How to get the Risk/Reward on Your Side

Featuring Sven Henrich

Sven Henrich, the Northman Trader, shows how building a framework for macro and technical analysis, helps investors recognize when the risk/reward scenario changes and when it’s time to adjust exposure. In this Expert View, Sven explains how he analyzes markets to create a positive environment for setting up successful trades. Filmed on October 31, 2017, in London.

Published on
24 October, 2017
Topic
Trading, Technical Analysis, Volatility
Duration
25 minutes
Asset class
Equities, Bonds/Rates/Credit
Rating
125

Comments

  • JC

    John C.

    2 12 2017 16:49

    0       0

    Solid video. Would like a follow-on perhaps that dives into some charts Sven is looking at as we head into 2018. Maybe compare/contrast with the Demark indicators of Thomas Thornton at Hedge Fund Telemetry. Lot of data pointing to a slowdown but all in all the market still feels bullish like it has more room to run after any short-term pullback.

  • KS

    Kathleen S.

    15 11 2017 02:09

    1       1

    Markets are rigged by CB's they are not real or organic explains why they don't move. Stay out. Why would you pick up pennies in front of a steam roller or dance on the edge of a cliff.

  • VK

    Vladimir K.

    12 11 2017 19:12

    5       0

    Thanks a lot, Sven. I liked the analysis and took some notes.
    Real Vision, I wish we had more videos like this.
    A question to Sven: How would you know that buy the dip strategy is over? what should happen in the charts?

  • KH

    Kanwal H.

    12 11 2017 04:42

    0       5

    Didnt get anything out of this video. No structure , no insight. Bad.

  • JO

    John O.

    11 11 2017 20:57

    0       0

    OK, I didn't get a huge amount of value out of this either; and it wasn't the slickest delivery; but it was unfair for someone to call it an infomercial since it's entirely reasonable for presenters to tell us what their firms do. To give the guy some credit, his latest macro commentary on the bullshit of "global synchronized expansion" is great stuff, so good that it is immediately a story on the indispensible zerohedge: https://northmantrader.com/2017/11/11/caution-slowdown/

  • ns

    niall s.

    8 11 2017 18:23

    0       0

    What I would like to have heard is an opinion on why volatility has died , to me this is the crux of the issue .
    Anyone got an opinion ?
    Is it passive investing in ETF's , lack of sellers this side of a possible tax reduction ? what do yall think?

    • ML

      M L.

      9 11 2017 23:09

      1       0

      USD19trillion in CB assets - more than 4x pre crisis levels - would be one big factor.

    • VK

      Vladimir K.

      12 11 2017 18:48

      0       0

      because it's a crowded trade now. When shorting volatility brings you Sharpe ratio of 7 for couple of years, many big players will jump into that...

  • HJ

    Harry J.

    7 11 2017 21:52

    0       0

    Black box!
    Key take away, on the other hand.
    What we need is a one handed opinion.
    Maybe up maybe down.
    Investing is hard work and based on
    Probable predictable outcomes, at least that is what i was t

  • SH

    Sven H.

    7 11 2017 18:57

    18       1

    Hello everyone, Sven here. Appreciate the feedback & working with RV on this piece.
    This segment was intended to discuss general process on identifying risk/reward.

    Since I had received questions on how we approach markets on a current basis, here's a link of material we put out for clients today which you may find of interest.

    This is a snapshot in time of course and part of an ongoing daily analytical process.

    https://northmantrader.com/samples/
    password: servicepreview

    Any questions feel free to ping me via northmantrader.com

    Regards.

  • JH

    Jesse H.

    7 11 2017 16:09

    4       0

    Didn't get much out of this, unfortunately -- mostly a commentary on how things have been to date in the markets, the "buy the dip" situation we've been in. No significant analysis here in my view, just a statement about RSI boundary points, VIX convergence, etc. I find it ironic that Sven comments that the more indicators you look at, the better your predictive capacity, and yet keeps referring to the RSI as the main indicator to trigger trends. If only markets were that simple. They are totally non-linear and not simple -- actually, what we have in the last 12-18 months looks to me much more like a "controlled" marketplace or where significant behavioural consolidation is taking place, not a free market in any sense. That's my two cents, for what it's worth.

  • AT

    A T.

    7 11 2017 10:30

    0       1

    I see quite few redflags about Northman around internet ?

    • TM

      The-First-James M.

      7 11 2017 13:05

      6       0

      Where? I've followed Northy for the last 2.5 years and have nothing but respect for him and his market calls. He has garnered abuse on Twitter from permabulls for his bearish perspective but I find his writing and analysis to be honest and refreshingly direct.

    • CL

      Christopher L.

      8 11 2017 19:37

      0       1

      I have followed on twitter, though not to his service. However, there has been a few well-known people on twitter that have questioned him. One said Northman has managed and blown someone's six figure account.

    • CL

      Christopher L.

      8 11 2017 19:37

      0       1

      I have followed on twitter, though not to his service. However, there has been a few well-known people on twitter that have questioned him. One said Northman has managed and blown someone's six figure account.

    • AK

      Anthony K.

      10 11 2017 16:35

      1       0

      @Christopher: If someone tweeted it, it must be true.................

    • TM

      The-First-James M.

      10 11 2017 20:44

      3       0

      I've seen the person who tweeted that involved in a joint attack on Raoul shortly after Brexit last June, when he and his co-attacker were seemingly accusing Raoul of trying to manipulate the S&P 500 down in his recent CNBC interviews. I recall Raoul responding that he can't even influence his dog and attempting to reason with them, before giving up in frustration and blocking. I took a look at this particular gent's Twitter feed and humility didn't exactly feature. I therefore personally treat any accusations originating from him with a pinch of salt.

  • AC

    Andrew C.

    7 11 2017 10:23

    2       0

    Very interesting, in fact. This is what is happening, despite the fact that many people want (- expect - dream of ?) - a 20-25% correction back to more historical valuations and to give the CB a bloody nose. "You can argue with the market or listen to the signals”.
    Great charts, but how does this era compare with how things were previously? A companion chart for another period would have really clarified everything about these markets.

  • CM

    Chris M.

    7 11 2017 05:22

    3       0

    I found it an interesting video to watch. But not a technical trader and don't invest this way. So while I thought he gave a good description on how he trades, nothing there for me to make money except continuing to hope that the VIX breaks out of its narrowing channel and pushes the market down so I can put some cash to work.

  • GP

    Gordon P.

    7 11 2017 00:36

    3       0

    I really liked the easy & simple way that was used to explain the charts, et -- Thanks Sven & RV

  • JV

    Jason V.

    7 11 2017 00:33

    3       0

    Fantastic analysis and insight into market details. Eagerly look forward to hearing more from Sven going forward.

  • AG

    Amir G.

    7 11 2017 00:12

    5       2

    We have seen volatility has imploded significantly since a year ago, the presenter in this video keeps saying (probably 7 times if I counted correctly) that what you and I think doesn't matter and it's all about what the technical indicators are telling us. So what are they telling us going forward? it's like I say Amazon has been going up on a straight line since Feb 2016, so what? what does it mean for the future? the problem I have with these videos is that they tell you a story about the past (basically a history lesson) without really taking a side on which direction they 'think' the market is headed.

    • HM

      Hot M.

      7 11 2017 02:56

      5       0

      It could be just BS, but I saw a statistic of how often big investors make the right call (directionally). I think George Soros, being one of the best, was 58%. And this what he reportedly says: It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong.
      Perhaps what you or anyone else thinks is less important than how you trade/invest. Thats kinda what the video is talking about.

  • RA

    Robert A.

    6 11 2017 21:50

    3       0

    I thought this was a good one and in this case the shorter time format was perfect. This Gentleman got his points across very well in this shorter video. Kudos to Curator Milton on both the subject matter and the video time length.

  • VP

    Vincent P.

    6 11 2017 20:31

    7       0

    I'd take Sven on our team. He stated the facts and backed them up. Good guy. Follow him all the time.

  • GO

    Greg O.

    6 11 2017 18:35

    8       45

    Good video for YouTube crowds, but here on RV it is the insult to the viewer, at least in my opinion. As a subscription channel RV should get rid itself of infomericals like this one or at least label them correctly so the viewer knows upfront what he/she is about to waste their time on.

    • MO

      Mike O.

      6 11 2017 21:12

      5       0

      Hmmm ... sounds like you are someone well adept to the techniques of technical analysis, Greg. For me, having spent an entire career elsewhere and having paid little attention to markets (well, some attention, but not nearly enough), I enjoyed this video very much and hope that enough of these types of videos will coalesce into some sort of critical mass of understanding (although I'm afraid my expiration date might turn up before this happens ... oh well ... can't fault me for trying).

      Anyway, I guess it is hard to cater to everyone's needs and/or tastes.

      But, as I understand that one of the missions of RVTV was to bring some understanding to the woeful masses who suffer from the lack of knowledge in this area (particularly those of us who went through the Great Recession and want to learn how to avoid future calamities), you may agree that videos such as this one are very helpful.

      (It's almost like having a bunch of kids in a one-room schoolhouse ... with some older and more experienced and some brighter and quicker ... then there are the kids like me).

    • GO

      Greg O.

      7 11 2017 09:24

      5       0

      @Mike O.

      Mike, I have nothing against the presenter as a person. I'm commenting on the video so the RV hears some feedback from users that are not happy with the way RV is heading. Not surprising to me, it seems like a lot of people have blinds in front of their eyes and can't see it through. This is just infomercial of someone selling you a service and all I'm implying is that it should be labeled correctly as such since RV is not a free YT channel. And to be fair, there is plenty of those recently on RV, not just this video.

      RV is a good mind exercise and offers a decent macro view. But it will not help anyone in trading (!!!) especially short term. The fact is that no one (!) can tell you "how to trade", you need to find your own way (before you go broke, hopefully). The whole RSI reaching oversold/overbought, indicator this and indicator that, please... Buyers don't come to the market because RSI reached 30... I know people love being spoon fed trading ideas but it just doesn't work in trading. Trading is done at the hard right edge and you need to find your own way how to trade and why to trade.

      If this video and similar somehow helps you and others in trading, then fine, I'm happy for you (though honestly I find it hard to believe, but what do I know). As far as I'm concerned, videos like this one is pure BS that is diluting the quality stuff one can still find on RV.

    • SZ

      SALEH Z.

      7 11 2017 11:34

      2       0

      Agree - very weak presentation for experienced Traders or tech Analysts. It’s easy to backtest all the indicators this chap mentions (since they are all backward looking) and the fact is at that specific point in time would a person have the courage to pull the trigger - I doubt it bc you are always afraid that a 1 pcnt selloff is a precursor to a 5 pcnt selloff . Most of tech analysis works sometimes and doesn’t work alot of the time. It’s just a risk reward tool I guess

    • MO

      Mike O.

      8 11 2017 21:22

      0       0

      Greg, I'm glad I responded to your comment as I clearly did not comprehend your meaning (at least not entirely) and you were kind enough to reply with these details that make your views much more clear.

      As far as trading goes, I am pretty much of a novice and don't rely on the information on RVTV which, I might agree (if I really knew anything), that may not be as helpful as some other sources of information.

      Some good ones (for me) have been the "Better System Trader" and "Chat With Traders" podcasts. I also picked up a book by Van Tharp that was recommended (I forget the title).

      So, while I am becoming familiar with trading strategies and such, I haven't done much at all. I am hoping to pick up some cues here on RVTV (either from videos or viewer comments) and very much appreciate the insights that others might share along the way.

      So, thanks again for your reply and all the best to you.

  • PG

    Petter G.

    6 11 2017 18:07

    13       4

    What a great presenter! I wouldn't mind seeing more of Sven on RV!

  • MO

    Mike O.

    6 11 2017 17:55

    3       0

    I had a nagging doubt the whole time that I watched this video ... up until the end. Yeah, the technical indicators were really (what's the word?) "on the money" in their pointing to turning points as well as to explain market behavior. But, what if the reasons for the unusual activity, such as in the VIX, were as a result of extraordinary conditions? (There have been many who have been saying so, no?).

    And ... what if these market conditions change?

    One interesting report I enjoyed listening to was this interview on the KE Report program with Trader Vic Sperandeo, who shared his views (along with a Bloomberg terminal screenshot) showing the distinct correlation of QE injection by the world's central banks (not just the FED) with the rise in the S&P -

    http://www.kereport.com/2017/10/25/trader-vic-historic-times-equity-markets/

    (This likely does not come as news to anyone reading this, I know).

    So, I was glad to hear Sven talk about how changing conditions will see very different behavior and that the indicators that he showed may only be reliable for a limited time going forward (at least if you believe FED talk about prospects for balance sheet reductions, or Mario Draghi weaning Eurozone off of QE, etc.).

    A suggestion (that I would love to see more of) would be to have in-depth discussions as to the ramifications of these prospects, such as the excellent video that Raoul recently did on the bond market.

    Thanks for the great content (I believe that they are really helpful to those, like me, who are trying to get a handle on how and why things are working like we see them doing).

  • JL

    Johnny L.

    6 11 2017 16:12

    2       0

    Fantastic presentation with sensible explanations to insensible times and markets. The spread since April on the VIX is stunning. They last as long as heart beats now. As soon as something blips lower buyer gobble it up. Not sure what the VIX portends being so tight but we will see in time. Good report.

  • RM

    Richard M.

    6 11 2017 16:00

    16       2

    Very nice common sense technical analysis video. Liked it a lot!