Sectors and the Swing | John McNichol | 9-10-19 | Swing Trading (days to weeks)

Sectors and the Swing | John McNichol | 9-10-19 | Swing Trading (days to weeks)

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Good. Morning everyone, John McNichol, here and this is swing trading days two weeks the. Topic, is going to be sector. And the swing so. Stick around. All. Right well good morning everyone, Ron Michele everyone else that's coming here live as, well as those you that are listening to the archived session, john McNichol once again for swing trading days to week September 10th. 2019. There's. My twitter handle on. The screen, if you'd like to follow me myself, as well as all their other fine instructors, here at TD Ameritrade education. Aren't accessible on, Twitter, where, you can go ahead and see some, information on the market some education, and hopefully some good humor, as well, let's, take care of her disclosures, and we'll get right into it. Options. Are not suitable for all investors as, these special risks inherent, to options trade and may expose investors, potentially, rapid and substantial. Losses carefully. Read the previous divided copy of characteristics, and risks of standardized options, spread. Straddles, and then the multi leg option strategies can entail substantial, transaction, costs including. Multiple commissions which may impact any potential, return these. Are advanced option strategies, that often involve greater and more complex, risk than single leg option trades and investors, should also consider, contacting, a tax advisor regarding. The tax treatment applicable. The spreads and other multi leg option, transactions. Now. In order to demonstrate the functionality of the platform, we need to use actual symbols, keeping. In mind TD Ameritrade does not make recommendations. Or determine, the suitability of any security or strategy, for individual traders any investment. Decision you make in your self-directed, account, is solely, your, responsibility. Transaction. Costs are important factors should be considered when evaluating in any trade now. We have a demo account that we're using for our practice trades looks, like a real account but it is not you. Have the ability to practice trades, as well utilizing. The paper-money application. Which, is for educational, purposes only and successful, virtual trading during one time period does not guarantee successful, investment of actual funds during, a later time period as those market conditions change continuously. Past, performance, the main security of strategy does not guarantee future results or, success and as, always all investing, involves, risk including a risk of loss now while this webcast discusses, technical analysis, other approaches. Include fundamental, analysis, may have served very different views and a stop order will, not guarantee an execution. At or near the activation, price once. Activated, they, compete with other income, and market orders and. Back-testing, any strategy, using, historical data is hypothetical, and no. Guarantee that the same strategy, implemented today would, produce similar, results. All. Right good morning you Diane. CW. Basil thanks for being here let's. Go ahead and bring up the thinkorswim platform let's. Discuss, our, agenda. For today, what. We'll do is we'll, take, a quick, look at the market, indices on seeing how they are setting up we'll. Look, at two of our practice. Trades. From. A previous session. We from two weeks ago Dollar, Tree and United Healthcare and seeing, how they're panning out and our, main topic will, be on, sectors. And the swing. Being. Able to look at a sector, and. Determine. In a potential, set up on some of the underlying, stocks, that may be part of that sector, our, learn objective, today is once.

Recognized In that pattern on an. Individual, stock being, able to place a practice. Trade based, off of the pattern all right. And. If you have any questions feel free to utilize the chat would certainly love to hear from you there. First. Off looking. At the S&P. This. Time we've also discussed, on, Twitter, as. Well. The. SP breaking out of that range over. The past week, it's. Kind of use some of our highlighted, tools here. And. It looks like we lost some drawn tones nope there we go. Talking. About this range in the, market that finally, broke out. The. Gold, line on the chart. References. A. Essentially. The midpoint. Of. The. Sell-off from, July. Midpoint. Of the weekly candle, and, I know it kind of did that little haphazardly, there. Up. Until today. Price had held. Right. Above that range, there kind, of dip below there today at the opening a little more on the negative as we're opening. Below there there. May be potential. To, weather. Test. The gap or possibly, even fill, it in, as. We look at it this is a typical. Potential. Flag, pattern. As we, go ahead and look at and. For some reason our drone tools are not functioning, as designed. Looking. At the previous, swing seeing. A pull back on that. As. Far as a swing, trader swings, are typically, looking to see if this, would continue to be a higher, low and. Probably. Would like to see it at least hold the, gap that's. What's a current on the SP at the moment there let's, go ahead and take a look at a few other ones here. On. NASDAQ, and the X. Now. Nasdaq, was a relatively. Weaker. At the opening, notice. We actually are starting off with a potential. Reversal. As. Price is trading below the. Low of the, high day. Also. Kind of highlighted, that midpoint. Of the weekly range from the sell-off in July had. Barely, held it yesterday and kind of below it today so we. May see a little more of a retest, of the, breakout as Nasdaq looks, like it's leading the, way on potentially, filling that gap. Bringing. Up djx for the Dow. Dow. Relatively. Stronger. At. Its opening, as. Even. Though it is down, still. Kind of in the low, range from, the previous day and. Holding. Above that midpoint. From. That sell-off, in, July there a. Lot. Of drivers on that you know industrial, stocks energy. Even. Financials, banks. I have, been up possibly. Supporting, the, Dow and. Then. Let's, look at the Russell. It's. Been talking a lot about the Russell, lately as well on, the small caps. The. Small caps have. Finally, broken. Out of their range. And. Had. A pretty strong move yesterday where the rest of the indices were kind of more flat to. Even. A little more negative, there. The. Russell was up about one and a quarter percent, at. The opening they're. Down as well however they're kind of inside, the. Upper, part, of the range there so. We'll see if this, turns out to be a bounce, today that can certainly. Point toward. Some opportunities, when there is a pullback that is, typical. To. Look for. You. Know anywhere it could be, you. Know one. Two three day pullback sometimes, pull backs maybe a little bit more. Ideally. As far as on the swing is, making. Sure that prices. Stay, above. Stay. Above previous, highs as. Well. As continue, to stay above, previous. Lows higher, highs higher lows, indicate. In an uptrend so for a bullish, swing this. Would be one. Of the more desired setups, to keep an eye on now. If you struggle with identifying. Those highs and lows, we. Have that fractal. Tool. We. Try and share with you under. Your pattern analysis, tool on the upper right hand corner, if. We click on that select, show patterns. It's. Part of your candles. And. Type. Up Williams. Fractal. Will. Double-click on that and. Apply. You'll. See the little carrot points that, are on the chart, corresponding. With, different highs, equal. Highs. Indicate. More of the sideways consolidation. Higher. Lows, followed. By higher highs represents. More of an uptrend we can see our moving average is also supporting, that as well. After. Today if if, prices are still below, this. High day one, may see a fractal. Point marked, right there it's not going to be updated. In real time, but. Kind of an educational, tool for those you that are still trying to identify highs. And lows that are in the trend if. You want to uncheck it you can go up to the patterns and go ahead and uncheck that. Let's. Go ahead and zoom this back out. Now. Let's talk a little bit about sectors. And the, swing so on, the left-hand margin. Have. A watch list of S&P, 500. Sectors. That's. Part of your public list if you, go on the watch lists, and under. Public one can also bring this up as well. Some. Traders may use other proxies. Instruments. That may follow indices, as well different. Index funds. Right. Here under SP 500 sector, indices is what we had brought up.

And. We. Can get, a glimpse anon you know what. Price. Action is going on today. For. Instance information, Tech in healthcare kind, of leading things down. Other. Areas consumer, discretionary, consumer. Staples, kind. Of round up the top and if, we go ahead and scroll down a little bit. Looks. Like energy, is. Still up and we've been highlighting this over the past week as. Well, on twitter on possible signs of some, rotation. Now. If we go ahead and scroll, through a couple of these. Sp500. Energy. Here. Is the index itself, we. Can look and see we know what type of patterns, may, have formed. Well. The very least we have an example of a break. Of the downtrend. Go. Ahead and identify that. Downward slope, again. If you struggle with this go and turn on those patterns with that William fractal, kind. Of connect the dots there. As. We connect it to these major areas. Also. Looking at. Horizontal. Levels. Of support, and resistance. As. We. Look at. This. Hi that was broken out over the last couple of sessions some, traders refer to this as a inverse. Head-and-shoulders. Notice. When you look at and. These. Fractals, can also be helpful in that. Bring. Up another drawing tool here a, little. Circle. Now. As I go ahead and highlight some of these fractals, there's a low. There. Is a lower. Low. Right. At the low and, kind. Of being a little covered there by the trendline it just drew a higher, low. So. Look at that transition, of lower. Lows go, into higher lows and boy. This is getting really sticky today. Let's. Try it one more time. Right, doesn't like our current. Trend line that's on here, I'm. Not sure why but you get the idea so transitioning. From lower, highs. I'm. Sorry lower lows to higher lows kind, of that shoulder head, and shoulder recently. Had a break breakout moving. Averages are rising. The. Next potential setup is possibly, looking for some, type of flag. As prices. May look. To possibly. Pull back. And. Ok. I. If. I go ahead and. Look. At our penny increment, stock list. Under. A watchlist you know here's a list of stocks. Supposed. To be more widely traded stocks. If. I wanted to we can actually right. Click on the column header and. Select. Customize. And. Once we customize in your columns, you can actually bring up sector. So. I'm gonna go in and bring up sector, I'll. Double click on that and, we'll. Move that up the list and. We'll, click OK. Now. Just like Excel you may have to go ahead and expand these cells out a little bit so, I'm going to go ahead and open that up a little. And. You. Can see as far as with these individual, stocks which sectors, that they are in. Expand. This out a little bit. And. Also at some of the script that's being shown here this. Is in, the. Scratchpad. For. Those you that are familiar. With it feel, free if you want to practice you can add, some, of these if. You're new, to. Some. Of these concepts, such. As scripts, would. Reference you to go ahead and take a look at the. Education. Tab. And. Look. At some of the prior. Webcasts. Weather. And. Technically speaking which, I cover. Every, Monday, on reversal, and bounce patterns, we. Use some of these tools, also. If you, go into the. It. Looks like with a little bit of lag here. If, you go into. The. Archive. For. Some of these webcasts. Click. On archive and. Find. John, McNichol. I. Did. A webcast a week, or two ago from. A good friend. Ken. Rose. That. Was on scripting. Trending. Studies. So. I'm going to bring that date up for you so those you can make a reference to that should. Have just been over. The. Past week or so script. In studies on thinkorswim trend, and bounce scripts dated. Eight twenty seven nineteen you. Want to get a little more of a background on that, all. Right so. To go ahead and take a look at some of these sectors, and with. The focus, on energy since we're looking at a chart on energy and that, reversal, we. Can go ahead and sort, the. Stocks here by that sector and scroll, down and see, what energy, companies, are here. As. You can see there are a few in the list here. And. One. May see some similar patterns forming. In. This case on Seadrill now this is a relatively. Cheaper, stock as a, lot. Of energy stocks have been beaten down and. You. Know there could be certainly some companies that may. You. Know go out of business or kind, of consolidate. Take. Our drawing tools they're horizontal. An. Example, of a. And. To. Apologize we seem to be having a bit of a lag on. Some. Of the tools here. Trying. To work through the best we can kind, of more of a W pattern as prices. Are kind. Of hanging out no, pun intended that is an example of a hangman, candle. At, resistance. Some. Traders may look is that, size of that pattern if there is a breakout. Good. Tool to use is the, rectangle. Tool. Where. We can measure, that. Pattern, or.

Measure. The. Swing all we're doing is going from support, to resistance. And. There. We go I'm, going to right-click on this and. Select. Activate and that. Should allow us to move. That. Up above that resistance. Where one can potentially project a potential. Price target keywords potential, there's no guarantees, that prices, will. Hit that level you, know as an example you know mentioned, in previous. Trades. DLT. Our Dollar, Tree was. One we did. Two. Weeks ago. We're. About a week and a half ago. And. Looking. At the set up. You. Know a previous, swing going from low to high knows there's those fractal, points basically, just connecting, two dots. We. Had an inside day on on 8:30, and looking. For price to trade, above, the high as a low day. Measuring, the distance between that support, and resistance. Setting. A target. Which. Was 107. With. 93, we had put in an order to. Sell when, the price hits that, area, selling. Into strength and, captured. That game now, the price go a little higher. It. Did but. Notice it's not much higher than, where. It was on the, exit. Now. Some traders may look to trail exits, as. Price goes higher but we, went ahead and sold. It at that target. Another. Example. UnitedHealthcare. This. Is an example of a bearish. Trade but just showing you that things. May. Not pan. Out or happen, on. The timeframe that you're, waiting for. This. Was an example leave, the same deal but on a bearish, side looking. To trade. The stock down to. A previous, low. Basically. Going ahead and retest in those lows prices. Did bounce a little bit to the downside, kind. Of reversing up a little bit still making a lower high so, there still may be a chance. For the price to trade down to that so, again another example of a swing, trade. Now. Looking at see drill here. We. Can do this as an example of a. It. Is a cheaper stock it is also a practice. Account. And. We're just because it's a cheaper stock doesn't mean that that's. Going to limit your. Loss although, as far, as they define risk trade. $3.22. That is the most that one would be able to lose on. The. Trade now. If I wanted to let's. Go and do a buy stop on. This this is an entry technique where some traders may, look to enter, as price. Trades, above a, certain. Point in this case above. Resistance. Now. We can set a certain, amount above, that, level there, with. The high this resistance, being, at three. Dollars and twenty seven cents one. Can set a nickel, a dime 20. Cents, whatever. Amount above there for. This example. We'll. Do ten, cents, above, this. Resistance. Which. Would be instead. Of three twenty seven being the resistance, about ten cents higher, 3:37. So let's go ahead and plot this on the chart, I'm. Gonna go ahead and, right-click. On an existing line.

Here. We. Can do a duplicate. Drawing. This. Is where you can kind of plan out your. Example. Of a trade. Edit. Properties. I'll. Go ahead and I'll plug in. 337. Change. This to gold. For. An example of a potential. Entry. As, far as a stop some, traders may set a stop that's a percentage. Below. The. Breakout point. Let's. Say as an example of three, percent, although. On lower priced stocks some traders may set stops at are a bit more you know five maybe, even 10%. Let's. Say in this example I. Will, do, an example of a stop about. 10%. Below. The. Breakout. Point so at 30, 27. 3. Dollars and 27 cents. That. Would be about 32, cents, below. So. We go in our calculator, here. Switch. Gadget. Bring. Up a calculator there. Do. 3 dollars and 27 cents. -. 32. Where. Some traders may be in a position size to a maximum, loss and not even use a stop. Let. Just kind of do an example. 327. -. 32. Cents. That. Would be a level at 295. So. Again I go ahead and right click on the. Chart. Will. Do a duplicate. Drawing, on. The lines so, I can just kind of plot in this out here. Maybe. Set was about to 95. It'll. Make this red. For. Example the stop now if the stop-loss is used keep in mind there's, no guarantee, that it would be filled at. That particular price that's where that stop would, be triggered. And. Notice. You know even at this point with the 10% you, know keeping in mind as far as what stops on lower, priced stocks those stops may have to be a bit wider because they have a tendency of being a bit more volatile. Another. Technique that one can apply as far as wit stops is. Adding. An indicator. Called. ATR, for Average True Range. I'm. Going to add, that, study from, our edit studies. ATR. Or average, troop stands for Average True Range. Leave. That 14 period, on there and apply that, what ATR does is basically gives, one. Approximately. What. The daily range is. For. An individual, stock and. The. Current ATR for this stock is about thirty cents, so, that's about ten percent of. The. Current price so. Notice. Kind of eyeball in that you know that ten percent stop, seems. To be a bit reasonable. Based off the volatility, of the stock well, the some traders may actually do a multiple, of this you. Know one one and a half times two, times, the. ATR, to. Basically, set, a stop, or even use that to maybe set a target. Based. Off of how much that stock routinely. Moves. So. We'll go in we'll leave that as, we have it and. Then. As far as a target, one, may be measuring. As. We'll, wait for our, screen to catch up with us. There, we go. Or. Maybe not, I. Want. Suck here there we go alright, and you, know looking at the. Higher range, notice. The. Distance. Between that support and resistance, when projected. May. See some, confluence, with, previous. Highs. In. Fact almost within, a few pennies there so, you know looking at that one. May be targeted, the upper part of that target a. Previous. High if, we look at one of the more recent highs it looks like it's at around 433. So. Let's go ahead and use that as a target. And. There's, no guarantee that prices, will reclaim that area. And. Working. Through, and. Entering, our targets on there I. Think. It's that was about 433, and. Click. OK. Alright, now as far as doing. A practice trade we can put this all together. By. One we, can go ahead and right click on the chart since, we have all our information on there and. We. Can do a buy, custom, with. Osio bracket. Now. I'm actually am going to position size this close to a maximum, loss I'm. Going to do an example of a thousand, shares if. You look at the size of our practice, account. I, have. A, net, liquidation value of, three hundred forty eight thousand, one. Percent. Of that is basically, thirty four hundred so. As we go ahead and look at on. Potentially. Buying. This one at. On, our practice account around a 337, looks like that falls out within about one percent.

So. I'm going to do is on the entry we're, going to go ahead and. Make this a stop. Light. Traders may be familiar to utilize and stops for an exit, we can use stops for an entry. We'll, leave that as a day order because if the conditions not met. We. Can always reinitiate, it however this, is an example of a horizontal, resistance, and what, some traders may do if. There's. A horizontal resistance, to condition, to get into the trade may be the same not only today but tomorrow the next day if you're waiting to break that horizontal plane so, some traders may use a, GTC. Good, tool cancel, to, go ahead, for. That example, so I'll actually make this a GTC, hour. Trigger. Point. Was. 337. Now. This, would be a market, order which. Means that if this stop is true with this triggered, price. Goes above 337. It'll trigger a market, order. Now. That may be fine for liquid stocks however there could be gap risk one, may be paying more than they, care to we, can make this a stop. Limit. Which. Now it'll prompt us for a second. Price which. Would be the most we're willing to pay once. It hits the 337. Mark so. Let's say I'll just go ahead and change this to 340. Just, a couple cents higher. And. Then. Now we have our exit, orders, sell. Orders this is a 1 cancels other will, make both of these GTC, for good tool cancel since if we do have, this order gets filled to. Stay in the trade, until one. Of these conditions are met the. Limit order. We're. Gonna utilize as, far as our target price, which. We, marked on the chart at four dollars and 33 cents. So. Again plug that in. And. Then. On the stop. We. Can go ahead and plug in, that. 295, now. Again I reposition. Size this to a maximum, loss so the risk is already defined one, does not necessarily have, to use a stop, in. This case however, a stop. Could be a way of possibly. Preserving. Some. Capital, when. One determines. That they, no longer want to be in the trait you know what is that point okay. Now. What I can do here is. If. I go ahead and right-click on where. That potential stop would. Be placed. You. Know I can just go ahead and, let's. Say I'll just take it down to. $2. Or. I should say not, $2. Yeah. I'll, say you. Know say $2. And. There. You go so notice, in this case that be a much more wider stop. One. Can position size by buying less, shares. But. Even with our example. I'm. Still only risking 1%, of the account so, I'll just put this as. Basically. A bit of a stopgap, there. If. The price entirely reverses. All. Right so you basically have the choice on setting. This, trade up how you'd, like. Or. Any type of trade should say that on. A practice, account and. If. The price goes above that, resistance, by. About 10, cents then. It'll trigger a trade if the price trades up to that target it, would lock in desired outcome, and cancel. The stop order if, the price was to go ahead and break down. Then. We, would be stopped out at whatever the next market prices after that price is triggered, now. We. Don't necessary have to also lit it all the week go down there as well if one wanted to you, know you can put in a price alert before, that you.

Know Create an alert. You. Know if the price goes below a certain, level at or below. You. Can go and set yourself an alert now keep in mind alerts, aren't to be a replacement. For your, daily routines. But. You can be alerted some things you may be overlooking. All. Right so there's our one example of practice trade there we'll see if that triggers. Looking. At some of your questions, Nicola says good. Morning John I have a question on relate to the topic I was wondering how did you get those earnings, icons they appear so small, on my chart the icons are big and get, in the way sometimes you, know I'm not sure I. Think. It has to do with basically. Your fonts, and your resolution. Question. Was you know how you. If. The turn allows me to do it. Alright, well, we'll. Be patient here I. Think. Part of it is you know might have a higher resolution there, so it may make them smaller, if. Anyone else has. A better answer, to that and found, something different let me know. Let's. See what else we got going on. Just. Looking at the. On. The equity on the account there one, or what's been okay, going higher there yeah, the S&P is still pulling back there looks. Potentially, maybe filling the gap let's. Look a couple of other energy, stocks see if they're showing some similar patterns here. We. May do is also, so. If we can find an example of a bearish. Trade. Some, bigger names here, like. Chevron, chevron. Breaking. Out look at some of these previous highs kind. Of that same inverse head and shoulders now. Pretty big move there some traders may look for a pullback look, for that flag and, one two three day pull back and looking, for that bounce kind. Of similar to what we had, done with. Dollar, Tree. Previously. You, know once the price goes ahead and. Runs. Up look for a little bit of little pullback price. Training above high-to-low day. Now. If we look at oxy, oxy. Is. Just breaking, above. That resistance. As. We. Speak, not, a lot higher. But. What some traders may be looking. For again. You. Know as a possible entry, I'm. Gonna go into a practice trade on this one as well let's, do it an option. And. We'll go to the trade tab well, let's go ahead and actually measure a target, here I'm. Going to right click on this. Still. Got this little lag going and. Do the same thing we did on our previous example, take the drawing tool. And. Measure. From. That support. To, resistance. We. Can right click on that activate. It and.

Move. It up to, that. Breakout point. And. Again one may see different confluence. Of. Where. That potential, target would be may. Coincide with some, previous highs or lows into, trend. In. This case. In, this, case lining. Up with was. Some, previous lows. Acting. As support potentially. Acting, as some resistance. Now. Some traders may also look at some shorter term targets, as well. Notice. When I look at some of the lows back here in July as well. As the high here in August, you know, again connecting, the dots with, some of those fractals, there notice, that's about half, of the distance there. It's. At typically. In a lot of cases where. Some traders may, look at their profit, management, when. It gets in that. 50 percent range as, an. Example if price makes, 50 percent of that move consider. In adjusting. Your. Stop if you have a stop to a break-even. Or. Possibly, scaling, out a part, of the position, as it. Looks to trade to, that high. So. We can go ahead and construct a an. Option on this one. Now. That's a potential move of. Just. Shy of about $4 we're at about 46 30. Right now. We'll. Go ahead and look at some options. Going. At least a month, out there's, October, 38, days. One. Wanted to can, certainly go, out further if. They consider that they need more time although, since this is days to weeks. We're. Taking a look at the anticipated, move, and, add. In at least, a month to it, so. In this case you know some of these moves can happen over about two weeks. So. 38, days may. Kind of fall out just a little short on that. We. Can go and look at some of the weeklies there however notice. When you get in to. Look. At liquidity, the difference between the bid and the ask, the. Smaller the difference between the bid and the ask points, towards that liquidity. If. I'm looking at let's say a little bit at the money. You. Know looking at some of these weeklies on, 25, October, notice, of spread is a bit wider, if. We go out to November, and, I know my computer is trying to catch up with me here. You. Look at spreads, that are. Relatively. Tighter that's will, do let's. Do November. And. You. Know here just a little, slightly. Into money. We. Have. 45. Strike. Those. Options are going for. 345. If. I go ahead and right-click on this and, let's do a a, buy, custom.

Wit, Stop. We'll. Go ahead position, size this to, a maximum. Loss, so. With, this example again. If I do the 1%, I. Can. Do, 10. Contracts. Open. This up right here. Hit. On confirm and send. You. Can see there's where that. Maximum. Loss would be which. Is 10 contracts, thousand, times the quote. There. Now. I. Can. Go ahead and. Put. On the exit, we'll. Make this a market. GTC. Which. Meaning when we sell this would be selling at the next available price, and, we're going to put a condition on, there let's. Bring up the chart again so, we can see those conditions, and that. Condition, would be if the, price trades up to. $50.00. So. I'm, going to click on the gear, for that, next. To the sale it's, going to bring up our condition. And. We can say that if the stock oxy. The. Mark which is essentially. The last price is. Greater. Than. Or. Equal. To. And. We can put in, that. Target price it. Allows me to do it. 50. And. If. We wanted to we can also put in a condition, let me save this momentarily. Even. Though we position, size it to a maximum loss we, can also say that well, if the stock breaks out, and let's say, fades. Or blows back into the pattern we. Can put. In an exit let's say 3%, below. This breakout point so. We got a level of. 45. 88. If. We, did 3%, below that. Will. Take 45. 88, on a calculator. Multiplied. By. 0.97. That'd. Be 3% below that, be a stop of 44. 15. 44, 50. I'm. Gonna go ahead and right-click on this, duplicate. Drawing there, just. Kind of visualize, that. And. We'll type in 44, 50. We'll. Make that red, indicating. That would, be a potential exit. There. We go. Now. Notice - if you look at the ATR, that Average True Range. Mentioned. A little bit earlier notes. The ATR and this one is a buck, 33. That. Means the average daily, range is about a buck 33, you, know our current stop. Is. About an 80. Are below, that breakout. Point so, kind of lines up with that. Alright. Nothing perfect, not an exact science there. And. Let's. Go ahead and we'll place this practice trade. I'll. Go ahead and I'll add that other condition. And. Say that if oxy, goes. Less. Than or equal, to. And, leave we said. 48. Was it 48 60. I'll. Go with that I can always go ahead and modify that later. And. We'll. Go ahead and we'll send it straight through I. Should. Close. 48 50 about 10 cents off, all. Right we'll go ahead and we'll send this through. See. One get that filled. And. Send. And. Looks, like I just had an oops trade. I. Just. Had an oops trade let's see what we did whose. Trade means you basically bought and sold. Something. And looks like we. We. Did that that, happens. Typically. Things are kind of slowing down a little bit kind of taken away a little bit of my mojo, let's see what happened is we bring epoxy, we. Can get a lesson learned there and. This. Is why you're supposed to, confirm. And, send not send, send. If. I go and look at the order on. How is filled. Basically. Say that if the yeah, mark is, greater. Than, 50. Or. Less than 48. 60. And. Looking. At the. Mark. On that. That's. Where, we messed up. Should. Have been putting in 44. 60. On that so let's try that one more time we. Got our practice commissions done. So. What, we can easily do is I can go back to that order I. Can. Right-click, create. Duplicate. Order. Can, change that the first trigger sequence, I can, go ahead and right-click on the other order. Create. A duplicate order here as well, and. Let's go ahead and modify that condition. So. We don't fat-finger, it. And. This, was. 46. It. Also doesn't help that although. I'm sharing, the screen with, larger, fonts, so. Everyone can see it unfortunately, sometimes this information gets truncated so, we got 46.

I'll. Put in 46, 30 hit, enter click save, and this. Is where we can double, check by, clicking on confirm and send which. I should have done in the first place is. Buying. The option at 3:45, and we. Got an order to sell it at the market. Okay. What are our conditions, if it goes at or above 50, or. At, or, below forty. Six thirty, so. If it hits either those conditions, it would go ahead and close out at whatever the next available, market, price is now, that we checked it we. Can go ahead and send, it. There. We go all. Right so we got to. Practice trades in there on the energy. Side there with Seadrill and oxy. As, we. Go and wrap things up a. Couple, things I'll challenge you to do is. Take. A look at some, of the other, sectors, that, may, have been showing, some movement. Over. The last couple of weeks again. We kind of highlight a little bit is on, Twitter. Some of the movers. That have been showing a little more relative. Strength. Also. In the industrial, size and the, industrial, side. Even. Though they're a little flat today, have. Been showing some strength over, the last month with energy. Also consumer, discretionary. So. Look, at some of the penny increment stocks that may have some. Of the same characteristics. So. There's a few industrials. And a penny increment list we're. Going to look at the chart. Bring. Up industrials, you. Can see a similar pattern that we had with. With. Energy. Although. Patterns. Setting up on this one after breaking out broken. Resistance, acting as new support, so, we're seeing an example of a potential, bull. Flag. As, price. Breaking, out. Possibly. Pulling back and, retesting. Price. Trades above high the load a would be a bounce so, if we look at some of these. Industrial. Stocks, we may be seeing, similar. Patterns. In, case of Raytheon. Connecting. The dots kind, of more of a diagonal, breakout. Looking. At the range. Right. Now it's a create. An example of a flag. Once. Again you can go ahead and measure the, distance between that, support and resistance, apply. The same principle whether you go for the full pattern or. Just. Part of the pattern which incorporates, some of those swings. Activate. That drawing and go ahead and potentially project, any of, your potential targets. Okay. This one's already broken out a little bit but, having, a little flag you, know it still, can be notionally. A, move. Up to, a similar. Target. As previously, you. Can go back a little bit on this one here which. My charts were working a little bit quicker for me today.

Although. Some of you may be saying that it's actually a good thing John maybe you're going a little too fast anyway. Louis. Louis says any preference. On use in stock price for stop or the, option, price it's really a matter of personal preference, there, Louis. For. Instance you know if you bought an option for let's, say a, three. Dollar option. And, based. Off your projections. You. Know you were, looking to make fifty percent or a hundred percent you can put in a limit. Order to sell it you know at four. Fifty or sell. It at six dollars, if you're looking for a hundred, percent gain, now, also, it's based off of the price making a strong move in a lot of those cases prices, would have to make about a ten percent move for. Kind. Of more of those. At. The money options, - or slightly out of the money options, - double. Notwithstanding. Any, time decay. Some. Traders may like using the stock because it's kind of fixed you're trading. The price. Direction, of the stock so utilize, in stock prices may. Be easier, for some traders, because. When, comes to price and an option one may not be able to exactly price, what, an option would be on a particular, day at a particular, price, although. You could use tools such as, the black-scholes. Theoretical. Calculator, to, extrapolate that but no guarantee. That you'll come up with that exact price okay. All. Right so look, in UTX. Is. Another one a few of these setting, up as. Potential. Bull flags after breaking out whether it's a one-day pullback, or a couple day pullback a couple. Things keep an eye on, Bo, in. Know. So you know kind of connecting the dots again. That's where the Williams, fractal, for, those you that still may struggle on identifying, patterns. You're. Also welcome to join us on technically, speaking on Mondays, for. Reversal. And bounce patterns where we do a lot of the similar things so. We have a bit of a squeeze triangle. On Bowen. As. It is breaking out. Measuring. The distance from. Again. That support. To resistance. We. Can project that out. Eventually. All. Right here we go. It's. A little triangle, pattern. And. If I go ahead and project. This out. Going. From the breakout point. Notice. A bit of a correlation. To. Kind. Of the previous high range in fact almost. That's. Kind of close and range there if, I go ahead and activate, the. Soar Rosano line kind, of coincided, with those previous, highs. Let. Me do one other examples, there and we'll go ahead and we'll wrap up we'll. Do this one on Bowen. You. Know we did an example of a. We. Did an example of a. Long. Stock it, with Seadrill we did an example of a long call, all with. Oxy. There, let's. Do another option, but we'll do a spread. We. Cover this on Wednesdays, at, 3. P.m. Eastern Time, now. Unfortunately. I'll be on military, duty starting, tomorrow, but. I believe my good friend. Gosh, I need a double check who's covering that maybe. Cameron, May covering. Down on that class, starting. Or Barbara Armstrong actually, I believe we'll be covering it tomorrow and Ben, Watson we cover in that session next week so, appreciate them doing that I'm gonna do an example of a a long. Call. Vertical. It's gonna be a little directional. But. Also. Define. Our wrists they're a bit so let's go ahead and do that and we'll wrap things up with, this example, so, I'm gonna go to a trade tab. And. It's. Not much more of a challenge in doing a single, option trade. Will. Focus on. October. We'll. Do the 38, days and. What, we're gonna do is buy, an, option. Closer. Being at the money, notice. This is a more expensive stock, and therefore the options have more of a premium. I'm. Gonna go right click on it and I'm gonna do by. Vertical. And. What. It's going to do is it's going to buy. One. Option, and. Simultaneously. Sell, another, option, at a. Cheaper. Strike. Now. Notice by doing this. The. Total, cost, of the trade is significantly. Less, than what. We were doing with. Just, a long call. There's. Also some other benefits, potentially on, this trade as well. And. I'll show you in a sec. Hit. On confirm and send. Defined. Risk. Define. Profit. So. Profits, are capped but. A reasonable, return on risk almost one the one there.

I'm. Going to edit. This trade and we're. Going to go ahead and. Let's. Adjust this up. I'll. Do seven contracts. This. Be risking about a half a percent. To, the account about. 1800, for a potential maximum gain is 1645. And, for. This one that reached that maximum game it, would need to be trained about 370. At. Expiration. However. We may look to lock in a game if. We realized, a certain. Percentage, of this. Let's say 50%, of, that maximum, gain so if we have let's, say an $800, profit 600. A hundred dollar profit we, may look to scale out or lock in part, of that game I'm gonna go ahead and send that through. Looks. Like didn't fill right away oh. There. You go now. If I go ahead and go. To our monitor tab. Bring. Our activity and positions. And. I'm. Gonna go ahead and bring up. An. Old layout here with some of the Greeks. And. Let's see if we can find Boeing in this list here okay so here's Boeing. So. This is a a positive, trade because we have positive Delta's. The. Options. When. They're long do have time decay but notice this is not a, large, amount that's. Also where some traders may benefit, on spreads, where they may have a low. Decay, or actually. Have actually, positive, numbers there, whereas. Other, options, that are more directional, may. Actually have. Larger. Thetas, so there's kind of a benefit, for. Doing, a defined. Risk. Spread, and it's. Also a little more forgiving. The, other thing I did not. Show. Since. I did the order a little too quickly and. Haste makes waste. I. Go. And create a duplicate order here, hit. That confirm and send. The. Break-even point. Three. Hundred six to seven dollars and sixty cents the, price does not have to go up very far for this to be a profitable. Trade. Commissions, are part of it so that has to be considered but. We'll go ahead we'll manage these, trades over, the. Next week or so I'll. Be gone for about the next ten days there so we may have to follow up on that at that point but. We'd encourage you to go ahead and apply. What. You learned here today. What. We did was, we went ahead and. Focused. On, sectors. And their, patterns look. At a sector recognize. A pattern support and resistance, is it breaking out is, it bouncing, look. At stocks in, your watchlist and maybe tied, to, that sector, and, kind of going by the adage that you know rising tide may, lift all ships so. We did practice trade on a sea drill on oxy. And one. On. Guys. Almost forgot oh and. Uh. Let's. Go and bring that up again. On Bowen. Gosh I can't forget Bowen so. We encourage you to go ahead and practice these concepts, as well. Pick. A stock in your watch list whether, a sector play or an. Individual, and go. Ahead and, utilize. A, entry, as well, as an exit, we. Did an example with a 1 cancels other. Based. Off the stock price and we, also did a conditional. Order for. An option, also based, off the stock price. So. If you learned something new today and remember folks in order to demonstrate the function out of the platform we, have used actual symbols keeping in mind TD Ameritrade does not make recommendations, or, determine suitability of any security or strategies, through the use of our tools any, investment, decision you make in your self-directed account, is solely. Your, responsibility so. Have a great day folks and we'll, talk again real soon bye now.

2019-09-12 10:42

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