Investing with a Sample Routine | Technically Speaking: Trading the Trend
[Music] hello and welcome to technically speaking on trading the trend weeks to months my name is james boyd we welcome you here today we'd like to welcome charles annette tm mia vijay george from tech george texas len mary don bill jack and many others and walter and many others we would like to welcome uh you and we'd like to also welcome you to uh what we call trend thursday this class i think is one of the most important classes because if you can't see longer term trends it's going to be very hard to move the overall portfolio and see some opportunities let alone in the long term but also even potentially in the shorter term so we want to kind of make sure we spend some time here and talk about this now tony actually says hello from south jordan tony i'm in murray uh and he says roll tide oh my gosh tony uh yeah nice i got yeah royal titans nice and boy they've been good this year not so much utah anyway good to have you now just real quick as we're getting started want to give us a quick reminder that you can follow us on twitter we do post educational content there daily i'll show you that in just a moment remember that when we talk about investing remember you should uh consider investment objectives risk and charges before investing remember that options are not suitable for all investors especially risk inherited trading options also understand we will demonstrate the function of the platform we're going to use actual symbols remember that td ameritrade the broker they don't make any recommendations or determine suitability of any security strategy for individual traders and also remember that last but not least transaction costs should be viewed beforehand and you should evaluate that and also last but not least there's the ops and greeks now as we get started here today we will take a look at market posture and sectors we will talk about what i call some routine steps that will be a follow-through of what we talked about on tuesday but it's going to be quick but we're going to show application of that because we're going to talk about smaller dollar stocks some of you might be interested in that and then we're going to move to bigger dollar stocks and as we do that i've also kind of sum up some of your questions i asked on uh twitter earlier today what could be some questions we could address here today i've sum those up i appreciate those and we're going to answer those as we go so let's go ahead and hop right in and if we take a look at let's say the dow jones i want to pull up this chart first off okay now this chart we're actually looking at the weekly chart now this class is trading weeks to months so it's very appropriate to look at a maybe not just a daily chart but maybe look at a weekly chart now when we actually take a look at the indexes what you'll notice is we got the dow 614 crashing higher okay at least it feels like it's crashing higher and then you actually see that if you look at the nasdaq up about 179 1.18 and then if you look at the s p 1.57 and then if you look at mr russell which we're going to talk about here today normally don't but we are now and if you look at let's say they're also it's up two percent okay so if we look at let's say what is leading percentage-wise it's really russell and the dow now i'm going to kind of minimize that now if you take a look at this and we if we were to kind of zoom this in a little bit this has been the trend of the market longer term now and direct uh direct answer to the question from len regarding in looking at weeks to months maybe is it more appropriate to look at a 10 20 day moving average 10 30 day moving average 50 200 day moving average if we were just going to pull up a chart individually we would look at a 10 30 day moving average where it's not going to be as sensitive to the crossing over it's going to lag a little bit more so in the first answer that question from land which moving average maybe to consider using longer term uh trends we'd probably say the 10 30. there's nothing wrong with pulling up a 50 or 200 day moving average but i would not really be having those on a chart that we would be looking at daily we would only be looking at those to really see those maybe if the market were to decline like we had lately now if you take a look at this as we zoom in what you're going to notice is tell me what you're seeing on the right hand side and let me kind of reset that chart so we can see that a little bit can anyone actually tell me what are you seeing on the right hand side now i can't zoom in anymore because i want to kind of see what is the what is the potential trend is the trend of the dow still in the upward trend okay well if we were to kind of draw a line kind of maybe from where we started a couple a couple months back this longer term trend still nicking a couple of these points it's still in that longer term trend now it has fallen down probably to the bottom of the trend line it's also fallen down to the 30-week moving average but it is still up above now the candle so far if you think this is support this would be a hammer if you say james i am not a bull you're a bear you're thinking of this maybe as a uh hanging man now if we go to let's say to the s p i'm gonna look very similar this is what it actually looks like we know that in the short term it broke down from a very steep diagonal train line but we said when it breaks down below that diagonal support it's not unusual that you fall down to horizontal supports so from a longer term week to month perspective it broke the diagonal see the blue line where's the horizontal okay 42 29 ish the horizontal line is also right near that 30 week moving average longer term longer term it's still okay in that awkward longer term training now you can almost say that in anything if you pull up the chart from 1900 okay but if we take a look at the one i want to bring up which is the russell now some of you know that uh some of us like to specialize on certain indicators or oscillators and uh i'm going to call michael keeley the resident expert of the macd histogram i might be the junior associate as far as the macd histogram but if we were to actually look at this if we look at the russell we see a large upward trend pole then we see a prolonged consolidation i want to go back into for example one of the questions that was asked by orlando okay and the question was as follows and i'm gonna wrap it in here and maybe is it he said is maybe with investors with maybe us having let's say a lack of direction is it maybe not the time to consider trend trading so if you actually kind of take a look at this what i thought was interesting is sometimes when you get in these longer term trends there can be pockets of consolidation okay when we look at the index if you take a look at this many of the stocks in the ross or the s p or the nasdaq or the dow maybe the index is sideways but that does not mean that all stocks are not trending that's not true we know that the majority might mimic the index but maybe there could be some minority that have a very strong upper tent do not forget that the other thing that we kind of say with this if we kind of were to mention is is it sometimes appropriate that maybe this trend can have a sideways range the answer is absolutely the sideways range is very important because after this big huge long run it needs to create a higher level of support where investors trust that that move can hold and investors could actually have a way to identify what their risk is okay now if we could now listen to what i'm saying okay we don't do those products that track the index okay but if we could the first paper money account of trade that would or could be done here is maybe buying a a product that tracks the russell okay now maybe what could that be now first of all it could be maybe a future it could be another type of product maybe it's just buying the russell itself and the ideas here is that maybe over time is this macd starting to rotate back up what i mean by that is the macd is not down as bad as it was before and the macd in other words is getting shallower and shallower and shallower and this is kind of maybe leading some investors to wonder is this maybe resistance finally going to break now if this paid money account could do those type of trades it would probably be doing a half position inside the channel and then leaving some extra capital that if the index were to break out of resistance adding the other half that would be trade example number one now we don't do those type of trades if you know what i mean because it's not that type of class where we can't record those okay now so that's the first thing i want to keep in mind is the smaller paths look like they're building up a potential level of resistance breakout okay that's the first trade idea or investment now by the way could it be a trade short yeah could it be potentially a longer term where you're thinking that extension might happen i think the answer is could yes now let's kind of talk about what we're when we take a look at the sectors real quick remember and this is a pop quiz if this market is truly becoming more bullish what sectors do you want to see participate more now we also kind of give it a language of higher blank okay what do we call that starts with a b ends with an a we want to see the sectors that actually have higher ba [Music] fill in the blank higher one now you could also say higher volatility stocks or sectors but we could also want to use uh really higher data higher beta would be sectors like maybe in this case of energy meaning they fluctuate more relatively sp what do you notice on that sector what do you see i didn't ask you what you found okay what do you see on the chart focus kind of looks like maybe a little resistance breakout now if we were to draw a little horizontal if you were to drive diagonal i don't care which way you draw if you take a look at both of those it kind of wow price got above diagonal horizontal now this probably means if we were to go look at let's say energy stocks something in there is moving which could be an idea for a trend trade okay now if we were to let's say look at a second area that's not going to be as volatile but the investor wants to see maybe these areas energy financials materials tech and i would say discretionary those five you want to see moves in those areas we do not want to see utilities go up the most staples boo we don't want to see that because if investors are actually buying those areas they're not really aggressive if they were really aggressive to be buying the stocks they have higher volatility financials are actually stronger which is welcomed if you're a bullish investor then we actually see tech which is also getting right back above the 10 day moving average and the 30 and what you also notice is when we look at discretionary doink above the 10 and the 30. and bill that's for you now the one thing i want you to kind of take a notice of is i hear people all the time talking about routine routine routine routine but i kind of question do they really have a routine they know it's important i mean i know a lot of things are important doesn't mean i do them okay now i want to kind of talk about this before we look at our trade example so we see some strong moves in energy today financials look healthier technology discretions that's going to lead us into some of these short-term trades well i say short-term i really meant to say smaller price dollar stocks but then it's also going to lead us into some bigger dollar stocks okay now one of the things when i wake up in the morning outside telling my wife good morning and by the way telling my dog jax you're the best ever uh i'd like to for example kind of pull up my little checklist of my routine okay so what happens is this routine we've been talking about number four number five number one condition we talk about every week for the last three weeks on tuesday on using options as a stock investor you don't believe me go look at it i've been sharing that now when i saw that prices were getting above the 10-day moving average and maybe also getting above the 30 what trend condition would that be what would that be hmm what would that be so if i said i need a cheat sheet okay so let's go back to the cheat sheet so we know that we were kind of in fall for a while or in number four okay we saw the prices drop we know that we saw that so it loops back to number one prices below both the 10 and 30 moving average remember we said on tuesday it's not where the market is it's where the market could be going wayne gretzky actually said that how are you such a good hockey player he goes i don't skate to where the puck is i skate to where the puck is going to be that's a great comment but i still don't know what to consider that's where the investor actually has some experience and they actually start writing down what could be some routine steps let's share those now as we kind of talk about what happens if the index what happens if the stock starts getting into that number two condition because if we start to see the stock hit above the 10-day moving average that means momentum you smell that if the stock starts getting above the 10 and the third day moving average you smell that that's maybe like number two or three condition when you start to get into a number two or three some ambassadors might call that historically a spring or summertime condition where there's stronger momentum and there could be stronger training now let's kind of i'm going to verbally speak to some of these things right now now number one as we talked about and i'm not going to go back if you want to know more about the first two steps go back and listen to what we said on tuesday step one okay just gonna kind of read them right off if you don't mind identify how bullish you are if the investor says james i want to kind of work my way back up to being more bullish identify what that percentage of what the how bullish percentage wise the investor wants to be we talked about that on tuesday number two remember that if the investor took off defensive positions like covered calls or protective puts or callers you got to remember when the investor exit those bearish hedges that actually increases how bullish the portfolio is which is great because that does not require entering a new position and that could actually inflate the portfolio quite a bit especially if you've actually done quite a few cover calls protected bullets and collars number three on a diagonal breakout okay i should say on this be watching for diagonal breakouts because if you have a situation now let's shift and now let's kind of talk about the application let's say the investor said james uh when do these diagonal breakouts happen well let's talk about this so if i were to say look at a stock maybe like devon energy okay this is what the chart looks like on the daily chart the first thing what you'll notice is the trend has been quite strong now if we were to go back to where we were just a couple of days ago what you're going to notice is if i were to go let's say from the right to the left we'd have to say that this longer to intermediate trend are still intact now if you're thinking well james i have no clue how you came up with these examples let me just give you a 30 second example of how you could find what i already found okay we're gonna go on the left-hand side because i don't want you to think that oh it's just james knows how to pull this up or barbara or the coach i want to show you what we did that's very complex and that's a joke you'll see that in just a sec if we pull up the s p 500 we already know that energies went up and if i pull up the s p 100 or the s p 500 and i just rank these by percentage [Music] the first one on the top of the list doesn't mean it's the best doesn't mean it's guaranteed to go up but it's definite so i just rank these by percentage gain i say could those be the stocks that have them could they also be the stocks that really have a trend so how many of you feel like you could probably do that you could pull up the s p 500 rank them by percentage and that could be an immediate way to actually pull up a watch list okay so so i just want you to know how i'm finding or i found the examples we're going to pull up here today so when we actually look at a stock like devon sometimes we can actually get the diagonal breakout when the stock has actually pulled back now in this chart i think if we were to ask people are you good with horizontal resistance or diagonal and i think a lot of people are way more used to horizontal that's more normal if there's already been an upward trend and they're probably more familiar with that but i need you if you say i don't look at anything i need you to bring up that skill level of being able to see a diagonal resistance breakdown because when you actually have a diagonal resistance breakout that means the stock is actually pulled back down to a longer term diagonal support and if that stock starts to break on a diagonal resistance now that could actually mean that the bears are losing control and those bowls are getting back in now if you take a look at this what you're going to notice is when we take it uh look draw a horizontal whether we draw a horizontal or diagonal the answer is it's getting above both now why are you bringing up these smaller dollar stocks well because i'm not going to make the assumption that everyone actually has a quarter of a million dollars half a million dollars let's say the investor said james on any given position i can invest 4 000 of capital in a position okay okay so let's kind of work with that okay let's say the investment said james i want to buy the stock okay i want to set a stop and a target so we're going to go right click on the ask price buy custom with oco bracket now annette says we need the shirt when you say diagonal okay i will share with you that uh i i have a number of shirts in the local mall at the fashion place mall they make shirts and you tell them what you want i do have a couple shirts that was actually uh brought on by two clients actually down in arizona where they attended a in-person event and each day they had a different thing i would talk about on a shirt and they were awesome now i tell the joke where they actually gave me a large i wear extra large and so the shirt was a little tighter on me and it stretched the candles and the trend little joke there should have seen it it was pretty funny now if you take a look at this what you're going to notice is the paper money account is going to buy the shares of the stock the second thing what it's going to do in this case is it's going to right click on that under like kind of that diagonal line and if we look at that it's really about 28 31.
now what i'm going to do is i'm going to take 2831 which is the diagonal support last 3 percent and what it's going to do is it's really going to bring up about 27.46 now the capital size that's going to be used here let's say the investor says james i don't have a quarter of a million dollars okay i'm trying to build the portfolio up over time now we've all been there okay uh if i take a look at this four thousand dollars worth of stock it's really going to be about 122 shares so what we have is a limit price it's saying that price or less get in it has to stop at 26 excuse me 27.46 dated gtc and if we were we don't have to but if the investor said james i want to set like a target on this what could be a target well when you get a stock where it has like a prior high and then it has maybe a low in or support well this is classic fibonacci okay now if you take a look at this we're going to use a little fibonacci and we're going to kind of look and see we're going to go from the top or the body of the candle down to the lowest point or the body of the candle so let me pause right there okay notice we're not drawing from wicks we're drawing from bodies where there were more touches we don't look at outliers we look at where there's the majority not the minority that's why this is drawing from the body to the body of the candles from the high and i say hi what do you mean about 31 down to the low about 24 okay now when i say high or low do not get mistaken for the intraday high or the intraday low i'm not saying that okay we're going body to body now if we do this we're now going to get the potential extension of where this stock might might try to go to well 161 would be that first fibonacci extension 3580 and the 200 extension would really in this case be that's not a fib again that's just kind of taking the width of from the zero to the hundred okay and then what it does is it just adds on that channel width and adds it to right there guys and gals that's not advanced that's like lesson number one of technical analysis you break out of a resistance where it was in a channel it might try to travel the same width of what it was just in so this width of the channel was seven dollars from 24 to 31 seven dollars at seven on top of 31 and that's where it gets the 38 change now if the investor said james i kind of have a longer term forecast on what that stock might do the investor might take that higher potential price target now that does not mean it's going to go there but if the investors say that james i'm going to type in a price of 38.50
or as they say down south 50 they're gonna we're gonna go ahead and actually say 38 and a half okay there it is trade number one a lower dollar stock shares of devin how do we know to look at devin okay well let's kind of backtrack for just a sec we saw that energies made a strong move we saw that energies also broke above the diagonal it broke above the horizontal and that sector is full of stocks we said what if i don't even have a watch list wonder if i just pull it off let's say a public list i could look at the s p 100 i can look at the 500 and one of the stocks actually look if you look at the first five stocks devon energy apache energy slb energy i need you to understand that it's not a secret of how we're finding the stocks we're just using the indexes okay and we're looking to see if those stocks actually maybe are up that might actually be an indication of momentum and trend especially if they're above a 10 30 moving average now are there any questions with what we just talked about now if i see if there's any questions i want to give a quick reminder that the stop is not valid until the stock is purchased second if the stock for example is purchased it's going to sell the stock if it goes at or be low 27.46 send the order and now that trade is gone okay now i so i want to kind of go back to so let's ask the question when we're looking at longer term intermediate which i think are like weeks to months when i start thinking let's say long term what does that mean to me i i start thinking like months to years so when we actually look at let's say this class weeks to months we're thinking something intermediate weeks to months or maybe even longer term if that was the case we would be looking at a 10 30 day moving average and that would really be i should say this the 10 week exponential moving average and the 30 week simple moving average so if we were to let's say go to this chart and let's look at example number two we're going to pull up like a stock and i'm just going to briefly mention when you look at let's say something like a pac uh apache okay what you're going to notice is this has been a stock that was going down and james you said that past tense that's true was past tense okay this has now been a stock that if we look on the week of 8 30 that broke out of the diagonal level resistance we also see that the price got above the 10 week moving average we're on a weekly chart and what you'll notice is the price doing getting to an inter week high and those moving averages are almost really almost crossing over now that does not guarantee that the stock has to go up okay it doesn't mean that but maybe the investor says james i think the price might try to go back up to those twin tops right there other 23 and a half okay i can't help myself okay but let's say the investor said i want to get in on maybe a stock like apache maybe just target a little eight ten percent move let's show that briefly and let's hit these questions right after okay we're gonna go buy custom stop now james you never actually no right click on the ask buy custom with the oco bracket now james i i don't normally see you do smaller dollar stocks i'm speaking to those individuals that say i don't have fifty thousand seventy five hundred hundred and a half two hundred thousand they might be looking for let's say smaller dollar stocks let's address it does that mean they can't try to ride a portion of that trend absolutely not 23 and a half let's go 2356 which is the line given so that way you can see exactly where i'm getting that and before i go to the question let's just address maybe where that potential support is if we were to let's say use that 30 period moving average 1881 as maybe a potential support area less three percent now by the way guys and gals boys and girls you do not have to set that target really at 23 and a half the investor that has a longer term focus they might set that at the extension of the 161 people money cat's going to go back it's going to actually push this to a dollar amount let's say the investment said james i can invest four thousand dollars that's it i i don't i don't can't buy a hundred shares typically four thousand dollars worth would be 185 shares we have a target and a stop now some people are really finicky about reward to risk reward to risk you got to be careful because it's kind of like it is it's a fabrication okay if you're speculating on what you think is the reward you don't know if it's going to go there and then the other part of that is you don't necessarily know if that 1824 is truly your risk so in theoretical terms yeah maybe it's helpful but it doesn't necessarily really answer the question as far as what's the probability to stop hitting the 23-56 versus what's the probability of actually hitting 1824. so if we looked at this trade and said james is the pay money account concerned that the the risk is more than the reward the answer is no it's not really concerned okay if the market is going up if the sector is going up it could maybe have a higher probability of going to 23 and a half and a lower probability potentially going 1824 therefore the the higher risk to the reward might not really be what you think it is and that's why i kind of use the word fabrication okay meaning you're just kind of making up numbers to make it look attractive now let's go for example to questions dylan asked is there a way we estimate a time horizon on reaching the target of the breakout well first off if i were to go back and let me kind of take a look at it maybe a stock and if you don't mind i'm going to send this trade through okay so if i were to go confirm and send remember the stop is not valid until a stock is purchased stock could be filled at a lower price than that if that's okay send the order now let me kind of take another trade now i don't know if we've talked about this i can't remember the older i get the less i remember but there's actually been a stock for example called royal caribbean i can't remember maybe there's some people talk about it and then for example there's another one called uh norwegian cruise lines and you know and then there's another one called ccl okay who knows i mean there's supposedly some people that board these ships and they go on vacation i mean i couldn't imagine taking a vacation but there's some people that actually do take vacation which would be wonderful now if we were to look at this chart in direct answer to dylan's question is there a way we estimate a time horizon on reaching the target of the breakdown so first off let's kind of back this chart up a little bit and what i want you to notice is if we were to look at this chart and kind of say here's the old resistance okay now if we take a look at this resistance resistance new potential support near there support support point resistance resistance resistance would you say right around that 26 area has been kind of like a pretty strong area as far as a ceiling and support over time would you say that that's like that 26 has been touched like more than one time i think so now and dylan's answer this question is is there kind of a way to kind of gauge how long it might take up to that 32 so first off the bigger the upside target is especially in a channel that that move might be be made sooner than later if it were to happen okay especially if there's not a whole lot of resistance that might stop it from going up the second thing is market conditions make a difference right if we had actually market conditions where they were bullish and the sector condition was bullish that could amp up the quickness potential if it were to go to resistance so i cannot tell you that uh hey uh i would first say if the stock breaks inside the old channel which it just did what is the likelihood of the stock going up to the top of the channel if someone said i think it's gonna take like a month because that's how long it took on the way down okay but i would just say to this if there's not a real level resistance in here that up move might be uh happen a lot quicker than you think especially if there's not any level of resistance if the investor was going to use an option trade and they said i'm going to give it 30 days since then you don't know for sure how long it's going to take maybe the investor says look i think it's going to take 30 days but maybe the investor says look i want to maybe give it a little bit more extra time now here's the thing the paper money account does not talk about buying long calls by itself okay no the investor could buy those loan calls but this paid money truck tries to get around that time decay component by not only buying a call but selling a put as well and then what that does is it really numbs the time decay or at least the majority of it now if the investor said look i think that up move could have really happened in 30 days let's give it another 30 days just in case we were wrong okay paper money account it's going to go to the november expiration it's buying the call step two it's selling the put now when we actually look at this on a one contract basis and we said what is the theta for this position let's take a peek why don't we when we look at this one long synthetic you're going to see that the delta is 99 it's like mimicking as if the investor owned 99 shares of stock and the theta is really 0.05 so there's really about five cents a day burning off the value of that option so it's not completely getting around time decay but it's at least trying to numb some of it the other way we could actually see that as far as that theta let's just kind of change that theta column let me actually verify that yeah it's it looks like it's about a half penny still okay so two cents over here paying collecting two cents it's about a half penny okay now the biggest extra thing if the investor said look i want to go along the synthetic try to numb some of that time decay let me do this well actually let's take this first triggers scq right click on that line and now what you're going to see it's going to create opposite order okay now it's going to set a target and a stop it's going to be conditional and it's conditional upon the stock so we're going to change that market data gtc so we're going to go right back up to where it says charts and say where's the target let's write it down 32 29. and if we were to say maybe where's
a level potential support we might even say that diagonal line maybe 24.85 okay 24.85 less three percent that's really going to get 2014. all right so here we go so
now we're going to go back we're going to go right back to this little star here and james this is the third trade that you've shown where they're lower dollar stocks that's right because some investors might not be trading in a bigger dollar account they might just be getting started out they might say how do i actually kind of practice in paper money riding some of these trends shorter term or longer term 3229 is the tar target take the next line a row mark less or equal to and we're going to type in a price of 2410. that's just 3 below support now when we type those numbers in critical that these numbers that are typed in here are virtually read and you read them mark price and security is great or equal to 32.29 yeah that looks good mark price securities less or equal to 24.10 and it's saying that if the stock were to get to those prices it's going to sell the options at their what market prices okay save the order so this is really if you take a look at this in like a this is like a substitute for stock buying it's emulating the profit loss diagram as definitely investor on the stock but they don't they have a right in obligation at the 25 strike price but they're not outlaying the same amount of capital understand that when the investor buys the long call and sells the put there is two commissions hence 65 cents times two for the dollar thirty if that's okay fire now if the paid money account fires that trade off now it's going to try to make this upside potential appreciate just we don't know going to have to see if that fills in that channel now the other question is how do i minimize custom expression subscription limit exceeded error in the watch list now listen to this very important so if i were to pull up so when i do this what you're going to notice is they load fine i don't have like a full set here okay off scripts but they load fine but when i pull up like a list of let's say nasdaq 100 i get this custom expression limit there's only a certain number of calculations this can do so what we have talked about historically is really having a list of less than 50 stocks how many a list less than 50.
now what the paper money account does is what it does and let me kind of show you this and i did this earlier so i want to show you that this can work if i actually pull up what i actually do kind of show this list is on my twitter page i actually broke up the nasik 100 in half i put 50 shares in one i just mainly typed them in and then save the list and if you say i like that list then stay tuned i'll post it right after this but if you look at this what it does is you can have more script column which is kind of really another way to say search it's each column represents a search of something okay or a scan now what you're going to notice is they load fine why do they load fine well because they're a list of less than 50 stocks and what you'll notice is when i went to the second list of navigator they load fine okay so what that's my joe that's what i would say is make a list of where it's less than 50 stocks this list is looking at the nasdaq and the list below that is the s p 100 and they load fine okay so right there there you go all right now other thing is cola says you you may you need more memory and a fast computer yeah i mean look if you're running a computer from 15 years ago okay it might be better than say i'm gonna maybe try to get something where the processing speed is a little faster that would help but i would still say to to the point is that i would still say a list of 50 stocks or less is going to probably help probably the most the other question is uh is what are your percent gain or loss on your weekly investment are you asking me that directly jax jack what in your percent gain or loss on your weekly investments now we have not ever ran we keep track of the balance but we have never broken down by what is uh what are your percent gain or loss on your weekly investments now i don't know if you're asking if the investor were to hold the position let's say for a week what the gainer loss would be i don't know exactly what you're asking there if you're talking about buying on monday or selling on friday uh if that's what you're asking well if you're asking that question then you're really kind of talking about something that's not probably trading the longer term trend or intermediate you're kind of really talking about almost a day trader to swing trader which by the way that's not bad and this kind of plays into orlando's comment okay now this paid money account it doesn't just do it doesn't do day trading okay and i don't teach any classes really on swing trading so the answer is undefined i can't tell you what does it make on a weekly perspective we track the performance uh really over a year-to-date perspective okay now be something to kind of track that okay now if you were talking about uh trading let's say uh maybe if someone was trading a real account and they said i do day trading and swing trading that investor would probably have a better representation of actually trading shorter term like that okay now the biggest actually thing is uh let's kind of talk about this question too since we've kind of brought up is the maybe the market conducive for trading the trend well let's kind of talk about this okay so here's the s p okay we know that the market was going up very steeply and the question is really from orlando is really and this kind of also i want to wrap up the other question is uh the investor asked the question regarding is maybe some of the thing we need to the question they had was maybe uh what are some of the things we need to maybe be made aware of and know sometimes the things we don't know can hurt us the most now i want to kind of go back to that checklist we talked about that sample routine now in step number three we actually talked about looking for stocks that were actually having diagonal breakouts okay we talked about on tuesday the importance of a buy stop and we talked about the example of a stock like an american express and we said when this stock is down and if that stock is diverging okay they'll maybe there's in some increasing likelihood the stock might break out of resistance and we talked about if that stock were to break out of resistance by one or two percent the paper money account might add or enter in the position that kind of broke above then it went doink again and so these diagonal breakouts with using buy stops are very appropriate so the person who asked me that question tell me some things i don't know i don't really like that i don't think it's necessarily the things that you don't know what concerns me is when the investor doesn't have a routine and they don't run through a systematic checklist and they're actually keep that air they're adhering to principles and practice over time okay it's not always about finding about things you don't know it's the things that you already know that you're not practicing that's what's that's what would be more concerning about than me telling you about something else about did you know about xyz type of stock i don't think that's very helpful go back to the routine look at the principles and the practices okay now let's talk about this let's take a look at two more examples the step four here when we actually start to see stocks getting above the 1038 moving average or one of the other is avoid panic on a down day so what that really means is when the stock goes up it might have a strong one or two days strong and then it gets a red candle that red candle might be the pause day that red candle could be the setup of a new potential kohl okay and then number five maybe consider selling puts now why would an investor consider selling foots well remember if you see the stocks starting to get above their 10 30 day moving average that must mean that that volatility is maybe getting whipped and if that volatility is dropping down then that means that the stock prices are going up through 10 up through the 30 and maybe breaking resistance now let's take two trade examples here so those are the five steps that the investor is thinking through their mind are they going through a checklist now does the investor have to do the exact same ones no but in packing order those might be some of the ones that the investor could be thinking about let's take two trades and let's bring these up so first off i want to look at a stock for example like marion okay we've actually seen some very unusual price action here and if you take a look at the stock like marriott no matter and i said this other day when you take a game experience if you've been talking about going on vacation you've been trying to get a hotel trying to get a flight it ain't cheap it's hard to actually find hotels at a fair price now if you take a look at also booking holdings you'll notice that chart hasn't been going down and it wasn't even going down when the market was going down so there's something going on here we got cruise lines okay royal caribbean ccl norwegian cruise lines marriott booking holdings those are all in the same space of consumer and leisure in the discretionary space now if we were to look at this stock one of the investors said well james i don't want i want to kind of go more with step number five stemmer number five was maybe considering selling those pets and maybe considering if the stock were to run off and flag back and bounce maybe considering them rolling those the investments probably a better chance to do that and by the way if you look at this the first resistance already ran up through the resistance the first one pulled back and then boink bounced right on that tent period moving out let's actually do this as our example let's say the investor decides they want to sell a put and the selling opportunity is a stock buying strategy and they're saying where they're willing to buy the stock and let's say the investor says they want to go out a little bit further out in time and they want to sell the put at a strike price with a certain delta associated with it okay well let's say the investment says 30 and 40. but what what what strike would that be would be the 145. if the investor actually sells this click on 515 what you're going to notice is it'll say single cell minus one and that's going to show that it's selling the put at the 145. now remember did we already talk about selling puts short put verticals long call verticals on tuesday did we say that those might be some strategies that the investor might consider in a number one condition did we say that why did we say that on tuesday we said that on tuesday because it's not where the volatility is it's where it could be going and when we saw that volatility was high a lot of times you actually saw that volatility drop now is that a guarantee absolutely not volatility can go up higher okay but sometimes we've seen a quick reversion and i think this one so far has kind of pulled it's been very similar if we go to let's say 520 the mid price if the investor said i'm gonna sell one put which is the obligation to buy the stock at the stride price from now until expiration and at expiration okay the premium there is 520 the max loss shown there is if the stock were to go to zero there's some ways the investor can consider in reducing that if they wanted that the buying power effect for the margin account is 24.88 and the cost of the trade is 65 cents so in summation of what we talked about here today we talked about the example of dvn we also talked about the example of apache okay we also brought up the example of norwegian cruise lines and also the example in this case of marriott as well now the biggest thing i want you to remember here is it's not about finding about all these 95 different things that you don't know i would actually turn that around and then say most of the time it's it's not necessarily what investors don't know it's what they know that they're not practicing it's the principles that are timeless it's the practices that are timely that's where the investor is always searching for other things that is actually stopping them from practicing what they already know and the longer they don't practice what they already know the more they kind of never just put the rubber to the pavement and actually practice so i would turn that question around a little bit okay now i'm out of my time here today because i'm gonna send the order let's go back so remember in the last couple weeks i've actually talked about trend condition four five on one talk about one on tuesday we just talked about two if you had a routine you have to just understand that you could actually get more confidence that's very important remember with what we talked about here today we demonstrated the function of the platform thank you so much for the comments in your uh participation here today with
2021-09-26 17:45
