Order Types & Dollar Cost Averaging | Technically Speaking: Trading the Trend

Order Types & Dollar Cost Averaging | Technically Speaking: Trading the Trend

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[Music] [Music] hello and welcome to technically speaking trading the trend weeks to months my name is james boyd alongside with me got my good friend uh cameron may he's a fellow instructor in the chat uh and so you'll see him as initials uh cm or cameron so just know that it is cameraman we welcome him we also welcome tom julia grace seattle michelle todd robert annette uh many and many others good morning good afternoon to you just real quick as we talk about this this is really talking about trading the trend weeks to months so trying to really kind of have more passive holdings okay trying to find some stocks that are let's say not just a short-term uptrend but also let's say an uh intermediate to a longer-term uptrend and also trying to kind of build a portfolio of stocks that really kind of have that relative strength now today also remember as we get started remember with what we discussed it is for educational informational purposes only not investment advice recommendation of any security strategy or account type options are not suitable for all investors special risk and heritage trading options also understand that when we talk about uh demonstrating the function of the platform we will be using actual symbols remember that td ameritrade does not make any recommendations or determine suitability of any security or strategy for individual traders and also remember when we talk about uh big money platform that is for educational purposes only and also remember if we talk about options which we maybe will a little bit remember that if we talk about options remember what the option greeks are and what they are a sensitivity to now just real quick as we're actually getting going i kind of want to kind of talk about the three things we'll take a quick look at the market in sectors just briefly the second thing we're going to really be talking about is really short-term setups in intermediate upward trends maybe some stocks that have actually pulled back based and maybe are trying to reverse back to the upside and the third thing i want to talk about is i want to talk about exiting i want to talk about questions maybe that you might ask yourself and considering maybe might the investor consider selling the position and i actually have five questions that the investor might ask himself to kind of maybe guide that decision or what is kind of think on what is their strategy and why is it in the portfolio okay we're going to talk about that so just know we got a couple stocks that we're going to consider on selling today i'm going to look at the five questions and then actually answer those and that's going to determine should the paper money account sell those positions so let's go actually go ahead and hop right in so first off as we take a look at this i'm looking at you at the s p 500 now what you'll kind of notice is many investors have kind of been talking about james can this be maybe like a bull flag yeah sure right we said if it breaks the 10 could it actually pull back down to the 30. i want you to notice something that the nasdaq went down more than the s p did and the dow went down more than the s p did and if you look at those charts we're kind of maybe trying to find some buyers due to that 30 period moving average which for an intermediate investor long term that's not unusual okay but shorter term we've actually been in this little pullback for a couple days now if you look at the dow jones what you'll notice is i said it fell down deeper to the 30 period moving average what type of candle are we seeing actually right here and what you notice is some investments might call that ha ha ha ha and you know those hammers okay it's not unusual when you get it kind of a rally to the upside then it pulls back and if it breaks the tent it's not unusual every so often they can it can go down and touch a 30 period moving average now my comments today are not going to be bearish in nature okay and so they're going to kind of be talking about some bullish trades from a shorter term to intermediate to a longer term perspective so our focus is maybe with that idea of longer term to intermediate trends is looking for some stocks that might be bouncing off support or breaking out of resistance and the last one i really want to kind of take a look at here is really the nasdaq and if you actually take a look at the nasdaq it's also in that area of the 30 period moving average but not seeing as strong as a bounce as we've actually seen on the dow and that's so far okay now i know that some of you are thinking james you got to show us the vix well remember the vix has actually been above the 10 period moving average for the last two days the intraday lows have been at the 10 period moving average and remember when we talk about the investing triangle we said when you're in a lower vix environment and maybe even rising like we've been in lately it's not unusual to see utility staples healthcare reits lead now we said that let's go kind of actually double check when you're looking at your utilities actually did punch a brand new high yesterday okay but that's not where our comments are going to be on tuesday we really talked about some staple stocks we call it holy staple tuesday that might be where my comments might be a little bit but my comments actually here today and maybe some examples we might look at are really going to come from okay and by the way i want to say one thing on this notice when it broke the diagonal okay the diagonal break was really on that day which is like the day before the moving average crossover now we might be thinking dad gummit missed it there's nothing left well we wouldn't probably go that far okay we know that if it actually breaks a diagonal it can go back up to the horizontal and it might try to extend okay if you're a fibonacci person you know where we're going of that comment okay so just because it actually broke the diagonal horizontal doesn't mean the trends over it might be trying to extend in that intermediate to longer term trend so when i say intermediate i really mean let's say weeks to months when i say let's say longer term i'm talking about months to years okay and if we were to look at that chart that staple chart what you're going to notice is that's what the chart looks like it actually fell down flagged really back to that old breakout area and doing getting a little bounce here on that chart now again remember what we said be careful you'll run into people and i said this before so i'm gonna make fun of myself i was one of the people that said man you know staples and healthcare and utility stocks those are boring you gotta be careful about that there are some points where those sectors can actually shine but our focus actually here today is really gonna be in health care and if we actually take a look at health care and we said what type of maybe potential pattern do we actually see in healthcare what type of pattern do we see now you could say maybe a little sideways maybe it's a channel but i'm kind of looking at maybe where it actually had this kind of here and then what you're going to notice is here and then what you're going to notice is it's actually kind of come back up to here so our comments today are probably going to be primarily in healthcare but maybe some staples but if we go back to that if we kind of measure maybe the bowl if you're thinking cup and handle it comes so far as a bowl if you will or a cup haven't seen much of a handle yet and what you're going to notice is that's 146 from the support area to the resistance now technician they might kind of say james if it was to break out could it travel to that extension level we'll go to fibonacci by going to the percentage fibonacci retracement going to go right back to the prior high start drawing there draw down to where that support level is so we're drawing from high down to the low bodies of the candles and if you look at this you know it's trying to get above that 100 line if you drag it forward and said where could it potentially try to go don't know if it could maybe and you're gonna see that maybe it might try to go to 1529. okay so that's going to be something we actually talk about healthcare primarily today but then also i'm going to actually talk about staples now here's the big thing okay sometimes people might say things like oh yeah you know this morning it was down 12 cents look we're not talking about is it down 12 cents we're talking about is there a trend okay now what my comment my first comment is going to be in the staple area and what i want to do is i want to start with a stock called target the red dot okay now if we actually look at the red dot if i ask you to kind of tell me where do you see support where do you see it okay so if we kind of look at this chart in kind of this we've been in a pullback it gapped to the upside and over time it's kind of really created really like three lows one touch here another touch here another touch here so three times over time we've actually kind of seen that maybe that base of support might be let's say 208 okay now what you're now going to notice is if we said where is resistance oh you go back and actually kind of say oh you have a high you have another high slightly lower high and the price right back is right there so now what you're going to notice is kind of have a resistance right here now when you're investing you like to also think about well what neighborhood is this in well the neighborhood let's just call it retail now i said on monday if you look at the industry groups for monday retail was one of those areas that was kind of showing strength which retail and i'm talking retail uh in terms of stores food stores and we that's why we talk about kroger but the biggest extra thing is kind of think about what else is it what type of companies are in this by the way if i ask you that question what type of companies are in this well you might be thinking about well isn't walmart in this area too uh isn't casco in this area too uh what about a company called dollar tree what about a company called dollar general that has a lot of lines on it so this area it's not just kind of target we could actually say targets are the one that might be lagging the area now the idea is that maybe could target start to go more in line with maybe the industry group that's the idea so first off what we're going to really show is now i'm going to kind of go back on vj's comment he talked about kind of averaging into the position okay and what i'm going to do is you guys and gals know that i like to use a sheet of paper okay so i want to kind of bring up just real quick if i can just a quick sheet of paper and i want to kind of just write this down we can write on the chart but i'm going to kind of take a look at this from what is the current stock price now okay so let's kind of look at the current stock price we'll write it down as 220 228 11. i also kind of want to take a look at what is the atr remember the atr is actually defaulted to 14 days we're going to go that test tube we're actually going to go back and actually say let's add on that atr average true range we're going to kind of use that as a price filter okay and what we're going to do is say what is the average true range over the last 14 days the average click on apply okay now we can kind of see at the bottom here it's really 670. now

some short-term traders and also longer term advances they'll kind of say hey what is one atr they're going to try to get in and if that stock goes up more than one atr they try to add into the position they're trying to spread out that risk they're looking for more confirmation it's going to go back what's the atr it's about 670. and so this is going to be the first entry price this is actually going to be the second entry price first entry price add an atr the second entry price is going to be set at this will be the second entry price and we say the second entry price this will be a buy stop gtc order so first it's actually saying get in but then what it's actually doing is saying don't buy the other half of the position until the price goes up one atr higher than the first entry so let's go to work so let's say the investor says i'm going to buy the stock right click buy custom let's go with stop okay first entry price let's move this over well the first entry price we talked about let's kind of uh there we go 228 27 the prices moved up a little bit but we need to kind of look and see where the support level is but when you actually go back and look at this that kind of the bottom of this is 208 but maybe the investment says james i don't want to set the stop all the way at the bottom of the channel okay they might actually say i'm going to set the stop at the mid point of the channel just so you can follow along all i'm going to do is they're going to say where's that mid that where's that maybe potential support question whoop where's the support got about 218 i think it's 218 let's verify okay about what about 218 ish midpoint of the channel that is also at where the moving averages are if the investor said the stop which is just support less three percent well let's just kind of and i'm just doing this so you can follow along but if we kind of look at that and said what is that it's going to really be right at 211 46 okay now let's kind of put it back on there so we're going to take 211 46 and put the stop right there now this is half the order but what we got to actually do is if we want to kind of dollar cost average in let's say the investment said james in a normal position i like to do twenty thousand dollars but this is going to drop it down to half that by clicking on the pool balls percent dollar amount it's going to go right to where you can type in what amount of money does the investor want to put in 10 000 we're going to go ahead and just click right above that dollar sign snap on that little red icon it's going to be 43 shares now if we take a look at this if the investor says they're going to do that confirm and send and now what you're going to notice is the stop it's saying if we go to that price or less sell the stock it can be filled lower now notice if the investor does that that fills now we've got to go back to the second position okay we're gonna go back up to the chart let's kind of move our little sheet back over and say what's that potential second entry price 234.81 okay 234.81 i'm going to go right back 234

right click buy custom with stop now i'm going to type in that price 234 81 that's a buy stop gtc and that stop we could use the exact same stop we did on the first order but now you got to remember that on this is this is we got to change it back to the capital amount right and what was that capital amount for that other remaining half of the position if we set a full position was ten thousand dollars okay we're now going to see that it's gonna be about 42 shares and there's also something called a buy stop buy the stock if it goes to that price or higher and if that stock is purchased then the stop becomes valid now i want to stop for a moment and just kind of see are there any questions now paul actually says isn't target actually consumer discretionary you know i kind of think i think you could actually say you could say the same thing about walmart right i mean they have a sports aisle they have a bunch of stuff in there it's not staple last time i checked right there's a lot of are you tell so let me ask you this paul when you look at someone's cart as they go out of walmart look in their car do they need everything in that car is it a staple now hopefully you're laughing okay you probably and if your spouse has ever gone to the store and they said they needed some things you'll notice that maybe they didn't need everything they said okay maybe there were some items that were discretionary so i the point is i think we're talking about things that can be staplish but also discretionary as well okay so that's where some companies they're not just in the footprint of one sector they might have their foot in two sectors okay now yeah it reminds me i tell my kid here's 20 bucks just go in there and get the one thing you need my son comes out with like a foam finger a hat fishing pole right i'm like did you get what you need he goes yeah well how much money do you have left i i spent it so yeah anyway yeah i had to kind of teach them that little father-son moment right there yeah definitely learn there's some discretionary items in there now confirm and send now remember this is saying buy the stock if it gets to that price or higher okay now gonna go to actually where it says send now notice what it's doing is now here's the deal think about how many utility stocks just uh discretionary stocks staple stocks energy stocks uh health care stocks reach stocks do investors really practice setting buy stops order above resistance we would probably gently push back on that and say no most investors are they're reacting to what they're seeing instead of having a plan ahead of time they're reacting now i want to push back on this well james isn't one of the risk of that is that the stock wonder if it opens up at 250 okay couldn't that stock be filled at a higher price the answer is yes if the investor did not like that they can just change it to a buy stop limit it would still have a trigger to get in but then have a cap on what the investor was willing to buy the stock up to and we'll show that in our next example now if we actually take a look at this now so this actually right here if we actually look at this this is just a classic buy stop with a buy stop order and then with a sell stop buy stops could be better about why it's an investor even doing a buy stop okay let me kind of write this down because there's a question on this okay if we actually said buy market it's saying as soon as possible okay if the investor said buy limit at this price or lower some people like to say or better and if you're the buyer you're thinking or lower right if someone actually said a buy stop well they're saying at this price or higher why why are they waiting to buy or hide they probably wanted to maybe break resistance they're saying don't enter until okay price bounces up or breaks out okay so they're saying there's a condition don't get in until something happens like it bounces up or breaks out when we actually talked about a buy stop limit that is actually this whoop got a spell right that'd help and the buy stop limit is the same as stop but cats the entry price now let's just kind of show that okay so these are kind of those four okay a lot of times we don't do market orders we like to kind of have a cap of what it is okay so if we kind of said all these four which ones doesn't show probably the most probably these two okay now let's kind of show an example of this okay so let me actually bring up a stock and the stock i'm actually going to bring up is i'm going to bring up a stock and i'm going to go to the area let's kind of show a couple names now lately there's really been some stocks in that healthcare space that have just been like what on earth okay let me kind of just show us a couple stocks okay you got danaher i want to come back to that which is in the healthcare space but stocks like abbyv i mean what on earth okay and then if you actually look at a company like bristol myers and lisa used to kind of say the stock never went anywhere well one time in 10 years it actually went somewhere lisa you should be laughing and then if you look at a stock like lily eli lilly that is okay another stock pushing to the upside and then if you look at the stock maybe like abbott these are kind of stocks like abby and danaher they're not necessarily so much in the extension okay they're kind of stocks that have actually pulled back and they're trying to reverse okay now what i want to do is i want to kind of bring up the stock of danaher what do they actually do well we're going to go back to where it says analyze going to go back to where it says fundamentals going to bring it up now if you said i don't know what to do that's okay go to analyze go to fundamentals and now it's going to be right here where it says healthcare now what you're going to notice is it says they operate three segments life sciences and they do a lot of genes proteins metabolite cells a lot of cause of disease boy there's been a bunch of that and you're gonna see they're kind of all over the place in healthcare and now what you're going to see is some of the fundamentals etc okay but that's where if you want to get more information on or go to the company's website bang right there well let's go back to the charts and what stands out a little bit to this on this chart well we kind of had an old floor here and there was a little resistance here and sometimes when these stocks kind of they fall down 296 should really be that area of resistance well if that stock is maybe kind of pull back and bounce off the upward trending moving average and now that stock is actually doing a large green candle up into the area of resistance now we have to kind of think about technical analysis 10 10 and what is that well if the stock were to break resistance can the stock break resistance and try to go the next level resistance so what i want to do in this is i want to kind of show the example of a buy stop limit okay so let's say the investment said james i want to get if we go above that red candle days high and that high was at 300 and 96 cents okay so let's say the investor said don't get in until we get 20 cents above that and i'm just showing the order okay so i'm going to right click on the chart go to where it says buy custom and then go where it says with the oco bracket now why are you doing the bracket well we're going to put a target at 329 but we're also gonna set a stop okay so buy custom with those bracket now again why don't people maybe like a buy stop order they don't like it because that buy stop order it is a it's a market order buy the stock if it goes to at this price or higher but the risk is you don't know what the investor is going to buy it for okay fine let's take one step further let's do a buy stop and and make it a limit how do we do that well what we're going to do is going to go back right back down to where it says limit and we're going to go where it says stop limit so if we said look buy the stock if it goes 20 cents above 300 and uh 96 cents which was the high from a couple days ago we're just going to type in 301 16. now what the investor could actually do is they could say look buy it if it gets to that price or higher but i don't want to buy it any higher than 302 16. so what's happening is buying i think it's a 301 16 but i'll buy it one dollar higher than that just example given but no higher than that 302 16. so the investor is kind of placing a cap on what they're willing to bite up to now if the investor does this order it might not fill today maybe it's going to be a gtc order the limit the first limit is gonna we're gonna put it at the area of let's say 329.

so that way we can be kind of consistent with what we're seeing on the chart maybe the investor says james i'm gonna exit out 329 the resistance dated gtc and if the ambassador said james where do we see support okay let me kind of back this off for just a little smidge we're looking at where do we see support well when we actually go back and look at this and say well we had a run up in the price and it pulled back let's circle the pull back right up in price and then pull back where's the pullback to two areas lately where it pulled back to 285 and if it actually we if we actually said support is 285 we're really kind of saying hey maybe that three percent below that area is 276.45 why is someone actually talking about a buy stop or a buy stop limit they're saying look they want the price to really bounce up off support or they're trying to time the entry as it breaks out that's the purpose of these two orders don't buy it and kind of kind of put these in red okay these are saying look they're trying to buy it as bouncing off support up or as it's trying to break resistance and again i think a lot of people are weak in that area okay that doesn't mean they stay like that but i think it comes down to they don't understand the order type they don't understand when to use one order versus the other okay if they're saying i like the setup but it hasn't broken out yet they'd probably say i'm going to do a buy stop i'm going to do a buy stop limit those are really saying the same thing but one caps the price in which the investor is willing to buy it for there it is now if the investor actually said okay i'm going to take put the stop here and gonna actually set that stop at 276.45 day to gtc so here's what i'm going to do in this case is for time's sake i'm just going to go ahead and actually put this now by the way james did you come up with a fictitious dollar amount like you just said one dollar i did okay i absolutely did some investors might say i'm gonna do two dollars or 50 cents there's not some scientific historical study they're just saying an artificial number how high would the investor be willing to buy that stock for okay that's the up to the distraction of the investor sometimes people just do 50 cents or a dollar between the stop and the limit target and there's the sell stop confirm and send we'll read that out loud notice there's not a commission there send the order and i gotta double check well i actually might be running out of money in that account and i am oh my gosh so that i'll fix that order and it got rejected but i can actually see what the price was and i'll re-fix that after this class okay so one thing i want to kind of see are there any questions now if i see as there's any questions one of the stocks that's lately had like a moving average crossover is a stock like colgate palmolive cl okay more in the staple space if we also look at let's say the uh clorox that's one that's been lagging a little bit more but also had a moving average crossover as well one that i also want to just touch upon just briefly would be let's say procter gamble that's another one that actually had a recent moving average crossover and if we kind of just before we actually hit the questions and said what about a stock like pfizer i want to kind of just touch on this but before i do that last trade example before we talk about our third agenda item and talk about exits i want to kind of see if there's any questions okay now can you talk about the heads position you put on tuesday i am hollywood chiropractic associates i'm not going to talk about that today because that was not in my agenda item uh i won't talk about it as of right now based upon the current market condition it wouldn't be exited okay uh it's still going to be placed it's still in this portfolio i haven't changed anything about it okay now uh just real quick so if i actually kind of talk about this one first let's actually go back to what this looks like on the daily chart okay this looks like something if we said what is the trend it looks kind of more like an upward trend if we actually go back to let's say the three year weekly chart this is what the trend is showing okay and it kind of has periods where it goes up and then it pulls back it goes up and it pulls back and it goes up and it pulls back and what a lot of investors actually typically say is man i wish i would have bought when the macd was down and then turning up where was i and then the investor says i saw the stock romp again and i pulled back and i don't know where i was but i wish i would have bought the ambassador sans when the macd and it starts to turn back up how many of you know someone like that where he said i don't know where i was but maybe i kind of overlook things sometimes okay so if you take a look at this what you're going to notice is the stock ran up and it pulled back and the investor might say james this kind of really looks like a maybe a shorter term bull flag as it's pulled back to the 30 period moving average bullish engulfing closed above the high of the low weak and it might be trying to bounce back up to that prior high okay so let's kind of talk about this so if we were to actually take a look at this chart and zoom in what you're now going to notice is tell me what type of candle this is on april 5th what type of actually candle is this now i will talk about semiconductors i got two semiconductors we're going to talk about in terms of exits okay that right there is what's called an inverted hammer okay inverted hammers can happen near supports that is not a now some investors might take that as an entry some investors might say look i wanted to get above the high of the lowest most recent red candle which is april 4th that's an inverted hammer showing a potential bounce but now what you're going to notice is it didn't bounce up until here that was the close above the high the low day and if you actually look at let's say the next day and the next day and that is today the seventh so now we're starting to see more of a bounce up now let's see the investment now by the way this looks like massive but the investor might say james i wonder if they said i want to try to buy the stock maybe if it were going to pull back a little bit well what type of order would they do if they actually thought the stock might pull back a little bit if they said james i think the stock's going to pull back a little bit i want to buy at this price or lower well let's go back to our order types right buy market is buying saying just i'm going to buy as soon as possible by limit is saying at this price or lower but why are they using that order well they're using that order because they think they're thinking uh thinking that the price could pull back some and if that price actually pulls back some that does not mean a downtrend that means that it might be pulling back a little bit or fluctuating okay so the payment account is going to use a limit order so we're going to go back to this let's actually bring this up we're going to right click kind of right on 54.33 now remember i'm using a buy limit because maybe how many of you have ever seen a breakout and said geez it broke up pretty aggressively and i want to see the stock come back down a little bit you ever seen that you ever thought that i'm willing to consider an entry if the stock were to pull back a little bit that's a limited right that's a buy limit order okay now remember if we kind of go back to what we said before a stop limit when is someone using that remember they're doing that if they're really thinking it's bounced up aggressively or they're saying i want to see it bounce up aggressively or break out aggressively okay so those are things that maybe in that situation that haven't happened yet they're saying i want to get in when it bounces up aggressively or breaks out okay if they said it's already kind of starting to break out but i think the stock is starting to pull i want to try to buy if it were to pull back some they're probably going to use a limit order okay now let's actually put our cursor right there right click we're going to actually go back to where it says buy custom we're going to go to where it says with stop now it defaults to a limit here now notice the stock price is at 55.25 the

limits at 54.28 limit dated gtc because we don't know if the stock is going to come down to that today friday or monday we don't know okay so now what you're going to notice is the stop data gtc this is kind of your more classic order if we said hey where was the last area where it bounced up off support well it's about 50 74. okay so we actually took a look at this and said if we set a stop below 50 74 that would really be a stop of fit 49 21 and all i did there is i just took three percent below this recent low area okay now for time's sake i'm just going to leave it at 100 shares and now what i'm going to do is i'll put it in the ira and if we did that let's see if it can actually fill now remember that's a limit or buy it that price or lower sell if it goes to that price or less the sell is not valid until the order's entered and now what you're going to notice is if the investor says that's what i want to do send the order and now what you're going to see is the order sitting right here a lot of times we think when these stocks go up they can never vacuum come down at all that's not true you'll never know unless you put an order out there okay now let's actually go to the third agenda item which i think is probably like we're ready okay i'm bursting myself so let's say the investor said james this is all great and wonderful but can we talk about some positions what are some questions the investor might ask themselves in terms of exiting and i want to talk about potential exits okay now how many of you actually think this is probably the hardest part okay and after you know a couple years of doing this i kind of ask questions okay number one is especially if we're talking about trading between weeks to months question that i want to ask myself is is the stock holding a one to three month support level okay and it should be clear okay so if we look at a stock is that stock holding a one to three month support level meaning we want want price above okay so if we said hey the stock had a one to three month support level and we're now below that that's that's not good okay so that's the first thing is a stock holding a one to three month support level second question we want to ask yourself is what does the stock look like okay on the three year weekly chart question mark okay now if if you look at the weekly chart and you said my gosh it looks like a downtrend okay that's not a good sign okay if you look at the weekly chart which is kind of showing not just days but weeks months right that's not a good sign okay third if we're talking about is this is this stock that we're looking at is it in a performing sector and you're gonna see where i'm going with that is it in a performing sector okay and if you said james the stock i actually own is in financials and it's in commercial banking and is that a sector that's really performing and if you look at the sector you say it's not that's not a good sign either now two last questions i want to ask myself is would the investor consider a new entry today given no position so have you ever actually now think about this question okay so you bring up a stock let's say it's for example like goldman sachs and you ask yourself the question okay let's kind of go through the checklist okay you look at this and said okay is the stock holding a one to three month support level remember the investor wants to talk about that we go look at the chart we said uh well a one to three month support level uh we just got below that okay so we would have to say swing in a miss okay so that's not good then if we actually said what does the stock look like on the three-year weekly chart okay pull it up pull up the three-year weekly chart and if we can see a downtrend on this this is not good okay if we look at this chart we say wow we're all looking up at both moving averages does that tend to make money not typically okay it typically means there's negative momentum and there's negative trend okay so if we're talking about trading the term weeks to months that's probably not what the investor wants third question to ask ourselves is is this really in a performing sector well if we pulled up financials and especially if we looked at commercial banking this is an area that's not been performing well okay fourth question is would they consider a new entry today given no position and if the investor actually pulled this up and said you know my entries are not normally when they actually hit fresh new lows and the stock just broke support and it's an intermediate downward trend well maybe the investor might ask themselves why are they in the position and that's really the fifth question okay why is the investor in the position okay so these are kind of like the five questions i ask myself okay now sometimes we kind of fall in love with the stock don't we we just we fall in love with it we don't ever want to admit that our decision-making process led to a sub-par outcome the investor doesn't want to admit that now like in marriage if you make mistakes it's better to admit them sooner than later because those trends could become worse over time same idea with stocks okay now let's kind of bring up an example of maybe some stocks that are in this portfolio and we're going to ask ourselves those questions okay now i like to kind of think of this as that the investor really doesn't own i want you to kind of imagine that you know take take take kind of the investors mentality out of this stuff they own the stock think about it as if if someone called you up and said hey i'd like you to view my stocks and would maybe you consider owning these shares because when you take yourself out of it you're not as involved emotionally and you can answer those questions so if we looked at a stock like amd okay andy and you notice that shares of stock and it had a covered call we pull up actually the position i want to ask myself the questions what's the first question okay so if i actually pull this up one year daily and i ask myself the question where is the one to three month support level and if we pull this up and we said where's the one to three month support level uh i think we would actually say we are literally uh right on it and this is a very thin sheet of ice right if this stock actually started falling down below 100 we would actually have to say the stock is not meeting that criteria okay it's not and if we said question number two what does it look like in the three year weekly chart let's pull it up and find out if we look at a three year weekly chart and says what does it look like we would actually have to say god that's not great when you're looking when the price is looking up in the moving averages both of them that's not great okay question number three performing sector we could also say industry group industry group would be semiconductors pull the semiconductors what do we see on semiconductors same thing we see on the stock when we actually look at this and say would they consider a new entry today given no position okay well you pull back actually up that stock and we say amd and say do investors who are bullish typically say what i look for is a descending triangle to consider entry anyone builder pew or anyone so what you'll notice is most bullish investors don't talk about oh yeah what i'm looking for is a nice descending triangle to try to get in bullishly now they might say i might consider entry if the stock we're going to break out of resistance but if that stock is not really breaking out of resistance they might say i'm not looking to get in okay because this is a continuation pattern where the price might break to the downside so if we had a little bit more time you might say hey set a stop below that 102 level two to three percent and if it broke that this would actually be not meeting the criteria as far as actually staying in the position now let me kind of show you one that's been offensive or that has offended this portfolio well one of them that's been offensive has been citigroup now if i asked you first question where was the support on the stock let's say one on a one to three month basis well i think if we said one to three months we actually might say 59 55. so if you're breaking one to three months support levels this is not adding to the cause as far as being a trend trader question two what does the three year weekly chart look like and if this doesn't look good it's probably because the daily doesn't look good and if we pull this up and say what does it look like horrible what is the industry train look like of the sector commercial banking again not great fourth question if you didn't own the position today would the investor consider an entry question number five why is the investor in the position and now we really get down to the brass tax is it something emotional or is it something what's going on why wasn't there an exit so if the investor said james they're in the position but i don't want to lose 1900 my pushback to that would really be or the investor might ask themselves is well they might not like losing 1900 but would the investor like to lose more okay nobody likes to lose anything but the thing is if the investor doesn't get out of the positions that aren't meeting the criteria of longer term trend trades the bad apples can take away they could actually draw down the portfolio and they can offset some of the very strong trends so if you never fire the bad employees that are taking away from your business in your portfolio the good employees never are good enough to offset the ones that are bad so this is actually a very big point i want you to ask yourself these questions and evaluate stocks and maybe your own paid money portfolio that aren't doing that great okay now i'm out of my time here today we talked about today really uh discussing healthcare in staples our main focus was actually in healthcare we did actually take a look at doing example on target which was stable and discretionary we also brought the example pfizer and also thr we also mentioned the examples of when an investor might use one type of order versus another and the last thing we really brought up is questions the investor needs to ask themselves why are they in the positions that they're in and if they're actually violating okay four out of five of these okay and ask yourself that fifth question why are they in the position okay if we look at the first four and they're not really answering yes okay that's a bad sign that probably says that there's an intermediate to a downward trend now i'm out of my time here today i want to thank cameron and all of you for all of your questions and cameron's help if you enjoyed today's session reach out and you can smash that thumbs up button you can also subscribe to the trader talks channel as well now remember with what we actually discussed uh you could actually also uh remember that this has been recorded and remember with what we discussed the content was intended for educational informational purposes only thank you so much and i will be on twitter throughout the week and also early next week as well and with that said uh stay tuned for our next

2022-04-08 16:07

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