Trade the Hour of Power

Activity Based Trading Example:

In the last trading hour of the day: 3 p.m. - 4 p.m. EST, you can spot directional institutional price moves that have a high probability to continue into the next day, where you follow identified trade setups:

  • When the high of the highlighted candle is surpassed in the price move of the opening candle.
  • When the low of the highlighted candle is surpassed by the price move of the opening candle.

Last Hour Signal and Follow Through at the Opening of the Next Day

Last Trading Hour Signal KMI

How to find those opportunities?

On your NeverLossTrading chart; however, who wants to go through hundreds of charts to find the preferred setup?

This is where we help you with NLT specific indicators that are integrated into our market scanners: Every day after market closure, we report stocks with potential trade setups, so you can push the trigger when an opportunity arises: NLT Last Hour Movers Alert.

At what we call the last hour power trade, all reported signals can be traded bi-directional, while we make a directional assumption in the NLT Last Hour Movers Alert.

Trading a bi-directional signal of the last hour trade means that we not only trade when the directional signal is confirmed, we also trade when our directional assumption of the last day is inverted by an opposite price move at the opening of the next day.

Last Hour Signal and Opposite Price Move

Last Trading Hour Signal

The way your NLT watch list scanners are programmed, opposite price moves of the asset in focus will be reported.

To realize such opportunities, we specify the following decision making point on the chart:

Trade Entry

The potential trade Entry arrives when the high/low of the trade initiation candle is surpassed:

  • To the upside: +2% of 1-SPU; at least by 1-cent.
  • To the downside: -2% of 1-SPU; at least by 1-cent.

Bi-directional signal trading means: You focus on the directional move in accordance with the overall up- or down price move pattern of the asset and trade the direction which is confirmed first.

Target

Target-1 as in all other NLT trade setups is 1-SPU, with an average expected time in the trade of four bars (1-5 bars, maximum 10 bars), when not cut short by an NLT Box Line.  However there is also a time based trade, where you consider an exit at 10 a.m., with the closing of the first candle, using the extended target (NLT Price Gravitation Line or NLT Box Line).

Target-2 (extended target) is the NLT-Lime Line, NLT Price Gravitation Line, or NLT Box Line.

Stop

The stop for the trade is:

  • Above/below the red NLT Double Decker Line for trend trades or at a NLT Box Line.
  • Above/below the high/low of the trade initiation candle for counter trend trades that do not have a valid NLT Box Line instated and show an in trade direction positioned NLT Double Decker Line.  

Last hour movers results from NLT HF and NLT Top-Line signals with assumed signal strength:

Signals, Signal Strength and Trade Target

Last Hour Signal Strength

Here are a couple of examples for last hour NLT setups and their actual results in relation to the next day price moves. For this analysis, we took the results of three consecutive days (December 2, 1, and November 28) and added a random day (November 13, 2014).

Last Trading Hour Signal Review 1

Considering that institutional investor mostly prefer sector investments or disinvestments, we highlight stocks that belong to the same sector, helping you to either put all cards on one sector of attention or diversify your investments throughout different sectors. There is no king’s way and the choice is yours.

By the lower probability of the NLT Vol. Diff Signals, with a need for multiple trade entry conditions, we decided to spare reporting those signals for this trade setup, while they remain to be good signals for trade continuation patterns in the NLT HF Day- and Stock Trading Concept.

Last Trading Hour Signal Review 2 Last Trading Hour Signal Review 3

Comparing winning and losing trades shows a phenomenal result:

  • Day 1: 12 winners, 1 loser
  • Day 2: 7 winners, 0 losers
  • Day 3: 12 winners, 1 loser
  • Day 4: 5 winners, 2 losers

Please consider that past performance cannot always be taken indicative for future results. There is a risk in trading securities can be substantial. Customers must consider all relevant risk factors, including their own personal financial situation before trading. In our teaching of how to trade the markets, in our newsletters, webinars and our involvement in the Investment Clubs, neither NOBEL Living, LLC, the parent company of NeverLossTrading®, nor any of the speakers, staff or members act as stockbrokers, broker dealers, or registered investment advisers. We worked out trading concepts and share them through education with our members and clients.

NLT Last Hour Movers Report for December 9

Last Trading Hours Signal Reveiw Chart DOW

From the closing of December 8, only four symbols made it to the last hour movers list. When you look at the appraisal field, you recognize that in case of a gap which represents more than ½-SPU move between the prior days closing to the new day opening, we do not trade with the NLT Hour of Power model: The NLT Price Breakout Concept Model is applicable.

The Put/Call ratio highlights:

  • Green: Stronger engagement in calls.
  • Red: Stronger engagement in puts.

The third field of the report refers to the ability to trade options of the referring stock on an hourly time frame:

  • Excellent: For stocks with high option volume, tight bid/ask spreads.
  • Acceptable P: Strong price movers with decent volume to trade the options of the stock with acceptable bid/ask spreads.
  • Acceptable: Decent volume to trade the options of the stock with acceptable bid/ask spreads.
  • Potential: Check if the current volume supports the trade you want to initiate. Do not consume more than 10% of the daily volume in your trading.

In our repot, stocks are selected which give us at least a 0.5% return on cash with the expected 1-hour price move: 1-SPU. This relates to a 2% return on cash/trade when using margin.

The NLT Indicators for momentum, trend, purple zone and volume, help you to specify the overall price position the observed stock is in.

In summary: The one-hour trading period delivers very strong directional trading opportunities. We report stocks which had high volume a strong individual price move that is combined with an NLT Top-Line of NLT HF signal and trade along with the high/low break at the opening of the next day.

The 1-Hour Chart Offers Opportunities for Day- and Swing Trading

NLT Yellow Volume Bar Breakout Trade

Trade Implications:

  • When day trading, positions that are opened and closed the same day
  • Swing trading: Expect to be in average three days in a trade to come to an extended target: NLT Price Gravitation Line or NLT Box Line.

When you day trade options, select stocks with Excellent and Acceptable-P categorization and trade their weekly options.

When you swing trade options of stocks selected by the 1-hour report, expect to be about three days in the trade and thus you need to give the option at least 9 days to expiration, reducing the impact of time decay.

Ensure for all your option trades that the minimum return the price move of the underlying shall produce shall be 25%, preferable 30%: Opposite price moves of the underlying quickly lead to a 50% risk when a position is exited at the stop.

 

If you swing trade, you can apply a method of trade adjustment. Option day trader’s best take the hit and find a new trading opportunity.

In your trading also consider that potential market maker moves can be identified by the yellow highlighted volume bar. You can find a detailed article about the invention and applicability of the yellow bar trade on our blog:

http://neverlosstrading.wordpress.com/2013/06/04/low-volume-breakout-trade/

Market Maker Move at the Low Volume Breakout Bar

A good way of following the direction of such strong price moves on the hourly chart is to mark the high and low of the yellow volume bar candle to then follow the directional breakout.

The nature of the stock market is that directional moves happen fast and those who fail to prepare their trades in advance might not be able to participate in the opportunity. Hence, we are going to help you by giving you the right instruments on hand to place your orders in advance.

December 11th Highlighted Stocks for an Hour of Power Trade

The above table shows how important a chart validation is: P did not fulfill the conditions by an NLT Box line cutting the price move to target short, hence the minimum reward/risk equation was not met and no trade was made; however, all other stocks fulfilled the conditions and produced winning trades.

So far, we let the computer find the opportunities and left the chart analysis to the individual trader; however, from now on, we will add a hand selection tool to this service for our subscribers. The last hour movers report is part of our Stock Trader Alert: Click the following link for details and to subscribe:

http://neverlosstrading.com/Stock_Trader_Alert.html

XOM Hour of Power Trade

Hour of Power Trade XOM

Chart Analysis:

  • XOM showed a substantial price erosion in the typical NLT downwards pattern.
  • The last hour signal on December 10th indicates a potential market maker initiated shortage of supply, with an expected upwards price move, initiated by short coverage: It is a bottom reversal trade on the first leg and we are careful, expecting the price to revert after its first leg extension.
  • The 1-SPU target has no obstacle: $88.87. The extended target is the NLT Box Line: $90.98
  • The Buy-Stop price is > $88.95; adding 2% of 1-SPU ($0.83) gives us an Entry of $88.97.
  • The Stop for the trade is at the bottom of the trade initiation candle -2% of 1-SPU: $88.18.
  • The risk of the trade is: $0.77. The reward is either: $0.81 or $1.20 (extended target). NLT students use their position sizing model (next page to decide for lot sizes); however, we already see here that the reward of the trade exceeds the risk and with thus a trade can be made.
  • Trading a bi-directional setup, we would also enter into a trade if the price at the opening drops below: $88.18; going short for a minimum of 1-SPU ($0.83).
  • This trade has multiple exit points: Extended target: and thus (our target-1); a time based target: 10 a.m. for closing the trade; 1-SPU Target (conservative approach).

Position Sizing: What shall be my order size?

The final decision is always yours but with the help of our position sizing model NLT users obtain additional support in appraising the trade situation for stock trades and option trades.

The first example calculates a price move to the expanded target and gives you a home run setup:

Position Sizing Model by NeverLossTrading 1

The second model considers a 1-SPU Move and proposes to trade two stock lots but only one option lot:

Position Sizing Model by NeverLossTrading 2

If you traded the option with the NLT Delta Force Concept (taught in our mentorship's), it lead to doubling your capital in a matter of an hour, quickly exceeding the original expectation.

How to enter your orders?

We use OCO (one cancels the other) with a buy stop:

We only trade hen the price comes to our entry price level of $88.97. Here are the action steps to take:

Go to your tos trade screen, right click on buy; choose by custom and click on OCO with Bracket:

OCO Order Entry 1 This will pull up the following order on the bottom of your screen:

OCO Order Entry 2 By default, this screen produces a limit order, but we want a buy-stop-order and click on the green LMT box to change it to STOP. Next we change the box where you see 89.92 and enter our extended target (LMT) and put the stop price into the lower box, where you see 87.92 now.

OCO Order Entry 3 To confirm that you changed your order to a buy-stop, click on the little gear-wheel on the right side of the order and it populates the following pop up box on the bottom of the Order Rule Screen, confirming that you now have a buy stop order with the referring OCO brackets: Ready to go - Confirm and Send.

OCO Order Entry 4

Another and easier way to place a buy stop order with a bracket is using the Active Trader Tab:

OCO Bracket Order Entry

We chose: Target with brackets at a $1.20 target, with a $0.77 stop from entry.

In case of an error for the target or stop price level, adjust those graphically on the chart by placing them right at your NLT Price Gravitation Lines or move those on the active trader screen after the order is placed.

Time is a critical element for this trade; with good preparation, you should have your order already in the market prior to the 9:30 a.m. EST opening. By not selecting extended hours, your order gets delivered at the opening of the day an only filled when your conditions are met.

Time Based Trade

For the immediate target, always choose the extended target of the trade and at 10 a.m., you decide if you rather want to close the entire order by pulling back the sell price limit or if you still see the extended target in reach

This way, you allow the ability to make the additional income by keeping the upside potential, beyond the 1-SPU target in your trade. In our XOM trade, the extended target gives us a 50% higher return over the 1-SPU target. Imagine if you did this trade successfully for 200 trading days making constantly a 0.5% higher cash return, this alone would double your investment money.

Let us see how the trade panned out:

XOM Hour of Power Trade Result

Chart Analysis:

  • The opening candle surpassed our price threshold of $88.97 and our order got filled.
  • At 10 a.m. we came to a price point of $90.60, giving us a 1.8% return on cash.
  • In the second hour, the extended target was reached and surpassed.
  • At the purple NLT Price Gravitation Line (bounce line), the price reverted
  • The noon candle had a yellow highlighted volume bar indicating market maker activity, which leads to a price shift if the high/low of the associated candle is surpassed in the next candle.
  • A strong price move, below the low of the yellow bar candle occurred, initiating a potential short position.
  • The dark green signal shows a momentum volatility change based trading opportunity, which got validated and came to target, continuing the expected bottom reversal price pattern. As day traders, we close our position and call it a successful day.

If you want to learn trading like this: Call +1 866 455 4520 or contact@NeverLossTrading.com

Good trading,

NeverLossTrading

+1 866 455 4520

 

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