Ask a Coach - Investor | Ken Rose, MBA, CMT | 11-19-20 | Trading thinkscript Custom Columns
Hello investors. And welcome to our ask a coach. Session here today. Hope you're having a great, day so far today interesting developments, in the market, uh with regards to what's currently going on there we're more than happy to, address, questions related to that area as well as strategies, as well as platforms, that's one of the things that i like about this session is we're free to go in whatever direction, that you all would like to go so let's go ahead and get underway here. Today. So just a reminder, you can follow me on twitter my twitter handle is at krosc. Underscore, tda. Where i post things related to this area as well as other areas of, investing. Moving right along here on our disclosures. Just to just a reminder that in order to demonstrate, the functionality of the platform, we need to use actual symbols however 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. We also use the paper money application, here this is for, demonstration, purposes, only. And we want to keep in mind that any level success that we may have in our paper trading account, isn't necessarily, indicative of the success you'll have in your actual live trading account, as market conditions, do change continuously. Here's a pitch myself been here since, 2004. I specialize, in blending both fundamental, analysis with technical, analysis. I love learning about this stuff there's always new technology. New concepts, and things to learn that's something that i love to do i love to teach it and i also love to trade it as well, i'm a contributor, on the td ameritrade network i'm a chartered market technician. And i work with things scripting building indicators, triggers as well as strategies. So, with regards to our session here today just a couple of. Uh heads up, we ask you to please submit questions that are definition. Platform, or strategy, oriented. An example of a definition, question would be what is a p e ratio. Definite, example of a platform, question b how do you add bollinger, bands. Strategy example what are some of the characteristics, of girl stocks. These sorts of questions tend to lead to an educational, discussion. For all that are in attendance. I'd like you to be about would like you to be careful, about questions that are specific. To a stock, or a personal position. For example, what do you think of xyz, company, i have difficulty, answering that one because it's specific to a stock. Physician, example. I have a vertical spread on nop should i exit we wouldn't really be able to address that question either because it's more personal. It's more personal in nature. These sorts of questions tend to lead to an advisory, discussion. And may only apply to a single attendee. When in doubt ask yourself am i trying. To learn or am i seeking, advice. This is a learning environment, and no advice is intended or offered. And having been said if you do have a question along these lines if you think about a little bit. You could you could rephrase, this question, and rephrase, it into a general, question. That comes in as a general question and those would be questions that of course. We would be able to address. So with that i'm going to come over here in the chat when i did have a couple questions that came to me via twitter. So we can look at those as well as any questions we have with the chat window thank you want to thank connie hill for being here, with us i'd also encourage you to follow connie on twitter as well i'm sure you i'm sure should be more than happy. To send over her twitter handle so that you can take a look at that. So, i've not seen any questions over there immediately, let's go ahead and address a couple of questions that i had over here on twitter to do that we're going to pull up. The, think or swim charts here so. Um in another, in a couple of other sessions i teach sometimes i'll teach sessions, on.
On Bull flags, and momentum, trading, and i also teach a session on short verticals. And in those sessions i use customized, columns. And over the last two or three days i've gotten like. Probably, seven to ten. Questions. And requests. As far as explaining, these columns and also how to load these columns. So these are these are three of the most commonly, uh used columns, that i have here. One is called breakouts. The other one here is called falling knives. And the other one here, is a, is, a flag column you know both flags and or bear flags so those are the three columns. Just explaining these a little bit with regards to the breakout, column. On the breakout column you're basically, you have a customized, column here that is looking at stocks. And trying to give you a heads up as far as a potential, breakout. And a potential, breakout would be something along these lines if we look at the spx, right here and also pull down here, it came up here, this is a resistance, level right here. And right here it broke out of that resistance, level right there so that's that's the type of things, that you're looking for with regards to breakout notice right here, the s p 500 came up here and it peaked right there. Well when the price hook came over here and broke above that that would be considered to be a breakdown. So that's that's what this customized, column is looking for, you'll notice that there's a number here breakout, two and breakout, one. If it says breakout, two then that is suggesting, that the breakout, occurred. Not, today. But but in the previous, day's market. If it says breakout one then that's that's looking that's that indicates, that the breakout, is actually occurring today. And you can pull these columns up during regular trading hours, and, and maybe, maybe, refresh, them, once or twice for those regular trading hours and they should give you, fresh signals, by the way these signals are not perfect, you know they they tend to do a fairly good job but they're not perfect, they're also not guaranteed. With regards to accuracy, or time or anything like that but to me but but they do tend to do a fairly good job. This one right here this falling knives column. What this does is this is meant to find stocks that are that are that are bullish, by nature. Generally, speaking notice. On the falling knives we have green ones here. And we also have red ones here so if we have red ones, that would be considered, a a bearish. Type of, a. A, bearish, a potential, berry, set up as it relates to falling knives, green wins is a potential, setup with regards, to wizard potential, bullish. Setup, and with regards to potential bullish set up we're basically talking about a stock that's moved up like this. Pulled back. Maybe moved up again maybe two or three times but, it's done something so that it is it has established, itself, as being in a in an uptrend. And then it starts to pull back like this now it's pulling back but it hasn't bounced.
If You look right here we have this bounce where it's pulled back and it's bouncing to the upside. But in this situation. It's just simply pulling back. So, when it's pulling back like that that's what we're that's what we're referring to when we call something. A falling knife. That is that it's pulling back and it hasn't bounced yet you know, you know what they say about when you try to catch a falling knife it's easy to get cut. And so, so there is an element of risk on these, but if, if the price is pulling back and it's approaching. A theoretical, support level you know previous resistance, levels or peaks. They can be theoretical, support levels we're approaching a support level, we can choose to do a trade. As it's pulling, back. There are some advantages, to that and there are some disadvantages. To that we discuss those a little bit more detail. In the in the session that i do on, on short verticals. But with regards to the customized, column here this is meant to find stocks. Where we have falling knives otherwise, they've pulled up, they're pulling back they haven't gone to bounce yet. And so you, so for the speculative, the more speculative, investor they may look to enter in a trade, anticipating. A bounce here, rather than seeing the bounce actually, occur. And over here if you look at the numbers here for falling knives here we have three. Here we have two here we have two, what that is suggesting, is that that's the length of time. For the pullback, in other words, we move up here then we pull back, one. Two days. Okay. That would be that would be more along the lines of this, two day falling knife, right here we have a three right here, that would suggest that we have a third day of moving to the downside, before we bounce to the upside. So you got two three and and and and and then you you can have you can have larger and larger numbers than three. That's the falling knives and right here is our is our flag column. I call it uh. Bull bear combo, column. It's just meant to find both flags we've actually already defined, or talked about what a bull flag is that's where the stock has come back and actually bounced, you know right there. We got that bounce right there that would be considered, to be a bull flag. Right here, rather than a falling knife it's bounced and started to move up like that. Then that's going to be a bull flag bounce where we pulled we moved up we pulled back rounds, actually bouncing. Okay. So so those are the those are the three columns right there. With regards, to adding these on your, on your platform, and being able to pull them up. Um. The uh. The, first, first of all you you'd want to get the link so i'm just going to pull up the links for one of these we'll do breakouts, right here, now by the way you don't need to do this part of it because i'll i'll provide you with the link for breakouts. All right, as far as having the link and then what to do with them, i'm going to come up here, versus, breakouts i'm going to do right click and i'm going to come down here and choose edit formula. And right here we have edit formula i'm going to come up here where it says share, and click on share by the way again don't don't worry about this you don't, i'm just doing this because i, want to share this with you. You don't actually need to do this because you're not sure you don't need to share, share with anyone in order to use it but, by doing that little step right there, i've copied the link into the computer's, memory. Okay. Now, i'm going to go ahead and send this to you over in the chat window. Okay. And i'm just going to use some, some shorthand here i'm going to choose breakout. And then we'll paste the link over there. In the chat window. Paste it, there it is right there just a reminder. It's not guaranteed, with regards to accuracy, time it's also not a recommendation. It's there for you if you want to use it which is fine if you don't want to use it then of course that's okay as well. So we'll send that over in the chat window. And then. I'm also going to. Create a little. Document, here. A little text document for those folks that are catching this. Session, as an archive. Recording. And we'll paste it in here, as well. I want to make this a little bit bigger. So that you can see it. Okay so there it is right there so if you catch this in archive recording you could you could just take a screenshot, of this by the way, you only need the last. Seven digits here you can use the whole link, but you only need the last seven digits in order to in order to implement, this.
Okay So that's breakouts, i'm also going to grab falling knives here grab this link here. By the way you can you can also sort those columns, to bring everything, up to the. Top. On that so if i wanted to get all the breakouts, to come up to the top i could come over here and sorry so these are all these are all potential, breakouts, here well maybe we'll look at a couple of these a little bit later on here. But i'm also going to send this over the chat window. And this is going to be the falling knives, i'm just going to call it fk. Okay. Just some shorthand, for over there in the chat window. And, we'll paste that again, not a recommendation. Anything like that. Not guaranteed. Accuracy, or time is there for you to use if you'd like. And then let's place this one in here as well. So the second one here. Is, falling knives. When you're looking at these on the chart so, i'm going to move these down here a little bit. Again for those of you that are catching this, as an archive recording. First one here is breakouts, the second one here is falling knives now i'm going to come over here and grab our. Our bowl our, our bowl bear flag one. And. We'll click this. And choose share here. We've got this here let's cancel, this. And i'll send this to you over in the chat window as well. And we'll just use, shorthand. Flag. And. Now you've got that one over the chat windows well again not guaranteed with scratch accuracy, time, not a recommendation. And then this will be the third one again the third one is the flag one so first one's breakout, second one's falling knife the third one is the flag one. And let's move these down. So that they can be seen. There we go so those of you that are are catching this as an archive recording, you can take a screenshot, and and and use them that way so, once you have the link how do you incorporate, it we'll just come up here to setup. Click on setup. Come down here and click on open shared item, and paste the link into this box right here. Okay, i pasted the entire link but again, if you're if you're if you're. If you're going to be taking the images just shut down the last seven digits right here and that that will work as well, then once you have the link click on preview.
And Then after you click on preview come over here and click on import. Then when you do that you'll get this little box here that says renaming, you definitely want to rename it. And you could give it any name you like because i already have these. I'm just going to give these a name so that i can find them, and hopefully at some time. Be able to delete them i say at some time because currently thinkorswim, is working on. On making it easier to delete some of these studies, okay i'll double check to see if they've completed that on this one but i'm not sure i'm just aaa. And then. Test. And then let's go with 11. 19. 20 but. You'd want to name here something like breakout for the breakout, something like, falling knives for falling knives and something like, flags for the flags, we're just doing this because i already have these i'm going to say okay, which i actually want to save just to show you how you pull them up, so once you save them these are custom columns. You bring up a watch this like we have here. And come up here where it says symbol do right click on symbol choose customize. And then over here under your available, items. They should be here under your available items so if i come up here i can scroll down or i can just type in three a's. There's three a's. And. It looks like, it is going to be right here. That one right there so i, add them right here and there it is, okay. So if i, so i so what i basically did is is i took one of those columns, okay and i added it, if you want to have all three you take all three columns give them separate names like we have all three right here, and then, load them up by, doing the process that we just did right click on symbol choose customize. Find them in here highlight them and then move them over that way. Okay. All right and, that's, that's, that i think i think we're in pretty good shape on that we should have a good understanding, of that so. Let's come i'm going to come back over here in the chat window then and see we got over here with regards to. Questions. So one question over here is the three better than the two on the falling, knives well that's that's a reasonable, question. Um. Just let's talk about that just a little bit. And to do that, maybe we can see if we can, find a falling knife here again these aren't, they're not guaranteed, but let's let's pull up cvs, right here this is indicating, we have a three falling knife on cvs. You can see right here we came up here. We, came down one. Two so we have three days to the downside, after this huge gap to the downside. Of course, cvs, was was impacted, by. The announcement. From amazon, they're going to be entering into the prescription, drug business. Cbs. Walgreens. And rite aid some of those other folks that provide prescription, grabs they all, they all they all pulled back significantly. Are they going to hold down there are they going to recover, well you know it's it's it's a little bit, you know we don't know for sure but we do know a couple things, that is that some industries, in some sectors have definitely been impacted, in a negative way. Uh by amazon. Um. Increasing, or beginning or competing with them but then some but then some have not. Now it hasn't been that long ago when amazon purchased whole foods. We saw kroger, we saw costco a lot of those ones tumble and bake and take some huge. Intraday, moves to the downside but they've actually, done a pretty good job of recovering at this point but the question is. Is the is the two or the three better. Well. I'm going to show you something, here, for purposes of our discussion, let's just kind of ignore this gap to the upside that we had here okay. Let's just look at it from this standpoint. Pull up, move up here and then a pullback, right here.
So Is a two better than a three. Well. On the pullback, here, it's not so much is a two day better than a three day, it's probably a little bit more along the lines, of how much of a retracement, do we have. From a tech from a technical, analysis, standpoint. You'd like to avoid a situation, where the pullback, is greater than 50, percent. Of the run-up. In other words, if we're going to measure this distance, right here, okay. And let's say let's say that at the top here we have. 100, percent at the bottom here we have zero percent. So we came up here wondering we're starting to pull back right here. If we get back let's say right here is fifty percent. Percent. If our pullback. Extends. Down, below that fifty percent line right there. We still have a bull flag but the problem is with the pullback, like that, when we recover and we start to head up. It creates a situation, where it's going to be more difficult, to get up here and make another higher high, we may actually roll over to lower high and then you could have some negative energy kick in. So for that reason, with regards to pullback. I'd say technicians, would like. Sort of like an ideal pullback, here. Not to go beyond. About 38, percent. Let's just say about 38. Right there. So whether, whether we're, two days three days four days or five days. A key thing, is you'd like to avoid a pullback that's greater than 50. It doesn't invalidate, the flag it just makes a little bit more difficult to make a higher high. And sort of a a. Sweet spot for some not necessarily, all but a sweet spot for some be that pullback. To come back possibly, to 38, or possibly, even, or even higher than that and start and start to move to the upside. Now a nice, tool you have if you want to measure that quickly. On the thinkorswim, platform. Is the fibonacci. Tool right here. Right down here at the bottom of your. Of your, of your platform, right here see where this t is right here. That t is there because the last thing we did here is we use the text tool. Well we're going to change, that now. We're going to come down here and click on that t so we have access these other tools. One of which is a fibonacci. Retracement, tool right here. So we'll click on that, and then we're going to use the fibonacci, retracement, tool to measure this distance. And this should also give us percentages. Okay. Now i'm not sure if we want to start at the top or start the bottom i'm going to start at the bottom here thinking the bottom is going to be 0.
And The top is going to be a hundred but you know what i was wrong. I just saw that we want to go up so we want to start where the 100 is going to be so we want to start up here with 100. And then we want to pull down like this. To come down here. Well, you know what actually the way these percentages, are going. I drew it, one way but the percentages, are going the opposite. I'm just looking at this so. Let's go back. And let's start at the bottom it's just the way they're putting in their percentages, which is fine. We'll go like this. Okay. So. So here is, zero but notice here we're coming down here is 23. Here's 38, percent, here's 50 percent. All the way down here to 100. Looks a little bit counterintuitive. To me but hey that's fine if, you know if, if they're drawn like that that's fine the key thing to keep in mind here, is you can use these fib numbers, to identify, that 38. Level. And we can see right here at this point. It came right down and touched that 38.2. Percent level, and now it's moving up which would be ideal from a flag perspective. Of course, we're kind of discounting, this huge gap to the upside be interesting to see what caused that. And and we may want to include it we may not want to include if we include that then then then it looks like perhaps, our, with that that would have an impact with regards to the proportions, here but, but that's what you'd be looking at with regards to the pullback, on that. Is, is, one consideration, be how many days but a greater consideration, would be. Where are we pulling back in relationship, to the overall. Previous move to the upside, right here. So let's take that one off here. Right there. Okay. All right it's just going to come back over here in the chat window. Um. See what we got with regards, to questions, here. Um. I see from adrian. What does custom expression, subscription. Limit exceeded, mean and how to remove, it so that that's that's a great question, because you do run into that periodically. So when you have these columns, right here. Particularly, custom columns. They call on a lot of the uh a lot of the resources. That are available, to you on the servers, at think or swim. And you can get to a point where the system will say okay. You're using, too many resources. Here, okay. You know you're. You're asking us to do too much if we do if we do more here it's it it then it's going to then just get a negative, impact, it could possibly negatively. Impact, other users. So what can you do about that, well one thing you can do about it is to decrease, the number of watch lists that you have opened. Like right here i just have one watch list open here. So you can first of all decrease the number of watches like you could have three or four watch lists over here, okay rather have three or four decrease the number you have, then secondly. Decrease, the number of columns that you're using within your watch list. Right here we just have one watch list open we have three columns going on here, okay. So far so good, we're not getting the we're, not getting the resource. Error, this is limit exceeded, so on and so forth. Okay. And then also look at look at the size of your watch it's like this this is one dollar wide liquid this is a little watch list we use for. For options trading. Okay. And i think we probably have 50 or 60 stocks here, if i come out here and maybe go to the public watch list. Of the russell, 2000. I moment of course, there it is right there custom, expression, right because this is such a large watch list. So, um. Those are those are some of the things that those are some of the things you can do about now there's two other things you can do. Okay. One is you can actually contact thinkorswim, and say you know what i keep getting this air is there a way to, free up some additional resources, for my platform. And there there are ways that they can do that so it's probably, worth a, you know click click on help on think or swim. Get a hold of someone in customer support explain to them the problem and say you know i really like to, be able to do what i'm doing here and i'd like to be able to accomplish that so that may also be, a possible, resolution, that, and then also possible resolution.
Is To take your watch this column right here. And convert it into a scan. Okay, you can convert it into a scan we actually talked about this. To some length, in a think script session that i did. Last tuesday, if you wanted to look at last tuesday's, think script session. That talks about converting, some of these columns. Into a scan so those are some of the, key things that you can do. In relationship. To that, okay. All right folks just coming back over here then. And. One question here from from rg. Could you enhance the bull flag column script, to consider, only retracements, less than 38 percent. It would be difficult. And i don't know how accurate, it would be. And the reason for that is, where do you start here i mean on this one we kind of we just said okay. Let's skip this right here. Okay. And we're and where do you start the up move here when you when you're looking at programming, the more subjective, it becomes the more difficult, it is to have something that has consistency. To meet, your expectations. Do we start do we start to flag all the way down here do we say okay this is a resistance level we broke above it let's let's start our let's let's start our pull here. So that that that would be the biggest uh. Challenge, to that. Is how do you measure. With regards to determining, that 38 percent. And i i would say that looking at thinking about programming, i think a lot of i think a lot of investors, would be just fine with you know what, let's just let's just identify, the flag and then we can pull them up and and look at some measurements, one thing you can do to. Help that go a little bit quicker. Is you can. You can come down here. And when you when you have your fibonacci. Set right here. Just, just, just have that set on this chart right here. And then come up here. And choose, what have we got here. Actually. Just do a right click on your chart right here come down here to style. And choose. Set chart default. When you do that. Whenever you bring up a stock it'll automatically, keep this fibonacci, tool, available, to you that will be the automatic, tool that comes up initially so that you can do those measurements. A lot of a lot of very good uh questions here today appreciate, that let me come back over here how are we doing on time wow our time's kind of. Slipping down here a little bit. Okay so so i have a question, here with regards, to, um dividends. The question itself is too specific, for me to answer but i think i can restate, it in a general way in in, in a way that i possibly, could address, it. And that is that a company. Announced, a dividend, today. Okay. And. The value. Of a, call option. Dropped. By five dollars and 55. Cents. Okay. So, how how would how would something like how would something like that occur. Well let's take a look at this let's just say you have a company and let's say the stock. Let's let's just look at this company right here let's whoops, let's shift gears here and. So here we have a stock, it's moved up and, where's a little drawing tool it's moved up. It's moved down. And right over here. We have a dividend. We we have an x dividend, date. And let's say that that dividend, there is going to be five dollars. Okay. Now the call option that we have keep in mind that call options. The higher the price of the stock the more the call option is worth. So maybe have a maybe we have a call option that gives us the right to buy the stock, because the right to buy this stock, maybe we have a call option. That has a 60 dollar strike price right here. Okay, and we have this we have this dividend, that's coming out it's five bucks and, we're, and we're just talking hypothetically. Here, the key thing to keep in mind is, there's going to be some investors, that are holding on to that stock. Just to capture this dividend. And once they get that dividend, they're okay selling the stock. So what happens on the x dividend date well it puts about five dollars, of pressure. On the stock in other words, they have the dividend, now, so they're okay selling the stock so the stock, it's not unusual.
It Does it doesn't always happen and a lot of it has to do with the with the amount of the dividend. That the amount of dividend, is significant. In relationship, to the price of stock, when that dividend, comes out what does the stock do. It moves down, in a strong way why because now you no longer get the dividend, after that, when the ex dividend, date hits right here we have a dividend. Okay. On that x date you no longer get the dividend now this is this is a 50 cent dividend, on a 60, stock and you can see by the price it didn't make a whole lot of difference. But it can make a difference. So if the dividend on the ex dividend, date you no longer get the dividend, that stock becomes, worth a little bit less to investors. The price moves down when the price moves down, that forces, the value of your call option, down. Right. Because now you have you still have the right to buy the stock at 60 dollars but, if you exercise, the right to buy it at 60. Instead of being able to turn around and sell it up here at 65. You can turn around and sell it for maybe 63. Or 62, or whatever. So the call option itself also loses value in that type of a situation. All right folks so. How we do oh man we're just about out of time. In fact i think we are out of time. And, i'll tell you what folks i'll let's just, i've i've got, i've got i've got quite a few other questions here but i'm not going to be able to get to all of them well i'm not going to be able to really. I'm just seeing if there's one here i could, address with just a minute or so left here. Um. Let's see from harshal. How can we remove it from available, items if we wanted to i have some duplicates, yeah. Yeah hard well i, i. I. I'm, basically wrestling with the same thing. How was it speaking at here is all these guys over here all this stuff. It would be nice if we could come in here and remove these. Because, you do tend to get a lot of duplicates, over here. And that's something that i've contacted, think think or swim about they have actually made some progress, we're now able to remove custom studies a little bit easier but we haven't quite got over. This we in these these are custom columns there's a difference between custom columns and custom studies but that is a. Known issue that folks are working on, all right well let's go ahead and wrap things up here for today. And to do that we want to come back over here.
Again Just a reminder, you can follow connie over on twitter that's at c-h-i-l-l. Underscore, tda, follow myself on twitter at, krosc. Underscore. Tda, love to see over there on twitter where i post things related to this area, as well as other areas of investing by the way i also have updates over there with regards to some of the scripts and things that i've written, in wave disclosure, just a reminder that, in order, to demonstrate, the function of the platform we need to use actual symbols however 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-corrected, account. Is, solely, your. Responsibility. Thanks again everybody for joining us today for ask, a coach, investor. Hope you have a great rest of your afternoon, and evening, and a wonderful rest of your week best of success you're investing, and just a reminder let's be careful out there the vaccine's, on the way let's be careful and get on the whole other side of this whole culvert thing as happy and healthy investors bye everybody, and hope to see you next. Week. You.