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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. 2
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. 3
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 4
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 5
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. 6
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 7
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. 8
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 9
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. 10
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 11
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. 12
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. 13
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. 14
We ll look at GM real quick. Nice. ENIP. You will get a lot of that. EA, I bet that s EA Games. 15
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. 16
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. 17
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. 18
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. 19
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. 20