending. Did it meet our criteria?

Price passes through the 55.

Price high is greater than the 2 EMA

6 EMA is less than the 55

This is a pretty decent scan right here.

Next we’re going to jump to S (Sprint). Sprint is nothing although it qualifies.

Oracle (ORCL). Perfect. Nice pullback, nice breakout to the upside.



We’ll look at GM real quick. Nice.

ENIP. You will get a lot of that.

EA, I bet that’s EA Games.



PG is Proctor & Gamble. All of it qualifies.

When it comes to going through this list I really think TD Ameritrade and Think or Swim

Platform really sucks. I will be showing you how I use Telechart. I space bar through

Telechart that’s how fast I can look through symbols.



MX. We’re at 3 million shares right here.

ATI. I don’t know if this qualifies.

Price passed through the 55 so that’s got to be 1 to 3 bars ago, that’s this bar (third from

the right), but the problem is I set the criteria for the other two so price high is greater

than the 2 EMA. Last one is 6 EMA is less than the 55. We should probably only do one

bar. If I say this qualifies above the 55, but if I say the 6 EMA is less than the 55, 1 to 3 bars

ago that would mean it could happen here (Furthest right) and this still gets pulled up

because it’s within the 1 to 3 bars.



GOOG (Google). I said price passes through the 55. I guess that’s what makes that qualify.

Price high is greater than 2 EMA. The 6 EMA is less than the 55. It looks like it’s entering a

down trend. Can you see how you can find the beginnings of trends.

(AN) There’s some nice setups in here.



Big list, nice scan. If were to change all of these to one bar. Right now we have 1,147 on

the list. We’re sorted by volume. We’ve got one bar. We cut our results by two-thirds.

When we had such a big list some of the good gems were hiding.

Trip Advisor. That could almost be a sideways channel breaking out of the channel but it’s

not quite that.

So we will be looking at more scans. We’re going to incorporate more indicators and then

we’re going to add Stock Fetcher which is one of the cheapest, easiest ways to do this with

stocks. If you trade Forex, I don’t use any Forex scanners. I observe my setups on Forex

and I watch for them. I can’t look at everybody’s platform. The logic is always the same. If

the logic is not something you can make sense of, then find another platform. Google

Forex scanners.



The thing with Forex is there’s very little to watch, but when you start looking at all of the

time frames (5 minute, 15 minute, 1 hour), certainly you can put together some scans that

make sense and could be very beneficial to you, but if you just trade a 15 minute chart and

you just trade the USD and the Pound, then you just have to watch those couple of pairs

during your trading sessions and look for those setups to occur.

2.0 ( 2 1) - s3.amazonaws.com · like dmi, adx and stochastics to refine some of this because no...

Documents