Introduction

In this section, Vivek Bajaj introduces the topic of multi-time frame analysis and welcomes Brian Shannon as a guest speaker.

• Vivek Bajaj introduces himself as the co-founder of Stock Edge and Inland Markets.

• He introduces the topic of multi-time frame analysis and mentions that it is an important topic to discuss.

• Brian Shannon is introduced as a guest speaker who is an American author, technical analyst, market participant, and trader.

Background of Brian Shannon

In this section, Brian Shannon talks about his background in trading and how he got interested in the markets.

• Brian Shannon's interest in the markets started when he was young and watched Wall Street Week with his dad.

• He made his first equities trade at 15 years old with $500 borrowed from his dad.

• After graduating college in 1991, he worked for Lehman Brothers in Boston before moving to Denver where he became a broker for a retail firm.

• He eventually became a trader for a proprietary trading firm out of New York before opening his own day trading office in Denver.

Technical Analysis Using Multi-Time Frame

In this section, Vivek Bajaj talks about Brian Shannon's book "Technical Analysis Using Multi-Time Frame" and its importance.

• Brian Shannon published "Technical Analysis Using Multi-Time Frame" in 2008.

• The book discusses the importance of using multiple time frames when analyzing charts.

• Vivek Bajaj emphasizes the importance of understanding multi-time frame analysis for successful trading.

Risk Management

In this section, Brian Shannon talks about risk management and how it has influenced his trading career.

• After becoming a trader for a proprietary trading firm out of New York, Brian Shannon learned to respect risk.

• He opened his own day trading office in Denver and was immediately profitable due to his strong respect for risk.

• Brian Shannon emphasizes the importance of understanding and managing risk in trading.

Conclusion

In this section, Brian Shannon concludes his discussion with Vivek Bajaj.

• Brian Shannon thanks Vivek Bajaj for having him on the show.

• He emphasizes the importance of continuous learning and adapting to changes in the market.

• Vivek Bajaj thanks Brian Shannon for sharing his insights on multi-time frame analysis and risk management.

Introduction and Passion for the Market

In this section, Brian Shannon introduces himself and his passion for the market. He talks about his day-to-day activity in the markets and how it led him to write a book in 2008.

Passion for the Market

• Brian's passion for the market comes from his day-to-day activity in the markets.

• He wrote a book in 2008 and is currently working on another one based on anchored volume weighted average price.

Alpha Trends

In this section, Brian Shannon talks about Alpha Trends, a site where he puts out his public information. He also mentions that Twitter is the best way to find his information.

Alpha Trends

• Brian runs a site called Alpha Trends where he puts out his public stuff.

• The best way to find his information is on Twitter where his handle is @alphatrends.

Fitness and Success in Stock Market

In this section, Brian Shannon talks about fitness and its relation to success in stock market.

Fitness and Success

• Brian believes that fitness has something to do with success in stock market.

• Maintaining physical fitness helps you sleep well, rest your brain, engage in stressful activities like trading stocks especially on time frames that he engages on as a swing trader primarily holding stocks for days to weeks at most.

Listening to the Message of the Market

In this section, Brian Shannon emphasizes listening to the message of the market and how it is important to engage with the cumulative knowledge he has.

Listening to the Message of the Market

• Brian emphasizes listening to the message of the market.

• He engages with the cumulative knowledge he has and tries to be as best as he can be here today.

Working in a Large Firm Before Entering Stock Market

In this section, Brian Shannon talks about his experience working in large firms before entering stock market full time and whether or not youngsters should get into the market from day one.

Working in a Large Firm Before Entering Stock Market

• Brian thinks that it's better not to get into the market full-time right away because you're going to make a lot of mistakes rather than getting some guidance from some structured program.

• He believes that working somewhere for some time and getting that right experience before getting into the market full time is better.

Finding the Right Career Path

In this section, the speaker discusses how it's important to try different career paths to find the right fit. He shares his experience of getting an insurance license and how it gave him a new perspective.

Trying Different Career Paths

• It's important to try different career paths before settling on one.

• You never know what you might enjoy until you try it out.

• Getting an insurance license can provide valuable experience and a new perspective.

Learning About Markets

In this section, the speaker talks about learning about markets by working for a big fund and understanding how money moves.

Working for a Big Fund

• Working for a big fund can help you learn about how money moves in markets.

• Understanding different time frames is key when looking at markets.

• Multi-time frame analysis is important when analyzing trends in markets.

Trading in Volatile Markets

In this section, the speaker discusses trading in volatile markets and using risk management techniques.

Trading in Volatile Markets

• Using anchored volume weighted average price can be helpful when trading in volatile markets.

• Understanding basic market structure is important when analyzing trends in markets.

Risk Management Techniques

• Managing risk is crucial when trading in any market environment.

• Using tools such as price, volume, and time can help with risk management.

Trend Trading and Stages of Uptrend and Downtrend

In this section, the speaker discusses trend trading and the stages of uptrend and downtrend. He explains that in an uptrend, traders should focus on long positions and avoid shorting. Conversely, in a downtrend, traders should focus on short positions and avoid going long.

Trend Trading

• A trend trader focuses on long positions during an uptrend.

• The speaker uses multiple time frames to anticipate little moves after a three to four day pullback.

• Short-term pullbacks are avoided when getting involved in trades.

Stages of Uptrends and Downtrends

Stage 1: Accumulation

• During stage 1, where the market is going sideways, traders anticipate where to participate in a new long or cover their short because it's no longer going down instead it's turned sideways.

Stage 2: Markup

• During stage 2, traders participate on the long side and avoid shorting.

• Traders can make money shorting stocks that are in up trends but there is naturally more opportunity to trade the long side.

Stage 3: Distribution

• During stage 3, the uptrend is kind of exhausted itself.

• Traders start getting stopped out of their long trades as they see potential for breakdowns.

Stage 4: Markdown

• During stage 4 decline, traders participate on the short side and avoid the long side.

• Traders can make money trading bounces but need to be nimble enough to day trade for instance.

Trading Strategies

In this section, the speaker discusses his trading strategies and how he identifies trends.

Identifying Trends

• The speaker looks for higher highs and higher lows on shorter-term time frames to stay with the trend.

• He raises stops underneath successive higher lows to manage risk.

• When a lower low is made, he exits as the definition of trend is no longer valid for the timeframe engaged in.

Buying Strength After Pullbacks

• The speaker avoids buying pullbacks and instead buys strength after a pullback.

• He exits as the trend gets tired and starts to make that first lower low.

Shorting in Primary Stage Two Uptrend

• Although one can short when it breaks down, the speaker prefers waiting it out until it undergoes accumulation again and has trends aligned.

• The daily time frame is an uptrend in this 30-minute time frame, which means he has momentum in his favor.

Time Frames Used for Analysis

In this section, the speaker talks about his screen setup and how he uses different time frames for analysis.

Screen Setup

• The speaker has several screens where he populates weekly, daily, 65-minute, 30-minute, 15-minute, and two-minute charts at once when clicking on a symbol.

Time Frames Used for Analysis

• The daily time frame is where he likes to identify what his opportunity is.

• He then looks at a 65 minute or 30 minute chart to see if there's sufficient reward potential for his perceived risk.

• For fine-tuning entries, he looks at shorter-term time frames down into that five-minute and two-minute area.

Volume Patterns and Risk Management

In this section, the speaker discusses volume patterns and risk management in trading.

Anticipating Volume Expansion

• The speaker looks for volume expansion on the way up, peak at the turning point, diminish on the retracement, and then as it starts to rally again when buying.

• The volume often comes in an hour or three hours a day later.

• The speaker tries to enter at the very beginning of that stage two on the shorter-term time frame.

• They go in at certain times where it's had resistance the last two and a half days at $31 or $30 per share.

Risk Management

• The key is risk management.

• The speaker takes a third off even though they think it might be able to go to $35-$38 per share.

• They sell some at $31.20 or whatever number might be because they want to reduce their risk on the first part and maybe raise their stop to break even.

• They take all the risk out by selling some shares.

Volume Weighted Average Price (VWAP)

In this section, the speaker talks about VWAP and how it helps traders objectively determine equilibrium points in supply and demand.

Understanding VWAP

• VWAP allows traders to objectively determine equilibrium points in supply and demand.

• It helps traders look at this market with blinders in terms of support and resistance and who has control: buyers or sellers.

Price is Truth

• Price is truth; it's the final arbiter.

• People argue all day long about charts, but price settles all those arguments.

• If someone thinks that they are wrong, they can take the other side of trade because price is truth.

Understanding Stock Trading

In this section, the speaker discusses how to measure stock trading objectively and identify key levels on the daily timeframe.

Measuring Stock Trading Objectively

• The most objective measurement of stock trading is where the stock is in relation to the volume-weighted average price.

• It's important to be aware of the direction of the volume-weighted average price.

• Always look at multiple time frames and avoid fighting against the bigger trend.

Using Moving Averages as Support

• The 50-day moving average often acts as support because many people have been trained to look at it as such.

• When a stock reaches its 50-day moving average, big hedge funds may start buying back shares they previously shorted, inducing other traders to do so as well.

• Sideline cash may also stick in a bid for shares when a stock reaches its 50-day moving average, further increasing demand.

Technical Indicators and Algos

In this section, the speaker discusses how algorithms are mapped to standard indicators like moving averages and why relying on just one number may not be enough.

Mapping Algos to Standard Indicators

• Algorithms have been mapped to standard indicators like moving averages.

• Algorithms can fool people by taking prices just below a certain indicator before reversing them from there.

Convergence of Indicators

• Relying on just one number may not be enough. Instead, it's better to look for a convergence of indicators like volume-weighted average price and Fibonacci retracements.

• Identifying key levels on bigger timeframes like daily charts is important before looking for evidence that buyers are gaining control.

Understanding Market Trends

In this section, the speaker discusses how to identify market trends and use them to make informed trading decisions.

Identifying Levels of Interest

• The 50-day moving average is a widely watched area that many people consider support.

• Predatory algorithms are designed to go into these areas, run stops, flush out traders, and then jack up prices.

• Look at levels of interest as a level to watch for evidence that buyers are gaining control.

Short-Term Trading Strategies

• Look for evidence that buyers are gaining control in the short term.

• After a five-day decline, it probably takes a day or two and a half days of trading back and forth in that band before making a move.

• Set your stop under the most recent relevant high or low because if you have a higher high, it says now the short-term time frame is looking like an uptrend.

Price Volume Time Analysis

In this section, the speaker discusses price volume time analysis and how it can be used to determine who's in control of the market.

Components of Volume Weighted Average Price

• Price volume and time are the components of volume-weighted average price.

• Time is subjective because everyone has different time frames.

• Determine who's in control: buyers or sellers? Is there equilibrium?

Market Trends

• When demand is greater than supply, prices move higher. This is called an uptrend.

• Sideways action after a rally could indicate distribution leading to decline or accumulation leading to an uptrend.

• When supply is greater than demand, prices move lower. This is called a downtrend.

Example Trade Analysis

In this section, the speaker provides an example trade analysis using two-minute candles.

Short-Term Trading Opportunities

• The market gapped up and rallied up, pulled back, found buyers who were defending that volume-weighted average price level.

• It stayed above the V-WAP and crossed back and forth in an equilibrium level.

• When it broke down through the little support in the V-WAP, sellers took control.

• For a shorter-term day trader, there was a great opportunity to short it at 360.355 with a stop just above this little lower high.

Trading Strategies

In this section, the speaker discusses his trading strategy and how he prefers to buy stocks when they break out of a tight range. He also talks about the fractal nature of the market and how it applies to both long and short positions.

Buying Stocks on Breakouts

• The speaker prefers to buy stocks as they break out of a tight range.

• He suggests buying at that point with a stop loss set just below the low of that range.

• This strategy is based on the idea that if buyers can maintain control after breaking out, the stock will continue to rise.

Fractal Nature of the Market

• The speaker explains that there is no difference in analysis between weekly candles and shorter time frames.

• This applies to both long and short positions.

Anchored Volume Weighted Average Price (VWAP)

In this section, the speaker explains what anchored volume weighted average price (VWAP) is and how it differs from traditional VWAP. He also discusses how institutions use VWAP as a benchmark for order execution.

Traditional VWAP

• Traditional VWAP is used by institutions as a benchmark for order execution.

• It calculates the average price based on volume for every transaction throughout one day.

Anchored VWAP

• Anchored VWAP allows traders to set an anchor point other than the beginning of the day.

• Traders can anchor their VWAP at any point during the day where they believe there was high volume activity.

• This allows traders to see if buyers or sellers are in control from that point forward.

Anchoring Bias

• The anchoring bias refers to our tendency to base decisions on our anchor point.

• In trading, this often means that we measure success or failure based on the price we paid for a stock.

• Price has memory and can get stuck in our brains, affecting how we measure success.

Volume Weighted Average Price (VWAP) vs. Dollar Cost Averaging

• VWAP is similar to dollar cost averaging in that it calculates the average price of a stock over time.

• The difference is that VWAP takes into account volume for each transaction, while dollar cost averaging simply invests a fixed amount at regular intervals.

Conclusion

In this section, the speaker concludes by summarizing his trading strategy and explaining how anchored VWAP can be used to determine cost basis.

Trading Strategy

• The speaker's trading strategy involves buying stocks as they break out of tight ranges.

• He suggests setting stop losses just below the low of that range.

Anchored VWAP and Cost Basis

• Anchored VWAP can be used to determine cost basis by calculating the average price of a stock from any point during the day where there was high volume activity.

• This allows traders to see if they are making money or losing money on their trades.

Understanding Volume Weighted Average Price

In this section, the speaker explains what volume weighted average price is and how it differs from traditional time-based moving averages. They also discuss how to use a 50-day moving average to determine if buyers or sellers have control of the market.

What is Volume Weighted Average Price?

• Volume weighted average price (VWAP) is a cumulative average that takes into account both price and volume.

• It adds up all the prices times the number of shares divided by the volume.

• This allows traders to anchor their trades based on where the VWAP is located.

How to Use a 50-Day Moving Average

• A 50-day moving average can be used to determine if buyers or sellers have control of the market.

• If it's rising, generally we give the benefit of doubt to buyers. If it's declining, we give it to sellers.

• If it's flat and prices are going back and forth above and below it, there may not be a trend present.

Anchoring Trades Based on VWAP

• Traders can anchor their trades based on where they want to know where they stand in relation to VWAP.

• The speaker recommends anchoring from the beginning of the day or week for longer-term time frames.

• By recognizing neutral periods when nothing is happening, traders can avoid forcing trades and wait for new trends to emerge.

Importance of Price Confirmation

In this section, the speaker emphasizes the importance of waiting for price confirmation before buying a stock. He explains that good earnings or positive analyst reports are not enough to justify a purchase until there is evidence of a high or high.

Key Points:

• It's tempting to buy stocks based on good earnings or analyst reports, but it's important to wait for price confirmation.

• The speaker advises against buying stocks in a downtrend and recommends waiting for strength after the dip.

• Using Starbucks as an example, he explains that even if it's a good company, it's important to wait for it to get back above the volume-weighted average price (VWAP).

• The VWAP indicates whether the average participant from a certain point is making money on the long side and whether the average short is losing money.

Calculating Volume Weighted Average Price

In this section, the speaker explains how to calculate volume-weighted average prices (VWAP).

Key Points:

• For every new swing high and low, you can calculate VWAP by anchoring it off that peak.

• The same concept applies regardless of time frame. If day trading E-mini futures on one-minute time frames, you can use VWAP based on lows and highs at specific times.

• The speaker uses different examples such as one-minute charts and daily time frames to explain how VWAP works.

• By using VWAP, we can determine when energy builds and when the average short is losing money and the average long is making money.

Buying Stocks After a Pullback

In this section, the speaker explains why he buys stocks after a pullback and not during breakouts.

Key Points:

• The speaker advises buying stocks after a pullback when volume starts to increase.

• He recommends buying one-third of his position during breakouts and waiting for confirmation before buying more.

• Breakouts don't always work, and it's important to wait for confirmation before investing.

Trading Strategies

In this section, the speaker discusses his trading strategies and how he manages his positions.

Selling Stocks

• The speaker sells a bunch of stocks when it trades within 83% of the time.

• He takes a third off when it reaches a certain level.

• He also sells another third on the breakout or raises his stop very close in there.

Adding Positions

• The speaker does not add on breakouts.

• He buys after the pullback.

• He day trades around his swing trade position but does not buy the breakout.

Risk Management

• The speaker maximizes his position by having a tighter stop relative to others who buy higher up.

• He reduces all risk by taking a dollar profit on a third of it and still makes 33 cents average on the full position.

Buying Dips

In this section, the speaker emphasizes buying dips and explains how he uses volume weighted average price (VWAP) to identify where buyers are in control.

Swing Highs and Lows

• Regardless of timeframe, buying dips is important.

• After earnings reports, buyers came in after a couple of days and took control.

Volume Weighted Average Price (VWAP)

• Once there is compression of range and VWAP off peak and low converge, that tells him where buyers are in control.

• This gives him maximum upside with least amount of risk because his stop goes under that level.

Using Volume Weighted Average Price (VWAP) for Trading

In this section, the speaker explains how to use volume weighted average price (VWAP) as a versatile tool for trading. He discusses how to anchor VWAP at different points and use it for entries, stops, and exits.

Anchoring VWAP

• The speaker explains that they are going to be in the market with strong bids.

• They try to absorb as many shares as possible because that's their fair value.

• The speaker explains how to anchor VWAP at different points and use it for entries, stops, and exits.

• If they missed buying at a certain point, they would still want to buy there.

Using VWAP for Entries, Stops, and Exits

• The speaker explains that if he is a buyer at an important high or low, he may set his stops underneath the rising volume weighted average price.

• The speaker says that VWAP is a dynamic support and resistance tool that can be used for entries, stops, and exits.

• He mentions that when the direction of the view app starts declining after pivotal entry events like successful tests of support levels or breakouts from resistance levels then it's time to exit.

Scanning Stocks Manually

• The speaker mentions that he does all his scanning manually by looking at weekly daily 65 30 15 five minute and two-minute time frames.

• He jots down notes on paper based on what he sees in these charts.

Trading Strategies for Short Time Frames

In this section, the speaker discusses his approach to trading in a period of heightened uncertainty and volatility. He explains how he shrinks his time frame and looks for opportunities on shorter time frames.

Manual Scanning

• The speaker has a master list of over 1000 stocks that he reviews on weekends.

• He narrows down the list to about 200 stocks that he will look at each day.

• From those 200 stocks, he sets alerts on about 15 of them and considers five as his A-to-B list ideas.

Trading Process

• The speaker focuses on stocks that are curled up tightly within a range and have favorable group characteristics.

• He sets alerts to remind him to take a closer look at these stocks if they break above certain levels.

• If the stock continues to perform well throughout the day, he sells pieces of it but may hold onto a small piece overnight.

Setting Alerts for Stocks

In this section, the speaker explains how he sets alerts for stocks that meet his criteria.

Alert Setting Process

• The speaker sets an alert if a stock closes above or below a certain level.

• He resets the alert if nothing happens after ten minutes.

• If the stock looks ready to go, he clears offers and gets it going.

Anticipating Stock Analysis

In this section, the speaker discusses how they analyze stocks and anticipate their movements.

Analyzing Stocks

• The speaker analyzes 20 stocks, even if only 10 are ready for trading that day. They want to see how the other stocks develop throughout the day.

• By analyzing different types of stocks (energy, bank, tech, gold), the speaker gets a better feel for what's happening in the market.

• The speaker manually analyzes stocks rather than using scans to get a head start on potential movements.

Understanding Market Movements

In this section, the speaker explains how they listen to the market and understand its movements.

Listening to the Market

• The speaker wants to listen to the market rather than tell it what they want.

• They analyze swing highs and lows from different time periods (day, week, month).

• The year-to-date volume-weighted average price is an important benchmark for measuring performance.

IPO Trading Strategies

In this section, the speaker discusses their trading strategies for IPOs.

IPO Trading Strategies

• IPOs are one of the cleanest ways to look at volume-weighted average price because there is a defined starting point for everyone.

• The first minute of trading typically has the biggest volume on a one-minute candle due to people flipping out shares from the IPO.

• The second minute of trading is where actual trading begins.

• Using VWAP off of low or high points can help identify buy signals with stop losses.

Understanding Breakouts and Breakdowns

In this section, the speaker discusses how to identify breakouts and breakdowns in the stock market. He explains how to use traditional support levels and actual average prices to determine when a stock is breaking out or breaking down.

Identifying Breakouts and Breakdowns

• The IPO is often defended until it breaks down hard on a gap, bounces, fails, gets stuck under it, and then tests it.

• The average participant defends the short while the average long says that it makes a lower low. This can be signaled as an opportunity to get out of the trade.

• Traditional support levels can be used to identify breakouts and breakdowns. However, actual average prices are more accurate in determining whether a stock is breaking out or breaking down.

Anchoring from Federal Reserve Announcements

• Breakouts and breakdowns can be anchored from federal reserve announcements. The S&P will look flat before 2 pm Eastern time when the federal reserve announces its decision. Afterward, there will either be an increase or decrease in price depending on the announcement.

• The V-WAP underneath indicates whether there will be an increase or decrease in price after the announcement.

Using V-WAP for Short Squeezes

• V-WAP can be used for short squeezes by identifying where shorts are positioned and what their average price is.

• If short interest increases over time, traders can look at V-WAP from that period to determine where shorts may feel pain.

Using Anchored V-WAP for Trading Strategies

In this section, the speaker explains how to use anchored V-WAP for trading strategies. He discusses how to identify where shorts are positioned and what their average price is.

Identifying Short Positions

• Anchored V-WAP can be used to identify short positions.

• The V-WAP from a gap or earnings report can indicate whether there will be an increase or decrease in price.

Determining Short Interest

• Significant events that change the supply and demand dynamic, such as highs, lows, and big volume candles, can help determine short interest.

• Price is the only thing that matters when it comes to trading.

Conclusion

In this section, the speaker concludes his presentation by providing information about his book and subscription service.

About the Speaker's Book and Subscription Service

• The speaker has written a book on Amazon that has been called one of the top 10 ever written.

• The speaker provides a subscription service. Interested traders can send him an email for more information.

Brian's Book

In this section, the speaker talks about a book by Brian and provides a link to it. He encourages people to use the link as it is not easy to find the book otherwise.

Link to Brian's Book

• The speaker provides a link to Brian's book and encourages people to use it as it is not easy to find the book otherwise. Link

Observing Indian Markets

In this section, the speaker talks about Indian markets and how they are good for observing volatility.

Indian Markets

• The speaker mentions that Indian markets are good for observing volatility.

• He suggests that even if someone does not like trading, they should still observe the market.

• The speaker mentions that he does not want to trade all night since it is already 9:30 PM local time.

• He says goodbye and ends the conversation.

Conclusion

This section concludes the conversation.

Goodbye

• The speaker says goodbye and ends the conversation.