copyright 2016 hatt publishing inc. | trading is risky ... · this absolutely works on forex. the...

Tommy’s Revenge Trading Method 2.0 (Module 3 Part 1)

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



Welcome to Tommy’s Revenge Module 3 Part 1.

Note: Just because I teach on a price chart using stocks does not mean you can’t use this on

Forex. This absolutely works on Forex. The only thing about Forex is you can’t really

search and scan. I’m not aware of any tools but I’m sure there’s some out there. I heard of

one a few years ago. I can imagine the technology or the industry has developed some

searching and scanning tools. If you can search by indicators, you can use Tommy’s

Revenge. So just because I’m using stocks, this is still going to work for you if you’re a

Forex trader.

The topic that I’m going to cover in this module is a deep, important topic. Everybody will

learn something in this module no matter what level trader you are. I’m sure some of you

have heard of what I’m going to talk about, but I think I’m going to touch on it at a level that

might really be a game changer for many of you. We’re going to talk about building your

watch list.

Don’t trade one or two times and draw conclusions. Trade more. Five to ten trades does

not provide statistical significance. Initially when you start trading it’s really about

gathering data. There’s going to be a price that you’re going to pay for that data unless you

paper trade then it’s free. Very often we spend $5,000 to $10,000 to bring in some

important data, then we can use that data to “trim the fat” and move forward with a more

profitable, solid trading plan. The good news is this can be done on a paper account so you

don’t have to pay big money for the data, but you’re going to be gathering data.

Whether you’re a brand new trader or a seasoned pro if you have not done this, then from

this day forward for you to see results and continue to improve over time it has to be based

on data. If you’re not gathering that data in some sort of format that allows you to reflect

on that data on learn from that data, then you’re wasting time and money and resources. I

learned this concept from the advertising we do online. A lot of times we’ll put campaigns



together where we have 1,000 keywords, we’re bidding $0.25 per click so 100 clicks is $25,

but if we’re will to test 100 clicks for $25 and we have 1,000 keywords, then we’re willing

to spend $25,000 on the test. What we then do is go through those 1,000 keywords and

remove the stuff that had horrible performance and save the stuff that had good

performance. One hundred of those keywords paid off, but 900 of them didn’t, but the only

way to find that out was to test 1,000 keywords.

What I learned from that is I had to pay for the data. In order for me to make those

observations I had to spend money. I couldn’t do it one keyword at a time because that

would take years. So to do 1,000 keywords at $0.25 is a $25,000 test for marketing

purposes. It’s the same thing with trading except it doesn’t cost you that kind of money. It

does cost a lot of guys. A lot of big level traders don’t mind spending 10 or 20 grand to take

their results and make some tweaks and trim the fat and move forward more prepared.

When you’re doing this you should be saying stuff to yourself like, “Wow if I look for this

setup in this market condition, it seems like I’m right 60% of the time.” “Wow, this setup

never works.” You’re going to look at your data and say here’s something that I did 18

times or 22 times and it never worked. Then you might make an observation where you

say, “Hmm this setup always works on this particular stock.” These are the kinds of

observation we want to make. This setup always works on this particular stock in this

market condition. The more experience you get the more market conditions you’re exposed

to and the more you can put on trades and be successful where other people would never

be successful.



Even if you made 50 trades and lost on 40 of them, you are still on the path to being a great

trader as long as you review the data. I promise, if you review the data, the next 50 trades

are going to be even better and so will the 50 following that.

How Bad Do You Want to Succeed?

The question that I have for you is how bad do you want to succeed? Think about that for a

second. How important is it? How critical is it in your life? How much better would your

life be? How much more freedom would you, your family and your loved ones have if you

could make this work and you could pull a couple thousand bucks a month or a weekend.

Let’s start by being really conservative. What if you could pull in a couple grand a month?

Whatever it is you’re looking for how important is it, how bad do you want it. Think about

that.

How Quickly Can You Place 100 Trades?

How quickly can you place 100 trades even if they’re only paper trades? A lot of guys say

paper trades don’t work because the emotion is not involved. Who cares about that right

now? We’ll take that into consideration. I’m talking about a setup, a stop-loss, a win or a

loss. If you’re collecting data and you’re doing this for the purposes of developing and

approving a strategy, I promise you your paper trading you will be involved emotionally.

Yeah 10 grand or 50 grand, but it’s probably not going to be when you’re really trading

because you’re going to be a little bit smarter about it than that so your emotions are not

going to get involved. People say paper trading doesn’t work because you’re not

emotionally involved. There’s no money on the table. Truthfully if you’re trading properly

and you’ve got everything in check, you’re emotions aren’t involved anyway because you’re

on top of that. You’re not trading with emotions. You’re trading based on logic and data So

whether your trading real money with logic and data or paper trading with a goal of



developing a system that works and gets better over time, either way your emotions aren’t

involved.

So how quickly can you place 100 trades? I don’t just mean go out and put 100 trades out.

I mean of course we’ve got to find the trades and we’re going to look at that in this module.

We’re going to look at how to find the trades. We can certainly be easier in the filtering

process. We can find the setup. The indicator looks good, price looks decent, price is

moving in our favor slightly but it’s not overextended. We can enter and set a stop. We

want to make sure the overall market condition isn’t going to hinder our stance. If we’re

trading something like Forex or oil futures, then we want to make sure the larger time

frames preferably compliment our stance but definitely don’t hinder it. So, how quickly can

you place 100 trades.

Don’t let your work be in vain. If you’re just trading and you’re not documenting

everything and taking copious notes and details, then you’re doing so in vain. All that work

isn’t going to pay off because you’re relying on your memory to recall all of this

information, and you’re taking what could be a short learning curve and dragging it out ten

or more years or you will throw in the towel like 80% of the people do.



A trader gets good by reviewing his/her track record and making observations. We’re

going to look at our entry, stop, the reason we entered, the overall market, risk, profit, loss

and if you desire, screen shots. I have a piece of software that I developed five years ago. I

don’t support it or sell it anymore. It was called My Trade Book. It just didn’t gain any

momentum even though it was awesome. While you were trading on your screen you

would hit Shift+F5 and your mouse turned red, and you could highlight and release your

mouse and that stuck a screen shot into a database and then you made your notes. Your

notes were where your entry was, your stop, reason for entry. You could use a Dropbox

and select bare neutral bullish on the overall marketing editions. It was really an easy way

to go back and look at all this information complete with pictures.

You don’t need that software. You can use Excel and I’m going to show you how to do that.

I don’t have a secret Excel formula that I use. I just look at the date, symbol, entry, market

editions, where I set my stop, any notes I want to make and a net result. If I want to add a

column for something else, I add it. I can log 100 trades on one single sheet. Although I

don’t take screenshots, I can see back in time up to 30 days on an entry date chart and

years on a daily chart.



This information will allow you to trim risk, increase profits and avoid more duds and

gravitate to the big wins. Again you can use a simple Excel worksheet or a Google Docs

sheet and record the information like this.

Go to www.docs.google.com

Click on “Sheets”

Start a blank sheet

Here’s your spreadsheet. You’re going to come to about here(Column B Row 4):

Type “Date” and tab over

“Symbol” and tab over

“Entry” and tab over

“Overall Mkt” and tab over (If trading Forex, use “Daily” or “Monthly”

“Stop” and tab over

“Notes” and tab over

“Result”

http://www.docs.google.com/



If you don’t document everything and have it laid out here, you keep yourself from fine

tuning and becoming good at this. We can look for setups and how to develop our watch

list.

This is how you develop intuition. You put in the work and you allow your past wins and

losses to effectively guide you. My list for picking watch candidates is as follows:

1. Range (Reward Potential). One of the biggest mistakes etraders make is that they find

a bunch of trades that are hopeless in the sense that there’s no money on the chart. You

look at the setup and it’s beautiful. You look at the past performance and the pushes on the

chart exceeding prior swing highs (bullish stop) and you see these large moves and

everything looks great, but what you don’t realize is those large moves only equate to about

$2 on a $20 stock. The reward is small and so is the risk and that’s okay because we could

allocate more money to that trade. You need to be aware of the range or reward potential

so you can allocate money properly.

2. Risk- Is there wild highs and lows? When I say risk I don’t just mean what kind of risk

is involved. What I mean is is this risky business? Look at the past, look at the highs and

lows and look at prior swing highs and swing lows as well as individual candlestick highs

and lows and look to see does price continue to violate a low or a high and continue in the

other direction anyway which is where market makers or price is stopping people out

before it takes off.

3. Is price fluid and predictable? Do you see fluidity, do you see predictability?



4. How does the overall market play into my current stance? If I’m bullish, what’s the

market doing? Is it up against resistance? Is it coming off of a huge long, bullish run?

These could hinder my bullish stance that I’m about to take. If so, maybe I should wait to

see if the market is entering a sideways channel or if it is going to correct or if it’s going to

break out and continue up.

Let’s take a look at searching and identifying some of these candidates. We’re not going to

find a bunch of stocks in one day. We’re going to look for some basic principles that were

described in Tommy’s Revenge manual. If you have a setup you like use it. Candlestick

patterns are unique where three or four can mean a potential reversal, but usually it’s

preceded by some form of support or break of resistance. If you pay attention to swing

structure and highs and lows, you will be able to identify any pattern that presents itself no

matter what it’s called.

Let’s use our original scan. What we are going to do is try to find stuff near the 55 that is

clearly just making its way through it. Why, because price closed above the 55, however the



price high is greater than the 2 period moving average and the 6 period is less than the 55.

This puts everything kind of in a cluster at the 55 which is our bearish, bullish zone, if you

will.

Let’s take at the SPX. We’re on a daily chart and the SPX has kind of been moving down for

a month. We’re making lower swing highs right now. A quick observation tells me nice

bullish day to day. Look at today.

Today is nice and we actually are on that 55 period. Let’s look at swing structure real

quick.



We have a nice push up through April 20th. It could easily be interpreted as a 5 Elliot wave

pattern. We reach these prior highs back in November of 2015. Today was a good day, but

we are making lower swing lows and lower swing highs. I would say short term this thing

is moving down. Very short term it’s moving up because look at today. We are definitely

holding this prior swing low support. I would say we’re neutral on this right now. Those

are the kinds of observations I want you to make going forward.

Over here it’s a different story in that price is coming down and we’re bearish for the short

term. The prior swing low is down here and we’re well above it. We find support right

here. This is solid and you can make that same observation with every impulse and

corrective pattern in here.

Swing lows are up, down, up, down. The lows are always on the bottom and the swing

highs are always on the top. My intuition from my years of trading tells me we’re going to

move sideways for a tad. My intuition also tells me we’re not bearish. Any time I say I’m

going to get bearish, I’m always wrong, the bulls come out and this thing always takes off.

We really want to focus on swing structure and highs and lows.

Let’s go to our scan tool and the scan should run automatically. We’re already sorted by

volume. I’m going to start plugging these in. First one is STP (Sun Tech Power Holdings



Company Limited). This has a couple of swing lows on the way down, took out a prior

swing low right here, nice bullish day today but I would be reluctant to jump into

something like this that’s so brand new.

SU, here we have our cluster. Notice how closely this resembles the S&P 500. This is Sun

Corp Energy INC. Nice run up. We did take out these lows.

I wouldn’t be bullish on something like this right now. We have a nice push down and a

push up and a pullback. We’ll have to see what happens right here. Would I put this on a

watch list? Potentially but it’s not really exciting. You want to avoid finding stuff that’s not

good because there’s nothing out there.



BHP. Notice the price action is splotchy and choppy. I’m not into that because it’s not

predictable and fluid.

MSTX- pretty much downward. For the purpose of this course, if I was shorting something

here I would still be mixed on this because it kind of recovered but the bigger trend is

down. As you can see to the left, the entire trend is down. Let’s add a filter to this.

Click “Add filter for stock”

Ask is $10

That will get rid of some of those. We don’t want to look at penny stocks.



ALKS A nice day today. This is closely matching the S&P 500. It’s a $40 stock. I would

probably put this on my watch list. What makes me want to add this to my watch list is it

matches the S&P 500.

PPG This used to be one of my favorite setups. I used to use Bullinger Bands and I called it a

return to trend setup. We’ve got a high, a higher high, a lower high. Once you take out this

low that’s confirmation of a move down.



Using the retracement tool, drag it up and click and drop. A retracement level of 50-61%.

You can see it better on a monthly chart.

Price has moved up and price is pulling back. What’s going to happen next? Price is going

to move up. If this thing was going to down trend, it could do so to 50-61% and then

reverse to the upside. For the purposes of being bullish, we have a nice bullish history but

we’re in a current short term bearish trend.



TRIP (Trip Advisor) It’s in a channel right now. It’s a long sideways channel.

RES Real choppy. Notice we have wild highs and lows. These wild highs and wild lows are

risky because they take out stops. There is some movement but it’s wild and unpredictable.

ARW Nice big move up. We’ve got that correction to the downside.



PRTA It’s a little choppy. If we look at this from a Tommy’s Revenge perspective, the setup

is fairly decent.

Our bullish information that gives us confidence is number one we have this nice move

back here. (Left) Number two, we came down here and we printed this low and we came up

and instead of coming down and printing a lower low, we printed a double bottom and

then price went up and took out this high. Short term bullish is perfect. I would be willing

to put PRTA on my list.

So far I have SU, ALKS and PRTA. None of them are ready to enter, but they display some

short term bullish characteristics that are worth keeping an eye on as the S&P 500 figures

out what it’s going to do.



LDOS. It looks pretty good, a little similar to the other. We could say it printed a higher

low, but really it just moved sideways. $2.50 on a $50 stock is not a bad stop and you have

the luxury of doing that because we have tight price action right here.

You find that kind of stuff and you do what I call “skipping a signal” where once it hits here

(or a little higher) and we have out resistance above. It’s not a 5 but a 3, but it has $10

potential in a couple of months and we’d want to see what the S&P 500 is doing because a

lot of these seem to be mimicking the S&P 500. I will put that on my list. Nothing is ready

to enter now.

GNRS Looks nice today. Today mimicked the S&P 500. No real strong pattern or support

there. That thing could blow up tomorrow. It could be worth watching but there’s no real

patterns that we look for to validate our stance.



Personally here’s what I’m going to do. In my experience I’m going to go back here and

wait and see what this does. Until the S&P 500 picks a stance, has some directional bias we

would want to scan again and look for bearish candidates.

Conclusion

I pointed out risky highs and lows. We talked about fluidity. At this point with all that I’m

seeing here I’m inclined to believe that I need to wait and see what the S&P 500 is going to

do.

copyright 2016 hatt publishing inc. | trading is risky ... · this absolutely works on forex. the...

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