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MARKETS: How to manage your risk if these record highs are making you nervous; plus, trading ServiceNow
- December 19, 2019
Joining Yahoo Finance’s Myles Udland is Brian Shannon, CMT and founder of www.alphatrends.net, who breaks down the price action in the SPDR S&P 500 ETF (SPY) as well as ServiceNow (NOW).
Why Brian Shannon ignores the headlines and focuses on price actionPublished June 18, 2020
The daily bombardment of news updates and opinions as we try to survive one of the greatest economic, social and health crises in generations, makes for a market environment riddled with uncertainty.
However, according to Brian Shannon, the founder of Alpha Trends, avoiding the headlines and concentrate on price action is the path to success as a short-term swing trader.
“We’ve got this amazing volatility, and for someone who is into short-term trading, this is where you really thrive. It’s been a great environment if you can be disciplined and keep your thought on what the economy might be doing versus focusing on price action,” he told Opto Sessions.
“The market is up 30% off the COVID-19 lows, [but] we are seeing record unemployment, businesses still shuttered and things that just seem so bad for the economy. It’s not the headlines that matter, but the reaction to it.
If you just listen[ed] to price action, you would have moved out of any short positions on the way down as it started rallying. Then you would start to look at recovering stocks and say ‘well, maybe I don’t trust them so I’m going to trade a smaller share size’. But price is moving higher and I don’t want to argue with price action because I know who loses in that battle. It’s going to be me not price.”
Lessons in understanding price action
This lesson in price action is something Shannon learnt early in his career. “I used to read research reports and even annual reports, and I would feel like I knew a company well,” he recalled. “But when I would go to buy it, the stock would go down.”
“[On another occasion] I read about a company who was laying people off and then the stock went up and … I thought ‘that doesn’t make sense’. The business is weakening and the stock should go down, but I dug into it and realised it was good for their business because it was cutting costs. We have egos and we place a high value on what we think the market should do. We argue with the logic of it the whole way down.”
“We have egos and we place a high value on what we think the market should do. We argue with the logic of it the whole way down”
Paying attention to price action is particularly important for those using a short-term timeframe, Shannon considers. He cites a phrase by Warren Buffett’s mentor Benjamin Graham: “In the long run, the market is a weighing machine but in the short run, it’s a voting machine”.
Shannon suggests that for those holding a position for any longer than three months should be doing a little more fundamental analysis than he does as a swing trader.
In his technical analysis, Shannon says first and foremost he focusses on price action. He says something a lot of people miss, however, is using multiple timeframes.
“Let’s say we first look at a daily chart going back 200 days to get a bigger picture understanding of what the trend is then … I’ll switch down to a 30 minute or a 15-minute chart, meaning each candle is 15 to 30 minutes of trading,” he explained.
“A longer-term timeframe is to identify the opportunity, the intermediate timeframe is to come up with a plan and the shorter-term timeframe of two or five minutes is where I can fine-tune my entries. But I want to wait for price confirmation that says the buyers are in control so I can manage risk before I commit my money to the market and trade.”
“A longer-term timeframe is to identify the opportunity, the intermediate timeframe is to come up with a plan and the shorter-term timeframe of two or five minutes is where I can fine-tune my entries”
On a typical day, there are about 30 stocks from a list of 300 that Shannon will have an interest in. He usually focuses on 10 of those, setting up price alerts at key levels. “So, as [a stock] approaches the level, I take a look at it closely on a shorter-term timeframe and start to get a feel for it,” he said, adding that you begin to anticipate entry over time.
“I want to listen to the message of the market. For price action, the market knows more than I do.”
“I trade using multiple timeframes.” by Brian ShannonPublished December 14, 2019
Brian Shannon started his career as a stockbroker at firms such as Lehman Brothers in the early 90s before moving onto trading full time. His first trading gig was working for a firm specialising in leveraged trading. Next up he took a position at a “better-funded competitor”, leading its proprietary trading programme and creating a series of courses.
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Technical Analysis Using Multiple Timeframes is a book that should be on every trader’s shelf, especially when just starting out.
“The highlight chapter for me personally was 8 where Brian breaks down trends which is my all-time favorite investment strategy. The chapter alone had 14 different fully colored stock charts all highlighting different aspects of trend trading. The flow is very easy to follow and even being a trader for over six years I still learned something new. Technical Analysis Using Multiple Timeframes is a book that should be on every trader’s shelf, especially when just starting out.”
I always believed Brian Shannon had the “Right Stuff.” Whether it was his stock picks…
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That’s right, I want you to pick up a copy right the hell now and read in awe as Shannon explains…
“That’s right, I want you to pick up a copy right the hell now and read in awe as Shannon explains how it’s not just about memorizing chart patterns— anybody who tells you that is a typically useless finance freak. It’s infintely more important to understand how variables, players and emotions align to create shockingly similar, repetitive, and, more importantly, predictable chart patterns. More importantly, Shannon delves into the steps necessary to make sure you stay disciplined—whether that means cutting losses quickly, using stop losses, waiting for pattern confirmation etc.In short, you need to read this book, if you don’t, you’re just ignoring a greatly useful resource and that’s not cool.”
I’ve learned more from Brian, and profited more, than from any other person.
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The level of wisdom I have attained through daily listening to Brian…
“The level of wisdom I have attained through daily listening to Brian and watching his setups develop (or not) is invaluable. He is unwavering in the consistent application of his basic principles of trading with confirmations through different time frames”
The great thing about Brian is that not only does he have the skills to trade…
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Alphatrends is a no-brainer in terms of value for traders of all skill levels who are teachable and seeking improved results…
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DO NOT invest one cent before you read this book.
With the release of Technical Analysis using Multiple Time Frames, disciplined investors now have a new tool to help decipher the often complex art/science of charting the markets. The cherry on top of this wonderful book is his use of full color charting and tables. DO NOT invest one cent before you read this book.
Brian’s book is an instant classic.
“Most technical analysis books focus on pattern recognition, but this book explains WHY markets move and HOW patterns form as a result, and without this understanding it is impossible to see deeper into the charts where the real value exists—this most excellent aggregation of insights takes you deep, real deep, into the heart of the matter where profitability exists. Brian’s book is an instant classic.”
Brian’s chapters addressing of how markets react at various stages from Accumulation to Decline was brilliant.
“Time is one of the most mostly ignored topic for many technical analysts as the Price is more evident and interested piece of information to act on. Brian’s ability to convey how to weave and focus multiple time-frames into trading is an excellent presentation. This book also addresses some of the key topics for traders like ‘How and When to Buy’ and ‘How and When to Sell’. I thought Brian’s chapters addressing of how markets react at various stages from Accumulation to Decline was brilliant.”
Brian teaches a straightforward and consistent approach to trading with an emphasis…
“Brian teaches a straightforward and consistent approach to trading with an emphasis on developing disciplined risk management skills. He has a sincere interest in increasing people’s understanding of all aspects of this profession. Alphatrends is a no-brainer in terms of value for traders of all skill levels who are teachable and seeking improved results”
Over the years I have become more of an investor than trader…
“Over the years I have become more of an investor than trader, but that has not reduced the importance of risk, psychology and money management, all of which I get from Brian’s book and website as I peruse the charts and his technical analysis skills. The book is a great read and combined with his daily website updates you have all the technical analysis ideas and coaching you need to make money consistently.”
Brian stresses the two keys to successful trading — discipline and finding a trading style…
Brian stresses the two keys to successful trading — discipline and finding a trading style that suits your style and personality. Without those two concepts, most traders fail. With that in mind, this book has several excellent technical analysis systems, but the chapter on Risk Management is really the key. All traders should find this book to be useful and rewarding.
Brian Shannon takes the reader through the essentials…
“In Technical Analysis Using Multiple Timeframes, Brian Shannon takes the reader through the essentials of technical analysis and then illustrates how to integrate those into a coherent trading methodology. From the phases of stock movement to price/volume relationships and risk management, Brian brings his topics to life with concrete and practical illustrations and explanations. This is an excellent resource for all technically-oriented traders; anyone who has enjoyed Brian’s video insights on the Alpha Trends blog will surely appreciate the way he synthesizes those lessons in this book.”
I’ve been following Brian Shannon at Alphatrends for nearly six years…
I’ve been following Brian Shannon at Alphatrends for nearly six years. His trading technique is clean and simple, and definitely the most successful approach I’ve found in 15 years of trading. I’ve learned more from Brian, and profited more, than from any other person.”
Brian is simply one of the best technicians on the web.
“Brian’s consistent approach to the market and risk management is like no other, his honesty, education and no “bs” approach is what will keep me a alphatrends sub forever. Thanks for all you do Brian your service has made a big impact in my life.”
In my opinion, Brian’s book is an excellent resource because he is great instructor…
“In my opinion, Brian’s book is an excellent resource because he is great instructor. Unlike many books on trading written by traders who frankly have a difficult time explaining their methods, Brian shows his skills by breaking down relatively complex ideas in a straightforward manner. Ultimately this makes his book particularly good for traders who are just starting out on the learning curve and those who’ve found other trading books too complex or difficult to implement in the real world.”
Trading the market without Alphatrends is like driving aimlessly…
Trading the market without Alphatrends is like driving aimlessly around without a GPS.
Choosing to learn from Brian Shannon was the very best thing I ever did to jumpstart my career and trading success.
“When I first began trading several years ago, I knew very little about trading. Choosing to learn from Brian Shannon was the very best thing I ever did to jumpstart my career and trading success. Almost every time I speak publicly about my trading journey, I credit Brian with providing a solid structured approach to the discipline of trading. He taught me a lot about making money consistently in the markets – but even more importantly to me, how to keep it.“
Brians service gives me a well balanced objective view of the overall market…
Brians service gives me a well balanced objective view of the overall market. He provides a nice balanced barometer of the market.
I have great respect for Brian Shannon. He is an astute trader and excellent educator…
I have great respect for Brian Shannon. He is an astute trader and excellent educator. His analysis is spot on for both beginning and advanced traders.
Reading Brian Shannon’s TECHNICAL ANALYSIS USING MULTIPLE TIMEFRAMES will have a profound impact on your trading experience.
“Reading Brian Shannon’s TECHNICAL ANALYSIS USING MULTIPLE TIMEFRAMES will have a profound impact on your trading experience. He clearly explains the market structure so you can discern clarity from what otherwise might appear random. The result is an outline of a trading approach that can be successfully applied regardless of your particular timeframe preference. I found it particularly rewarding to see his emphasis on risk management. The chapter on trading tips reflect Brian’s deep understanding of the market. His book is on the top shelf of my library.”
Brian Shannon provides the most objective commentary on the market today
“Brian Shannon provides the most objective commentary on the market today. His video recaps are mandatory viewing for all SMB traders.“
Brian’s trading and technical analysis focuses primarily upon price action versus indicators…
“Brian’s trading and technical analysis focuses primarily upon price action versus indicators, opinions and emotions. For that very same reason, he frequently finds success where others so often fail. Much can be learned by Brian’s approach to trading!”
He frequently finds success where others so often fail.
“I have been watching Brian Shannon’s stock market videos consistently since 2006. Alphatrends is a must read blog at our shop. Brian is simply one of the best technicians on the web.“
Brian is a gem. His simple approach to day and swing trading is how it should be taught…
“Brian is a gem. His simple (who’d have thought!) approach to day and swing trading is how it should be taught. He teaches a few basic mantras that, combined with a disciplined risk management approach are all that one needs. The only hard part is managing your own emotions, and he even helps with that with a bit of tough love when it is deserved. The chat room is the best I have come across. No nonsense advice, identification of low risk opportunities and constant guidance and instruction will have you “making the trade your own” in no time. His whole approach from the daily videos, to the midday update and chat room instruction is the only thing you need to become a more disciplined and profitable trader. Brian truly is unique in my view and well worth the dollars for his service!”