Quick Start Guide v1 - Viper Trading Systemsvipertradingsystems.com/Training/Manual/ViperQuickStartGuide_022… · 10/2/2015 · the true extent of the exposure to the risk of loss

c o p y r i g h t © 2 0 1 5 V i p e r T r a d i n g S y s t e m s L . L . C . P a g e | 1

Trading Manual v3 Updated: Feb 10, 2015 Copyright © 2015 Viper Trading Systems L.L.C.

Quick Start Guide v1

Updated: Feb 21, 2015 Copyright © 2015 Viper Trading Systems L.L.C

The viewing and use of the content contained herein, including, but not limited to, all Webinars, videos, training

videos, and instructional Manuals are for the exclusive, personal use of the subscriber, and therefore they may

not be copied, reproduced, distributed, or otherwise made available to other persons or third parties.

DISCLAIMER

Important Notice - Risk Disclaimer

Notice/Warning: This notice cannot and does not disclose or explain all of the risks and other

significant aspects involved in trading FUTURES, but you should particularly note the following:

Under margin trading conditions even small market movements may have great impact on the

customer's trading account. You must consider that if the market moves against you, you may

sustain a total loss greater than the funds deposited. You are responsible for all the risks and

financial resources you use and for the chosen trading system. It is important that you should not

engage in trading unless you understand the nature of the transaction you are entering into and,

the true extent of the exposure to the risk of loss. Nothing contained in this Trading Manual is to

be construed as investment or trading advice.

This Trading Manual may not be suitable for all investors; therefore if you do not fully understand

the risks involved, you must seek independent advice. All trading strategies are to be used at your

own risk. Viper Trading Systems cannot be held responsible for any losses incurred as a result of

using any of our trading strategies/software. Any trading software should never be left unattended

due to many variables outside of your control such as computer or data failure, power outages,

position mismatches, network problems, etc. Past performance is no guarantee of future returns.

This trading system should not be relied upon as advice or construed as a recommendation of

any kind. It is your responsibility to confirm and decide which trades to take. You trade at your

own sole discretion and at your own risk.

Commodity Futures Trading Commission (CFTC) Rule 4.41

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE

DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO

ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP

DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS

SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF



HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE

BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK,

AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF

FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO

ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS

WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER

FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC

TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF

HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING

RESULTS. THESE PERFORMANCE TABLES AND RESULTS ARE HYPOTHETICAL IN NATURE AND DO NOT

REPRESENT TRADING IN ACTUAL ACCOUNTS.

Table of Contents

Introduction

I. Risk Management and Instrument Selection

II. Trends and Trend Trades

A. Examples of Non-Trending Markets

B. Trend Changes

C. Up-trends and Long Trades

D. Downtrends and Short Trades

E. Box Trades

F. Retracement Trades



Introduction

This Quick Start Guide is intended to be a quick and easy way to learn the basics and get

started trading.

In the first section of this Quick Start Guide, we review two very important topics which are

the starting points for all traders who wish to trade the Futures market; namely, risk

management and Instrument selection. This is where the trader should start.

The second section of the manual will address trending issues and the very basic trades to get

started trading the Futures market.

I. Risk Management and Instrument Selection

Clearly Identify and Manage your Risk What is risk...? Risk = Loss There are two types of trading risk: Max Daily Loss Risk = The maximum amount of money you are willing to lose in any given day Trade Risk = The amount of money you are willing to lose on any give trade

Calculate your Maximum Daily Risk A good rule of thumb for calculating your maximum daily loss risk is that it should never lose more than 3 – 3.5 % of you trading account size in any given trading session.

Max Daily Risk Calculation Example



Let's say you have a $10,000 trading account. Multiply that by 3 – 3.5% = $300 - 350. This number represents the total maximum amount of money you should be willing to lose in any given trading day. Once this loss limit is hit - you must respect it and stop trading for that day. Think of it this way, you would need to have 25 to 30 consecutive losing trading days in a row with no winners in between at this max loss number to completely draw-down this trading account. It is highly unlikely that you would actually take a max loss every day for 4 to 6 weeks. Even as you are learning how to trade; however, this is the kind of cushion you need to stay in the game and become a long-term successful trader.

Instrument Selection **** This cannot be emphasized enough…! The selection of the Futures Instrument which you trade is as critical to your success in trading as much as all of the rest of the content of this manual ***** Each Futures instrument has its own movement and price action profile. Just like finding a good partner, friend or mate; careful attention should be paid to understanding each Instrument’s ‘trading personality’. After experimenting with several different Futures Instruments, try to narrow the candidates down to one or two. Also, no matter what stage you are in with regard to your trading skill-sets, most traders should not track and/or trade more than three Instruments in any given trading session. All trading includes some losses, you should allow yourself the ability to take at least 2 or 3 losing trades per day to reach your max loss and stop trading. DO NOT place all of your maximum daily risk on one trade - this is not proper trade risk management.



Futures Instrument Selection and Trade Risk - Assume your maximum daily risk is $300 to $350 per day. - Divide max daily risk by 3 = $100 - $125 = Maximum trade loss risk per trade. Most initial stop loss orders are 10 to 15 ticks. To determine which Futures Instruments to trades, multiply this number by the tick value of the Instrument you are interested in trading: NQ, YM and DX are $5 per tick X 10 to 15 ticks = $50 - $75 This is the amount of money you are willing to risk per trade or Trade Risk. Multiply this by 3 = $150 to $225 – If this is equal to or less than your maximum Daily Risk – then you should trade these Futures Instruments TF, EMD and CL are $10 per tick X 10 to 15 ticks = $100 - $150 Multiply this by 3 = $300 to $450 – If this is equal to or less than your maximum Daily Risk – then you should trade these Futures Instruments

Calculate your Daily Profit Goal

A good rule for calculating your daily profit goal is to double your maximum daily loss numbers

Daily Profit Goal Calculation Example

Assume your max daily loss numbers are $300 - $350.

Multiply this number by 2 $300 - $350 X 2 = $600 - $700

This number represents your profit goal for the day.

When your profit goal is reached you should stop trading

This will help you avoid over-trading and avoid losses.

II. Trend Identification

A. Non-Trending Markets

It is possible to spot non trending markets in real-time; in order to do so, you must observe

the following items in the market:



- Swing high levels are about equal

- Swing lows levels are also about the same

- The market has a flat or sideways appearance

- Cannot draw an uptrend or downtrend line

- A non-trending market can be consolidation after a large move up or down

********** CAUTION - IMPORTANT NOTE **********

Most traders should NOT trade non-trending markets. Trading choppy, range-bound

markets improperly can result in many losses and a negative impact on your account; as

well as your trading psychology. If you wish to try trading ‘the chop’, please do so only on

a simulated account. If you find that you have developed the skills to successfully trade

choppy markets, then, and only then, should you consider trading your live account.



Futures markets alternate between periods of tradability and periods when

they should not be traded. Developing the skills to quickly determine whether

an Instrument is tradable is critical to your success.

If you are watching three or more Futures Instruments, there is normally a trade

set-up occurring at any given time on any Instrument. Often, there are excellent

opportunities to trade the markets. If you are a trend trader, then will need to

wait for a trend to develop. In particular, you will need to patiently for

retracement trades in the direction of the trend, watching stops closely, and

swings for taking profits.

B. Trend Changes and Consolidation

At any given point in time, all Financial markets exhibit three types of price

action: Up, Down or Sideways.

A trend change occurrs when a market that was trending reverses trend from

Up to Down or vice versa; or changes from trending to a Sideways market.



Another powerful trade that occurs normally when trend changes occur are the

consolidation areas. In this case, use the Object Trader EXT Region with an

outside close.

The above is an example of both consolidation and a trend change from down

to up. Engulf the consolidation using the region tool of OBJECT TRADER EXT.



The above is an example of NQ changing from sideways to an uptrend. Trade

entries are taken on pull-backs into support.



The above is an example of a trend reversal from up to down. After YM rolled

over at resistance, and broke support, the trend change is confirmed. From that

point forward, trade entries are selling short on retracements into resistance

areas.



The above is an example of CL rolling over from a lower high, then taking out

support, thus confirming the trend change from up to down. Afterward, there

was a nice retracement back up into resistance and a consolidation area. This is

a textbook example of boxing in consolidation using the region tool in OBJECT

TRADER EXT and taking the short on the breakdown out of the bottom of the

region.



C.Uptrending Market

A uptrend is characterized by a series of higher highs and higher lows (see chart

below).

UPTREND = LONG TRADES ONLY

After the intial thrust in the up direction, the trader must patiently wait for

retracements into support to take long trades.



D. Downtrending Markets

A downtrend is the opposite of an uptrend in that it resembles a set of stairs

going downward from one floor to another; and is characterized by lower highs

and lower lows (see chart below).

DOWNTREND = SHORT TRADES ONLY

After the intial thrust in the down direction, the trader must patiently wait for

retracements into resistance for roll-over short trade entries.



The trader is looking to only take short trades in a downtrend.

E. Box Trades

A ‘Box Trade’occurs when the market pauses and consolidates in a tight range

located normally at or near the mid-band. This is an ideal trade for using the

Object Trader EXT using the region feature to ‘box in’ the consolidation area.

Long Box Trade

In the example below, NQ was obviously in an up-trend, so the trader would

only activate the long side of the Object Trader EXT region. This type of trade is

perfect for the use of OBJECT TRADER EXT. Activating only the long side

prevents getting ‘head faked’ into a short trade on a deeper retracement.



Short Box Trade

In the example below, you can see that YM was clearly in a downtrend; so the

trader would only activate the short side of the OBJECT TRADER EXT region.

Activating only the short side prevents getting ‘head faked’ into a long trade on

a deeper retracement. Remember to fully engulf the wicks and bodies of the

candles and engage the ‘outside close’ entry method.



F. Retracement Trades

We watch fora retracement trade in the direction of the trend. This is when the

market is trending up or down, and after a thrust in the trend direction, the

market begins to ‘retrace’ in the opposite direction to find a higher level of

support in an uptrend, or a lower level of resistance in a downtrend. The best

way to gauge when the retracement is nearing the end, and the trend is about

to resume, is the 45 degree angle retracement line is breached triggering the

trade.

Regular Bar Retracement Trade Long



A key charactaristic of a regular bar Retracement trade long is that the bar color

remains the same as the trend – blue for an uptrend.

In the case of the long trade, the retracement line is broken to the upside

triggering the Buy trade as you can see in the chart below. The intial stop is

placed at or near the stop dot below the entry.

Regular Bar Retracement Trade Short



A key charactaristic of a regular bar Retracement short trade is that the bar

color remains the same as the trend – red for short.

In the case of the short trade, the retracement line is broken to the downside

triggering the Sell trade as you can see in the chart below. The intial stop is

placed at or near the stop dots above the entry.

Yellow Bar Retracement Trades

One of the main charactarisitcs of a yellow bar Retracement trade is that the

retracement is much deeper than the regular bar Retracement trade; and when

this happens, the bars turn yellow. One needs to be careful when drawing the

45 degree retracement line as to not draw it too tight or too loose as to follow

the price action. This could cause an early or late entry. Allow the market to

complete it’s retracement and then resume the trend direction.



Yellow Bar Retracement Trade Long

In the case of the yellow bar Retracement long, the retracement bars will intially

be blue as is the color of the bars in the direction of the uptrend; then, you will

notice as certain levels of support are broken, the bars turn yellow. Look for the

retracement line to be broken to the upside triggering the Buy trade as you can

see in the chart below. The intial stop is placed at or near the stop dot below

the entry.

Yellow Bar Retracement Trade Short

When looking for a yellow bar Retracement trade short, the retracement bars

will initially be red as is the color of the bars in the direction of the downtrend;

then, you will notice as certain resistance levels are broken, that is when the

bars turn yellow.



Look for two things to occur to trigger the short trade, the retracement line is

broken to the downside triggering the Sell trade as you can see in the chart

below; and generally speaking, this event also happens at or near a previous

resistance level.

The intial stop is placed below the stop dots located above the short entry(see

example below). For a more comprehensive manual, subscribers can go to

www.vipertradingsystems.com/subscribers.html for basic and more advanced

trades

The viewing and use of the content contained herein, including, but not limited to, all Webinars, videos, training

videos, and instructional Manuals are for the exclusive, personal use of the subscriber, and therefore they may

not be copied, reproduced, distributed, or otherwise made available to other persons or third parties.



Documents

Quick Start Guide v1 - Viper Trading Systemsvipertradingsystems.com/Training/Manual/ViperQuickStartGuide_022… · 10/2/2015 · the true extent of the exposure to the risk of loss