The STRAT

All things strat related for stock trading, a methodology created by Rob Smith. Knowledge should be collaborative and shared, not behind a paid wall. Definitely a work in progress. Not financial advice.

Want to contribute? Let me know ask for collaborator request. Twitter @rickyzane85

Overview

TheSTRAT is a trading method developed by Rob Smith (@RobInTheBlack).

Candlestick Overview

Before beginning you have to have a basic understanding of candlesticks. Candle sticks have 5 basic parts.

WICKS
- 1 - Top wick / high / very top of the candle
  - The highest price the stock trading during the given time frame of the candlestick
- 2 - Bottom wick / low / very bottom of the candle
  - The lowest price the stock trading during the given time frame of the candlestick
FILL
- 3 - Open
  - The price of the stock at the open of the given time frame (top or bottom of the fill depending on the color, more below)
- 4 - Close
  - The price of the stock at the close of the given time frame (top or bottom of the fill depending on the color, more below)
- 5 - Color
  - Green / Hollow / Empty
    - 3/4 The open was lower than the close, it opened at the bottom and closed at the top (price went up)
  - Red / Black / Full
    - 3/4 The open was higher than the close, it opened at the bottom and closed at the top (price went down)
Example

STRAT PART 1 - Candles and Pricing Action

1 Candle
- Names:
  - 1 Candle / Inside Bar / Inside Action / Consolidation / Sideways
- Technical:
  - Occur when the current candle falls completely within the prior candle
- Meaning:
  - Balance, equilibrium, buyers and sellers agree on price, no one is in control, trying to determine where price is going next
- Detail:
  - Never trade a one bar, wait for the consolidation to stop then it's time to get into a trade
- Example
2 Candle
- Names:
  - 2 Candle / Directional Bar / 2 Down / 2 Up
- Technical:
  - Occur when the current candle takes out one side of the prior candle
    - A 2 down means it took out the previous candle's low, but failed to take out the high
    - A 2 up means it took out the previous candle's high, but failed to take out the low
- Meaning:
  - Sellers are selling it down or buyers are buying it up but not both, a 2 can turn into a 3, but never a 1
- Action:
  - The market trades in the direction of the most 2's, but only trade 2's with continuation
- Example:
3 Candle
- Names:
  - 3 Candle / Outside Bar / Discovery Candle / Mother Bar
- Technical:
  - Occur when the current candle takes out both sides of the prior candle
- Meaning:
  - Price discovery starting over, buyers willing to buy it up, sellers willing to buy it down, choppiness
- Action:
  - Never trade a mother bar, price discovery is happening, wait for further confirmation one way or anther
- Example:

STRAT PART 2 - Other Factors

Time Frame Continuity
- Price direction is best determined when looking at multiple time frames rather than lagging indicators or moving averages
- When all time frames point in the same direction in either direction, or Full Time Frame Continuity, is the ideal trading situation
- Example:
Broadening Formations
- Simplest explanation is = it's a compound 3 bar
  - Lower lows and higher highs
  - Can draw this anywhere on any time line
  - Just pick a high, draw the line to a higher high
  - Pick a low, draw a line to a lower low
  - Bars should be more FLAT than not, otherwise mostly inside action (which is fine, but if you are looking for trends start flatter)
- Increasing price volatility and diagrammed as two diverging trend lines, one rising and one falling
- It usually occurs after a significant rise, or fall, in pricing action
- It is identified on a chart by a series of higher pivot highs and lower pivot lows.
- Directional bars and outside bars that fit into a triangle and ultimately lead to reversals or expansions and present trading opportunities
- Picture:

START PART 3 - Actionable Signals

Hammer
- Candle that looks like a "hammer"
- Little to no top wick, open and close are very close to the top of the wick, 75% of the candle is mostly wick at the bottom
- Action:
  - Entry as soon as the next candle breaks above the top, or top, wick of the previous hammer candle
- Picture:
Shooter / Shooting Star
- Candle that looks like a "shooter" / upside down hammer
- Little to no bottom wick, open and close are very close to the bottom of the wick, 75% of the candle is mostly wick at the top
- Action:
  - Entry as soon as the next candle breaks below the bottom, or bottom wick, of the previous shooter candle
- Picture:
Inside Bar
- Inside bar (explained above)
- Action:
  - After price is done consolidating it will break up or down, take the break at the top or the bottom of the previous inside candle depending on which way it goes

STRAT PART 4 - Misc

PMG - Pivot Machine Gun
- A very fast moving upwards or downwards candles taking out previous highs or previous lows
- As the prior candles are "taken out" it causes those investors to go the other way, reinforcing the direction of the bar even more taking out even more highs or lows
- Picture:
TTO - Triangle They Out
- Inside action on a larger timeframe
- As consolidation is happening, things will get "tighter" toward a point and eventually break out up or down and go fast
- Picture:

Detail

Cheat Sheets

STRAT Cheat Sheet1

STRAT Cheat Sheet2

Candlestick Cheat Sheet

Kicking Patterns

Acronyms and Terms

TERM	MEANING	DESCRIPTION
15'r/15er	15 min Candle	Candle on 15 min interval
5'r/5er	5 min Candle	Candle on 5 min interval
60'r/60er	60 Min Candle	Candle on 60 min interval
AH	After Hours	Stock trading after the market closes 4PM EST
APTR	Average Percentage True Range	indicator to measure the volatility by percentage of a stock with price being neutral
AS	Actionable Signal	A "signal" to take an action
ATR	Average True Range	Volatility indicator - a wedge or triangle shape of the recent candles
BF	Broadening Formation	A compound 3 bar - higher highs - lower lows - subjectively drawn
BMO	Before Market Opens	Usually a term used for when earnings come out in the AM before the market opens
DTL	Down trend line (magic lines)	Trending down on the magic broadening formation trendline
EMA	Exponential moving Average	type of moving average that places a greater weight and significance on the most recent data points
EOD	End of Day	End of the stock trading day 4PM EST
EPS	Earnings Per Share	A company's earnings per share outstanding
ER	Exhaustion Risk	Reached magnitude or price target or right at broadening formation line
ETH	Extended trading hours	Trading that occures after the market close 4PM
FTC/FTFC	Full Time Frame Continuity	All time frames "match" - they are all up or down
GAP	A gap in stock price (missing candles	A stock opens and GAPS up or down and there is no fill in between. Missing by or sales may lead to opportunities for that gap to "fill" quickly when things reverse.
HAMMER	Candle that looks like a hammer or T	Actionable signal to a move upward
HCS	Hammer Counter Shooter	Hammer that counters/turns into a shooter
HOD	High of Day	The high stock price of the day
ID	Inside Day	Whole day is inside candle from prior day
IW	Inside Week	Whole week is inside candle from prior week
LOD	Low of Day	The low stock price of the day
MAG	Magnitude	How far a price run is or the price target
MM	Market Maker	Company or an individual that quotes both a buy and a sell price hoping to make a profit on the bid–ask spread
MOMO	Momentum	Usually momentum in a direction
MTFA	Multiple Time Frame Analysis	Look at more than one interval
MTG	Mind The Gap	Rob Smith saying look for the GAP on these it might fill
NATH	New All Time High	Stock made a new all time high
NHOD	New High of Day	A new high stock price of the day
NLOD	Low of Day	A new low stock price of the day
ORB	Opening Range Break	when a price breaks above or below the previous candle high or low from the open used on 15, 30, or 60 mins from open
ORH	Opening Range High	the high price of a stock from the opening range 15/40/60 mins from open breaking to the upside
ORL	Opening Range Low	the low price of a stock from the opening range 15/30/60 mins from open breaking to the downside
PDT	Pattern Day Trader	Traders who trade 4+ day trades over the span of 5 business days on a margin account get their account flagged with this
PM	PreMarket	Stock trading before the market opens 9:30AM EST
PMG	Pivot Machine Gun	Trend pivots the other way taking out several highs or lows of other candles
SHOOTER	Candle that looks like a gun or upside down T	Actionable signal to a move downward
SMA	Simple Moving Average	moving average calculated by adding recent prices and then dividing that figure by the number of time periods
The Flip	New candle	Flip of the time interval to produce a new candle
TTO	Triangle They Out	corrective pullback/activity - a wedge or triangle shape of the recent candles
VWAP	Volume Weighted Average Price	statistic used by traders to determine what the average price is based on both price and volume
WW	Worth Watching	Keep an eye on a this stock
IN FORCE	A method/strategy is in force	Above the reversal / continuation entry to the upside and below the reversal / continuation entry to the downside
LOTTO	Lottery Ticket	Gamble play, risky but very rewarding, usually a fast expiry

Social Media

Youtube

Twitter

@RobInTheBlack is the creator
@LevJampolsky
@AlexsOptions
@TradeSniperSara
@CyberDog2
@jam_trades
@JamesBradley_
@japor3
@WayoftheMaster7
@ADBYNOT
@chucknfones
@OptionizerSS
@r3dpepsi
@Banker_L83
@R2DayTrades
@FranknBear
@StratDevilDog
@yogajen70
@toddjostendorf
@ElaineBenes99

Links

News

CNBC - premarket
- https://www.cnbc.com/2021/06/18/stocks-making-the-biggest-moves-in-the-premarket-adobe-smith-wesson-orphazyme-more.html?&qsearchterm=premarket
Fed Reserve Calendar & Events
- https://www.federalreserve.gov/newsevents/calendar.htm
Economic Calendar
- https://research.investors.com/economic-calendar/
Upcoming Earnings
- https://www.earningswhispers.com/calendar
Blog
- https://acquirersmultiple.com/blog/
Newsletter
- https://litquidity.co/pages/newsletter

Analysis

Marketwatch: upgrades & downgrades
- https://www.marketwatch.com/tools/upgrades-downgrades
Analyst Consensus
- https://www.tipranks.com/
Short Interest
- https://www.marketwatch.com/tools/screener/short-interest
Finviz Sector Tool
- https://finviz.com/groups.ashx

Tools

About

All things strat related

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