O.K. I got it wrong ... but MarketClub's "Trade Triangles" got it right.

O.K. I got it wrong ... but MarketClub's "Trade Triangles" got it right.

The last three days in equity markets have been extraordinary beyond anyone's imagination and you have to respect the market.

One of my heroes in the stock market was a gentleman named Bernard Baruch. You basically don't hear about him anymore, but his teachings about the market are incredibly useful. You may want to read his book, Baruch: My Own Story, which I highly recommend.

One of my favorite sayings that Baruch gets credited for goes like this: "The main purpose of the stock market is to make fools of as many men as possible." Well that certainly happened to me this week when the head and shoulders formation reversed and the market squeezed all the shorts dry.

I got it wrong, but MarketClub's "Trade Triangles" had it right. Our "Trade Triangle" technology was basically neutral and on the sideline's until yesterday when the weekly "Trade Triangle" flashed a buy signal on the stock market.

If you've been reading this blog for any length of time you know that I stress diversification and discipline in trading. When you do that, you really do win out in the long run.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

58 thoughts on “O.K. I got it wrong ... but MarketClub's "Trade Triangles" got it right.

  1. Hutch,

    Thanks for your feedback.

    The results we've had for the past 8/4 on totally just using the trade triangles without any human intervention.

    I am hoping to get something up and running based on stocks and ETF's. Stay tuned to this blog.

    All the best,
    Adam

  2. Adam,

    Have you ever published any live portfolios demonstrating using the trading triangles doing buys and sells with a group of 10 stocks? I would be interested in the win/loss percentage of following a real world example. Say you started with 100k (~10k each) and traded based on triangle buy and sell signals. At the end of 6 months would you have more or less money? Using no human intervention other than executing the buy and sell following the signal.

  3. According to some other Technical Analyst, the Head and Shoulders top pattern is still valid. It is not unusual they say to have a right shoulder come up to the mid-point of the head or even higher. They also showed past examples of this happening.

  4. Hi Adam, I've been following your videos quite a bit and really appreciate what you've been sharing. Indeed market love to make us look like fools and ppl who's in the mkt long enuf will know this. what's impt is the money mgmt when we are wrong and the sound tech skills that you've so generously sharing. Pls ignore all the idiots who obviously is only looking for 100% right calls which just means they havent trade long enuf or they're just plain greedy and lazy to not see that money does not fall from sky! to make money fr the market need a tremendous amt of discipline and hard wrk.

    You're one of the best I've come across! Thanks so much!

  5. Mr. Hewison

    After viewing that video , I ask for your thoughts on how low it would go. What I wanted was a prediction, fibonacci gave us the possibilities. Sorry about that. We all talk speculation on what we think will happen. You were not wrong because your final word is usually, "TRADE THE TRIANGLES".

    Curt in KY

  6. I've already had my say on this.

    As for the triangles. I track nearly 100 stocks. Those with a +100 rating are invariably up as a group whatever the market does on any particular day. Those with a -100 rating are group down even when the market as a whole is up.

    1. Hello Ralph,

      Your mail just confirms what I was hoping for from trade triangles.
      So looks like following the trade traingles with discipline will ensure that the overall portfolio is in the positive.

      Can you share how you filter your trades identified through trade triangles OR do just follow the triangles?

      Thanks,
      Trikaal

      1. Hello Trikaal

        Thanks for your interest. I try to keep it REAL simple. I use marketclub for every buy. If I don't have any ideas from the news or other sources, I scan all the stocks with a plus 100 rating. From that group I choose three to five stocks between $5 and $10, across a range of sectors. That's it. Not very scientific. I don't really want to know anything about the companies themselves: P/E ratio, management strength and all that. That stuff confuses me. When I am going short (and I am usually 50-30% long/short and 20% cash) I go for somewhat more expensive stocks $10 to $20 from the -100 file. I use two sma and an ema crosses. 200sma/150ema for long-term trend, 20sma/10ema for short-term trend. I glance at RSI and MACD and like them both favourable before I buy. That's about it. Short answer? I throw darts and then use stops and money management. Good luck. Ralph

        1. Thanks Ralph. Appreciate sharing the information with me. The fact you do not 'filter' your trades gives me an impression that trade triangles by themselves are pretty reliable but maybe filtering them will 1) increase the probablity of success or/and 2) make the trader more comfortable with his/her choice 🙂

          Trikaal

  7. When the mini S&P broke the head shoulders low this past July 8th, I got excited and bought some near the money puts. When there was no further follow through, I became a little nervous. When the market closed that day at 873.75, which was above the breakout point of the head shoulders low of 871 made on May 18th, I sensed trouble. The market closed above the breakout! It also closed above the breakout the following two days in a narrow trading range. Thereafter the market took off north and the shorts got burned. I believe we had three opportunities to get out. It's hard to divorce our emotions from trading, but if we had reacted to those three warnings, we could have sold our puts at a marginal loss or immediately gotten out of our futures short contracts. Perhaps Adam can comment on this technical analysis.

    1. Roger,

      Thank you for your feedback.

      It is perfectly normal for a Head and Shoulders pattern to retest the neckline. The first sign of trouble is when a market closes in this case above the neckline.

      As always diversification and money management are the keys to successful trading.

      All the best,

      Adam

  8. Thank you so much for your regular and timely insigts. I have found them extremely educational and useful. As regards being wrong or right, no one can claim to be right all the time. Thank you again.

  9. I appreciate this website and the trade triangles. Adam's work is excellent. I've been monitoring the work and am very near to subscribing. I made great money on the Aussie dollar info a few weeks back. Let's see if this Euro move is for real as recently discussed in a video by Adam.

  10. What folks keep forgetting is you can be wrong 9/10 and be right once and make big money. At the end of the day its money management.

  11. Adam, You got it right! the neckline did break and there was downwarsd movement. it just didn't go very far.
    Magnitude can never be known.
    Trading defensively with good money management produced a profit with the short trade of the HS pattern on any of the 4 equity futures.
    And if you were ready for the possible retest of the neckline that so often occurs, one might have gotten long fairly early and still be working it.

  12. Hi, Adam,

    You did great job and you are not wrong! The odds are: this pattern has about 75% right, 25% wrong time. You tell us what you see when the pattern forms. We trade not buy guessing, we trade by what we see and we trade like a jelly fish, we float with the wave of market. We can not predict anything. At that moment, you are 100% right because you tell us what you see. So you were not wrong.

  13. Think the government team and GS has managed to get the shorts out on this pump and good news? Nothing lasts forever! The fat lady is yet to sing. regards, short and broke.

  14. The folks at CNBC could learn a thing or two from you about honesty, and humility. For those two traits, I thank you.

  15. The mark of a successful trader," I got it wrong". I take responsibility for my beliefs. Balance of probabilities usually wirhin the context of experience can still be wrong. Any trader making and retaining money well knows that being wrong is all part of a zero sum trading process. Being right more than you are wrong is all that is relevant to the profit makers. Loss takers ,of course, think otherwise.

    I very much appreciate your market analysis Adam.

    ron

    Ron

  16. It must be the novice traders that criticize so harshly. It is impossible for anyone to be always be right.
    We look charts and probabilities. When they don't play out, we switch our position.
    This is a science and an art, not just science.

  17. Does Trade Triangles take in consideration how Goldman Sachs and JP Morgan manipulate the markets? Never fight the GodFather or you will die.

    HH

  18. Adam ...... Thanks for your great videos and commentary. I have been a fan of you and your site for 6 months and have learned much. I also realize that to be successful one has to think for ones self and not take gospel what others say or recommend. On your video with regard to the head and shoulders, I took that to mean that what you were presenting was not a sure thing, but what one could expect. It was still my responsibility to evaluate what was happening and have a fall back position, if it didn't happen. If someone wants a sure thing and without risk, they should put their time and money somewhere other than the stock or commodities markets. Keep those videos and comments coming.

  19. No worries; we're all wrong some of the time. I appreciate your videos and your thoughtful analysis. Sometimes it helps to see the charts close up and sometimes it helps to see them from a mile away. Lots of us were surprised by the past few big up days, especially considering the lack of "green shoots." But it just goes to show you that sometimes the market is simpler than our complex analyses, choosing to go in the direction of wishful thinking, rather than in the direction of reality. You win some and you lose some; just don't play all of what you have and then you won't lose your shorts (pun intended).

  20. Why discuss being right or wrong? Right and wrong are simply biases and meaningless in trading. Manage your risk. As for being wrong from "time to time". Try being "right" around 40% of the time and still being very profitable. Cut your losses and let your profits run. Great video's Adam. No apology necessary. Thanks.

  21. Adam,
    I value your experise even more now that I know you are sincere in your efforts to educate your followers. There is an old saying; " the operation was a success but the patient died"! But the key question now is where does the market go from here? I too think we are approaching resistance and hello bull trap.

    Thanks, Adam

  22. Adam,
    No one has mentioned that your analysis of crude oil seems to be playing out correctly, so far.
    In follow up to the S&P, perhaps the bounce back has been intensified by short covering, and you may soon be discussing a double top formation?
    Not a subscriber yet, but you have my attention!
    Richard T

    1. Richard,

      Thank you for pointing out the crude oil market. I appreciate it.

      Hope to welcome you soon as a MarketClub member.

      All the best,
      Adam

  23. All traders should take responsibility for themselves. No need to blame anybody. We should read and listen to expert comments with an open mind, but always trust what the charts tell us. Traders, especially amateurs, should be informed that there is such a thing as "fading the patterns" done fondly and commonly by professional and institutional traders who trade against the obvious thinking of the masses. These groups represent big money who can shift price action. It pays to wait for confirmation and not pre-empt the pattern by too early an entry. I have been a victim myself one too many times. Mark Douglas advised in his book "Trading In The Zone" that traders should not worry about missing an opportunity as there are lots of other opportunities. I also read from somewhere else that there is no such thing as missed opportunities as they are taken up by losers! Sorry, don't mean to be mean - just thought this latter statement funny.

  24. All traders should take responsibility for themselves. No need to blame anybody. Always read/hear expert comments with an open mind, but trust what you see on the chart. Traders, especially the amateurs, should be informed that there is such a thing as professionals and institutional traders are fond of fading patterns and do the opposite of what the masses expect. If we pre-empt a pattern and not wait for
    confirmation, we can get very caught! Don't worry about missing an opportunity, as there are others to come if you miss this one. I read somewhere that there is no such thing as a "missed opportunity" as it always get taken up by a loser!

  25. Adam...I thought you might get a kick out of my own blog entry based on your above letter. It's called <a href="http://thehumanforexmachine.blogspot.com/2009/07/triangles-trump-humans.html" Trade Triangles Trumps Humans

  26. Oh, and I have read Bernard Baruch's My Own Story many years ago. Enjoyed it tremendously. Not quite Reminiscences of a Stock Operator, but very worthwhile. (The reason I don't rate it quite as high is because BB was such an obvious insider and he exploited that status shamelessly. Many of his operations would be illegal today.)

    1. MG,

      Thanks for your feedback.

      You just named one of my favorite books: Reminiscences of a Stock Operator.

      Thanks,
      Adam

  27. I've seen enough of your work to know that you're knowledgeable and overall do a very good job. No need to apologize on any level. Anybody with an ounce of maturity should already know that everybody is wrong from time to time with respect to market direction predictions. You're better than most, that's for sure. Perfect? Of course not. So what.

  28. Adam, I greatly respect your striving for clear communications. That includes admitting when you have made a mistake. Indeed, without that ability, you could not communicate clearly, since you would constantly be covering up - and I have had a bellyfull of that from most 'market professionals'. My hat's off to you.

  29. A penny saved isn't bad, coulda woulda shouda, oh well,next week a roll of pennys may come our way if we wait and be cool. (Good waiters get good tips)Your advice is very good, especially for free, for folks like me who don't subscribe(YET)to your site.

    1. Jim,

      Thank you for your feedback I appreciate it. In this business nobody gets it 100% right all the time. Even our trade triangles technology which is incredibly good is not 100% accurate. The Trade Triangles are however very good at making money.

      If anybody tells you they make money all the time on every trade, run the other way it's a scam. Just think of Bernie Madoff and I think you get the idea.

      All the best,
      Adam

  30. Yes indeed, Adam. You certainly can be proud of your algorithms. You would have been on the sidelines until 8,580 on the dow and you could have ridden the rise (so far) to 8,711. But, frankly, I think this hot-air balloon will crash and trap the bulls. But then, the market can stay irrational longer than you can stay solvent.

    1. Jane, Jane, Jane......

      What on earth is your problem? Any type of investment or trading is guessing no matter what strategy you use. The use of charts is to enable us to guess with more accuracy, but of course we are never going to be right all the time. The key to successful trading is not whether you are right or wrong, it is whether you make money. What would you rather be, right or rich? My guess is you'd rather be right. Why would you even bother responding with such garbage. If it's not for you then just walk away and find something that is. (Perhaps I could suggest knitting....).

      People like Adam and Market Club provide a great tool for people to learn from. It's up to you whether you use it to your advantage or not. Keep up the good work Adam.

    2. Guys, instead of blaming adam for his interpretation of the price action on the S&P,how about doing some homework before placing your money in the market. the service that marketclub and Adam Hewison provides is an invaluable tool in your trading but shouldnt be blindly followed.
      i would advise you all to subscribe to ino-tv, view some of the seminars and really learn how to trade.
      AND REMEMBER "PRICE PATTERNS FAIL 50% OF THE TIME".

    3. Jane, trading/investing is a funny business. Intuitively, we think that being right is the holy grail to trading. Paradoxically, it isn't. You can be right 90% of the time and still lose money. (Lots of small wins with very large occassional losses.) You can be right 10% of the time and make money (Lots of small losses and the occassional large win.) And you can make money by being right 50% of the time and wrong 50% of the time. Obviously, if you can combine being right more than 50% of the time with winning trades that make more than the losing trades lose, you've got a winning system. But the point is: Be careful of the "wanting to be right" bias. Most people would rather be right than make money (even though they don't realise that.) You might want to read K Van Tharp's book which also covers this and other topics.

  31. Like so many others who speak and get ut wrong - better leet the charts do the talking -

    Guessing is akin to Gambling.

  32. As one who not a subscriber yet - I have looked to you for guidance and evaluate what you Say as I am not a chart reader - I'm sorry you got it wrong - that is the problem - So many get it wrong - You wonder whether the guessing game is worth it's weight on gold. It's is obvious it not worth anything.

    It's better to let the charts lead than playing Russian Roulette with one's mouth if they are truely guessing - - by speaking.

    I will not be looking at your videos.

    1. Jane,

      Thank you for your feedback. I guess you missed or other video on the dollar which proved to be very accurate. That video was published at the exact same time as the other video which proved to be not accurate.

      The dollar video more than made up for any losses in the equity market.

      All the best,
      Adam

  33. Most of the newsleters and blog sites have been wrong.. Completely wrong!

    Whoever is controling this market must be reading the comments on the web and doing the opposite..

  34. Hi Adam

    I do not find your quotation to be true. The markets are trying to find fair market value and all people are not on the same side of the fence on this issue to which makes for a great game of tug-a-war.A moving market is a good play to be in. Glad to see your honest admissions. Keep up the good work. Thanks

    Norm

    1. Claude,

      Thank you for your feedback. Yes you're right it's not the first time I've been wrong in the markets. However if you around the markets for any length of time you will see that no one and I mean no one is right all the time it just doesn't happen.

      One thing that most no one mentioned on this particular comment was the other video we put out on the dollar which was very accurate and more than made up for the head and shoulders chart formation.

      All the best,

      Adam

    1. Dear Saifee,

      Keep your eyes peeled for a new video. I know Adam had a specific video on PNG in the pipeline.

      Today or tomorrow I think.

      Best,

      Lindsay Thompson
      Director of New Business Development
      INO.com & MarketClub

  35. Adam, I read that book and everyone who decides to trade should read it first, this last week everyone and their brother were looking for that head & shoulder setup,i said to myself, "self,when everyone expects the same, it usually means it won't happen" and that and my trade worked out, thanks for coping to your plea. Ed

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