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In the recent live chat conducted with THE KIRK REPORT, I promised to share some of my latest trades “in the crosshairs”. I will be taking the opportunity to share not only the trades but to share the thought process behind them as well. These posts will not be a “brag” time nor will they portray my style of trading as a fail safe, get rich quick system (because it is not). There will no discussion on my percentage gains or losses, on how much money was made or lost, how many winners in a row I have had, etc. etc. because none of these things matter to you and have nothing to do with your success or failure. My trading record is worthless to another trader. What does matter are the concepts behind the CROSSHAIR and how they can be used in any style of trading, whether mine or yours or another. Get the concepts and you get the CROSSHAIR.
A TRADING PARTNER
I developed TRADING IN THE CROSSHAIRS as a simple to understand, disciplined approach to managing risk and emotion whereby the CROSSHAIRS itself takes on a life of its own; a trading partner if you will. A trading partner with no emotion and no money on the line; a trading partner who accepts what the market gives; a trading partner who follows the rules under any circumstance; a trading partner whose trades are not based on hope, greed, fear, and wreckless abandon; a trading partner whose interests are best served when left alone; and a trading partner whose memory is only as long as the last trade.
THE CROSSHAIR
In this post I will focus on the CROSSHAIR itself, with subsequent posts focusing on how best to use the CROSSHAIR, in conjunction with a few other parameters, as a weapon on the trading battlefield. I will also be releasing a free video to help explain THE CROSSHAIR and how it takes advantage of one repeatable and tradable pattern in the stock market.
According to the dictionary a crosshair is a set of two perpendicular lines used in the sight of a firearm to align the gun with the target. It is also referred to as a center of interest or the object upon which there is attention and focus. For me, when trading IN THE CROSSHAIRS I have found a stock that is of interest, I focus on it and set my sights on pulling the trigger.
The CROSSHAIR is formed when several indicators provide a buy signal at the same time. They must all agree or there is no trade. The buy signal can be for long or short positions(calls or puts) as I am market neutral and ready to change direction when the market tells me to. I also use simple moving averages that I refer to as TANKS and they are the 200, 50, and 21. What you see in the charts below is what I use to indentify my CROSSHAIR.
Very simple, very clear, very precise.
GS (Goldman Sachs) DAILY
Entered on 9/8 when the stock formed a CROSSHAIR after finding support at the 50 and 21 TANKS.
AKS (AK Steel) DAILY
Entered on 9/8 as AKS formed a CROSSHAIR off the 50 TANKS and then moved through the 21 TANKS.
AMT (American Tower)
Entered on 9/4 as AMT formed a CROSSHAIR with a strong move up through the 50 and 21 TANKS.
DECIDING TO “PULL THE TRIGGER”
It’s one thing to see the target in the crosshairs and quite another to actually pull the trigger.
Kevin McCaffrey, a sniper, describes pulling the trigger in the book TRIGGER MEN by Hans Halberstadt, when he writes:
Being a sniper involves making decisions about people’s lives. In sniper school you are taught many things about target detection and engagement criteria and all sorts of other things related to the mission, but when you are out in the real world and behind the gun, things look different and those decisions are not so clear…I really wanted to make a kill and came close one time when I saw a man doing something at the side of the road. He had a shovel and looked like he was digging a hole for an IED. Using a shovel on the side of the road was something that met our rules of engagement; the locals had been warned against this and the man should have known better. But he didn’t seem to be in a hurry, and I decided to wait a bit before killing him. After a few more minutes of observation, it was clear he was not digging a hole-he was just burning trash and using a shovel to build a pile of garbage. This taught me to very carefully analyze my targets, to be patient, and to be 100 percent certain when I did decide to pull the trigger (255).
Since trading is a matter of financial life or death there are several factors involved when making a decision to enter a trade or, as I call it, enter the battlefield. Your weapons must be prepared and your rules of engagement checked and double checked(which we will discuss in the next post). You must think like a sniper. You should be 100% certain that this is the trade you want to make; that it is time to pull the trigger.
And it all begins with THE CROSSHAIR.
Related posts:
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