Swing Trading Days to Weeks | John McNichol | 10-15-19
Good. Morning, everyone, John McNichol, here and welcome, to swing trading Dave. Looking, at the chats there. We. Got Gwen, Sandeep. Anthony, Michelle, basil. Sharon. Towel. Boy. We got quite a few people online we appreciate, you being here as well as those you listening, to the archive session. Let's. Go ahead and take care of a disclosures, and we'll get right into it. Options. Are not suitable for all investors as, these special risks inherent, options. Trade in makes those investors, a potentially rapid and substantial. Losses carefully. Read the previous of audit copy of characteristics. And risks of standardized options, spread, straddles, and other multi leg option strategies, can, entail substantial, transaction, costs include. Multiple transaction. Fees I the. Advanced option strategies often involve greater more complex, risk than, single leg option trades and investors should also consider contact, and a tax advisor regarding, to tax treatment applicable, to, spreads, and other multi leg option transactions. Now. In order to demonstrate the functionality the platform, we are using actual, symbols. Keeping. In mind TD Ameritrade does not make recommendations. Or determine, the suitability of, any security or strategy, for individual traders any investment. Decision you make in your self-directed, account, is solely. Your, responsibility. Now. Any investment, decision. You make in sceptre L as I mentioned it is solely your responsibility now, we're using a demo account for. Our practice, trades looks like a real account but it is not you have the ability to practice as, well with paper money that software, is for educational, purposes and successful. Virtual trading during. One time period does not guarantee successful. Vexxt investing, of actual. Funds during a later time period as those market conditions change continuously. As. Always all investing, involves, risk including the, risk of loss now while this webcast discusses, technical, analysis, other approaches. Include fundamental, analysis, may have sort very different views a stop-loss. Order, will. Not guarantee an, execution. At or, near the activation, price once, activated, they, compete, for other income. In orders. All. Right and let's. See Mike's joining, us as well let's, bring up the thinkorswim platform and, we, we'll discuss, our agenda. For today if, you're, new to, this webcast, certainly, welcome, appreciate. You being here if you find that some of the topics we're discussing may be a little bit over, your head would certainly, refer, to you to our education. Tab and within. The, coursework. A lot, of things we're reviewing, here today, can, be found in the, technical, analysis, course, when. One goes to the, education. Tab and, selects. Stocks. You'll. See the stocks, technical. Analysis. Course that's. A great follow up for this session as well, as if you want to get, more into the basics, we have a getting, started series good. Friend Cameron Mae teaches, a webcast, on Monday. At 11:00, a.m. Eastern Time called, getting started with technical analysis, all. Right now point your attention over on the left-hand. Side as far, as what our agenda is, we're. Going to talk about swing, trading what, it is and some, of the components of, that support.
And Resistance. How. Price patterns, may come into play. Candle. Patterns, which we will be utilizing as examples. For possible. Entries, as well, as exits, and, how. One, may utilize, a bounce, to, get into a, swing. Trade so, our learning objective, for today, is at, the end of this session you, should be able to enter, a, practice. Swing trade on the. Thinkorswim, system. Now. If you have any questions feel, free to utilize the chat would certainly love to hear from you, so. Starting off let's go ahead and bring. Up a big, chart and we'll talk about an example of what, a swing. Is. Well. We have the sp500 on. The, screen right now I'm. Going to go ahead and. Bring. Up a bigger, chart. See. If we can do that. And. This is a sp500, chart, over, the last year what we'll do is we'll also apply, this to. Some individual, stocks I want, to do it go. Over, to. Laughs. This. Screen, right here so. Swing. Trading in essence. Is trading. Levels. Of support and resistance so. How can we identify those. Levels, of support and resistance we. Want to go ahead and look at the, highs, and lows, that. Occur within a Trent lose. You I follow me there's, actually a nice easy tool that, you can utilize a good, teaching tool maybe a good confirmation tool, to, identify, highs. And lows that, occur in the Trent we. Can do that on the, chart. Itself by selecting. The pattern. Tool. Over, on the upper, left, hand side of the platform. We. Can go ahead and select patterns. That'll, go ahead and bring up a larger. Window here now, one. Can search for various price patterns but we're gonna look at candlesticks. And through. That candlesticks. We can go down the drop down and find. Williams. Fractal. Williams. Fractal, is an indicator. That, will potentially. Plot highs, and lows, major. Highs and lows that may occur within the Trent we're gonna click that Add selected, and click, OK, so, now as we go ahead and look at the chart you'll, see these various. Carry, points, that, are on the, chart I'm going to go ahead and zoom in on a portion. Of the, S&P, 500. In. The context, of an uptrend so how do we see an uptrend, an uptrend. Is higher.
Highs And higher lows. So. As we go ahead and look at the fractal. Points here. And. Just kind of highlight a few of these. Notice. That we're. Seeing sequences. Of higher, highs and higher lows and that, goes ahead and continues. Likewise. From a downward trend. We. Can see examples, of lower. Highs and lower, lows. Now. Kind of the concept of swing trading is to trade. The swings. Go, with, the trend kind of think of it as an analogy of the the ocean you, know the tide comes, in and you're, right in the individual. Waves as that, tide continues. Moving in whereas. If you, try, to ride a wave when, the tide is going out you. May be going against that trend, and so, one of the aspects of swing training is to, trade the trend if you, have a bullish, trend the, focus will be on typically. Bullish. Swings and if, you have a bearish. Trend, the emphasis may, be more on bearish. Swings so. Let's. Identify swings. Within. The trend, fairly. Simple is identifying. Lows. And, highs, within. That trend, so. In the case of the, upward, trend. From. Low, to, high would. Represent, that swing. Low. To, high another. Swing low. To, high low. To, high and notice, that, continues. As long as the trend is up. Now. A change. In trend for, a swing trader for a bullish swing trader is if, prices, are no longer, making. Higher, highs and higher lows that. Would be more of a transition. To, possibly, a pattern. Breakout, trade or a, reversal. So, when we kind of go, forward here into, the summer time, notice. An example, of prices. Breaking, down below the low make, it a lower. Low. That. Would be the first sign of a possible, trend, reversal. And with. That if one, was to trade. The swings that are consistent. With the, trend one. Would not look at a bullish, swing any more, they may look at a bearish, breakout, or start, trading, downward. Swings as we can see here on the opposite, with a, bearish. Trend the, bearish, swings are essentially. Going. Down. Downward. Swing. Correction. Downward. Swing, likewise. As far as change in with a bearish. Trend is, when prices, start making higher highs or, higher lows, so, in this example as, prices. Went ahead and. Broke. Out and started, making higher. Highs as. Well. As higher lows now, we're seeing an upward trend that is a reversal. If you want to learn more about reversal. Patterns you can join me Monday, on technically. Speaking, which. Is basically breakout. And. Reversal. Patterns which is every Monday at, that. Time. Zone would, be. Essentially. 2:00 p.m. Eastern, Time I always have to do the math in my head alright. So hopefully we have a little understanding, of what. A swing, is. From. Both a bearish, perspective, as well, as a bullish. Perspective, essentially. Trading, levels, of support and resistance training. From lows to, highs from. Bullish perspective, and trade, in from resistance. To support, or from, highs, to, lows from. A bearish, perspective. I. Do. Not see any question so it looks like everything's, going pretty good there let's go ahead and switch, up a little bit and we'll bring up a couple of symbols. And. We'll. Explore this a little bit more so. Let's. Go ahead and bring up. Oracle. Orcl. Now. As we look at Oracle. We. Can see examples, of. See. Examples, of price making higher highs and higher lows how, do we do that, well. We still have those fractal, points that are on the screen. Previously, Oracle, was making, a downtrend. Downtrend. Defined, by make. Those lower. Highs and lower, lows, that's. Continued, to occur. Now, you know notice that there was more of a sideways. Pattern some. Traders call that a basin, pattern, or a reversal. Pattern again. We teach us in technically speaking kind, of an example of a, w. Or a w, a double. Bottom, pattern. What's. Happened recently over. The last couple of sessions prices, went ahead and broke out so. Question. Is are we in an uptrend. Well.
Again Go ahead and make the comparisons, of the highs and the lows. There's. Low, low. So. We're starting to see the loads go a bit higher there's. High higher. High it's, a little congested in here, but. Notice as we're. Looking at the highs and the lows that would be defined as more of a, uptrend. At least over the near term going back over the last month we, have a breakout of that pattern, broken. Resistance. Has a tendency. To act as new. Support, so. Really when it comes with entries. Whether. It's a swing trade in a lot of cases in a trend trade there's, really two flavors, trading. The breakout. As price. Breaks, through a level, in this case resistance. Or, the bounce as prices. May pull, back to, that support, in this example, the. Idea being is that broken. Resistance. Has a tendency. To act as new, support, so, with, that break out we're, seeing price pull pulling, back now, this pattern that you're seeing right now is, one, of the techniques. That are taught in the technical analysis, course called. A flag, pattern. So. A flag pattern, is when, you have a swing, in this, example, a. Example. Of a stronger, swing, where. Prices go ahead and shoot up, so. And you could possibly use some, of the fractal points as a bit of a guide but, we see a swing. Going from that low. - hi, that's essentially, Foreman the pole, a. Lot. Of times when you have a swing. Prices. Just don't continue going up indefinitely. Kind, of does a zigzag, trends, have a tendency, of zigzagging, so, we're. Looking at the upward, swing that is the tradable. Part, and then. When prices, pull back or, retrace. That, is potentially, setting up for another bounce. And, looking. For an entry so. With, that little bit of a pullback that is what some traders would refer to as a. Flag. Typically. It may be, three. To five days and a pullback sometimes, it may only be a one or two day you may even extend a bit, more the. Setup, would, continue. To be in effect as long as. Prices. Continue to, stay above. Previous. Lows and preferably. Above. Previous, highs. It's. Not out of the ordinary for prices to break out of a price pattern, and pullback. Weather, retesting. That. Resistance, as we're potentially, seeing right now or possibly. Even blow back into the pattern, to. Form that higher low so, this would be an example of a, bull, flag setup, now. As far, as an entry, there is a few, ways that a trader may look at it one. May, be. Anticipating. The bounce, anticipating. The bounce may be looking. For some, type of bullish. Candle, to appear, at or, near that support. Area now, in this case we're seeing an example of a whore ami or. An inside. Day, now. There's actually been two of them we're. Seeing from, yesterday, inside. The previous day and even, today being, inside, yesterday. Now, some, traders may refer to that as being, bearish. Seeing, as it is at a high and that, is potential, but. That is also potential, for that setup looking for price to pull back a little bit however, a price kind of stays inside, that range and kind. Of goes a little sideways that's what some traders may refer to as a flag. In a stiff breeze, kind. Of a flag instead of drooping. Down you. Know kind of catching the wind and kind, of go in a bit more sideways, that's typically considered, to be a bullish. Pattern, and in. Anticipating. That you, know a trader may enter. Right, now, anticipate. In that the price is going to break higher now. There's pros with that the pros is if you're, right you're, captured, and that momentum and hopefully, capture in almost, the full strength of a swing the. Con is. You. May be in to trade and the price may go ahead and fade a continue pulling back now. What some traders may look to do is look for little more of the conformation. That. Can, be priced. Trading. Above the high, of the. Low day, in. This. Case. In. This. Case with this pullback here one. Would be looking, at training above that high but since the next day is a hoorah me her Ami's can you be used as a potential. Entry, so going above the high, of that, her ami if, the price trades higher, trigger. In that, entry, and. Then. The final. Type of entry is a. Little. More, time. Is not. Only to see if the price trades, above the high the low day but, actually, sees if it closes. Above the. High the low day and so that indication, maybe if you're, looking at it towards the end of the trading day today, let's. Say about a half hour before the market closes and, the, price looks like it's going to close above. That high then, that may, possibly. Be your, entry. So. That's. The entry now where is a potential, exit, what. What traders may do is measure, the distance between. That. Support, and resistance, or that preview in this case the previous, swing and. Project. That target, out so. When we look at this example. We have from around the. About. The 5350, level, and, the. High being. Upwards, around. 57. So that's, a range of about three, and a half points, so the expectation. Is if the, price breaks, higher and trades, higher they may be targeting, about, three to three and a half points, which in this case would push closer to that sixty, dollar level, so, let's see if we can go ahead and place.
A Practice. Trade based, off of this setup okay. And. Keep an eye out if you do have any questions there, once, again thanks for being with us we looks like we've got some great, attendance and some great participation, there. So. I'm going to do is I'm. Going to go ahead and, right-click, on the chart and. We. Can go ahead and select. By. Custom. With. Osio bracket, we'll. Do an example of a stock trade first and then we'll see if we can do an option. Nice. Thing about the thinkorswim platform when. In doubt right-click notice. I right clicked and I, was able to bring up this. Type of order now as far as bringing up this type of order, we're. Planning, a trade and trading, a plan, plan. Being is to enter if price breaks above, a certain level. And. Then, we're going to talk about the sells in a moment so let's talk about how we can construct this, entry, so, if we're saying, that we're, looking to enter if price trades above the high of the low, day. Just. Kind of mark that put a cursor on the bar that, high is 57:21. Now. Some traders may set a. Trigger. You, know maybe a little bit above their you, know a certain, dollar amount for our example, let's say we'll do 20 cents, so, in this case if the high is 57:21, let's. Say 20 cents above that that would be 50, 741. So, I'm gonna go ahead and right click on this. And. It properties, you, can use a horizontal, drawing. Tool on the chart to kind of help visualize. That trade. Question. Is what is a no Co bracket, we are gonna cover that for you in just a moment. First. Let's talk about the the entry, part of that order and we'll close, the rest of it out, so. 5741. Is going to be the potential, entry. Now. Right. Now this is a limit order if I go ahead and plug in 50. 7.41. And. Just. Go ahead and place this order. This. Order is going to fill why. Because. It's a limit order we're saying we want to buy the stock at. 5741. Or. Better. Which. Would be a lower price and since the market is currently below. That price it's going to instantly trigger but, we're not looking to enter, right, now based off of the. Example. Here we're look we want to wait until price. Actually demonstrates, some momentum, and trades, above that, area so, to do, that we. Would have to make this a stop. Order a lot, of people think that stop orders are just for getting out of a trade but stops can be used to get into a trade. This. Is to be used to get into at a price, that is higher than the market. Notice. There is a stop, price that's the trigger price it's. Same, 57:41. So, what we're saying is if it hits 5741. It's. Going to trigger an order, to get in now. It is a market, order is what. It's set up for so, if it hits 57:41, or higher it, will trigger a market, order we would be in the, trade now, some traders may do is make, this a stop, limit on their, entry, and, specify. The most, that they're willing to pay for, the stock let's. Say I do it about another 10, cents, that. Way if the stock gaps, at the opening, one. May be. Forced, into a trade, at a higher, price, than they care to a for at least in this case we're specifying the most that we're willing to pay. 5751, in this example if it's higher it won't fill that's, okay that. Would be an example just to trade running away from us now. As. Far as the time in force. Day, means. That this will only be in effect for today and that's how we'll leave that because. The. Current, condition, is if price goes ahead and trades, above and. Let's go ahead and actually do this on the big board so we can visualize this a little bit better, here is. The. Condition, today is looking, for the price to trade above. The. High of. Yesterday. Okay, the high of yesterday.
Which Would be right there now, let's say today price. Doesn't do much more than what it already did. And let's say it stays right there price did not trade above the high yesterday, well. Then one can initiate, another, order that's why we're leaving this one on day because. It'll cancel and you, can go ahead and. Really. Next, entry, as the, price is pulling back the. Swing trader is looking to capture as the, momentum changes, and trades, above the high of the previous day and this may be continued, over. A series a day we may see a, couple day, pullback there as long, as the lows. Again. Stay above the previous, lows and preferably, for a stronger trend, the. Previous. High that. Would be that. Potential, entry or that setup so, kind of tracing, back as prices. Go back but. We're planning on any, change of momentum so, that's why we're placed in the trade today. If the. Price bounces try, to capture that momentum, all right. Now. Currently. As we go ahead and bring this one up. We. Got the trade now if you're playing around on the chart and you have an order that you're working on and all sudden look like it disappeared it, probably, didn't if you go ahead and look at the lower, right. Where. My mouse is which is right just behind my picture here I'm. Going to slide this up a little bit you'll see a little, arrow. Box. Here if you click on that that, will go ahead and bring up that order. Okay. Now. So. We have our entry set, up now the question was wait John what's an OC, oh that. Set, stands for one cancels. Other, because. By creating, this one cancels other notice, there's two sell orders there's, an order to sell at a. Limit and then, there's an order to sell at a stop. Now. First off as we look at this we're. Gonna change the time and force, from. Day two, GTC. That, stands for good till cancel so, if we get into the trade, we. Have to, sell orders that would continue, to work for us. After. We're already into trade and good till cancel means that those orders will remain in effect until, they. Trigger or if they are cancelled. Okay. Now, with. That in mind if. We. Go ahead and decide okay well what is our potential, exit there are two potential exits, for this example, one. Being a desired, exit. Which. May be a target, price and then the other one would be getting. Out. At. A, loss, or a stop. There now. For. This, example. What. We'll do and. We can do this on the chart as well is we. Can basically measure that, target. So, if we come over here and look. At that previous swing. Which. In this case from, right here you, can utilize your drawing, tools as well, we'll. Select that. Under. Drawing tools maybe a diagonal, line and. We're. Gonna draw from the low. Swing, low maybe. Pick out one of those fractals and. Take. That up to the high now. As you're drawing that you may see what. That distance is, and, you've got to tap it a little bit here. Okay. That may not work for us here a little. More sensitive to my finger here let's go ahead and do, it here on the chart first and we'll highlight it, just. Trying to show you in how you can do it, take. The drawing tool and draw, from the low, to. The high, that's. About three and a half dollar move, then.
You Can right click on that line and. Create. A duplicate, and then. You can project that, up and you. Would go from the anticipated. Swing. Low which. Is should be the bottom, of the flag itself, and, then. Notice that Pat. That target, would come just shy of about sixty, dollars, you. May see some confluence, of. That. Target, going. Back to possibly, some previous, highs that, may have been in the trend. Just. Kind of pull this back, notice, that coincides, with some, of the previous highs with, Oracle. Okay. And. Then. In the case of the stop-loss, is. Looking. At where. The support is and set, and stop a little bit below that in our example, we would be looking at the low, of the, pattern in this. Case the flag and setting, it a percentage. Below, that, flag pattern, we'll, use an example of 1%. Below. The, load, a, so. With that let's go ahead and plug that in to our. Osio, bracket. Order. And. To. Calculate the stop-loss. Now. We're going off of. Currently. On today's, low now this, may be something you may be looking at more in the afternoon because price can continue to go lower now. If we want. We can also, just. We'll, just go off today's low for the moment that. Would be 56 36. 56:36. If. I do 1% below there, we. Can bring up a calculator. And we'll, take 56. 36. Times. 0.99. And. That. Will give us a value that, is 1%, below that low so we're looking at 55. 79. So. You can use your drawing tools as well put. It in a horizontal line. You. Can right click on it and, at. The properties. We'll make this red, for. A potential, stop. And. Again. You're just visualizing. The trade on the chart. And. Then that way it also helps you when, you go ahead and. Modify. Your, Osio order, so, when we come here and. Again I can click on the little. Arrow, down on the bottom to bring up the order. Looking. At the. Potential. Target, of, 59.95. That, would be the limit. Part of the Osio so. On the limit order when. You think limit think target. 59.95. And then. For the stop. We. Had put I, think. I did the math wrong on that one up no it's good, let's see if we got that right here. 5608. I believe is what we had calculated. Nope. Let's try this one more time, get. A little math wrong on here. Let's. See the low there again was. 56-36. It's. Nothing wrong with double-checking the math. 55. 79 what I did was when, I right, click to edit this. Make. Sure you change whatever price level you, want if you're gonna visualize this on the chart so.
55. 79. Click. OK and then, that's the level that we can put in for our stop, now, keep, in mind. That this, entry. Of 55. 79. Is just. A trigger price that is not the fill price if. The, price is at that level or lower, it will, fill at the next available price and if, prices gap down that can be significant. So keep, in mind that one. May lose, more. Than they expect, if there is more slippage, in that, market, so. In. Summary. What, the Osio bracket, will do is once. This order, the buy order is filled. If at all it. Will trigger these two sell orders and, is. Called. A one cancels, other because. If it hits our limit, of. 5995. Which, is desired outcome, that. Would, cancel the, stop order it, would fill cancel, the other order if the price goes down and, stops, us out it will go ahead and cancel the, limit, order so it's a great way of being able to plan the trade and trade, the plan so, I'm gonna go ahead and we'll click confirm. And send and. Send. Now. Notice it didn't get filled right away, also. Notice, the visualization. On the chart your, orders, open, orders would, be displayed, on the, chart, so. Until. Price actually trades above the high the low day this. Order will, stay in effect until the end of the day, this. Order will cancel and then the eoseo brackets, would disappear, so. As I mentioned if, this does not fill then, one, can focus on the high of the, current. Day and. Reconstruct. The order the, same way look, for the entry 20, cents above it set. Your stop accordingly, based off the low and set. Your target, based, off of that, swing. Great. Collin glad we were able to help let's. See if there are any other questions Chris says complete newbie, why, would one week or one year, of a trend would, have anything to do with what will happen to the stock tomorrow, okay. So. Great. And valid question, technical. Analysis, is an approach. Some, traders or, investors, may. Not be. As. Much fans, of technical analysis, but. The short story is the. Concept of technical analysis, is the analysis, of human behavior. Traders. Have been trading, for hundreds, of years in some cases, thousands. Of years or at least a thousand years the. Idea is a lot of buying and selling patterns. Have a tendency.
To Reoccur. Just. As we were looking at the sp500. From. Earlier in the summer. The. Different swings that occurred were, fairly similar now, it will change, at some, point but. What technicians, have a tendency, of doing is anticipating. That if price traded. A five. Dollar range and breaks out it may trade another five dollar range, if, it goes head breaks out of that five dollar range it may trade another, five dollar range higher and just kind of continue. With that so that's what swing traders attempt to do now. There, is no, absolutes. That, this. Will be a successful. Swing trade or even, if that order would be triggered but, it is planning, for the potential, of that event occurring, and the. Theory is a trending. Motion, stays in motion and. So swing traders attempt to trade those, shorter, term Momentum's, in the, trend until, it changes and, I showed you a few, ways on how you can identify those, trends if the, prices continue, to make higher, highs and higher lows then. One can continue trading those bullish swings until, things, change it, may start off with equal, highs or equal. Lows and. In. That case one would have to wait for price to break out or. If, prices, start making lower highs and lower lows that. Is a change, in trend, so. Great question appreciate, that and. Let's. See if we can go ahead and put in an example of an option trade before. We go since we got that one in yeah. I think we got time for that let's. See, let's bring up. A. BB. V. Now. This, stock one, thing to consider as far as for a shorter, term, trades. Is. Earnings. Looking, at earnings. We're. Coming into another earning, season once again and as we go ahead and look at this. With a V. There's. News events that will appear on the bottom as a chart looks, like we have an earnings event coming out you know around, the end of the month going. To begin in November so if one is in, a, trade. They. May look, to close, out the trade before that earnings event and since this trade may be more, days to weeks you know there may be enough room to possibly. Capture that now. This. Is actually some of the patterns that not only I discuss, in the, technically. Speaking class on Mondays, but, I also tweet these things so. If you noticed. On my. Scratch. Pad as. Well. As on the title slide you'll. See a Twitter. Handle, I. Can. Go and bring that up. Right. There at the top. Looking. At at. Sign, J, McNichol underscore. TD a this. Was actually one of the, ones that talked. About was, a kind. Of more of a a bowl pattern, going, from a downtrend. To an uptrend. Now what's happening more recently. It's. Still in an overall, longer. Term downtrend, but notice, how over the shorter term we're seeing some of those bullish. Swings, so. With that in mind some. Traders may be looking to capture these. Bullish. Swings, and, you. Can see that there, are a few bucks on each one now, right now is the price making higher highs and higher lows no. It's. Making some, lower highs and. It's. Making higher, lows, now. I got a three-year-old granddaughter and she can probably tell me that that is a triangle. Now. That is a potential. Breakout. Pattern. So a bullish, trader may be looking for prices, to break, out of that pattern and look to capture, the size of that pattern again swing, traders are trying to capture support, and resistance. And so they may project, out a similar, move which, in this case let's. Say is around the $70, level, upwards. To let's. Say 75, that's, a $5, move so if the price breaks, out it may potentially move $5, which, would be at least testing, if not breaking, out of its, longer-term, trend, those are probably gonna be a bit of confluence with, previous, highs, as, well. Okay. So let's, see if we can do a set, up here, with. An option, now, we don't have a trigger for an entry but we can go ahead and show how you can set one up for that so. If we go ahead and bring that up and, we'll. Wrap up with that Chris, you're very welcome. So. Let's say for this example. Looking. For price to break the, resistance. We'll come up with a number here. And. Technically the price has broken, that, diagonal, resistance. So we'll we'll use that as an example it doesn't mean that the price is going to stay below that or, stay, above that should say so. We're going to go to the, trade tab we'll, look at options, so the consideration for options.
Is Looking. For the, amount of time that one needs for, the trade and for. Swing trades that should typically be going, out at least a month or more, given. Some time. So. Let's say we look out about, 45. Days now, some of the considerations, for options is liquidity, sometimes. The difference between the bid and the ask can, be larger, some. Traders like to see this spreads being a bit, smaller maybe, gopher. Closer, in you. Know 31, days out you know we are seeing. Some. Moves now you know considering that our earnings. Is going to be coming out on a. V. Here and my. Mouses were in a little slow here. Which. Is around the beginning of. November. Volatility. Probably, or it may remain high so probably, not as much depreciation. On these options until after, earnings, so we could probably go look, at the 31-day as an example. Let's. Say we'll go, ahead and focus a little, more at. The money and. What. I'm going to do is I'm going to right click and. We're. Going to do a buy. Custom. With. Stop, we're, going to do a conditional, order here now. I'm going to enter in assuming, that the price has broken, out, but. I'm going to do is I'm, going to make this a. Market. GTC. For. Good till cancel now. The market order means when, this order is triggered to sell it will sell at the market price. Idea. For this is thinking, about, can. Additionally. From. The standpoint of liquid. Stocks if. Your trade illiquid stocks you may not be happy, with the, types of fills that you get, now. I'm. Going to go ahead and go back to the chart and let's determine where the potential exit, is. So. We already targeted an example, of the swing. Measure. In the pattern. So. Let's say I go ahead and I'll measure the, distance. From the, support to resistance on that pattern. I'm. Just using a rectangle, tool and I'll go ahead and I'll activate, that and I'm, going to go ahead and move that to the breakout point so.
That's The price, range potentially. For this pattern. So. Looking at the top of that. That. Would be a target, of let's. Say. 78. 91. And. Enter. In approximately, right now we're at about 74, 31 so that's about a you, know a four four and a half dollar move. Now. What I can do is set. A potential, stop below, this. Area now. On breakouts, some, traders may look for a little more of a buffer let's say we'll do three, percent for this example. So. I will take three. Percent of the, support, let's say it's or the, resistance, let's say that's seventy four. I'll. Take seventy four times. We. Did times a wrong. Number. Seventy. Four. Times. Point, nine, seven. That. Would be seventy one seventy eight. So. I'm gonna go ahead and want. To right-click on one of these price. Levels. It. Allowed me to do it. Create. A duplicate, drawing and I'll. Slide that down where my potential stop is. Right-click. Select. Edit, and I'll. Change that to 71. Point, seven, eight we'll. Make that red, just. To illustrate that potential. Okay. We'll click okay all, right so plan the trade trade the plan now if I go ahead and bring up, the. Order here. We're. Going to bring this up on the big screen so now we have the order, on the, screen now what we'll do is what's called a conditional order. On this, sell side. So. To, the far right, of the order, there's. A little blank spot and if you click it you'll see a little gear, and by clicking on it it's going to bring up some, of the order, details. This is where we can put, in a conditional. Order, so. For our example. If. I try that one more time. Bring. That up, and. It looks like it moved it to the other screen so, I'm going to go ahead and slide that over. And. You got multiple screens going on. And. For some reason I'm stuck. Here we go that's a little bit better. So. Let's bring this, over. Okay. So. You'll see you'll have room for a couple conditions, here, let. Me go ahead and write down some prices, here. So. Our target, was going to be 78 91, and I, think our stop was going to be 71. 78. Okay. So when, we have this. This. Order, up this is where we can go ahead and plug in that information so first off you can go ahead and select the, symbol. In this. Condition, box and by clicking on it it should automatically. Bring, up the, stock the. Second. One, is the method, of that. Trigger we're going to use the mark, that's, kind of like the last price, and then. You have a trigger, that says. In this case less. Than or equal. To now, since it says less than or equal to, what. We're to do is that, will be the example of her stop since this is a bearish. Trade, so. What we'll do is we'll go in and plug, that in, to, the price. Plug. That into the price and. That's. Going to be seventy. One point. Seven. Eight. We.
Hit Enter, now. With that we can go down to the, other order. Which. This could be our target. Price so. With that we were paid the same step we got a BBV we. Can go ahead and select mark. And this, one we want to change that to greater, than or equal. To, and then. We'll put in what our target, price was and in, that example I believe that. Was. 78-81. Or. Seventy eight ninety one so I'm going to go ahead and plug that in. Seventy. Eight point nine one. Enter. And then. We can click Save. Now. With, this in play now we can hit confirm and send and double check our work by. Hit. And confirm and send. That, brings up the order confirmation remember. It is, confirm. And send, not, Sensen, if, you watch me yesterday I was a little quick on the finger and placed, a couple trades a much. Quicker than I care to so. This. Basically, tells us, we're buying an example of an option, for a buck, eighty seven that's one contract. It's. Going to sell the, condition. It's, going to sell at the market if one, or two conditions, occur that, would be if the mark is at or, below. What. Looks, up this is why we double check because it didn't capture something, so seven eight ninety one and then it says zero we need to go back in and edit that that's, why you got the edit, button and, that's why you do, confirm. And send, to, double check so. We're gonna click on that gear again. So. We can bring that up. We. Click on the gear it'll bring up the condition. That's. Very weird, on, how it did that. 71. 78. Is the, stop no, why is it tucking it in up there's a couple numbers in there 71. 98. Is the. Stop and. When. You're doing this on your screen you probably shouldn't, see this I have the fonts larger, so you can see it the, drawback, is it kind of truncates, things and sometimes I don't see exactly when I'm typing in. Hit. Enter and I think that should have done it so. Now when I hit confirm, and send. At. Or below 71, 98, or at, or above, 78, 91, so there we go here's. Our risk which. Is the value of the option 187, if we wanted to we can put. In the number of contracts, however, much we're willing to lose on the trade I'll do an example of 5 for, our example. That'd, be risking about just under $1,000, that's significantly, less than what my net liquidating, value is. And. We'll. Go ahead and we. Will send. This, and. We. Got that filled, and. We'll go ahead and continue monitoring. That, now. If you notice on the, chat, on YouTube. Folks there, is a survey, link would love, to, have you go, ahead and click that out and go. Through it should be only just a few questions and would, love to hear what, you think about this session some, great participation here. This afternoon let me double check and look, at so hopefully it helps you out Carlos on the option trade we did two examples, today we, went ahead and did a stock. Trade and, we just did a fix to a hundred shares although, some traders can position size accordingly, for that and, we, went ahead and we did an options trade position, in size for, a risk of about a thousand. Dollars, now. If you want to re-watch this, session, typically. Within about two, hours you should be able to go to, the same webcast, screen, on your, education, tab and then, select, the archives. You, should be able to see the session uploaded. Usually, within a few hours there, all.
Right So. What do we do today folks. We. Went ahead and we talked about the concepts, of swing trading do you appreciate those, you that are here new, today. We. Talked about how we can identify the. Trend the. Support, and resistance levels and kind. Of what we may be looking, for in those, candles. Looking, for price to trade above the high of the, low day we. Did some potential entries one anticipating. A bounce, and the, other one as the, price was breaking, out so. We would encourage you to do is practice, what, you learned here today. Knowledge. Without practice, is. Just, still knowledge, if you want wisdom you. Need to put it into play so. I do hope you take the time to. Review what you learn here today and do, at least, one, practice. Swing trade on your, paper money account, look, for some of the similar setups we reviewed, here today and, then you can go ahead and join me, each and every week for, this session so, do appreciate you, and let's. Make sure we understand. That, in order to demonstrate the functionality of the platform, we, had to use actual, symbols, keeping, in mind TD Ameritrade does not make recommendations. Or, determine, suitability of, any security or strategies, through the use of our tools any, investment, decision you make and your, self-directed account, is solely. Your, responsibility, so. John McNichol sign it up signing. Off guess what we got Barbara Armstrong, coming up at the top of the hour with, getting, started with futures, so. Stick around. You.
2019-10-25 12:48
