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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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Over the years I have become more of an investor than trader…
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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…
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Brians service gives me a well balanced objective view of the overall market. He provides a nice balanced barometer of the market.
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“The great thing about Brian is that not only does he have the skills to trade the markets successfully, but he knows how to teach those skills in a way that everyone can relate to.”
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!”
Brian teaches a straightforward and consistent approach to trading with an emphasis…
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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.”
Alphatrends is a no-brainer in terms of value for traders of all skill levels who are teachable and seeking improved results…
“Overall, this is an excellent book, one that I recommend to any trader that is interested in technical analysis. I endorse the book enough so that I have joined the affiliate program and have placed image ads on my blog. I don’t promote too many items on this blog other than books from Amazon but this is surely a product I feel comfortable recommending. Most importantly, the book is not filled with fluff or any unnecessary fat which I believe is its best feature”
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’s book is an instant classic.
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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.
He frequently finds success where others so often fail.
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“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.”
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“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!”
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.
The level of wisdom I have attained through daily listening to Brian…
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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’ve learned more from Brian, and profited more, than from any other person.
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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.“
Trading the market without Alphatrends is like driving aimlessly…
Trading the market without Alphatrends is like driving aimlessly around without a GPS.
I always believed Brian Shannon had the “Right Stuff.” Whether it was his stock picks…
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