Swing Trading Days to Weeks | John McNichol | 3-30-21 | Pre Market Scan & Using ATR
good morning everyone john mcnichol and welcome to another fantastic day of education with td ameritrade this is swing trading days to weeks we'll take a look at the market open see what's going on we'll discuss atr average true range and we'll look for some trade setups so stick around okay well hey it's great to see everyone live with us today such as ricardo like your chick see casey giles mark michael jeffrey mary rick alex shawna we got a few mikes mike s mike m and everyone else do appreciate you joining us live each and every week a special shout out to those you listening to the archive session as well do appreciate your support there a great opportunity if you like what you're listening today make sure you click like for this youtube video that way others are able to see that and there's also opportunities to comment i do appreciate barbara armstrong helping out on the chat today with questions so if there's anything i'm unable to get to she'll be more than happy to help you can see my twitter handle uh on the screen down at the bottom at j mcnichol underscore tda if you wish to follow myself along with other fine instructors such as barbara let's take care of disclosures and we'll get into it a little too quick there remember options not suitable for all investors spread straddles of the multi-leg option strategies often involve greater and more complex risk the single leg option trades now in order to demonstrate the functionality of the platform we will be looking at actual symbols keeping in mind td ameritrade does not make recommendations or determine suitability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility uh now if we go ahead and look at uh transaction costs are important factors should be considered when evaluating in any trade and looking at uh the paper money application you're encouraged to practice what you learn uh successful virtual trading during one time period does not guarantee successful investment of actual funds during a later time period as market conditions change continuously as always all investing involves risks including the risk of loss now a stop-loss order will not guarantee an execution at or near an activation price once activated they compete with other income and market orders all right and uh here's our agenda we'll take a look at the market open uh you know treasury yields are up uh impacting looks like the nasdaq again uh we'll discuss average true range which can be used in a number of ways what we're going to use it simply today is being able to identify stocks that have a a higher daily move you know swing traders are looking for stocks that you know may have a a rather nominal move and you know atr can be a tool to help you do that and then we'll also go ahead obviously look for uh swing setups now i was looking uh you know at the chat you know there's some discussion uh on script uh that barbara may have shared in one of her webcasts and may have been tied to some script that i've created now if you actually follow on twitter uh anything that i share uh in the webcast uh you'll see notes uh both on the thinkorswim platform uh as you can see uh up here at the top there's a twitter handle uh there's the trader talks channel where you can subscribe and click like uh even with some of the things i'm utilizing like the chart you know here is the shared script to bring up that chart uh as well as some of the productivity script that we may make reference to concerning moving averages uh crossovers uh looking for bounces uh such as the call holds and from a relative strength standpoint you know one can look at percentage returns you know incorporating some relative strength over the last month and the last 89 days uh you can see i actually already have a lot of these added if you want to take a deeper dive or learn more about these fields you can simply go to the twitter handle and uh on my pin tweet uh you'll see that link right up at the top you can click on that document and it gives you a background along with the script on which each of these do should be pretty self-explanatory if you go ahead and read through that and also the steps on being able to add those so there you go and uh looks like uh barbara shared the my twitter handle on the chat i'll also go ahead and take the liberty to paste that in the chat and for those of you that are uh listening at home you can simply just go to my profile on twitter all right all right let's go ahead and bring up looking at the market well you kind of get an idea looking at the sectors uh over on the left here uh kind of split financials being positive after taking a hit yesterday uh industrial slightly positive consuming communication services fairly flat and looking down the list mostly other sectors in negative territory with information technology tech being impacted the greatest as uh looks like uh yields uh pushing higher uh where it looks like we're at 1.76 on the 10-year if we go back and take a look uh you know over a little more of a longer term i actually discussed different asset classes in the futures uh webcast yesterday which was at the market open i believe uh that may be available for uh viewing now uh but you know yields have basically pushed back uh you know pre-covered you know getting back into the range where we were in the second half of 2020. there's some concerns that those yields you know may you know continue rising you know whether we push back up in the three range where we were back in the latter half of 2018 i guess that would be a little more of a normalization um you know compared to what we've seen historically but if you don't already know you know higher yields are going to impact uh companies that have uh more debt uh or you know companies uh particularly on the growth side uh that are benefiting from you know lower interest rates that they can reinvest um you know it eventually affects uh the bottom line and there's kind of historical view of yields and we're kind of getting in the lower end of uh what we've seen uh at least uh post uh the great recession and one would have to probably go back even farther to see what uh uh you know potentially real normal rates uh would potentially be and i think some of you remember uh pre uh great recession on you know where some of those ranges were okay uh all right and uh so with that you know if we go ahead and look at some of the uh major indices this was also a discussion point uh yesterday in the breakout and reversal class you know there there are some divergences on what some of the major indices are so as a swing trader is looking for a bias you know whether bullish or bearish uh it may depend on you know what index uh or stock that may be tied to that index you're looking at if you're doing kind of more of a top down uh in the case of the s p uh we talked about this yesterday intraday as far as resistance you know bulls would be looking for a breakout of this range now in in the context of the s p 500 you know this is more the characteristics of an ascending triangle you know horizontal resistance rising support you know so the still a bullish trend uh you know even though prices may have backed off of that resistance so we're kind of seeing potentially a you know kind of a flag in action at the moment if we're holding this range and see if we're able to get that pop that could be a catalyst for another swing trade looking at the dow djx a relatively limited number of stocks as far as 30 stocks we can see that the dow 30 actually did have a positive swing uh from the last week one of the few indices that did that and even making a new high entered a high yesterday so positive swing as we're kind of hanging out uh inside that previous day now as we move on to the nasdaq and the russell uh we can start seeing some of those differences uh in the case of nasdaq you're well off the highs from middle of last month and you know we are seeing a bit of a squeeze as prices are kind of squeezing in between support and resistance kind of a smaller triangle it's kind of a battle of you know different time frames again a talking point uh in our breakout and reversal pattern class yesterday where i focused on reversal patterns you know from a bearish perspective you know one may see more of a top in formation that had broken down and has blown back into that pattern uh more of a confirmation of that is you know for the index to break down particularly below some of these previous lows and hold however over in near term we can see the bullish case you know as far as price action making lower lows still holding higher lows and a bullish reversal being a breakout to the upside and taking out those highs and inverse head and shoulders so you can see that confusion the moving averages are also supporting that as notice all those moving averages are going flatline uh both off of you know a shorter period a 5 a 13 and a 55 kind of fibonacci series that i've been utilizing and so the nasdaq is looking for its way to break one way or the other then finally the russell uh rut uh not as weak as the nasdaq but not as strong as the larger caps and this this may be a bit of a pause as you know the small caps have been some great out performers uh for some time um so whether that's just some profit taken or we're seeing uh some rotation possibly some concerns as far as the reopening uh trade uh and concern for yields uh we are seeing some weakness as uh notes of nasdaq has rolled over uh relatively strongly here from yesterday as price closed below the low of a high day and we're kind of inside that lower range today again you can see the potential pattern question mark as far as a head and shoulders top and pattern with the breakdown you know being taken out some of these previous lows so again kind of being more in a neutral area right there so kind of looking at some of the comments uh maestro uh understand that if you see a breakdown the s p we can see uh potentially trade one of the s p stocks this is just kind of an overall bias since many stocks do have a tendency of you know following what the market is doing um we're going to see there's probably going to be some outliers and we'll see if we have some setups with that today this is just kind of an overall market posture uh on saying that hey not everything is uh going in a lockstep to the upside or to the downside okay so a few ways of looking at it and yes if you are focusing on nasdaq stocks it's probably important to keep an eye on what that actual benchmark is doing okay um now some other things uh give some insight go in the market watch tab uh we've shared this with you uh where uh this is where you can also take a look at you know what some of the movers are in the pre-market uh i've shared with you the column for marked percentage change that's where you can before the market opens you can see some percentage changes based off of changes to the bid in the ask notice once the market's open you know you're going to see them pretty much be the same as the regular percent change which before the markets open is going to be showing zeros now you know one uh one area that if you wanted to look for stocks that may be making some significant changes in the pre-market this is one way of doing that again you can right click on any column header select customize and then look for mark percent change mark percent change and what that'll do is it'll show you those price changes based off of the bid and ask price changes in that pre-market so you can kind of get an idea potentially what are some of those movers now with that uh another way of looking for some of the movers is utilizing a scam and i'm going to go ahead and go to the scan tab and we'll share that with you let's see if i can bring this up as you can see i got quite a few scans here and i just had it previously let's see here here with me for just a moment just shows you i need to clean up some of my scans and we are actually going to talk about atr here in just a moment uh on scanning i must have misplaced it i had a pre-market scan but let me show you on how you can set that up on your own here i'm going to go ahead and clean this up right here uh you go ahead and select let's say a broad market index if you want or you can look for the whole market let's say i'll go ahead and bring up the s p 500. bear with me mouse is giving me a little fit here and what we can do is we can add different price filters uh one if you want to do it based off of price which is a common price filter uh you know you can go ahead and do that you know let's say you're looking for stocks that are trading over twenty dollars uh we can add another filter now some of these filters we're going to be talking about are going to be study filters if you have paper money you would not be able to use the study filters on paper money you'd have to set this up on your real account and i'm going to go to uh study filter here and go ahead and look for after hours percentage change i'm going to go ahead and add that and then here you can go ahead and set looking for a specific change based off the close the closes moved greater than a certain percentage in after hours trading so right now it's set for one percent uh here you've got a check box for extended hours and we got it set for a one minute time frame now if i go ahead and scan this right now uh you know we may probably aren't going to see anything at the moment and that's because the market's already open uh but if you run this uh you know after market hours during an earnings season or before the market opens you know usually in that last hour half hour you can get some insight on what stocks may be moving you can modify those percentages uh again you know the market watch tab again looking at market percentage change we'll highlight some of those for you as well you know as we kind of look at some of the movers on on the nasdaq 100 uh you know we're seeing uh baidu seeing some recovery on some of discretionary uh stocks uh like trip marriott let's go ahead and bring up a chart of marriott here mar see marriott uh found some support down around the 55 day moving average uh not quite a hold or price closing above the high the low day had a little tick above the other session we may see some of that move today let's go ahead and make a note of that and potentially looking at more of a what we call a diagonal breakout of that previous pullback kind of flat line at the moment uh let's see uh let's see the other one there t-com or on the travel side on the website little more weaker some traders may refer to this if they're looking at more of the bearish play more of a bear flag where we see a downward swing and a little more of a flag in action that may be at or below as far as a reference point i've been utilizing the 55-day move in average as an example to look for candidates for more for a bear flag the price was to fade and break below this would be an example of a bearish swing trade as traders may target that previous swing in this case to the downside and you know maybe look at a bearish spread trade as an example that we've done in the past to trade that down if the price was to break below let's see some some of the other movers so that's on the positive side on the negative side you can see a lot of the big growth stocks from broadcom tesla splunk xylinx as far as on the nasdaq hundred uh taking the bigger hit let's go and bring up the s p 500 take a look at that you can see a lot of the ones getting hit are more on the information technology area and whereas on any of the gainers have been on the staples staples have been doing some outperformance lately um unfortunately at the expense of growth you know there may be a rotation in the more defensive areas of the market such as consumer staples real estate we've seen some moves in utilities uh and the like speaking of which on utilities uh fe uh first energy uh is an example looking for an example of a cohold which we did have yesterday actually reviewed this earlier in the session price actually broke above and inside day we're kind of just inside today you know some swing traders may be looking for prices to possibly take out that previous high which this is a great uh segway into uh our discussion on atr um you'll notice right now this stock train at 34.88 you know its previous high is at around looks like just shy of about 36. that's
only about a a dollar move right there now if we go ahead and uh add the atr as far as visualization we'll go to studies we'll select edit studies and we'll go ahead and select atr towards the top of the list you shouldn't have to really search for it atr if i go ahead and click on the little question mark for it that's going to take you to the learning center what does the atr do well it's a study that calculates the average true price range over a time period the true range is going to be the greatest basically it looks for the the greatest difference between a a high and a low a high and a previous close or previous close and a current low so you know just kind of think of basically kind of like a candle essentially incorporating that whole range uh by default uh the settings 14 and we'll stick with 14 uh for our example based off of wilder's moving average uh 14 you'll see a commonly used period as it's tied a lot uh to uh as it's tied a lot to uh the lunar cycle which is 28 days 14 is half the lunar cycle so we went ahead we have that uh we'll double click to add that indicator by the way if you do have click on the question mark if you scroll down there is more details that will take you to the learning center which is a great resource would encourage if you're you know trying to learn about different indicators you know education learning center all things think or swim under technical analysis or any page you can go and type in any indicator you want and it'll go ahead and take you to that description of that indicator and as i mentioned you know this indicator may be utilized in in multiple ways we're going to focus on one for today let me incorporate some more tomorrow so i double clicked and that or not tomorrow next week so went ahead and added that we'll click apply and click ok and you'll see the indicator down on the bottom so you know in the case of first energy and looking at the value for that putting a cursor uh you know the current value is uh 0.79 right here so that implies is you know based off of you know the last 14 periods uh that the average daily range of this stock is about 79 cents uh now if one's looking at you know capture a a swing if we go back and you know look at a swing here you know this is a move of about you know four points uh over the course of about seven to ten days and so that seems to line up a bit with that atr notice the atr does change uh now if one's looking for larger swings then that would imply that the atr value you know would be higher also atr naturally is probably going to be higher on more expensive stocks you know such as a tesla where the average true range value is currently setting at about 47 so yes if you know one's looking for you know larger nominal moves you know they may focus on more expensive stocks and maybe utilize options or if they're doing individual stocks you know they may look for stocks with a a higher atr so we can go ahead and search for that as well and let's actually go ahead and do that so i'm going to go ahead and go to the scan tab uh we'll get rid of go ahead and do a little preset here and kind of a good starting point uh what we had uh started to do what was looking on the pre-market is you know you can start with an index or you can go ahead and you know look through the entire market if you want you can do it by category look for all optionable stocks i'll still stick with the 500 s p 500 we can always change it if you want to look at the nasdaq you can do that and i got it intersecting with all optionable uh from there uh have a price filter which is a stock filter so if you were to add it individually you just go to add filter and select stock uh right now i put a minimum of 10 you know you can go ahead and decide you know on you know whatever you know size you want you can go ahead and put in an upper filter if you want if you wanted to filter out uh more expensive stock so you know if i plugged in something like 500 or you know let's say 200 that would certainly filter out a stock like tesla then liquidity very important this is a study indicator uh so again uh to utilize this it would have to be on the uh real-time platform and that filter you know if you go under study uh you can go ahead and modify whatever comes up and if we uh go ahead and take a look at uh the link here you know under volume you can see that's where that average volume is you can go ahead and change that i already did have an example here the defaults like 50 period so you got a 50 period simple moving average greater than and right now it's showing 250 000. let's say from a swing trading perspective we're looking for some more liquidity and so i'll plug in a million shares all right so we got a million shares there looking at the daily period then we'll go ahead and we'll add another indicator i'll go ahead and do add filter we'll do another study filter and then we'll click on the drop down and you know you can go ahead and find your indicator possibly in some of these lists if you're not sure you can just go to custom and from in here you can go ahead and select your studies and values directly from here now we want to do is make sure that this is cleared out here so i'm going to just hit delete whatever default setting that was then i'm going to go ahead and select add a condition do add condition and then in the drop down we'll click and uh we'll go ahead and we'll select study and again we shouldn't have to look too hard there is a tr by the way you can see that there's other variations or studies for atr that you know we may incorporate we have incorporated the atr trailing stop in the past it's way back in the archive we'll probably talk about ways of doing that although we've utilized a parabolic sar as a little more effective uh trail and stop let's go ahead and go to study and we'll select atr and then uh in this case we'll leave the default settings of 14.
and then what we're concerned here is looking for a value and what we can do here is say looking for an atr that's greater or equal to a certain value so i'll go ahead and click on that and we'll select value and then we can go ahead and plug in you know what that value is you know let's say we're looking for a stock that has an atr uh where the stock moves at least a dollar fifty on a individual day okay so the average true range of a dollar fifty i'll go and i'll click save it says within one bar so that's basically within the current period so i'm gonna click save and there it is atr is greater than or equal to a buck and a half so click ok we're going to scan the s p 500 i'm going to go ahead and scan and basically there's about 200 stocks that you know have at least that buck 50 move so that's one way of you know managing a list a combination of liquidity uh price and incorporating a particular study if i go and do it on the nasdaq 100 we can go ahead and change that list as far as nasdaq 100 you know there are 49 that do that you know if i want to play around with this value you know i can go ahead and select edit we can edit that value okay well what about two atr or a value of two i should say not two atr uh click ok we'll do that and scan looks like it's working a little bit harder this time actually not a huge difference there so you know this is the way you look for stocks that are having you know uh you know an average move there let me go and switch this to uh the s p 500 again notice i'm also looking at all optionable and we'll scan that and you know on the s p since it's not as volatile uh as the uh nasdaq uh notice it did have more of an impact here as there's only 158 stocks uh that have that impact and you'll you'll notice as you look at these probably a lot of these stocks may be priced you know in the higher part of our searchable range you know these are stocks that are kind of in uh you know as high as around 200 dollars um there's you know some other stocks that are kind of in the 100 to 60 dollar range for instance there's southwest there which i believe uh southwest uh we've announced some purchases of uh some boeing flights or boeing planes if we bring up bowen ba and as much of a strong bounce although prices are trading above the high the low day all right so let me go ahead and actually share that scan with you again this is not a recommendation to endorse any scan or strategy i've showed you on how to manipulate these values so currently this is set for the s p 500 looking for stocks over a million shares between 20 and 200 and with an average daily range of uh atr of greater than or equal to two so go ahead and manipulate it make it your own let me go ahead and save the scan query i'll call it atr scan click save double check make sure that works then we'll go ahead and we'll share it we'll plug that in the chat for those of you that are here live with us allows me to do it and then for those of you that are listening to the archive session i will plug this in our scratch pad called atr scan and all one needs to do is basically uh paste in that uh seven character code it is case sensitive and i've told you once i told you twice i'll tell you three times and uh some people will still uh forget i said that you take that code you go up to setup and under setup there's a link that says open shared item so you got the gear in the far upper right hand corner you select open shared item and you paste in that seven uh digit character and i hate when the scan does this uh now i need to see if this is a uppercase i or a lowercase l and it is a lowercase l for those of you that are listening to the archive or are transcribing so that last character is a lowercase l not a capital i uh you load it if you load properly it should come up like this if you're on paper money once again it will be an error it will only work on a real-time platform since it is a study filter and uh there we go so on a real account you should be able to see something like this and again you can go ahead and manipulate these however way you'd like so if you found that helpful just a uh another way of you know being able to scan for stocks that may meet your criteria since swing traders are typically looking for stocks that may have a nominal move you know from days to weeks you know stocks with a higher atr uh may afford you that now keep in mind the balance you know some of those stocks may end up being more expensive uh so if you know one's trading stocks they may focus on an option trade uh or if they have a larger account that may not be as much of an issue or just trade a smaller block of shares uh let's go ahead and see uh you know based off of that you know as far as any setups now once you have a scan that's saved you can bring that up as a watch list over on the left hand side here or on your market watch tab so i'm going to click on the drop down and let's say i go ahead and bring that up should be up here atr scan so that would be a real-time dynamic list based off of uh the criteria i saved now this is looking at s p 500 stocks as an example um if i modified it to nasdaq 100 and saved it then it would be looking at nasdaq 100 and then this you know where some of the you know other script may come into play uh where i i do have script based off the moving averages again reference my pin tweet this is looking for stocks that may be trending up or down relative to uh the 5 the 13 and the 55 period moving average the ones that are in bright green are potentially more stronger trends the ones that are in light green are in potentially more weaker uptrends i think some of your patterns and consolidations uh whereas you know red would potentially be more down trending stocks or at least being below the 55 day average and on the pink ones uh the bearish trend may be weakening or potentially setting up for a bullish reversal although that's not a guarantee that that'll happen then our second column is the kaholt which is a common setup for which is a common setup for looking for the bounce and we can see a couple of stocks here let's say here's new core which potentially has a decent trend that may be bouncing let's look at that and looks like we got kind of a little more of a flag set up after a nice break and a run up here this is this would be something that a swing trader may be potentially keeping an eye on based off of that previous swing if the price was to kind of consolidate over this day and break higher may look for a potential move of a similar duration if i go ahead and let's say do a duplicate drawing here wherever that low of that flag may be may look to project out a similar move morgan stanley saw some comments from from barbara financials probably some of the stronger movers today after getting slammed yesterday a lot of concerns as far as with the the hedge fund apparently some of the major u.s firms supposedly not as exposed and so again a bit of a bounce back after selling off this is what happened from friday after the news hit there's continued bad news that the market open on monday and then we can see that potential recovery so some dip buying here on some of the financials we do have earnings coming up now for uh a classic swing trade we generally are looking for trading more of that momentum to the upside this would be a little more of an example of a reversal uh where you know some traders may be looking for a diagonal break of this trend if we were to trade this bounce we are fighting against some of that downward momentum you have a macd on here as well you know that kind of illustrates some of that too double d appreciate the kind words yeah this is where you know scans can be effective as far as you know real time if you know what you're looking for you know as far as you know stocks that meet certain criteria you can incorporate that you know you can even incorporate some fundamentals into the mix if you wish uh let's see uh mkc i believe uh that was uh one of the leaders that we looked at today kind of gapping on earnings and you can see also potentially a bullish reversal as price may be breaking away from that downtrend a lot of staple stocks have been showing some of these moves let's see if anything else may be setting up here on the airline front where's united airlines after uh bouncing last week uh not as much follow-through with the market selling off price is trying to trade higher uh this potentially being a higher low and prices trading above the high the low day that's what this hold attempts to look for let's see some of the other airlines like delta which is up today as well trying to push above that high and let's see we looked at uh southwest alright see what example of the swing trade we'll do today becomes a little more challenging as there's a lot of a lot of headwinds in certain areas now one area that i'd reviewed previous week with one of our affiliates was keep an eye on transportation here's chrw one of the truckers and you can see resistance we broke resistance retested and are trading higher on that right now so we have an example of an ascending triangle uh jb hunt another one jb hunts already leading on that and continuing higher and you know if you want to see other stocks that may be part of that group uh you can simply uh go to the market watch tab you can drill down for instance here's s p 500 i can go buy industry now this will actually look at all stocks but if i do buy industry uh go to industrials that's where transportation is part of you know here's road and rail i can go ahead and look at trucking companies or look at railroads let's do we'll do all here for an example and you'll see a potentially a big list that comes up uh again you can kind of utilize uh just some of this sorting here uh probably need to clean up the list as some of these stocks are no longer traded you know look for some of the more higher volume ones as we look at that well there's uber and lyft there's csx union pacific so you can see some of those and looking down there's kansas city and then looking at some of the uh trucking companies now some of these may not be as uh widely traded werner was another one was looking at as well and you can see werner kind of still holding up against that resistance these could be some of the catalysts going forward uh you know as far as with the bull market you know are these companies able to move stuff ksu and sit now i think kansas city is up for an acquisition uh with that being up let's look at unp looks like union pacific is kind of flagging out right now alright so go back on you know some of those uh transportations looks like chrw is probably one of the ones that may be a little more aligned uh to what we're looking at and i'm just going to do an example of a a long call spread this is something that i teach in the long verticals and diagonals class every wednesday or correction every thursday at 3 p.m uh you know if one wanted to uh you know they can also do a stock trade and potentially set a stop that's percentage below this breakout point you know let's say as an example three percent uh or you know do a defined risk spread which would have a defined risk uh if the trade was to break down so uh what i'll do is uh let's see what the options look like here and the options may not be as widely traded uh as looks like i don't have too much of a selection on that so we may end up having to end up doing the stock let's see well not too bad um looking for spreads that are less than ten percent of the ask price uh in this case uh you know no more than 47 cents this is a spread of about 30 cents you know not exactly tight but you know not wide either what we're going to do is uh we're going to uh buy uh a and at the money and then we're going to go ahead and sell uh an out of the money strike and uh that out of the money would potentially be where we believe the stock to be uh going at expiration now typically i would do these uh an example about 20 to 30 days out we don't have that luxury here but i'll do this since we're on it and time permitted for illustrative purposes uh you know based off the size of this pattern you know this is about a you know a four dollar move uh kind of along the lines of uh you know as far as with that atr um you know a little bit on the smaller side and there's around 100 range so if one believes that's trading above 100 they can go ahead and select that spread so let's go ahead and price this out and i can simply right click on the option that we're going to buy we're going to do buy vertical what makes this trade attractive you know for smaller accounts which barbara does teach a webcast on this you're welcome to join her that we're paying a relatively lower amount let's say i wanted to risk about 500 on the trade i can do this three times there is a little bit of a spread here so let's say i'm going to go ahead and adjust this in an attempt to get a fill to do about buck 35 it'll hit the confirm and send and you can see for an example now generally i'm looking for a little closer about one to one uh we're risking about 405 to make about 345. uh now the reason why the reward
isn't as great is the price is actually not that far away from where we're at for a maximum gain price needs to be trading above 100 at expiration if i did the 105 that would give a greater reward and so if i went ahead and did that let's say do 105 we are going to pay more for that spread but we also have a potentially greater reward if i do confirm and send you can see what the maximum loss would be and where the maximum gain nice thing about the spread as well is it doesn't necessarily have to move as strongly for the trade to be profitable the break even is relatively lower we just have to be above that 100 area now if we weren't as strongly bullish then we can select the 100 strike okay um so i'll go ahead and i'll actually leave this at the 105. i'm going to reduce the number of contracts since i mentioned uh it was closer to about 500 i'll go a little bit over here so we're going to be risking about 600 price would need to be trading above 100 for to be profitable at expiration and our maximum gain would be 8.76 so we'll do this trade and we'll go ahead and we'll manage that and we'll review this in a later session so i'm going to go ahead and send this through looks like we went ahead and we got that filled and we encourage you to practice what you learned here today as well folks so what we did is you know we kind of did a bit of a top-down looking at the market recognizing that as far as with the different market indices they're not all doing the same thing as we've seen in the past so one needs to be a little more selective as far as bullish or versus bearish trades if we still see some things continue to weaken we'll probably focus on some bearish swing trades as well as we've done in the past but would encourage to practice what you'll learn here today maybe that atr scan to look for stocks that have a higher daily range and practice with some of the similar swing setups that we did here today uh i do appreciate uh barbara helping us out on the chat today as always make sure you follow her on twitter as well as take a look at some of her webcasts uh including uh getting started with options uh and uh trading a small portfolio uh otherwise we'll let you go for today and remember folks in order to demonstrate the function out of the platform we did have to use actual symbols keep in mind td ameritrade does not make recommendations or terms and suitability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility so if you like what you learned today folks click like and we'll talk to you again real soon bye now [Music] you
2021-04-01 13:20
