Swing Trading Days to Weeks | 5-28-19
Well. Hello there and good, morning traders this, is Mike Follette speaking. I'm filling. Filling, in for the very patriotic, John McNichol, as he, is away for. Duty, and I, think he's actually gonna be jumping out of airplanes. A. Jump. Over the beaches of Normandy, I'm, kind of commemorating, d-day. Anyhow John is out of the office and so obviously. That's a good reason to excuse, him my, name is Mike Follette though and I'll be filling in for him today in. Swing trading days to weeks hope you had a terrific weekend, and just. To introduce our topic today, if. You've ever thought to yourself hey, I'd like to have, a better understanding, of some of the tools that are available on thinkorswim, to. Help me with my exits. For example, if I want to get out if the stock goes up or if, the stock goes down and. Not. Have to, sell orders out there hanging or an, extra sell or out there hanging just in case the stock goes up first and I you know I want to have that other order. Cancelled we'll stick around because we're going to talk about those types of orders and how how. Swing traders can benefit from them plus, many other things so, as we get started just remember, this, class is for educational. Purposes and that options, are, not suitable for all investors there, are special risks to, trading, options, that, may expose an investor, to potentially, rapid, and substantial. Losses spread. Straddles, and other multi like strategies, can entail those, those. Additional, transaction, costs, so. Just be aware of the impact of returns with those trades. Involving minimum. Profit benefit, can be more significantly, impacted, by those transactions. Now, in order to demonstrate the functionality, the platform, when you use actual, symbols, however, any. Indecision you make on investing, in your self-directed at portfolio is solely responsibility. There's quick look on the right-hand side of the page how, those transaction. Costs, might appear in your portfolio. And. Paper. Money again, is for educational, purposes only sorry. I cracked, a red drin because someone said good morning John it's not John it's, like.
Today. Past, performance, of any security does not guarantee future results or success all. Investing, involves risk including the risk of loss and this. Webcast, does use technical analysis, but, there certainly are, other approaches, like fundamental, analysis, and that can assert, different views, probability. Analysis, is looking, at. A, model, basically, telling us what probabilities, could be in the future but it's not guaranteed back. Testing is look at the past looking. At the past and that's hypothetical, and there's no guarantee no. Soliciting, no recording, no taking pictures no part of this presentation should be broadcast, without the written consent of TD Ameritrade, also, there's a quick look at the greeks from delta theta, and all, those things suggest how, an options, price should change with changes, in price. Time and implied. Volatility. And. So. I've. Got those taken care of all. Those disclosure, slides I'll tell you about let's flip over here to think. Or swim in, a paper money account and just, see what's kind of going on in the markets I've had this extended. Weekend, and by the way I hope your weekend was fabulous I know I had a good weekend, we've got a little family tradition. Where every Sunday, we go. Around and we and we decorate, graves of, you. Know parents, and grandparents, and it's. A great opportunity, to get together as family. But. I certainly hope you had a terrific Memorial. Weekend as well and, certainly. Appreciate. Those who've gone before you have sacrificed. Alright, but let's take a look at these markets, as we're coming back from. Memorial. Weekend, looks, like the S&P 500, is up slightly. The, S&P 500 is, right. Now trading at 28, 36. And could. Could, the S&P, 500, by the way I'm looking at /es. Could. Just, evaluating. The S&P 500 speak. Speak. Anything to a swing trader right what could watching, just the overall markets, provide. For, a swing. Trader looking, at for example the CS well. Swing, traders, right, just at their core they have, a tendency, like to do certain things when there's momentum. Behind. Them, writer there's perceived. Momentum, behind them for example swing. Traders if they're, bullish, they, love the idea of markets, potentially, being in a bullish, market write-up. Trending market, and markets. May be bouncing, off of a level of support. That's. If they're bullish if they're bearish, you know they kind of like the idea of down training, markets, with.
Maybe, The market at a level of resistance, so, kind of a confluence, of things coming, together right. Because you. Know you've, probably heard the saying I'm sure you have that, are rising tide, or of, dropping, tide right floats, or sinks all boats swing. Traders, do like the idea of having the momentum, behind them and certainly. The momentum, of the market, can be a benefit, because you, know if you notice there's a pretty high correlation. Between what, individual. Stocks do and what. And. What broad, markets, are doing right there's, a pretty strong influence, from the just, large market itself broad, market itself and how you, know individual, stocks might perform overall, pretty strong correlation, so, you'll see swing traders, potentially. Evaluate, this S&P, 500. Just to see where. The momentum might be there where, we are relative to support, and resistance, and what may be some significant, price levels, are to, keep their eye on so. That they could make potentially, a better judgment, on how they're going to swing trade and so, what I want to do is just kind of go through maybe, a little bit of a process with you, you. Know swing trading traders. Like to look at trends, then, they like to look at support, support. And resistance levels then they like to look at maybe some sort of a confirming. Indication. Validating. Maybe bounces. Either. Up or down and, so, let's take a look at the overall trend, of the market for a second, and. Especially you probably noticed, when we, started. Up this class that, the title of the class is swing trading days, two, weeks now. When you're talking about swing trading days two weeks you know that might suggest a, potential, you. Know kind of idea for how long the trader might be invested, in a trade right, affecting to hold maybe, for days to weeks now. That's a swing within potentially. A larger. Trend, right, just um you know maybe back it up just a little bit here if you, see something, that's going like this. That. Would be an uptrend. Right, setting, low prices, that are going higher, and high, prices that are going higher as well so higher highs and higher lows, swings. Would, be kind of the distance, between these, low and these high spots, right. Kind. Of those bounces, from, support up to resistance, or those bounces, down from resistance. To support, those are sort of the swings there now, if somebody were looking, at swings. You, know anywhere from days to, weeks, in, terms of their investment then. What, they're looking at usually, are these periods where the markets either rallying, four days two weeks or selling off four days two weeks within. That, larger, trend, that exists, so, now. What's. The direction of that larger, trend because if a rising, tide floats all boats if. That, larger, trend is up. They might anticipate there, could be better momentum. On the, swing up and they might trade in the direction of that trend right expecting, maybe days two weeks worth of hold and if, the trend is going, sideways, for, example, and sometimes that'll happen you're gonna see it a lot more in these markets, because, that's, sort of what the broad market is doing here right, but you'll see days two weeks worth of moves within, a larger, sideways, trend now, if a rising, tide floats all boats that's. Just kind of a sideways, type of trend there so. Traders, you know might look to trade that either up or down depending, upon whether or not we're at support, or resistance right. Certainly a downtrend. Lower. Highs lower lows and. When you're looking at something like that a swing, trader might look to be bearish, in that sort of environment look. Four days two weeks worth of swings you, know kind of looking for the bounces, from resistance, on the way down so how, do we apply that to, the broad market, okay, I just wanted to step back there and talk about trends and kind, of. Two more points of inflection potentially. You, know points is where you might see reversals, and, evaluate. That and apply that to these broad markets, so what would you say the overall trend, is here and let's, call it the larger, trend, maybe the intermediate, trend for the S&P 500. Well. It kind of looks like that, S&P. 500. Trend is let. Me even zoom out just a little bit more. That. S&P 500. Trend generally, speaking, has, been setting higher highs and higher lows but. As of late we've kind, of gotten into a pattern, where our our highs and lows have started to equalize, a bit, here and in fact there might be even a price pattern, that. Some traders are watching called the Head & Shoulders in there right, where just, to describe that head and shoulders where, you've got this head up here, and these, shoulders, in these, areas, here, and then, possibly, a neckline.
Down Here at the support level of around 2,800, but, it's you know certainly we're dealing with the market that's flattened, out a bit and so what you're gonna see potentially. Is a lot more stocks, that. Have flattened, out as well and in. Terms of what's in store for these markets well right now they're getting pretty. Close to a level of support some. Traders might expect, a short, term maybe, days two weeks worth of move back. To the upside, maybe. Closer to 2,900. If the market stays within that channel but. If we break down below. 2,800. Well, who knows the, trader at that point might measure the distance, between the head up here, and the, shoulders down here and anticipate. The market could go lower. About. That distance and that's about a hundred fifty points, head. And shoulders they're just, going from the high of about 29, 60, down, to where the neckline is of about 2,800. You, know that's better than 150. Points, below. 2,800. And that might send the market, down to about 26. 50, ish something. Like that if the market gets down or. If the market is able to break 2800, but, that's all thinking ahead basically, I mean basically we just take a look at current conditions. The. S&P has gotten. Closer to a level of support and it, looks like perhaps it's, starting, to bounce. Higher, here, and, let me just zoom in on that maybe you can see that just a little bit better, SP, getting closer to a level of support right at about 2,800, potentially. Bouncing, higher here now. When. You see a market, right potentially. Bouncing, one way or the other oftentimes. You'll see swing, traders, potentially. Bring in, some. Sort of an indicator, to, validate, the swing right or to validate what might actually be happening one. Of those indicators, that they might use is. Potentially. A MACD, indicator so. I'm going to add just a MACD indicator I'm, sure John is talk to you about this quite a bit we'll, just go with the MACD histogram the. Default, MACD. Histogram is. 12. 26. 9 and that's, fine, right using that 12 26, 9 some. Traders may shorten that up a little bit if they want a bit more of an active, signal you know something that's a little bit more responsive. To changes. In the market in. Fact. One. Of, you. Know one of the ways to kind of deal with that some traders might actually cut those numbers maybe in half you, know on the histogram but we're good just go and leave it the way it is right there but. What I wanted to show you here is that if you notice the MACD, histogram is. Starting, to go. Higher again, right, it went lower for a couple of days there as the market was pulling back but now we've got that MACD, the Storting starting, to actually, work, its way higher we're, dealing, with a day here where we've got another. Slightly higher low there on the MACD, so, MACD. Is actually suggesting, a little bit of bullishness we've. Got an S&P 500. That's potentially, closer to support, being about 2800. And looking. At that last kind. Of high point up here that's, pretty close to, 2900, right, so within that range that's there you, know some swing traders might anticipate the market could work its way up toward, that, 2900. Level, but if we break Bo support. Well, those same swing, traders especially if they watch for those price patterns, they, might expect to move down but, we've got these sideways, markets, right, that's kind of what we're dealing with that. Are at potentially. Some shorter, term levels. Of support and they're starting to bounce higher, and, we've, got the MACD, actually, working higher as well so the short term days the weeks and I don't know where the markets going right, in. In terms of you, know absolute, knowledge right, nobody knows, that however. Just. In terms of trend analysis. And support and resistance, we, are fairly sideways. And we. Are, starting to bounce off a potentially. Support here at 2,800, and there, could be some space to get back up to 29, so, keep your eye on those broad markets, you might see a bunch, of stocks out there that are similar to, these broad, markets. Now, in addition to that, right. Just looking at these broad markets and I get this question, asked to me all the time right. Mike if I'm, considering. Being a swing trader, you. Know maybe buying a support, selling, it resistance, looking to benefit, from those swings well where. Do I look, for examples. Right or where do I find stocks that might be reasonable. For swing, trading I don't, know if you've ever asked, your self, that question, but where do I find you know good stocks well. You know it. Might be reasonable for traders. To just find a few liquid. Stocks that they're comfortable with maybe, they're comfortable, with the fundamentals. On those companies and just. Keep watching those names, and just, wait for kind. Of the trade to come you. Know their way right. That way they know they've got a stock that they're comfortable with and it's already, a stock that they're you know they're just familiar, with the way it tends to move and, then they wait patiently, kind.
Of Like you, know a cat. In the weeds waiting for a mouse or whatever you, know there's actually a psychological. Mindset, going on they're kind of the hunter mindset, so to speak, but. Waiting for the setup to come come, their way just watching a select few of stocks but, if somebody wants you, know it's looking for maybe more exact temples and they don't have necessarily a select few stocks on their mind they might, look for stocks that have a lot of liquidity and, maybe, some volatility, behind, them right a lot of liquidity and some volatility now what do I mean by liquidity. I mean, they're very actively, traded, and, what do I mean by volatility. I mean stocks, that have a tendency to make moves, right now where do you go to. Look for those types of companies well. You know one, of the places to start and I'm not making a recommendation that it's only these companies, that you trade but. You know looking at the broad indexes. Is one, way to start for example if, we. Go to I have, an existing watchlist over here called the corners, if we, just jumped over to a public. Watchlist and let's just go with for example the. Nasdaq. 100, right. Could switch a watchlist, over to just you know NASDAQ, stocks, so. These are big cap companies, that. Are part of the larger index and the. Nasdaq, can have some volatility, to it right technology. Names and so, these are the underlying components, creating. Some of that volatility, in, that. Nasdaq, 100 so, this could be one way for, an investor, to start if, they just were looking somewhere to get going, you know look at stocks within the Nasdaq, 100, now. Where do you start from there heck they could look for stocks that maybe are moving. The most or moving the least you know stocks that are down the most or stocks that are up the most kind, of depending upon where, they, want to start their heck think it even alphabetize. This thing and, just start going through stocks, based. On alphabetical. Order and so. Let's. Just try that for a second right let's start with you. Know I'm just going to the first. Stock. Listed, here in the Nasdaq 100, alphabetize. The symbol is a al. All right, now. If we're looking at this and. We're. If we're trying to evaluate or, trying to gain a swing, traders, mindset, just. In terms of priorities. Many. Swing traders, will think first, what's. The overall trend right, is it up down or sideways because, you, know they might be thinking they want to trade they're the swing. In the direction of that trend so, what would you say about this is up down or sideways sometimes. It's difficult to tell well how do you how you identify, trends, though you, know one way to do that is to just look for highs, and lows see if you can identify support, and resistance, levels and start drawing lines now. I'm going to draw some lines here just in some general areas how, do you draw lines you know how do you identify levels. Of support and resistance look. For touch points, right, so I'm going to see if I can find some areas where the market has touched a number, of times and just draw a horizontal line, connecting. Those touch points and. If, you notice I found a point here where we've got one two. You. Know there's a touch there. Three. Four. You. Know just kind of touch points as areas, where the stock is found, at a level where it's had a tendency to bounce that's, above it bouncing, and stay above it or, if it's below that area bounce and stay below it so, just looking at this there might be some, resistance. If the stock rallies, here right, around what level maybe. 35. Ish somewhere, between 34. And 35 ish now. Also. Look. For levels, of support, right, in it you know support, and resistance, can actually be the same number depending upon whether the stock is above it or below it but. See if we can find levels, where the, stock has gone down before, and maybe, bounced, up from, those levels, and draw you, know align their connecting, just dots right, I have, a, grandson. And. Just. Coming up this week he's gonna be two years old he's, a, really. Cute little dude but, he's getting into, you, know just basic, drawings, right, just apply some basic drawings, here if. I can get this started. See. If you can connect, some dots finding. Some highs and lows. Now. It looks like here, on a, al, we. Do have some, lows, here now I'm going all the way back in time and some traders might actually say Mike your support level is is too, low there right, and that's one of the things you draw your lines connecting, bottoms, or draw your lines connecting. You. Know bodies but, I like to think in terms of levels of areas, anyway, right, in this area of around 29, to 30 dollars a share, you, know we've got potentially. Some support, just based on the fact that we've, got this touch point all the way back here, in January.
That The stock seemed to bounce up from and rally from there and also. You. Know and this is interesting because. Potentially. You, know depending on the trader they could say maybe, it's actually broken through, a level, of support but we've got a zone of support, in this area over here notice. This as well we've got a MACD, indicator that's. Gotten very very low and, so you. Know some. Swing traders might be looking at a stock like this with. A low MACD, and potentially. At or, near support. As you. Know a stock - you, know evaluate, I'm not recommending this right, but a stock that might be near, a level. Where potentially. We could see some sort of a bounce it's, not bouncing, today but. Identify. Support. And resistance, you know and going back to the idea of trend analysis, right, what would you say the overall trend is on this kind, of looks like it's pretty sideways, right. Bouncing. Between you. Know these, levels, of right around mid-30s, down. Here - high. 20s, right. In that range but it does look pretty you. Know sideways. So, if somebody is evaluating. That sideways, trend for swings they. Might be looking at getting bullish, near, support, and bearish. Near, resistance, right now we're pretty close to potentially. A level of support but there's not a lot of confirmation. Coming through there next. One in the list Apple. Right. Um so, let's, see if we can identify some trend, analysis. On Apple, now. One. Thing we've seen going, on with Apple here is. Has. Had kind of an uptrend, going. On you, know as most of the market dead through the first part of the year where we were setting those higher highs and those, higher, but. As of late it looks like the stock is kind of worked its way into this pattern of setting. Some lower highs and lower lows. Okay. So what, are the swings within, these and. I don't know where that line just went but we'll try it again but. Where are these swings, within, these highs and lows well. They're, these bounces. You know where we move up off support, up to resistance, down from resistance back down to support, and it, looks like Apple. Potentially. Is in, a downtrend, right now on an intermediate, term interestingly. Enough, as well it did sort, of break through. Possibly. A level of support from the longer term right. Around this level of 180, or so. You. Know some traders might be looking, for Apple. To actually make them move lower, here. So. Hopefully you. Know this kind, of makes sense and there is some discretion, that goes into this but, identified, the larger trend that's, happening right it. Generally, the larger trend is going to be defined as something that's been, going on for weeks to months if. You notice here for the last few weeks not, quite, a month yet Apple. Has been down trending. Right. And then, look for swings, somewhere, in that channel, days. Two weeks long right, within that within. That intermediate, Channel that's that's, making its move it's interesting though that with Apple, it does look like potentially. It's breaking, through a larger. Level of support, at about 180, within. That downtrend. Now. Here's my question though when when, does an investor, you know get in once. They've identified potentially. Their setup well, that's where they might use the MACD, or some sort of an indicator, to help them identify when. To get in you, know for example if. The MACD is high and starting to move down they, might decide to get in then, a on a bearish, trade once that MACD starts to drop where, if the MACD is low and starting to increase, they might get into a bullish, trade once that MACD starts to go up right, but it looks like Apple, is in sort, of a downtrend, here, just, did breakthrough, possibly. A level, of support so. Some, traders might be looking at that old support, to become a level of resistance and that down. Trend, that's kind of been forming, here in the last few, weeks to, potentially, evolve and send the stock lower again. But. That's in direct conflict, right now with. The MACD, right, the MACD is actually, saying Ah this stock should be going higher and so. You, know there's there's oftentimes, conflicting, signals that some sometimes investors, will run into as well all, right let, me jump over to another name here I was just kind of going through the Nasdaq. List. A little bit earlier and a. Stock that's sort of been in play, many investors, have been watching, this one a lot of volatility, to it but it's right off the Nasdaq, as well well. Let's gonna go through some analysis, on on, this, one together and for, right now I'm. Actually getting going to get, rid of this MACD, indicator because, that might actually draw, some. Confusion, but hey we use the MACD use an oscillator, if somebody needs, maybe. Some further you. Know evidence of of. What's going on here but just looking at the price action here, how. Would we define the, trend on this stock and generally. A swing, trader days the weeks they're.
Going To be looking at an intermediate, trend. It's trying to draw some trend lines here just connecting, high, and low points and, it does kind of look like we've got one maybe, two three, four. Kind, of bounces, that have been going higher. Now. Also this. Stock has, sort. Of gotten into a sideways, channel or it wasn't a sideways, sort. Of pattern. Where it kind. Of got trapped below about that seventy-five, number, but, then last week it broke out above, 75, and now. It's come back down and it looks like it might actually be bouncing. Up above, or, away. From 75, here, and. It actually didn't get all the way down to that 75, number but you get the idea here so, we've got a stock that looks like it is setting, higher. Highs and, higher lows. Right and it. Does have that look where there are some of those swings, that. Tend to happen within. This. Trend. And. We just had a swing higher. On. The heels of that we've, seen a swing down and that, swing down has gotten the stock back closer, to potentially. A level, of support, so. A swing trader might look at something like that an uptrending, stock at support. After a pullback for. A bullish. Type of trade and just eight not recommending, this stock but, just for illustrative, purposes let's. Talk about t-mobile, and some. Of the ways one. Of the things I wanted to do here I mentioned, this earlier in the class I wanted, to talk about how to use thinkorswim. To. Identify. Or to possibly. Assist, with trading, some. Of the setups, that a swing trader might look for maybe bounces, off support. You. Know and and actually. Using, this having. Active, orders to, do some of the the heavy lifting for the. Trader just so that I don't have to be watching this thing the whole time let's. Say let's. Say someone we're expecting, this stock to, maybe have a swing here and get back up to you. Know this high the. High there is called the IR is right at 80 93. I'll, just say it's just, kind of rounding numbers here, let's, say the high is 80 dollars a share, okay. And so, swing traders, they. Really need to think in terms of, not just entry. On this trade but exits, I'm jumping over to exits right now, generally. A swing trader is gonna have to exit, parameters, in mind where. Am I going to get out if, I have to take a loss and where, do I get out to take a profit a swing. Trader would look for potentially. An. Old level, of resistance, right, previous, highs or. Maybe, matching. A previous. Move higher that the stock has had and get, out if the stock reaches, one of those target, numbers now, again, if someone we're looking at maybe, a target, of the previous, swing high, that. Would be right around, $80. Or the target here so that's possibly. An, exit, now, on the other hand if that swing trader we're looking at an exit, to. Take a loss, they. Might actually use, the pivot wherever they think the stock is bouncing, up from and. Just say if the stock breaks down below, possibly. That last low there that, could be the exit on the downside, now, the last low I'm just gonna move my pointer, and, get to that last low point, right that level where the market started to pivot and head higher there.
Looks. Like the low price and there was about 75. 25, some. Treaters, some, swing traders will actually say if. The stock goes 20, cents, or so below that last, low so, that would be about 70. 70, dollars, excuse, me 75, dollars, and five, cents they, might get out if we break below that, level there so kind of general ideas here exit. For target. Or for a profit, and exit. To take a loss, because, they, want to fail fast and get out of this trade if it works against, them and again there's, various techniques, that, a trader can use right, I'm just using some, of the basic, setup parameters and, I think John McNichol talks a lot about these as well you, know targeting, levels of resistance, and getting, out pretty. Quickly if a, level of support is breached the level of support, possibly. Meaning that last swing. Lower right there so, if trader, were using those numbers right we'll say target 80. Exit. Seventy. Five. Dollars and five cents how, could they how could they trade that with some. Of these automated. Triggering, type of orders to help them get out well. Let me just go through an example with you here. And. We'll do this on the stock and then I'll show you an example if somebody wanted to use maybe a call option instead. So. Let's. Create a buy order here so we've got an order we'll just go with a hundred shares of stock so buy the stock and, then. I let's, say we wanted to have this entry, order trigger. Maybe, our exiting. Orders for right did in and if that entry, order actually, fills. Get. Out using these triggered, orders. Basically, so, the first thing I want to use here is first, triggers. Okay, and that's going to be found under. Advanced. Order here okay. So we'll go with first triggers, but, I've got first trigger sequence, in this particular, example I'm, not necessarily going to use first trigger sequence, what. I'm going to go with here is first, triggers, oh see. Oh, okay. Now, with this first triggers, Oh see oh we've got the first and that's going to be the buy order, what.
We're Gonna do, now is right-click. On that buy order and create, a couple of opposite. Orders here. Create. Opposite. Order oops. And I just click the wrong things let me switch this over okay, to sell, orders here. So. When we're dealing with these, sell orders basically, the logic here is the. The, original buy order, that's, the first if that fills that's, going to trigger these. Two sell orders to be active, but these active, sell orders are going to be one cancels, the other that's, what Osio stands, for so. If one of these sell orders fill the. Other one that doesn't get filled will automatically, get cancelled that's the logic right now. If someone is using stock, they. Might want to have a limit, as a target, we'll just call it. $80. To, the up side a limit. Is a target, on the up side and then on the down side this would not be a, limit, this, would actually be a stop-loss we'll just call that 75. Point. Zero, five and we'll, make that. GTC. On both of these okay so a couple of things to keep. In mind and, I, just didn't. Hit that as a stop there we go stop-loss. Market. You. Know make that GTC. So if you can follow the logic here the, first triggers, to, exit, orders the one being a limit, at a higher price so if we go up to eighty get out and. Another. One that's going to be the lost taking, exit that's using. A stock applause. Which, is nothing more than a trigger just so you know stop losses are not guarantees, they're. Nothing more than basically triggers, if the, stock gets down to 75, oh five trigger. A market, order to get out at the next available price now, that next available price might. Not be seventy five oh five it might be something very far, away much, lower than seventy five oh five so, just be away stops, our best efforts, there no guarantee. You. Know of where you're going to get out and. There's pros and cons certainly, for using those stop losses but, if someone did this, right. They, could just, in one fell swoop have, in order to get in and if that fills have. These two orders, to get out just kind of set up if the stock goes up to, a number exit, if the stock goes down to. Their lost number get out so it's almost like if you've, ever used cruise, control. You. Know in your car you're. On a long, road trip or whatever right. You know your distance the. Your heading and. You're. Just tired of you know micromanaging. The pedal the gas pedal, all the time what. You can do is kind of put it on cruise control, this. Is sort of the same idea as. Using. A cruise, control, right not saying it's exactly the same thing but sort of the same idea if we get in go, ahead and have these automated. Orders to get out make those GTC. Right. And get out at our target and our stop loss numbers, right, and that would be one way to actually trade. This now, I'm gonna go ahead and just hit confirm and send on this so that you can see the description of the order now. The order description. You can see here by, one hundred of the, stock and right now our limit is at seventy 704, so that's only gonna fill if the stock trades at seventy seven oh four or lower, and then. If that fills, right. Then. Go ahead and trigger, you, can see here it's triggered, by number, one, trigger. These, two sell, orders, which. Are Oh see, oh ok. So sell, these at. One hundred or, excuse excuse, me sell one hundred if we go up to 80, or. If we go down to 75. Oh five those, are tied to one another and they're both triggered, by that first order there now remember, there's going to be commission involved, here there's, just a quick look at those Commission levels, you. Know for both entry. And exit, and we could just hit confirm, and send and. Have. That order kind, of work in there, okay. So now that's. One way to trade this you know if somebody is just using the individual, stock there. Is a little bit of a shortcut as well, if. Someone for example wanted, to buy, this thing and put in one of those order types okay. They could just. Right click on the ask price, right, so just right, click on the ask rather, than left click right click there and then in the menu choose buy. Custom. Okay, by custom, and in, that custom, field they could go with osio. Bracket. And if, you notice right as, long as you know that right click remember right clicks they do a lot of things for you here on thinkorswim but. If you can remember that right click on the, ask that's. Gonna create the, order if you choose buy with. An O Co that'll, create an order kind of by default setup, for you and if, we seen this before. First. Triggers, OC. Oh yes. We have seen that before we, created, that by ourselves right we created that in that last order type but, now this is one way to just kind of bring up that template, for you and and. Have these things all kind of you. Know manually, or automatically. Input but, you do need to have your. Parameters. Actually set up here as well you've, got to make sure you.
Set Your limits, and your. Stop losses so, for example, if somebody had a limit, at 80 that's gonna be the higher price and a. Stop loss down here at, 7500. Five seventy five spot, zero five boom. They, can set those up make. Those sell orders GT see if that's the way they wanted to play it go, ahead and hit confirm, and send and where. Have we seen this before oh this, is just like that last trade, right by a hundred. And then sell them at 80. Or 76. Side 12 they're set. Yep. Didn't. I set that I'm, an idiot I didn't set the sell stop that's all right we'll just leave that sell stop in there I was just talking about it apparently, all right, but yeah make sure you get your order, set appropriately, don't be a fool like me and just forget you know talk about GTC, rather than setting your stop-loss so remember to set your stops okay. So there's just a couple of examples now also, it's. Pretty common, you'll get individuals. Who like the idea of the swing trading, but. They. Like to use options. You, know something they can get leverage potentially. So, for example let's just take a look at I'm going to open options, that, have some time before they expire here, but, let's just go with these 52 day, contracts. Here out, here in July. Okay. But if somebody bought a call, for example for example if they just bought that 75, call that. Would give them the right to, buy, 100. Shares of stock at. 75. And. For. That right they would have to actually put up some capital put up some money to do it the, cost of this option would be. $480. So rather than buying the stock a hundred, shares right now right, which would cost seventy. Seven hundred dollars, to basically do that just rounding those numbers they. Could buy the right to buy the stock at a strike price of their choice in. This case we'll just look at the 75, there and. Put. Up a lot less capital, right if the ask price on this option is four dollars and 80 cents, they. That's. Really four hundred and eighty dollars because, each one of these options controls. 100. Shares of stock so, 480, bucks and. That gives them the right to buy the stock at 75. Now. The, theory here is if somebody bought one of these calls and the stock goes up that. Call should, go up in value as, well, but. It's an unknown thing we don't know for sure what. The value of that call is going to be worth just for, your kicks and giggles here, if you, wanted to kind of estimate, some things you, can do that right. So if. You visualize this call it's, currently trading for 4 dollars and 80 cents have, you ever wondered, hey what might that call, become, worth if. The stock goes up to 80 and, let's. Say it takes a week or two right, days two weeks we'll just say it takes two, weeks to, get up to 80 what can happen to the price of that, coop, ssin if that, actually takes place what. You can do is actually. Switch, over your layout, here to, where you've got something, called Theo, price and that's what I've already did just, click this layout. With Theo price in it and. This. Has got a theoretical. Option, calculator, in it and you could actually set, some parameters to, sort, of estimate, what, this option might, become worth right. So. Let's just say in the next two, weeks. We'll. Just say by june june.
11th, Here on, june 11th, the stock is up, at. $88. So let's say it's gone up i -, it's. Gone up by $3.00, here, because. Right now we're basically a 77. Right and so, we'll just go with 80 11, so the stocks gone up three dollars so we're just adjusting. Our stock price here and then. To be fair if the stock does go higher it. Is pretty common that volatility, will drop so, we'll say volatility. Comes out we'll, say it goes down by you, know one percent. So. If that call is currently, worth. $475. In. Theory. If those things play out if, in the next two weeks right, june 11th, if the, stock is up at 80 and volatility. Has come out granted, I just put in a one percent volatility, decline. What. This Theo price is telling us is. How much that option, in theory, should be worth, right so that's why we use Theo, price is. So that we've got this Theo pricing, calculator over, here and, then we can keep our eye on this Theo price column. And compare. The difference between the current option price and the Theo price maybe, you could see here that you, know this if that were, to take place if the stock made that move higher in theory. This option, could move up a pretty, large percentage. So some, traders liked that idea the, leverage, involved. With using those options, right, and so, you. Know how a smaller, amount of capital can be used and the return on that capital could, potentially, be a lot, higher than what's invested, in the stock but options. Do have some negatives, right if you're buying these they, do have time decay working, against you and just. Frankly if the stock doesn't move with stock stays right at 77. By, the time expiration. Rolls around that. Option, will lose its value no, intrinsically. It would only be worth $2. On expiration. So. That time decay. Probabilities. Basically, are working against you if you're using a call but, some, people do choose, options, when they're trading these. Swings so. Let's just talk about real quick how somebody like the idea of using those order types those. Triggering, types of orders how. They could use that but apply that to maybe buying a call option okay. So here's, what we're gonna do with. This call option all. Right again. This is just for illustrative, purposes only, let's. Say we bought one of those and that'll create an order to buy that call, now. On the other hand let's. Say we wanted to sell that call if the. Price of the stock goes up, to, 80, or. If the price of the stock goes down to, 7500, five right we just want to get out of this you, know based on whichever of those things happens, first well, what a trader can do at this point is choose under. Single order or under it's, right next to advanced, order where it's a single choose. First, triggers, sequence. And. That's what I'm going to do is choose first trigger sequence, and right.
Click On that and choose create. Opposite. Order okay. So I'm going to keep this kind of simple here get, out of this option. Right. Just sell this option. If something. Happens, okay, as long as we get into this trade in the first place so the first the buy order if that fills sell. This option, sequential. To that filling. Based, on certain parameters that we're going to choose now. I just showed you how to use those Oh see, oh type, of orders those two separate orders where. To, sell orders one higher one lower. And. Eight, which ever one of those fills just cancel, the other one and you, know be out of the tray, but. There's another way you can do this an option traders sometimes will find this useful on, this. Sell order if you. Notice all the way to the far right hand side and it's kind of hidden here, just, we're looking for this box right. Here on our sell, order. If. We. Put our pointer, right there, we're gonna see a gear, icon that, appears it's, kind of invisible, until you put your pointer right on top of it but, I'll click that gear icon what. That'll do is bring, up an order. Entry, box, okay this allows you to get into some more detailed, type of parameters, on the, sell side here, let's, just say we wanted to sell, that, call, now, here's the rub right, when you're trading options, and you're using this type of order the. Rules that we're gonna place on this sell order, are, to get out of this call using, a market. Order, okay, we're going to use a market, order now that's that. Leaves a lot up to kind, of chance here uncertainty. You know options, they're less liquid, than stocks, and it's, difficult to understand, or to know you. Know especially, if you're using market, orders where you're ever gonna get out right and especially with an option, because of sometimes. The liquidity, there it can be really difficult to know what we're gonna sell our option for but, we're gonna make this a market, order to sell this option, if the, price of the stock does, something. Okay, we're gonna base this triggered. On the, price of the stock doing something, now, what, we'll do is go down to this conditions. Field, so we set the first part up here as a market, order then, we'll go down to conditions, and under, conditions we're, going to choose this to submit, after submit. Based, on some certain criteria, you can choose submit at if you wanted to this. Is this a pretty customizable. Screen if somebody wanted to have an exiting, order to, get out of this based. On a date or a time preference. They can actually set that so don't have this be a valid order until. You, know this date and this time it's pretty cool by. The way you could set in order to cancel it you know, doing the same thing now I'm not going to use the submit act, boxes. Here what, I'm going to choose to submit when. Yeah. That's, what we're going for here is submit, when at least, one of the following triggers, are met and that's, where we're gonna set our triggers here so.
This Is where I will drop down to the box for symbol, right, now we click just right underneath that symbol, box and team US will pop up the. Reason you have to click on that is because you could submit an order to get out of this right to sell these options, if, Sprint, did something, so this box actually, is open, you, could trigger this based. On the index, doing something or based on another stock doing something, right we'll just keep it to t-mobile though, so, if TMU. Asks, if that's symbol, the. Marked price right, being the mid price, goes. To a certain, level now. The first trigger is at or, below if you notice that sign. There says, less than less. Than or equal to right. If you're going with that field, just, put. In your stop-loss. Number. Here, or not yet your stop-loss number. Now I got to be careful the way I state that right, if. We go 75. Oh. 575. Oh 5. Think. We got it there. Sorry. It's kind of hard to see that number I'm. Just gonna go with 75, spot, 0 5 again okay I think we got it that time that. Is sort of like a stop-loss, day. What this would do is say if the price of the stock goes down to 7500 5, get. Out trigger. An order right. Or trigger that sell order at market, now. Also you can place another one here. Where. You set it where if the the stock is greater. Than or equal to a higher number right, so let's say we go with a tea here, a tea. Spot. Zero, zero. Now. Because. This is so easy to kind of fat finger and screw up I highly. Highly highly, suggest. You, read the description, here but, if you notice we've. Got a description, that's getting set up here so. Submit, the following order, to sell that, call basically, then the. 19. 2019. Call seventy five strike. At. The, market, price and this, order is valid, only for the current trading day so we've got to make sure we switch, that to. GTC, so it's a good thing to read that but. Wait so that's term number one wait, to trigger this order. So. We're waiting on that and when does that get triggered when at least one of the following indications. Is our conditions, is satisfied so. Show a wait condition, status, until. The mark price of the security is less. Than or equal to, 7500, five so the price the mark price being down at 7500 five or lower or, the. Mark price is greater, than or equal to $80. Some makes sense so. This is an order to someone, we're trading a derivative, not, the stock itself, they. Could actually have, an order, to get out of that derivative, based. On the price of the stock doing, something. And that's what we've got here right so to repeat the, parameters, here I'm going to go through that entire process again. Let me just go ahead and delete, this order by. This call. Then. At the bottom choose. First trigger sequence. Create. An. Opposite. Order in, this. Opposite, order go all the way to the right click. The gear icon, with. The gear icon that's, going to give us the additional. Parameters. Writer the more advanced parameters type, of box and, we're going to sell this call using, a market, and we'll. Make that GTC. So a market, order. This is where we can set the conditions, in this condition, box so. If the, stock price marked, price and you can choose either the better the asked if you wanted to whatever you want to trigger that is and. Just read that where it says less.
Than Right. That's we're looking at there's the first one is less than or greater or equal to, and we'll. Choose. $75. So 75, spot zero five whatever, the typical stop-loss was. Or. And. Then we'll choose greater than or equal to this, would be sort of the targeting, number. Eighty. Dollars. A share eighty spot, zero zero go. Ahead and tap out of that field and then before this order is ever placed submit, the following order to sell that call at, the, market price we, don't know what that market price will be this. Order will be valid, until it, is either filled or cancelled but, wait on this right, I'm, it's. Going to be a group type of order right this condition, will be wait and tell one, of the following conditions is satisfied either. The stock goes down to 7500 five or, the stock gets up to eighty dollars a share we'll go ahead and save, that it. Confirm, and send and so, that's, another way that somebody could do this right, so now we've got an order a, position. That's in there plus we've got a working order, that, has a wait condition, tied to it and, and. It's all based on those parameters that we've already selected so. That's. An example of how sorry. Just, the thinkorswim. Software. Can, be used to create more of these elaborate. Types of orders kind. Of the one of the primary goals though, here is to, sort of put things on cruise. Control for. That swing trader as much as they possibly can. We're. Using these different order types right. Where you've got these conditions, that are set just. Be aware there's, there's, an opening, here for some real slippage, talking. About slippage, especially, with that option order. You. Know get out based, on the stock price, triggering, a certain threshold get, out of options for whatever it's worth, market. Orders on options, right. Basically. You. Know if if we were using purely, market, orders on thinkorswim. Using. The trading. These options, and we were buying you, know we'd be buying it for 65. That's, four hundred and sixty-five dollars and selling. It for 35, right. That's four. Hundred and thirty five dollars, that's, the slippage, between the bid and the ask price, so that's like twenty five dollars or whatever it is right um.
Those. Are some of the weaknesses some, of the things that you open yourself up to when you start using especially, those market, types of orders we're. A lot of traders they like the idea of actually trying to get filled somewhere in between the bid and the ask right. But I did want to you know so there's pros and cons to using these types of orders right but I did want to demonstrate those, to you see, how you could better use the thinkorswim platform here. Now I. Acknowledge. This many, of you are thinking it can I see more examples, Mike, spent a lot of time you know talking, about swing, trading in general, you know looking at setup parameters those, types of things but, then we spent a good 20 minutes or so just on these different types of waters which is really, a major, thing I wanted to talk about here is there. Anywhere else you can go to get more information though, about active, trading swing trading techniques. Like this well. You know a class does come to mind and. It's actually today, right. So. Today, coming, up at. 12:30. Eastern Time, we. Do have a webcast. Called. The, splash active, training and it's, not you know it can be different, topics, that are that are focused on there in the, splash active, trading, however. This. Class is all about those active, trading techniques, that's, a great class to attend if you want more examples, of you, know anything, from swing trading to different, types of momentum, based active, trading approaches, so, certainly, you, know that's one class to think about and it happens today it's a 12:30, Eastern Time it's an hour long class where. The focus is active, trading with Pat. Also. Don't be afraid to go through this. List. Here of classes. That might specifically. Apply, to you but today there's, a great class that could reinforce a lot, of these concepts, for active trading and. That's going to be in the, splash today so check that out. Okay. So, wrapping up the session all right my primary, focus, was. To have you understand, how to use thinkorswim. For, these different, types of orders right. Those, triggering. Types of orders to not only get in but something that you could set to get out, either. An O Co order, or, even, those triggering, orders in those advanced, conditions, fields, that. We demonstrated. There on that trade tab so hopefully, that has that, gives you a better understanding of, how to create those different types of triggering.
Orders And there's, a lot still to learn so I would suggest again, that you continue, to follow. These classes, take, a look at different classes that could be applicable to your needs, I thinks, everybody for your time I'm going to wrap up the session for today though and, certainly. Hopefully. That was a valuable, session for you there is a survey. That I put in the chat box the. Five, questions survey, feel free to take that and just let us know about, how, you felt the session went today and, everybody. Thank you for your time and for. Now let me just remind you that this class has been for educational, purposes only coming, up next we do have a futures. Class, just. Getting started with futures and that's with barb. So, that'll. Be in one half an hour from now so, just. Right at the top of the hour, check out barb getting, started with futures, okay. Have. A great day everybody and we'll talk to you later, bye, now.
2019-05-31 21:31
