Technically Speaking: Trading Stocks & Options | Ken Rose CMT | 11-5-19
What, are some of the key metrics that we might look to with, regards determining, is a market going to continue to move to the upside or could we possibly see, some breaking, and some weakening and a movement to the downside. You. So. Investors my goal here today is that we'll all have a have a good understanding of, looking. At a couple of key metrics one of them is a proprietary. Indicator. That we have here at TD Ameritrade it's called the market forecast, study we'll look at that a little bit of detail another. One is looking at moving average crossovers. We'll, be looking at these from a longer term perspective okay. Before. We get too far along though let's go ahead and run through our disclosures, to also just a little reminder you can follow me on twitter my twitter handle is at KR. O SC underscore. TD a what. Were there on Twitter I do post things related, to both technical, analysis, fundamental now so the stock market in general and the like so I can follow me on Twitter love to see you there as well where, discord is here today investors, just a reminder that. Options. Are now suitable for all investors a, special risk inherent options, trading makes well as investor potentially, rapid and substantial, losses we really won't be getting into options that much today primarily we'll, be looking at things from a stock, perspective. Do. Keep in mind that transaction, cost commits and other fees our important factors should be considered when, evaluating any trade in order to demonstrate the functionality the platform, we need to use actual symbols however TD Ameritrade, does not make recommendations. Already term the suitability of any security or strategy for individual traders any, investment decision you make in your self-directed, account is solely, your responsibility also. We do use the paper money software application, here this application, is for educational, purposes only successful. Versus trading at one time period does not guarantee successful. Investing of action funds during a later time period as market, conditions do, change, continuously. So. Here's a picture myself been, here for pretty close to 15, years started, here just wanted to pick, up a little bit of work during the summer I enjoyed what I was doing I enjoyed working here and times gone pretty fast great.
Environment, To work in I specialize, in blending. Both fundamental, and technical analysis. I came from a financial, background I worked, in in. Mortgage. Banking, along, with publishing and then some different areas in there so so, I do like to get into the fundamentals, with regards to companies I have a history of doing that from a mortgage bankers perspective, but I also like technical, analysis, as well I teach, Advanced Options along, with fundamental analysis courses as well as helped put those courses together and you may see me periodically, on the, TD Ameritrade. Network, as well so. Today. What we're going to be talking about you some, some of the key areas we'll be looking at as we'll be talking about how, to define long term investing, now as I did mentioned, we, will be looking at these areas but will will pay particular focus. In two, areas these two indicators the, market forecast study and also moving average crossover, we will spend a little bit of time though talking about long. Term investing, and how we can define long term investing, how, to perform, a market. Posture analysis, and this this is an area where that market forecast study will come into play also, potential. Entry and exit signals we'll. Talk about those talked about trade management, and techniques, as well talk. About how do we how to determine appropriate risk in position, sizing and. How to place orders on the thinkorswim platform so. We will go into each one of these areas I should say touch upon these areas but our primary areas, of focus here will be this. One right here market posture analysis, and. Potential. Entry and exit signals as they relate to two. Key studies we're going to be looking at here today one being the market forecast proprietary, study and the, other one being just. Using, moving, average, crossovers. And look, at it like that and as far as our analysis, right here. Okay. So with, that in mind then let's go ahead and, get underway well well well, well we'll use these slides to our benefit here but we will be kind of bouncing back and forth between the slides and the thinkorswim platform so. Long-term investment. Is. Sometimes. Consider to be held for it when we get back to that page there there we go a long-term investment is sometimes to be considered be held for at least 12 months or more this, is one way to define, a long term investment. Another. Way to determine a long-term investment is by simply analyzing, trends and indicators, on your chart using. Longer, aggregation. Periods, on the individual, candles, in other words using, rather than using a one-day aggregation, just shift it out and use a weekly aggregation. Long-term. Investors, may use some may use value, base growth based method, of investing, so this, this. This is part of long-term investing, that is a typical. Long-term, investor, they won't be swayed by the by the ups and downs of the market by a lot of the noise that goes on in the market on a day-by-day basis. They'll, be looking at things. To tend to have more of an impact over longer periods of time with, regards to individual, companies looking, at the fundamentals, of those individual, companies long-term investors may use technical analysis, as a method.
Of Initiating. New positions, in addition to fundamental, analysis to determine what. Investments, to consider so the key concept, there to keep in mind is long, term investment, long term investors, they, will tend to use fundamental, analysis, just let me underline this fundamental. Analysis, to determine the what and. Technical. Analysis, to determine, right. Here it says new we could also just call that. Excuse. My penmanship, here with the mouse when. So technical, analysis, possibly. Determining, when to when to take, a position when to get out of a position fundamental. Analysis, to consider what, positions, that what positions, may be into, what may it would may be of interest to that investor, long term investors, do. Stay aware of general, market, and sector, trends and we'll talk about the transfer going forward. Here momentarily so, so, that's just a little bit of a definition with regards to a long term investor, okay and. Why, we're here let's go ahead and. There. We go right here so here's our market watch what I want to do here on our market watch I just want to pull the thinkorswim platform, here. For just a second, and let's. Pull up aspx. Here for just a moment. We'll. Collapse our left-hand side here so that we can see a little bit clearer notice, it right here on the SPX, i've got a six-month chart and on this six-month chart each individual, candlestick. Represents. A day now, I'm at a 1-year chart in each individual, candlestick represents, a day so. Looking at this chart right here and in determining the trend we'll go back and look at the slides with regards to trends usually, when you're looking at a trend you're identifying, highs and lows. Yeah. And, let's just see if we can bring up a little drawing tool here and look at those we'll, come. Over here switch our color here a little bit so right. Here, there's a lo right there there's a lo right there there's a hi right there there's a hi right here right in here notice that we have a little. Grouping here of highs and lows. I have. This nice little uptrend, that's going on, match, the peaks and match the lows on the market did have a sell-off then we started to kick back in gear now we're kicking back in gear once, again well, this is a chart where each one of these candlesticks, represents. A day ok. It's, a one day chart, one, day one year chart well. Rather than say or you, could say in addition to saying that a long-term trend is a trade where you're going to be staying in it for at least a year we may not want to stay in stay in a trade for a year I mean think about it think about what could happen over the course of a year we.
May Just look at these trends you know these these, little ups and downs here notice right here we have this channel right here we. Might want to look at look at the channels, on different, charts but instead of determining. Whether in a long-term trend or downturn trend by how long we're in the trade we, can change the aggregation, period, for each one of our little candlesticks, right here that, by nature of, technical. Analysis, will, tend to keep us in trades longer, then. We then than we normally would and we wouldn't be getting getting, in and out of trades as often because the signals come less often when, each one of the candles were using, has, a longer, aggregation. Period or if we were going with a line chart and we use weekly aggregation, it would we would see the same thing less. Less. Peaks less troughs less, noise with regards to the overall market so, looking at it from a longer-term perspective then. Let's. Change our chart here I'm gonna I'm gonna go ahead and I'm going to stay with one year you can see we have a lot of ups and downs here I'm going to change this so so we're looking at weekly candle, I'm going to keep it at one year and we'll come in here to weekly candles, and. You can see this is quite a bit different isn't it quite. A bit different I got quite a bit of room over there on the right hand side let me just. We'll. Come in here to time access when you got weekly candles you're going out there 50 weeks you probably don't want to go that far let's just go ten, weeks. But. There again now, what are we saying on when we're looking at one year and a day we were seeing multiple. Multiple. Highs. And lows to look at it could be there could be potential, entry and exit signals over different periods of time now, what do we've got over a period of year we, got a low here, got, a high here at, a low. Got a high here, we, got a low here, so looking. At this how many potential. Entries do we have based on bounces, and trends, well. Over the course of a year we have one here, one entry. There's. Two entries, and. There's. Three entries. And. There's two, exits, two potential, exits in between those entries if we're playing the trend we.
Probably Wouldn't, after we took this entry right here we. We, may not be looking at any X's because we've continued, notice how our lows, have. Gotten progressively higher. As, we've. Got along here, so. Keep that in mind investors, we're talking about about. Long-term, trend, versus short-term trend, we. Can identify the, trend, that we're looking on and the trend that we're trading in by. The aggregation. Of the candles, that we're using, rather. Than say I'm going to go out to this chart of this chart or possibly in addition to saying that we, can simplify things I say hey you know what if I'm using charts, where each candle stick represents, a day that's a short-term chart if, I'm using candlesticks, for each candlestick, represents, a week that's a longer-term chart, if, I want to go even longer term I can go to it monthly, candlesticks. As well, okay. Well, with that in mind then. Let's. Come back over here to our slides I just wanted to touch upon now we're looking at that so, with, regards to determining, your market posture, and one of the things we looked at was trend we can also use, indicators, to. Help us in determining market posture. One. Of those indicators, can be a moving average crossover, type of a situation and, if we look what we have right here we'll, just make a few notes in here as well it's changed. A color or a little, drawing tool right here so. Long. Term. Months. Two years this is a key here weekly chart I would suggest that that's going to be your key right there a bullish. Indicator would, be when, a 10 period, exponential, moving average. Is above. A, 4040. Period exponential, moving average, a bearish. Indicator, would be when the 10 period exponential, moving average, is, below the 4840, period, exponential, moving average, a, transition. Period could be two. To three weeks. Following. A crossover, in other words if we have a situation where, one is crossed like right, right right here's a little sample here like right, here, okay, notice. Notice, here that we're using weekly, charts, okay right. Here what's occurred well what's occurred right here is that, the ten, period. Exponential, moving average, now notice what this is since it's a weekly chart it's a ten week. Moving. Average when. The ten week moving average crosses below the 40 week, moving, average that's an indication of bearishness what they're suggesting here, is you, can choose to use a transitionary. Period you, don't need to but, you can choose to use a transitionary, period of. Two to three weeks in other words the, crossover, occurs right here. But. Before we take various action, we might want to wait two. Or three weeks I'd be one here so right here then, Friday. Of this week would possibly be the time we're gonna say hey this, looks like it's going to hold maybe I want to get out of the trade or, maybe we look at and say hey wait a minute, looks like we maybe we found a base here I'm not ready to get out of the tray and you could hold on to it have it go up here and it goes up here breaks right here, we, go one two then right here would be saying okay do I want a is, a time to enter this trader is it not well. Now. That. That would be based based on whatever your transitionary, period is, what, some investors, will do those that look at it from this standpoint. When. Is when they when the underlying security. Is moving down like this. So. That both these lines are moving to our moving down like this, that's, when the market forecast study could come into play because frequently when this will happen you'll. Have on the market forecast, what's called a bullish, cluster, and we'll talk about that here momentarily, and, coming. Out of that bowl each cluster they'll use that as a first indication, with. Regards, to turn around and then, perhaps. At that particular time they may enter in a portion, of a position maybe. Ten maybe twenty maybe thirty maybe, a greater percentage of the, position, that they intend to enter in and then, they may hold on until both, of these moving averages are moving up right here. Both. Of them are moving up and then. When. The 10 crosses, above the 50 then look at that as an entry notice, right here that, when. We're breaking above right, in this area right here when we're breaking above, the. 50 right there the 50 is primarily, flat that's. It's really not moving up here, it has a little bit more no back here to change direction and it's starting to go up here and it's continued to go up so that would be a consideration, that some traders would be looking at when, looking at this at looking at this market posture, analysis, is using two indicators, and again we'll, be looking at the market forecast line here momentarily.
So. That is that, that was that was on a weekly chart okay well, now we're looking at things from a from a daily chart perspective, here we have bullish, indicator 30. Period, now right right, right here we are using, we're, using a shorter time frame and we're using different indicators using a 30 period simple moving average, we're, just simply saying is it rising. Here. We are right here notice this is not an exponential, this is a simple period moving average is, it rising if it's rising and if the price is consistently, staying above it that indicates, bullishness on the other hand if the. S if the if the 30 period simple moving average, is falling, right now it's not falling but if it was falling and the price was consistently, staying below it that would be considered to be a bearish, indicator, and that may be this combination, is using a simple 30 period moving average is it rising or is it falling as a price above it as a price below that, can be used as a bullish. Indicator and, also as a bearish indicator, now, here. We. Have a neutral indicated, neutral indicator 30 period simple moving average is flat or oscillating, and price is trading within, a range maybe, we can just take a kind, of show you what something like that would look like we're primarily for this session we're primarily going to be focused on the long-term aspect, of things but let's, say they let's say that you have price going like this. Let's. Basically go in sideways you have a moving average line and price, is just you're, just moving up and down on both sides of it like that typically, when you have that you have a chalk that's the stock that is moving in a channel, and you're looking for the stock is going to break out of that challenge I'm going to break down. It's, gonna break out to the upside is are going to break out to the downside, now right down here folks we see right down here this is our market forecast, study. We'll, check out here when this is going to come up on a slide we're going to go into some detail look. In the market forecast study not only from the standpoint of a shorter. Term chart which is using daily candles here but also possibly with, regards to a longer-term, chart. Okay. We and we basically discussed this and for purposes of our discussion here we're defining, short-term. Trade and long-term trade based, on the aggregation, period, that we're using you, can set it into a time frame you, can say short-term is days to weeks you, know let's go back here. Let's. Go, back here a little bit more there we go. Short-term, here days weeks or or, in addition to that we can just use the aggregation, I think you may sense that my preference. My. Preference. With regards, to looking at charts it's to lean a little bit more towards, that area not necessarily, completely. But lean a little bit more towards that area of using aggregation, just, because it tends to be a simpler, concept, that, you can that. You can grasp and you can use okay but, that doesn't necessarily mean, it's the best cause it's it's the best way to do it if. You want if you want to determine long. Term short term by using other methods there's nothing wrong with that okay. All, right so what have we got coming on here next then we got market posture. Daily. Chart a high so, this, this is basically talking about trend a high, in the trend is established, when the stock closes, below, the, low of the high day in other words high, in a trend is just basically the stocks gone up it's found a resistance, level it's rolled over and it started to head down the. Confirmation. Of when that's occurred that you can use is you can just say you have a closed right, here that's below the low right, there of the high day so that, creates. A peak that creates, a resistance. Level on the chart one of those Peaks a low, and the trend is established, when the stock closes above the high the low day so right here we're, marching down okay. Right, here this is the low day this is the lowest point we start moving up here, but, we don't get a close above the high of this low day until right here so we can use what's called a K hold close above the high to low day to confirm, a support, level we can use a CBL.
Ohd, Whatever you want to call that code. Okay. As identifying. A potential, resistance level, up in this up up in this area right here. So. Right here we're right here this is where we start getting into our market forecast, indicator, so. The market forecast indicator, is a proprietary, indicator. We. Can look at it on on the slides or what I'd like to do to discuss, this I like to go over to the thinkorswim platform to. Take a peek at this so let's do that we'll come over here to thinkorswim platform and, right, here I'm just going to blow this up I'm going to make it a little bit bigger here. There. We have it right there okay. Notice. That notice that the market forecast, has three lines okay. It's. Got a it, has, what's called an intermediate line, which is the green line. It's. Got a a momentum, line which is the red line right here and, it's got an intermediate, line which is the blue line right here this, this this proprietary indicator. Is giving, us a short-term, forecast. An intermediate, term for a short-term forecast, okay, which, is your which is your momentum, line, okay. And and. The longer-term really, is this Green Line which is your intermediate, line so this is momentum, the Green Line is your, intermediate line the, blue line you, know. What, you, know the the common, name for the blue line escapes, me at this point okay but. This but this would be momentum this would be intermediate let's just say the blue line is in between the two the important, thing to keep in mind here though isn't, isn't a bunch of names it's more what the forecast is when, the red line here this momentum, line is in little reversal zone and breaks out it's giving you a forecast, of about one to three days, okay. When, the blue line gets in this low reversal, zone and breaks out it's giving you a forecast, of moving to the upside somewhere, in the neighborhood of about of about three to seven days when. The Green Line breaks out of this little reversal zone a starts moving to the upside it's giving you a forecast, now now, I'm saying days here but what I should be saying is candles, okay because right now we're actually on a weekly chart so. Rather than rather than rather than one to three days we're talking about one to three weeks when we're on this longer-term chart when, the intermediate, line break breaks out of here you're looking at something a little bit more lasting, probably, somewhere in the neighborhood of about one and a half to three one.
And A half to three weeks, on a daily chart and, we're probably looking at somewhere in the neighborhood, of about. More. Than a mornay more in the neighborhood of, of about two. Three, weeks to a month when, we're looking at a weekly, chart so. This is this is what this indicator is giving us a key part of this indicator, is what is called clusters. And right, over here the cluster occurs when what happens, the, cluster occurs when, all three lines get. In the lower reversal, zone like right over here which occurred back, here in December remember, the sell-off that we had at. The end of 2018. Hopefully. Hopefully from a bullish perspective, we can avoid that it going, into going to going into the end of 2019. Now, everybody's, expecting, the old Santa Claus rally and boy Santa Claus just did not show up right we, had so we had to sell out this created, what's called a bullish cluster right here now. The, signal, for the bullish cluster, is when. The intermediate, line breaks. Out of that lower reversal, zone which occurred right here and, you, can see that the market basically. Has moved up strongly since then we kind of get an idea of the percentage, move here. We are right here we breakout right here so if we come here and. We come up to where we're at right now the markets, moved up by about 21%. Since, that occurs now does that always happen it, doesn't, always happen you, know the the, the the, indicator. Can, can, be effectively, used and can help to kind, of can help to can help you to improve your performance but, it's not perfect you know it does have some misfires here. And there and we always want to keep that in mind okay, now. The moving average crossover, right here we're talking about this a little bit earlier. About, when these lines cross let's. Look at right. Here on. Our chart right here the green line represents, the, the. 20-period. Moving average and the Gold Line represents the 50 period moving average on this well let's, see do we have 10 and 50 here looks like we actually have a 1040. Right here let's, shift those around a little bit because we want to match them up with the slides that we're talking about here and. On. Those slides we were talking about a 2040, if I believe. Let's. Just double check no actually actually we were, actually, for purposes of our discussion here we're using a 10 and a 40, exponential. Moving average, so, let's. Go ahead and we'll stay with that. What. Have we got here so we have a 10 here and we have a 40 here yes so we're so we're good to stay with that and right now we're using weekly, aggregation, I'm going to change our aggregation, your investors, back to a day. Just. For just for a momentarily, momentarily. Here, I want, to come over here over here I've got I've got a listing of stocks that make up the S&P 500. And. I just, want to check something here, carefully, if. We got a 10 and a 40 there so. Notice here I can go through this lecture that represent the S&P 500 I, can go through one stock at a time if. I want to just identify something. Where, the 10 is, starting, to cross above, at. 40 period moving average or, I can use some technology, here and sort this column and, this will just bring all the stocks in the S&P 500, where.
The Tennis crossing the 40 today, to. My list right here here's Netflix, right here and if, we pull up Netflix right here, let's see or we still, on a weekly here let's, move this back to, a day. Come. Over here today yeah, and let's go three months. We'll. Start off right there, and you can see right here maybe a little bit difficult to see but, the 10 is just starting. To cross right here above the 40, look, at axp right here same, thing is just starting to cross over HP. Same thing as just starting to cross over right here now. This is an important, thing that I like you to look, at here carefully. What. I can do here is I can right. Click on, this column, here this custom column, and come in here to edit formula. You'll. Be able to get to from customize we have it as a custom climb you need to come in here to edit formula, come here to edit formula, and right up here I can change my aggregation, ignore. This stuff just. Leave it alone just come up here and change your aggregation, so we're going to change this aggregation, to a week. I'm. Going to apply that we're gonna say ok and I. Was doing some recalculations. Here now, we have ones for weekly charts let's change our chart here because our purpose of our discussion here today was. To look at things from a longer perspective. So. We're going to go ahead and use our longer term chart, now we've got all these guys here whether we should be look at these from a longer perspective where, these lines are crossing. And. I just want to catch a questioner go along here there's. A study fork a hold is there one for KB, lol, ohd yeah there is actually. And. See Harris not quite following on the indicator it's about volume, so on the indicator, right here this this market forecast indicated, let me just explain, a little bit a little bit a, little bit more detail here this, is all about price movement, okay, the, market forecast, does not take into consideration, volume, it, just looks at price movement, if you're, familiar with the stochastic. Syndicator. Looks, at overbought, and oversold. It. It follows that same type, of a type, of a scenario it, is proprietary. In nature okay, but, I can't tell you this it doesn't take into consideration, volume it's looking at price movement, over different periods of time it's looking at averages, with regards to that price movement and in doing that it's, identifying, overbought, overbought, areas, and oversold areas and. In, thinking about this right here I just want to do one other thing here investors, I'm going to come in here you know, in teaching, this I think I'm trying to squeeze too much into. Too short of a period of time and I apologize for that I just, kind of get excited about this time of the oh there's all this neat stuff would like to share with everybody and. But. This is but this is being recorded okay. But. This this really is some these are these are these are some really nice cool tools that. Are available to you for your use and I, want to make them available to you so I, come. Over here, and. Let's. Say this is our market. Forecasts. And, let. Me grab this right here. Let me make this a little bit bigger here. There. We go and I I'm gonna come back to this okay but, that is our that's that that's the nature of our market forecast study right here okay, so we've changed to weekly charge now I come over here and click. On this and here's. My 1040. There's the ten just crossing there I could go through these very quickly here's. The ten just crossing right here. Here's. Here's, the ten just getting ready to cross now the slides, and we're, probably not going to get through all those slides but I'm not too worried about that because I want to get through the, meat of what we want to do here today so we solu it so we have a kind of a cleaner and clearer understanding of, this a bullish. Signal from. A technical analysis, standpoint on a long-term chart could. Be in using, these in combinations, it could be when, the ten crosses. Above the. 40, and the, intermediate line, is either above, this, 80 area, right here or, it's between the 20 and 80 and moving up so with. HS, a be a potential, bullish entry signal it would be, SNA. It, would be a potential.
Hii. Potential. Looks like most of these would represent some, potential. Bullish. Entry signals, because we have the, ten crossing, the forty right here in, looking at this we do want to keep in mind that the the price could, reverse a start to move to the downside there's no guarantee, that that is not going to happen okay. Now. You may wonder about this market forecast line because we talked about you. Know earlier we talked about Polish, clusters. And how sometimes, if the, stock is moving down. Okay. We. May have a bullish, cluster, signal, before. We get a moving average crossover, signal, right here. That's. A possibility, and some investors, will use these in concert with each other well, here we have another custom, column, and, let's just make sure we got our I'm going to go to edit formula, here I want, to match up our aggregation, I'm going to set this to weak. I'm. Gonna play now remember, how I did that okay because I've, got some links here that you can use to build these you, want to know how to go in change the aggregation remember. Bringing, over as a custom column right, click on the name of the column. Edit. Formula, right. Here's where you change your aggregation, don't mess around with this that could be problematic, unless. You want to get into think scripting and stuff then go ahead and have at it alright but. If you just want to be careful about that okay, so, right here it looks like because the markets been as strong as it has we. Don't have a lot of what would be called bullish, clusters, in the S&P 500 because, in order to get all three lines down here it takes quite a sell-off in fact I only see one here bullish cluster on 80s and. Here we have a right here we can see here, you. Come over here I, just. Highlight, this for you. There's. A bullish cluster we have all three lines in little reversal zone does that mean it's time to buy the stock, it doesn't, it. Doesn't okay. The, signal for a bullish cluster, is when, the intermediate, line breaks, out of that low reversal, zone notice, we also have a bullish cluster here. Okay. We, broke out what happened the stock went up for a few weeks but then it. Rien sued and the trend continued to go down right. Over, here we have a. Bullish. Cluster, here's, our signal what happened and when we got this signal we got a signal here the stock went up for one week went. Sideways and, then it started to move down, so. This is what I said the bowl each cluster doesn't. Necessarily, guarantee, okay. That the stocks going to move up and have an extended move but it is an indication of that one. Thing you can identify is, when, you have the bullish cluster and then when you break out you, can look for a key area on the chart, for. Example like, right here we had are bullish cluster right here then. We break out right here you, may want to hold off until the stock actually breaks. Above a previous resistance level, to give you some kind of a confirmation. Right here I, think. I could and, I make that a flatline, pretty close but not quite, let's. Come over here and. You, may actually wait till you to get up here or maybe, you wait till you get a pullback and you get a bounce off of a high or low I would say that a lot of investors may be looking to something more along those lines, in, any case after, you get after you get your signal, here you may want to look at something technically, by, the way folks with regards to looking. At some of these things from a technical analysis standpoint you. Know what as we've talked about these things you may feel a little bit overwhelmed with, regards to some of these concepts, okay now. I try to craft this so that it's beneficial to everyone but there still is that potential, that that, that potential tendency. For that to occur if that's the case I'd encourage you to attend our getting started series that's. At 11:00 a.m. Monday. And on, Monday. We have technical, analysis, at 11:00 a.m. on Thursday. We, have stocks and on Friday we have options in relationship, to our discussion, here the, Monday, and Thursday. Getting. Started webcast it again or at 11:00 a.m. Eastern Time those those would be a couple of those be a couple of great, sessions, to attend. Okay. Everybody so notice. Here we also have berries clusters, like click on here, all three in the upper reversal, zone. All. Three are you know I'm not seeing a bearish cluster here actually, unless. Well I can actually we do we have the red just getting up here and we have the blue and the green up here already and, this.
Here As well okay. This. Is just identifying for, you when you have these particular. Clusters. That are going on there's some other things you can do as far as having, a bearish cluster than a breakout but that does get a little bit more complicated so we've talked about using, the market forecast, study here with these reversal, zones we've, talked about using moving average crossovers. We've. Talked about using aggregation. Periods to differentiate, between long, term investing, and shorter term investing. Okay. And and. And in talking about these things that I want, to also share, some of these things with you okay so, this, is the market forecast column, this is the crossover. Right here let me just pull this up what, I encourage you to do is possibly just just take a screenshot. Of this. These. These are links that you can use these, are links that you can use to, build the same, study. The same custom calm the columns that we just discussed, these. Are links you could you can take a picture of this a screenshot, of it keep. In mind you can actually do this with just the last six digits right here the. Last six digits for the market forecast study that's this guy over right here our lowercase J, five for lower case u lower case M upper case n, lower. Case V for. The for them for the market, for the moving average crossovers. That's. This column right here, the. Last six digits for this is lowercase T the numeral nine lowercase, e lowercase, W uppercase. T lowercase. D uppercase, F again you can take a screenshot as well now. For the market forecasts, call neces column right here the. Last six digits are the numeral seven, it looks to me like an uppercase I, uppercase. T uppercase, Q lowercase, Y or, KC, and uppercase T if you, have those six digits, and, what you could do is you, could come up here to setup click on setup click, on open shared item just type them in here paste them in here click, on preview, you give a little box that says rename, you definitely want to rename it because if you don't rename it you'll, have a difficult time finding it difficult. Time finding it when you want to add it as a study to a chart or difficult, time finding it when you want to add it as a column over here on your watch list. Okay. Alright. Everybody so we would like to do a trade here though right let's. Come over here and. We'll. Bring these guys up to the up to the top here and let's. See what we can do here with regards to a trade wait. To see is where the both. The 20, and the 40 are moving up. And. Then, we get a crossover, that one was pretty close boy that one's pretty close isn't it you can see right here the, 40s just shifted into gears the, tense the tensest, shifting gears I think I said 20 I'm talking 10 on the 10 to the 20 they're just starting to move forward, and move, in and move into place and we also have the market for class line. Between, these two areas right here so. If we were going to do a trade then here on Morgan, Stanley, would. Want to identify this, resistance. Level that we broke above right here. There's. Our resistance, level let's look at the price point right, there we'll do edit properties let's, just see our price point. At. Forty five twenty one so that's a theoretical, support, level. 4521, we, also want to take into consideration the. Range of the stock tends to trade in from, in order to manage our risk appropriately, and right, down here let's collapse our let's, shorten, our market forecast here let's increase. Our Average True Range right, here this is Average True Range this, an indicator that's giving us an idea of the. Volatility. Of the individual, stock, you. Can take the average True Range and divided by the price of stock to kind of get an idea of how volatile, it is when you're comparing, volatility. From one stalk to another this, is giving you the range though from. The highs and the lows on, a because. We're using a weekly chart on a week by week basis. It also takes into consideration gaps. In his formulas, so those are also covered, no. But, some investors, will do is they want to give a stock some room because. It's, not unusual for stock to come down and test this old resistance, levels of support level maybe even drop down below it somewhat so. How much room do we want to give it below that well. This this is a week this is a weeks of volatility, will, play the part of the investor that's okay giving it giving it about half, half. Of the average true range when, using a weekly chart so, this is two two this is almost two dollars and fifty cents we'll take a dollar twenty-five here and. Using. That let's go ahead and run some numbers here so if. We're looking at the entering a trade it looks like we still have time before the market closed it looks like we'd be entering the trade at about forty eight we'll.
Put In an order to enter the trade at 4895, okay. So. Where. Where. Would our stop-loss, be though that's what we want to look at here initially, so, we're at 45. 21. Is our support level I'm going to subtract from that a, dollar. 25. And that tells me where the stop is absolute, awe. It's, going to be at 43. 96. So, how much risk do I have per share if I put in an order to get field of 48 91, we'll find the difference between these two it's. Gonna subtract from this. $48.95. This. Gives me my risk per share to shut this down risk, per share equals. $4.99. So. Let's play the part of the investor, that has $100,000. Account, doesn't. Want to risk. More. Than more, than more. Than. Let's, say that, doesn't want to risk more than, more. Than 5%. Of that on any one trade, okay. So 5% doesn't, want to risk more than $5,000. And doesn't. Want to invest, more. Than 10% on, any one trade it should be $10,000. Now. Keep in mind a stop loss is theoretical. In nature it, may or may not get you out if the stock gaps down a big way it's not going to get you out that. That anticipated. Stop level which was at 43 96 we could get filled at a price lower than that we want to keep that in mind when we're using stop losses, okay. But, using this so let's say let's, say our risk per share then is 499, if we don't want to risk more than 5,000. On, the trade then it would take our 5,000, were divided by a risk per share a. 499. And. That. Would suggest we could get, 208. Shares my. Numbers went weird there so I just want to run. That again. 5,000. Divided by. $4.99. It's. Going to be 1,000, two shares okay. 1,000. Two shares if we get 1,000, two shares and we pay, how. Much we're looking at forty, A's. Ninety-five. We've. Got 49 thousand, that's a lot more than that ten percent of our account right that's, like half of a $100,000. Account so we want to shift the years this and recalculate, we'll, just take our 10,000, maximum, investment. And. We'll divide that by our price to get in, forty-eight. 0.95, looks. Like we're looking at about 200, shares. So. How would we put together our order then we talked about managing, our risk I'd. Be put together our order we can do it right from the chart we can right click on the chart we can choose by custom, with. Stop when. This order comes up folks let's go ahead and set our quantity, here let's. See how we're doing on time you. Want to go 200 okay. The, order comes up it's important, to always set, your top line first in other words set your set your limit by price first because, if you set your stop price first when you come up here and set this it will change your stop price it may not be the price you wanted so. We said we're willing to pay one. $48.95. Our. Stop. Was. Going to be up down at forty three dollars and ninety six cents will, make that a good till cancel, order right, here and, we're. Looking at 200 shares now it's currently trading at forty eight ninety one when you put in a limit order that says okay I want to buy the stock but I don't want to pay more than forty eight ninety five if. It's currently trading at forty eight night it looks like the ask is forty eight ninety - we, should get filled at forty eight ninety to. Pray. We you think we should get filled 48 ninety-two for at least the first hundred shares after that if where you have if we have like a thousand, share order we yeah, it, may go up out after that first hundred shares the, first hundred shares we should get filled at forty eight ninety two I would suspect the entire two hundred shares would get filled at that point right there so. We got everything set up here stop and I'll set you know it looks like we're good to go we'll, click on this will. Send it in here and there, she goes there's, our field so though our order was filled there now it's sitting in there they continue, to go up would come in here since this is a weekly trade what would be the thing to do well, if you hear about some bad things going on about your company or something like that there's, no harm in coming in here and just seeing how it's doing on a day-by-day basis. Just, don't get too moved by things unless, something company's specific and, you know something something, unusual. Something has really got your concern just, filter out the day by day noise and, just primarily, like to, make an adjustment if you feel like there needs to be an adjustment on Friday, of each, week alright. Everybody so I'd encourage you basically do what we just did you know find a candidate, you. Can use these tools to put things together again. If you like to follow me on Twitter it's it's, at K ro sa ek then our OSE like the Rose underscore, t da I do.
Post Things related. To this type of stuff so and. And also updates, with regards to this type of stuff as well so, here's one final peak right here again, if you want to take a screenshot of that take. A screenshot of that and I think that can help you out and with, that let's. Just kind of I basically went through most all this stuff that I wanted to so let's skip right here to our disclosures. And just, reminder investors in order to demonstrate the functionality of platform we need these actual symbols, however, TD Ameritrade, does not make recommendations. With. Regards to the individual, strategies, and/or individual securities, and then the like and those decisions, with regards to those decisions, made in your self-directed account, so, be mindful of that, okay. Also. We used to pay for money application, that is for educational, purpose only everybody, it's been great having this opportunity substitute. Here today, and. I, want to wish all of you best of success in your investing, I hope you have a fantastic week, we. Want to double check over there in the chat window got a couple more minutes here. Let's. See from Marlin I would like to buy 100, then wait for that to drop and then buy again you can absolutely do that thanks Veronica appreciate. That Eric the, code for the market forecast, did not work for me okay. On, that one Eric I would. If. You want to if you want to shoot me a little note on Twitter, I, I'll. Try to respond, to it okay if because what I did what I actually need to see is the actual code that you put in cuz sometimes there are typos, I like, to get out after the clothes before the moving, average on a daily okay so that's if, there would you show us how to set up a trailing stop and, at least what I'll do is I'll put a note in here on a trailing stop and a percentage, little, bit out of time your day but I'll put a note in there for the next coach that teaches next time that, there was a desire there to look at a trailing stop loss from a percentage, basis. Alright, everybody, okay, well, thanks al RIA and nicole. And everybody else will go ahead and sign off here for today, again. Best, of success everybody. And we'll catch later we'll see ya thanks again.
2019-11-09 05:40
