Here’s a guy who didn’t let what clearly should have been fatal trading injuries stop him from kicking mind-boggling amounts of badonkadonk.

Who?

An accountant who got fed up with his office manager and other office BS who quit his day job to become a full time day trader from home.

Devastating Wound(s)

At one point during the Battle of Office Hag, Major Jeff Cooper decided that his days of being pounded by an office manager for about $100 a day had come to an end. Instead, he apparently resolved to deal with any future office goblins personally.

Not only were things going bad at work, the Major caught his wife cheating on him and was filing for a divorce.

Not only were things going bad at home, the Major was just a private back then, in terms of trading, and he lost his nest egg in the Tech Bubble Crash: $45,000 gone in the blink of an eye.

Anyways, back to the Battle of Office Hag. At one point, after being falsely accused of stealing, he did the kind of thing that most of us only dream of doing: he quit and just happened to hit the power switch on the company’s main server as he walked out. He also called Microsoft to report the pirated versions of Microsoft Windows and Office that 15 people had on their computers in the corporate office. My hero.

The Awesomeness That Followed

About seven years later, Jeff had his first $80,000 year stock trading from home.

This is how Jeff did it.

Early on, he realized that strongly trending markets tend to pullback to major Fibonacci retracement levels of 38.2%, 50%, or 61.8%, before rising again.

What occurs is that a strongly trending (runaway) market will take a number of days rest before continuing its trend. This is very true within the early phases of the move. The rest, or pause, will come in the form of sideways movement or a couple of down days (up days for downtrending markets). This comes mostly from people who were fortunate enough (or smart enough) to have purchased the stock at lower levels (or in downtrends, who had shorted at higher levels) and now want to lock in their gains. However, this pullback, or relaxation, can be utilized by the momentum growth funds and traders as a signal to accumulate extra stock at lower levels (or, on the downside, unload stock at higher levels), subsequently once again causing prices to move higher and creating more momentum. How far these shares run is totally impossible to forecast but the bottom line is to climb aboard early and let the market go where it’ll go.

But where did Jeff enter the market to provide himself with the highest possibility of profit while taking the lowest degree of risk?

He identifies only the strongest trending stocks and, with the use of an oscillator, pinpoints when the pullback will likely exhaust itself and the trend will resume.

For those of you who are new, ADX stands for Average Directional Movement. The ADX measures the strength (not direction) of the trend. The higher the ADX reading, the stronger the trend. Jeff only trades stocks whose ADX reading is 35 or higher. This means he is only looking at stocks that are moving strong in one direction. To identify the direction, he uses the ADX +DI and -DI. Simply, if the trend is up, the +DI will be greater than the -DI and if the trend is down, the -Dl will be greater than the +Dl. Please review this stock trading lesson on trend trading.

Therefore, Jeff only buys into strongly trending stock (its ADX reading must be 35 or higher) and its +DI reading must be higher than its –DI reading. If we are looking to short a downtrending stock, the ADX reading must be 35 or higher and the -Dl reading must be greater than the +Dl reading.

The second indicator Jeff uses is the stochastic. Stochastics are a mathematical formula that is based on the fact that as prices increase, closing prices tend to be closer to the upper end of the price range, and as prices drop, their close is usually near the bottom of the daily range.

Conventional wisdom states that when readings get under 40% the market is oversold and above 60 % the market is overbought. There are four components of stochastics — Fast % K, Fast % D, Slow % K, and Slow % D. The only one Jeff uses is the Fast % K. This is an extremely sensitive component, and it allows Jeff to better measure overbought and oversold conditions.

Jeff uses an eight period Fast % K for his calculations. In uptrending markets, he wants the Fast % K to drop to 40% or under. This means the market has pulled back (oversold) and there is a higher than average likelihood the market will again move higher. In downtrending markets, he wants the Fast K % to climb to 60% or higher. This means the market is overbought and the downtrend is likely to kick in again.

Imagine what Jeff could have done with Heikin Ashi charts!