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Tsunami Trading Educators, Inc Trading Manual:

1. Introduction
2. How we are different
3. Our Indicators and Trading Theory
4. Trade Setups and Trade Management
5. Installation of Software
6. Money Management
7. Technical and Member Support

1. Introduction: Congratulations! You have purchased a tool for your


trading that will change the way you trade, forever.

When we put together the elements of this trading software and program,
we had been students of the markets for decades. We had already bought
most of the trading courses and trading software out there, and had been
frankly disappointed at what was available. In our opinion, there was little
out there that was new under the sun, and little that made consistent
money day in and day out. Since 90% of traders lose money, and these
methods and strategies have been more or less available for decades as
well, it would perhaps not be surprising to you to find out that most
traders, ourselves included, using these methods had trouble making
money consistently.

We would categorize the many other products out there in 2 different


categories. The first category is the largely subjective trading methods.
They will give you an array of indicators, setups and price patterns and
then provide a perfect trading example for each in a 300 page manual or 20
DVD home study course. Then they would tell you to go and try to trade it.
Or that they would not tell you the optimal pattern or setup to trade, as it
“all depended upon your own risk tolerance”. We think that is another way
of saying, they did not know what setup was the best and would like to
claim success on the ones that did work, always after the fact, and escape
the blame for the ones that didn’t work. Or perhaps it’s just a thinly
disguised pitch to get the client to take their “advanced mentorship
course” which always would cost several thousands of dollars more. Only
in this course would they reveal the real trading secrets and how to apply
the method and learn “all the nuances, sitting beside a real trading
professional”. Some have such an enormous list of indicators and multiple
time frames that have to line up, that it’s really almost impossible to take a
trade in real time. Another real problem with subjective trading
methodologies is just that, they are subjective! The trader has to decide on
his own, which indicator or price pattern or Elliott wave they are in. If they
win they are on the top of the world. When they lose, they blame
themselves for not checking that last 99th indicator in their 100 indicator
check list. That leads to indecision, self blame, stress and no chance of
long term success.

The second category of trading methodologies we see out there are the
predictive ones. Citing the legendary trading abilities of Gann, or the
mystical ratios of the pyramids of Egypt or of the petals of a sunflower
(Fibonacci), or the phases of the moon and their relationship to Saturn,
these methods attempt to predict today’s markets with theories of
centuries ago. Since there are so many Fibonacci levels and Gann levels
can be placed every 1/8 of the range, it’s no wonder that some of these
predictive methodologies will at times, seem to be able to magically predict
the future! We liken these magical predictions to the carnival fortune teller.
“You will meet a dark and handsome man”. Since the predictions are so
general, and since there are so many Fibonacci and Gann levels with so
many different points to draw them from, you’re bound to hit one right on!
The magic of these predictive methodologies, in our opinion, more are the
result of so many traders looking for turns at these levels, a self fulfilling
prophesy.. Again, these predictive methods are also subjective and hence
can lead to frustration, indecision, and stress.

2. How we are different: We at Tsunami Trading ARE different. We are


100% mechanical with absolutely no subjectivity in our methods, and we
do not attempt to predict the markets but instead simply react to them. The
key to our success is our ability to read the hidden buying and selling
pressure of the markets in real time, using our proprietary copyrighted
software. We trade the markets with 100% objectivity and 100%
mechanically. Our methodology is based on what moves all markets in all
timeframes, and that is the elements of Price, Volume, and Momentum.

Tired of all the subjective and predictive methodologies out there, our
engineers sought to analyze what really moved all markets. People buying
and selling at certain price levels (Price Action), People buying more and
more in a trend move likely to continue (Volume Action) and People buying
more at an accelerated pace in a trend move also likely to continue
(Momentum Action). After years of testing and formulation, these three
trading functions were quantified by complex mathematical formulas using
the real time information and data available from the exchanges. When we
placed all three formulations into one complex algorithm, we had created
the PVM number which is our answer to objectively trading the markets
100% mechanically. Unlike other static mechanical systems, which are
known to eventually fail as market conditions change, because our
software reads what moves all markets in all conditions, we feel our system
is dynamic and should withstand the test of time. We did not create a
system around one particular market or timeframe. We analyzed from the
ground up what moved all markets, and now successfully apply any market
on any time frame to our system. Interestingly, although we did not seek to
predict the markets in anyway, real-time testing and trading has shown the
PVM (Price Volume and Momentum) numbers to be in fact forward looking
predictive indicators of the hidden buying and selling strength of the
markets! We feel they are the one true indicator of the market every trader
must have to trade the markets effectively and with consistency.

3. Our Indicators and Trading Theory:

Tsunami Basic Indicator Set:


Tsunami Waverider
Tsunami Stop
Tsunami Trender
Tsunami Trender Dots
Tsunami StopTgts
TsuPaintbars
TsuPivots:
Tsunami Waverider: Imagine you are flying an airplane in a horizontal line.
There are 2 ways to make the plane rise. Use the engines and pull the
wheel back, or dump off weight out the door so the plane is lighter. We
use that concept in the markets to predict future price movement. The PVM
numbers above the price swings are termed bullish PVM numbers and the
PVM numbers below the swings are termed bearish PVM numbers. Our
theory states that a bullish price movement should be preceded by either a
increased bullish PVM number as compared to the immediately preceding
bullish PVM number ( the engines and wheel aiming up thrusting the
airplane higher), OR bearish PVM numbers that are decreasing in size as
compared to the immediately preceding bearish PVM number( throwing off
excess weight out the cockpit door). The PVM numbers are the white
numbers given to you by the Tsunami Waverider indicator and are placed
right above or below every swing of the market.

Tsunami Stop: Because trends once started tend to continue, and we are
always seeking to trade with the trend, once we are in a winning trade, we
do not look to trade a new trend direction until the trend change has been
confirmed. Tsunami Stop is our trend change indicator. It will position
itself above the price bars in a downtrend and below them in an uptrend.
The Tsunami Stop is one of our greatest discoveries as it determines the
true PVM trend extremely well, and it keeps you in the trade much longer
than most other methods that we have seen. After the PVM generating
Waverider indicator, we feel this one, is probably the most important. You
are always told the secret of trading is to let your winners run and to cut
your losers short. Well this indicator will let your winners run! Tsunami
Stop requires a price bar to completely breach it and for the Tsunami Stop
indicator to jump to the other side of the price bars at the bar close, to be
stopped on a trade and for a new trend direction to be confirmed.
Tsunami Trender: This complex mathematically derived formula will
analyze the entire price series of data and come up with an independent
determination of the immediate PVM trend and of PVM trend change points.
The Trender indicator is usually very smooth and will signal early change in
trend points, while still avoiding many false signals. We will only buy the
market when this indicator is blue and will only sell the market when it is
red.

Tsunami Trender Dots: This is a Show Me study that will simply note for
you visually and with an alert if you so desire, when the Tsunami Trender
indicator has changed color and trend.

Tsunami StopTgts: Finding a good entry is only 1/3 of the equation when
trading. Knowing where to place your initial stop and knowing where to
place your profit targets is the other 2/3 of the equation. This indicator will
analyze the PVM volatility of the market and place above and below each
price bar the suggested initial stop and 3 suggested profit targets. Upon
entering a trade on any particular price bar, for example a buy, simply
highlight the entry bar and the data window will show the Buy stop (the
initial stop used for a buy trade in the scalp method), and the 1st, 2nd, and 3rd
Profit targets for the trade.

TsuPaintbars: This Paintbars study uses several stacked PVM algorithms


to determine with a high degree of accuracy “very bullish” and “very
bearish” conditions. We will only buy the market when this indicator is
blue and will only sell the market when it is red.
TsuPivots: This indicator will paint on the chart for you everyday the key
pivots of the day where the markets will oftentimes turn. They use a
different formula than what is commonly available in the trading arena, and
we find them to be very effective. We find them useful in our trading mostly
as possible additional targets for trade exits.

Trade setups and Trade Management:

Scalp Strategy: In this strategy, if the system is flat we look to enter on the
very next occurrence of a buy setup or sell setup. Once in the trade we use
the Buy Stop or Sell Stop ( the yellow dot below the entry bar is the Buy
Stop, the yellow dot above the entry bar is the Sell Stop) lined up with the
entry bar as the initial stop on the trade. Once a 1st PT has been reached,
the system switches to use the Tsunami Stop as the trailing stop on the
trade.

Nonscalp Strategy: In this strategy, the system uses Tsunami Stop as both
the trend filter and stop on the trade. The system will only take buys above
Tsunami Stop and only taking sells below Tsunami Stop. The nonscalp
strategy uses the Tsunami Stop also as the stop for the trade (whereas in
the scalp method, the system will use the initial stop (the yellow dots lined
up with the entry bar) until the 1st PT has been reached, and then switch the
stop to the Tsunami Stop trailing stop).
A buy setup:

A PVM configuration where:

The most recent Bullish (upper) PVM number is larger than the prior Bullish
(upper) PVM number OR
The most recent Bearish (lower) PVM number is smaller than the prior
Bearish (lower) PVM number

Enter long at the close of a blue Tsunami paint bar with the occurrence of a
blue Tsunami Trender Line/Tsunami Trender Dot.

A sell setup:

A PVM configuration where:

The most recent Bullish (upper) PVM number is smaller than the prior
Bullish (upper) PVM number OR
The most recent Bearish (lower) PVM number is larger than the prior
Bearish (lower) PVM number

Enter at the close of a red Tsunami paint bar with the occurrence of a red
Tsunami Trender Line/Tsunami Trender Dot.

Trade Management:
If using the scalp method, line up your cursor with the entry bar, The data
window will show the buy stop ( initial stop you will use if you are buying
the market) and it will show you the value of the sell stop ( initial stop you
will use if you are selling the market). The data box will also show the 3
buy and 3 sell targets for this trade.

If using the nonscalp strategy, you will not be able to place a hard stop into
your trading platform (you might want to place a far away security hard
stop just as a precaution in case you lose your internet connection). In this
strategy, the Tsunami Stop trailing stop is the stop on the trade and only is
stopped out when the Tsunami Stop line jumps on the other side of the
price bar at the bar close. When that occurs you would simply exit at
market.
TsuBot-Your Automated Trading Assistant:

If you leased TsuBot-Your Automated Trading Assistant, you now have at


your disposal, the greatest trading assistant available on the market today!
We took the proven algorithms of the scalp and nonscalp strategies and
hard coded the whole process into TsuBot. TsuBot will color code the PVM
numbers for you (Cyan for bullish and Magenta for bearish) and completely
monitor markets conditions for you for buying and selling opportunities. If
you set TsuBot to the scalp strategy, the rules of that strategy are followed.
If you set TsuBot to the nonscalp strategy, the rules of that strategy are
followed faithfully. TsuBot makes no errors and can monitor multiple
markets for you at the same time. Her alerts are visual, verbal, and they
can be emailed to your cell phone or broker for Auto-Trading.
TsuBot has numerous inputs to customize to your trading preferences:
Here is a LIVE 10 minute trading video of TsuBot trading the nonscalp
strategy!

http://www.tsunami-trade.com/install/videos/Tsubot9.29.avi

Scalp TsuBot Trades:


Nonscalp TsuBot Trades:
Software Installation:

1. Your software will arrive via priority mail from the USPS. You will
find your customized CD, this short owner’s manual and a
completion of transaction receipt. Please fill in and sign this receipt
and fax it back to our office fax. The Fax number is 650-897-8200.
2. Insert the CD into your computer. There should be 2 files, one
entitled Tsunami Setup.exe and the other your customized
Tradestation ELD. Please note this ELD is customized to your
personal customer ID and Network ID which can be obtained by
opening your Tradestation platform and clicking on the top menu,
the Help Icon. Then it will state About Tradestation 8.3. Click on that
and it will be displayed Licensed to Customer number xxxxxx,
Network ID = yyyyyy. We need both the Customer number xxxxxx
and the Network ID yyyyyy to be emailed to us to prepare your
software)

3. Now double click the Tsunami Setup exe. Follow all prompts clicking
Next twice then Finish.
4. Now Go to the Start Menu on your computer, Click Start, All
Programs, Find the program that says Tsunami Trading Educators,
highlight that line and drag your cursor to the right onto the words
Enter Password:

5. Copy down the 6 digit number in the ID row. That is your hardware
ID for this computer and will never change for this computer. Email
us that hardware ID and we will send you back a long string of
numbers and letters which is your new password for this computer.
Copy and paste that new password into the new password slot and
click OK.
6. Now log into your Tradestation account, if not already logged on.
7. Double click your customized Tsunami software ELD ( its on the CD
disc we sent you)
Click Next

Click Finish.
8. Only after you have received the new password and installed it into the
new password slot will your indicators work. After they are fully installed
and enabled with the new password we will now install them to your charts.
9. Open your Tradestation platform.
10. Click on the top of the platform, File, New, Window, Chart analysis, OK
11. Right click chart, Insert Analysis Techniques, Indicator
12. First highlight TsuStopTgts indicator, then click ok.
13. Right click chart, Insert Analysis Techniques, then holding the CNTRL
button down the whole time, left click TsunamiStop3, Tsunami Waverider3
and TsuTrender1.
14. Right click chart, Insert Analysis Techniques, Click ShowMe on the top,
then TsuTrenderDots1
15. Right click chart, Insert Analysis Techniques, Click PaintBar on the top,
then Tsupaintbar 1.2.
16. Right click your chart, Background dragging, enable

Congratulations! You have installed the Tsunami Basic Indicator set!


Money Management:

Probably one of the most important things we can teach you is proper
money management. 90% of traders lose money and many will blow their
accounts out before they even really get started. The most common
reason for that we feel is improper money management and position sizing.
If you follow the Tsunami money management plan, it should be nearly
impossible to lose all your money. I will repeat that, if you follow the
Tsunami money management plan, it should be nearly impossible to lose
all your money. Of course never say never right?! Anything is possible in
trading including losing all your money and then some!!! Perhaps to be
more legally proper, we should say if you follow our money management
plan, you will finally have a good chance at succeeding at this very difficult
but rewarding profession!

We analyzed why losing traders lose and came up with a few ideas. We
already discussed 2 of them. Trading largely subjective methodologies,
and trading predictive methodologies. Both methods are in our experience
inconsistent and difficult for the average trader to master.
We also already discussed our feeling that a 100% mechanical and
objective approach that utilizes the tenets of Price Volume and Momentum
in a dynamic fashion is a better way to trade.
Yet a trader can lose with the Tsunami system as well! How you might ask?
Any trader can lose with even the greatest system in the universe if they
practice poor money management (trading too much size for their account
balance) and poor self management (being unable or too stressed to take
the trades without hesitation, or trying to cherry pick the trades).

We feel these 2 very common trading errors are what lead to failure for
most traders, even if they are armed with a powerful trading system like
ours. The answer to both problems we feel is the concept of OPM (Other
People’s Money). If we can trade only or mostly with OPM, you should feel
less stressed and less hesitant to take the next trade. It’s not your money
anyway, right?

The way to trade with OPM as much as possible, short of being a broker, is
by trading only minimal size at first, ie 1 contract and slowly build up your
trading account. Set a conservative yet still aggressive profit goal you
must make per contract, then only when you get to that goal of having
made that much of OPM in profit, are you allowed to increase your trading
size. For example, after a respectable period of successful paper trading,
start trading with only 1 contract of the market of your choice. It makes no
difference if your account balance is starting at $5000 or $500,000. You
should start trading with 1 contract at first. You are new and bound to
make mistakes. Plus you only want to trade with OPM as much as
possible! The equivalent minimal unit of stocks or options or whatever
else you may fancy to trade can be applied here as well. Set a reasonable
profit amount that you must make per contract before you will allow
yourself to increase trading size. In our live trading room, we trade the E
mini ES (@ES), 5000 share charts and the Eurocurrency futures (@EC),
1000 share charts. A hypothetical illustration of the “magic of money
management” in these contracts is shown below.

In this hypothetical illustration, which takes into account no losing days


which should be considered almost impossible to accomplish with any
trading strategy or method, we used the daily profit goal of 24 tics per
contract traded ($300 a day/contract) in the @EC, and increased trading
size by one contract every $2500/contract gained. In the @ES we used the
hypothetical daily profit goal of 4 points per contract ($200 a day per
contract) and increased trading size by one every $1000 / contract gained.
Two different starting account balances were used in this illustration.

As you can see the results can be quite impressive using proper yet
aggressive money management. Also remember, after the initial period of 1
contract trading with your own money, after that it was all trading with
OPM! Is this really possible you may ask? Perhaps with a lot of practice
and some good luck! To be fair, you could also have lost that amount of
money or more, in this short period of time as well. However, one of our
traders recently reported to us that he is following our money management
plan as discussed above, and so far, he is in fact on schedule! He started
with one contract and now is trading two! He is trading the @EC 1000
share charts using the nonscalp method going all on and all off at the 2nd
Profit Target or 24 ticks per day daily goal. He provided us proof of his
claims!
Will he make it all the way to the $44,800 price level and beyond by the 40th
trading day? Since trading is risky and involves other factors beyond any
system’s control, ie the trader’s psyche, only time will tell if he will be able
to ultimately succeed, however he certainly has had a nice start and we
believe his early success validates the significant potential of our
aggressive, yet still conservative (only trading with OPM as much as
possible) method of money management! Food for thought. What is your
favorite market? Develop your own trading money management plan and
apply it! With Tsunami you have all the tools you need. You just now need
the will, discipline, and determination to succeed. Your success really is in
your own hands!

7. Technical and Member Support:

Demonstration Days( Monday – Thursday) : We demonstrate the system


live in the Emini ES and Eurocurrency Futures from 9 AM EST – 11:00 AM
EST. From 11:00 AM EST – 11:30 AM EST , we demonstrate the software on
Stocks and Other Markets by request. At 1130 AM EST – 1200 noon LarryK
will demonstrates the system on the spot Forex markets.

Member’s Day ( Friday): We devote all of the Friday session to the members
only. Here is the ongoing weekly schedule of classes:

800-830 AM EST. - Software Installation


830 -930 AM EST.- PVM Lecture with John G– He explains the rationale
behind the software and why you should understand this is a universal
concept in trading and hence can be applied to any market on any
timeframe.
930 – 1100 AM EST. – Live Futures Daytrading (@ES and @EC) where
JohnG will demonstrate the concepts learned from the PVM Lecture and
how to apply the software to different markets and time frames ( Futures,
Stocks, Commodities, Forex)
1100- 1200 AM EST. – Forex Lecture Series with Professional Trader LarryK

If you still have questions after these live daily educational sessions where
you are encouraged to ask any and all questions in real time, you can
always call us at 505-918-2270 or email us at info.tsunamitrade@gmail.com.

The best of luck in your trading and please only trade with risk capital!

The Tsunami Trading Team

======================================
DISCLAIMER
======================================
FUTURES AND OR STOCK TRADING CAN INVOLVE HIGH RISKS WITH THE POTENTIAL
FOR SUBSTANTIAL LOSSES. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS
HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD,
SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE
TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR
OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH
AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO
SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.
NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO
ACHIEVE THE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. ALL TRADES
DEPICTED OR DISCUSSED IN THE CHATROOM, WEBSITE OR COURSE ARE TO BE
CONSIDERED STRICTLY SIMULATED AND HYPOTHETICAL. TRADING INVOLVES HIGH
RISK AND YOU CAN LOSE A LOT OF MONEY. WHEN INVESTING IN SECURITIES YOU MAY
LOSE ALL OF THE MONEY YOU INVESTED. WHEN INVESTING IN FUTURES, YOU MAY
LOSE MORE THAN THE FUNDS YOU INVESTED.