Technically Speaking: Trading the Trend | James Boyd | 2-18-21 | Scaling Into Trending Stocks
hello and welcome to technically speaking trading the trends weeks to months my name is james boyd great to be here with everyone today we'd like to welcome jill yoku abu peter lisa uh shalondra alfred amy glenn anthony jonathan george from texas and chris and it looks like a couple you are working on your uh german there uh and that's a great sign because it's a great place germany switzerland austria it's all good places so yeah keep on keep up that good work and uh leanna is actually from snowy wyoming and uh yeah so i live and currently live in salt lake city it is actually you know we had probably six inches of snow yesterday first time we've actually had snow really of any real magnitude yesterday we're grateful for the water because my front yard was looking like a hay pasture so we'll take the snow okay hopefully wherever you are you're warm uh you've had you have a plan in place of water and food you have a plan in place just in case maybe that power isn't on uh hopefully you've actually made some plans ahead of time of actually how to maybe try to last maybe a day two or three hopefully not as long and you get power restored as soon as possible so just real quick as we're getting started uh my name is chase boyd i teach on thursday this class and we call it trend thursday if you think about people that do well they all have something in common they rode a trend now that trend could have been in it could have been in commodities it could have been gold it could have been oil it could have been indexes it could have been for crying out loud bitcoin but it doesn't matter they rode a trend so if someone really wants to try to get ahead time wise and actually maybe financially wise understanding trending how it works very important that's what this top this class is really talking about and so just real quick as we're getting started remember when we talk about options and if we do we'll probably spend half the time talking about stocks half the time talk about options remember that options are not suitable for all investors special risk inherited trading options we're going to demonstrate the function of the platform we're going to talk about actual symbols td ameritrade the broker does not give any recommendation determine suitability of any security or strategy and also remember last but not least the option greeks delta down to theta quick reminder that actually john mcnichol is talking this week about option strategies on the virtual workshop this week as also a heads up now today we will talk about the market posture for sure we're going to kind of talk about maybe the internal dynamics what's actually happening in terms of momentum we're going to talk about actually uh stops stop adjustments and also some trades that are going near expiration now today i think the magnitude or the number of stocks we look at is going to be on the higher end but i don't think that's a bad thing so when we talk about management just know that some examples might be a little bit more in depth but we're just going to look at them very quickly especially with the ones that are coming to expiration but we will be talking about stocks and maybe are there stop adjustments that could be looked at or there are examples of protection so today it's going to be very application oriented and we're going to talk about the changing dynamics of momentum okay now as we do that let's go ahead and hop right in to the s p first i like to start here kind of gives me a general gist of uh kind of what's happening in the market in general broadly speaking and if you look at the s p you're going to see that we've been above really the blue and the red line really since about february 2nd here it is 16 calendar days later today we actually did go down just a little bit we actually went down intraday to 38.84 and then the price is actually up trading near the high of the day look at the body of the candle and if i were to draw i don't know if you know this but uh for example and i shouldn't have done that but uh for example if you go to uh if some of you actually use fibonacci you'll actually know that so far if you kind of measure i'll kind of bring this back up but if you were to draw fibonacci let's say from about 37 10 to maybe let's say the bot the top of the body of the candle you know maybe about 30 39 25 so far this has been a very shallow pullback so if there are bears there's really not a lot of bears so far that are really driving down the price now let me kind of throw this out why are they not really selling what's causing investors not to really sell because remember if they sell they go back to cash how much is cash worth okay if they actually sell their stocks they actually say look i'm going to go back to my bonds but if yields are rising that mean bond prices are going where they're going down i know what i'm going to do i'm going to sell the stocks and then actually sit and buy gold well gold's actually been going down so when you kind of have to look at this in terms of if they were to sell stocks where could they really be going and if there's not really an area to really go it might cause the investor in stocks to stay longer in stocks the second thing we might bring out is if the support levels in the market or stocks in general aren't really breaking they're probably not at a higher risk of actually having a uh a greater chance of being stomped out so let me see if i can't do this just real quick and kind of go the different route on this i'm going to add a study and i might not be able to i don't want to do that let me go to all studies let me bring something up see if i can yeah see if i can now okay i don't want to do that but if you were to draw really a fibonacci from about 3715 and you were to draw up to about let's say 39.35 i mean i didn't think we're at a 23 percent retracement okay not a whole lot of a pullback so far okay now when you also take a look at let's say the nasdaq nasdaq also did slip down below 30 period moving average and we said this the other day that when you look at the indexes let's say the s p and the the s p and the nasdaq they just kind of more or less really look like they're kind of at the top of the channel and if we were to kind of combine these lows to lows to lows and draw a diagonal line it just kind of looks like we've been kind of riding the upper end of the channel and the price is really now kind of pulling back and it's kind of sitting in the middle of the channel and this class is not day trading 101 okay it's riding the long term trend so the longer term trend is still up but we would have to say in the shorter term it is actually pulling back from the top of the channel and so all eyes really are on this area at least on the dow and the s p excuse me the nasdaq and the s p 13 250 would be the marker that the technician would be watching and draw the same line in the s p and see if actually the price can really stay up above that diagonal support okay now ricardo also brings up the common about 1.9 trillion as far as the stimulus now that that's kind of interesting because you know they're talking about trying to push it forward as quickly as possible be 1400 per person one of the biggest well actually that's the biggest package i believe it was i think 1200 before but yeah that's a lot now you gotta also gotta remember is that gets priced in almost immediately okay and that's already baked in but to the fruition if that actually does really happen again that can actually cause maybe a trend continuation uh but remember a lot of that already gets baked in they make the assumptions that that could could happen and it gets priced in when we look at the volatility here we see that the volatility rallied and then actually fell back we don't really see an expansion quite yet of volatility okay now i want to kind of go to a couple stocks here let's look at some examples now how many of you as far as a quick uh quick uh in the chat could you let me know if you do vertical spreads okay let me know if you actually do vertical spreads now the reason why i'm saying that is in the margin account with tomorrow being expiration okay now we we got to address this okay so i teach monday through thursday and tomorrow which i don't have a class is actually expiration date now these are four examples of verticals now tell me what i should do okay so if you were managing this portfolio and you saw this what would you consider in this portfolio on these four short vertical positions tell me what i should do okay now as i'm kind of getting some answers there what i'm going to do is i'm just going to kind of look at this right there look at that look at this and then we'll look at that so three out of four now remember we're gonna actually hit really a lot of these quickly three out of the four 98 99 100 three out of the four are pretty much near or at maximum gain so these are pretty much like toasted right now remember the trade on these were the following stay above 525 the stock's at 590. so that's way far away stay above 222. the stock's at 242. stay above 240 the stock's at 260.
now if you don't mind i want to kind of just show you this so on three of the four now the biggest thing is let them expire worthless that's a little dangerous because when you look at this is if they are over if they are over five cents they there is a commission attached but if the investor said i don't want any chance of it having to be put to me because you remember the stock does not have to be below the strike to have those shares assigned okay no whoever bought the put can exercise their right now it's more likely if the stock is closer to that strike of 240 or below the strike of 240 it's higher likelihood that they would exercise that but whoever is short has an obligation to be the buyer until the very stinking end till expiration okay so if there's one day left there's still one day left okay so if the investor doesn't buy them back they keep that door open of the possibility of being assigned to buy at the strike price don't forget that okay now if the investor said well james when was this position put on well it was actually put on january 12th i'm just going to show the entries on these and then we're going to talk about closing those so on january 12th where was it so january 12th was really about right there was on that large candle it was pretty much when the stock was really poking its way up it actually fell down but actually really if you look and see well what did the trend do from january 12th till now the answer is nothing it pretty much went sideways this is one of the benefits there's two main benefits of this number one it's not directionally as sensitive and number two if the stock goes absolutely nowhere that's okay too just want the stock to stay up above the strike price okay now if the investor said james i'm going to close this out i want to lock in that 352 game how do they do that they can right click on that line create closing order buy it back so this would be about 351-ish dollars or so and it's buying it back for a debit of four cents if that's okay confirm and send giving four dollars back plus the commission and now what you're gonna see is send the order now we're gonna fast fire this okay if on microsoft okay so on microsoft 287 100 so it's pretty much right there now if the investor thought the trend could continue they might choose to want yeah sri says actually commission should not be a consideration i agree with that to a point because the thing is when you think about let's say the unrealized potential profit which is uh in this case 100 percent and when you think that the investor could get back 100 and potentially have the obligation to buy the shares the commission as far as the consideration is going to be very small compared to what that unrealized gain is so i still think you look at it but you have to realize it's not that large considering okay remember if the investor thought the trend could continue they might choose to roll those options okay so on the first one was about 350 or so the second one is about let's go back and take a look about 287 so 350. where's the calculator 350 okay remember 350 plus 287 it's about 637. let's go back and see if that can realize that now i'm going to push this up to let's say a debit of 5 cents why just trying to get the position filled as soon as possible let's see what happens okay that's gonna pay five cents back but it's on two contracts and it also has well two dollars and sixty cents for the commission okay now if the investor says send that order there it is it feels and i overshot that price the reason why i overshot it is to try to get it filled as soon as possible and the last one we'll mention here before we talk about stock is on the nvidia now nvidia is in what neighborhood what was it starts with an s three letters x is the third letter and if you buy a vowel it's o the sox the semiconductors and we know what semiconductors did because we talked about that last week now if you go back and let's say look at nvidia it's at 100 360 where was this put on january 21st let's get a quick idea of what this is doing or where was it at the start let's kind of grade that entry on january 21st it was really about right there now notice what do you think this investor was thinking that put on a bullish trade right there what do you think they were thinking was it a bounce was it a diagonal breakout again i want you to kind of get the understanding the thinking what did the investor see well the investor probably saw a diagonal breakout that initially dropped down and fell back inside that old channel and this was the second breakout time and notice it didn't remember the first breakout didn't work sometimes the second one will or could and what happened after that entry on january 21st well the stock actually fell down a little bit but what you're going to notice is it never really fell down below that 515 support that had about 59 touches almost in a row now it's not quite 59 it's probably 50 but there was a lot of touches at 5 16 and it stayed above and from 5 16 it actually really started to create a nice little uptrend now remember short vertical puts they are bullish they're just not as bullish as individual stocks which is nice because when those stocks actually go down it doesn't hurt as bad and you could take more directional price fluctuation the strike that was sold was 525 and if the investor says james you know what i want to profit take on that right click so that's 360 at 360. these three are about 997 dollars now remember on this too it's just gonna show a zero mid nat two i'm gonna push the price maybe see if he can't get let's say two cents three cents just something where it's more likely or probable to get filled and if that's okay i couldn't gonna confirm and send that there it is for the two contracts the commission and send the order now james why do you talk about your classes management positions all trades are done in classes the entry of them and the exit of them so we got to talk about that because these were ones that were really expiring tomorrow james what about the vertical on paypal well that is actually one that still has about 29 days left okay thomas said she says i have a hard time getting filled when buying back well that's why i kind of overshot that price and notice i overshot the nat uh the natural price and maybe even win a penny over two above the mid okay because when you get closer and closer expiration there can be less open interest less trading and so i went a penny or two above that thomas so i think we're on the same page there okay now let's take a look at a couple stocks shall we now i got a whole like a whole list here okay just i want to talk about a couple of these stocks okay now i'm going to kind of fast fire a couple that they kind of are interesting in terms of when we look at let's say dow type stocks that i kind of thought was they were interesting in terms of number one trend but they're also interesting in terms of what the price is doing itself so this class is trading the trend weeks to months right and when you take a look at this when you look at let's say triple m we see a like a long term upward trend now the price isn't let's say parabolic but it just kind of now we could draw from right to left or it doesn't matter we could draw left to right but i don't care which way we go we're probably going to get an angle of support diagonally speaking probably about 170 okay now if i were to ask you the question well where do you see horizontal support what where do you see horizontal support so if i had to draw a line and said horizontal support we said diagonal about 170 horizontal might be in the area of where now remember i'm going back and looking at these old highs about right there that's about 177 and then you get a big rip to the upside one goes from 165 187 pulls back and then you get like a little run to the upside pull back and then you kind of see that it's maybe now is old resistance here i'll label this as really r is that old resistance maybe getting some touches here and here so 170 degrees five is maybe acting or trying to flip from old resistance to a potential new support now when we also look at the w pattern we kind of see a double bottom this really right here and i'm going to label this the middle here as the lower high area now people talk about i'm going to scale into the stock what in the world does that mean well maybe you actually see the let's say the stock trying to create a new base and maybe the investor says you know what i'm going to buy some stock let's say maybe as close as i can to support but maybe the investor says you know what i don't want to buy maybe the other half of the position unless we get above let's say 182 or 183 so let's kind of go back to our little cheat here okay now when we do this what i want to do is i want to kind of bring up there we go okay so what i want to kind of do is i want to bring up like a little sheet that we talked about in terms of evaluating a stock entry all right so here let's bring this up okay so this stock is trying to create a new base and we're going to say okay now remember when we did this before the portfolio value was 150 500 we've got to update that to 159 about 500.
okay so let's update that so okay chat now we said at the beginning of the year the portfolio was gonna risk about a half of one percent now that number is always going to be the same right sure hope not because if the portfolio balance goes up higher and higher the risk amount will go up higher and higher okay so the the risk amount is 797 dollars that would be a half of one percent that's not investing that's risky now if the investor said you know what the current price 178.91 what's the support we said the support is kind of right about let's say 175.70 now the stop we're talking about stock okay and the stop was 170 43 trade risk is just the entry price minus the stop loss now this is kind of theoretical or is because you don't know if it's going to get stopped out right at 170 43 don't know that and the position size it says buy 94 shares well if the investor said i don't want to buy a full position i only want to buy half remember we said when possible it's going to try to do in increments of 100. so if it's at 94 the paper money
account is going to buy how many shares how many shares is it going to buy let's go down 50. it's going to buy half the position and the other half is going to set an alert that if it gets up above 182 let the paper money count no okay so in this case what's going to happen here is if it gets up above the middle of that the other have to be added as the stock makes a not a lower high or an equal high but makes a higher high so let's go back to the paper money account we're going to right click on that candle we're going to go right back to buy custom we're gonna go with stop now what's gonna happen here let me kind of move that over and now what we're gonna see is okay not a hundred shares gonna take half now if you take a look at this 50 shares 50 shares okay current price the stock is about 179 13. the stop which we saw before which was really two to three percent be low support we said was 170 43 stop day gtc this is saying if the stock is purchased then sell the stock if it goes to that price or less okay now it's only buying a half position so in this case this is kind of like scaling in investors sometimes like to buy as close as they can to support but they might not get in an entire position they might want to say show prove it to me that other investors are buying and let's see the stock get above maybe the middle of the w and make a higher high before adding the other 50 shares so here's what that looks like it's just showing the capital involved commission is zero nice round number and if that's okay the investor can send the order now if it sends what you're going to notice is it puts the order right there we're probably off by just a little bit and then the other thing we're going to kind of do is going to go back and at the middle of the w we're going to right click right on the middle of the w and we're going to go to alert what do you think the alert is going to be why am i going to send an alert well we're going to set an alert and say hey if you get above the middle of w we're going to kind of write a little maybe potential ad 50 shares question mark because if it starts to get above the middle of the w that actually would be a higher high now a couple you are really asking well i saw one person i said a couple that's not i i saw one person someone said hey is this sheet available i don't have anything to send you but you can make like so this i did on a technical analysis in-person event and if i mean we could make one up right now the hardest thing would be to do is probably to type this in okay this is like our little sheet of paper this is also in the online course i stripped what was in the online course and in the in-person event and with what was on that slide in the in-person event and i just wrote down what they asked us to do and i just put on a little sheet of paper so i don't have anything to send you but feel free to kind of strip what's in the online course the in-person event because this is just really the basics of really position sizing now the question was wayne says is this uh is the stock price sent to the exchange so it is known by others or held by toss and not share boy wait good question uh that would probably be a td ameritrade question where you call into td ameritrade or maybe even call into the think or swim uh the toss trade desk and ask them now i believe wayne my initial answer is going to be the broker would actually have knowledge to where those stops are and i don't believe until the the price goes to the actual price specified to sell it's not sent to the exchange that's my initial answer but wayne that would be actually a good one to actually confirm by actually uh asking maybe the toss trade desk okay but the thing is so let's say that other people know about it the price would still have to go down to that price level okay hater yes all right okay now let me kind of fast fire two others now i kind of thought it was interesting because when you look at his twin cousin in the same neighborhood honeywell is actually one of those stocks that's really been kind of sloping down but it's coming closer and closer to kind of getting those moving averages to pinch might be trying to cross now when you take a look at for example let's say what that weekly chart is showing again we're talking about industrials what does it look like on a longer term basis honeywell actually is still in an upward trend so this won't be one that maybe the paper money account is going to keep an eye on to see if that stock might be trying to bounce going into early next week another one i'm gonna also get the paper money account is gonna keep its eye on is mickey d's the golden double top arches so the next time you actually drive by mcdonald's think of a double top formation okay sorry i've been waiting all morning to say that now what you're going to notice is an awkward move in the price diagonal slope what we're also seeing on the macd okay is really like the macd is not getting deeper and deeper to the red it's actually gone green it hasn't been green well easy it hasn't been green probably since let's say october this has been the first time we've actually seen it go green so now let's kind of said that maybe someone says okay james we see the stock run up and pull back to an upward sloping 30 period moving average and maybe it is maybe it is for example trying to create a base we see a prior hot we see a base and the resistance area is where where's the dominant level of resistance so if i said to you where has the stock gone up to not been able to get above and then fell back down up down up down where did it go where did it go up to and then where did it fall back down now i know what happens here this is where people say geez i wish i would have gotten in back then the problem is they didn't because they didn't actually know kind of some basics of how to scale in scaling it is just saying hey you know what in this case maybe the stock is not fully gotten above the area of resistance so if i were to ask you where do you see resistance kind of reminds me of the simon property group example and the wdc example where it's kind of building a base and it was actually kind of getting a higher level of support and if you notice this the price lately hasn't been pulling back as much now i don't know sometimes why people think this is so hard a friend of mine talked to him a couple months ago about scaling in and he was a real estate ambassador and he acted like he had no clue about scaling in i i was stunned okay scaling in just means that the investor is not putting all of their capital in at once now it might be done maybe third third third quarter quarter quarter or just simply a half of the capital and the half when the stock bounces and or breaks out so in this example could the investor buy prior to the bank they could but they actually might decide you know what i'm not going to do the full position so let's go back to this quick cheat sheet okay some of the basic questions the investor might be asking themselves okay so we know the portfolio value still about the same we know that's what the risk is the entry price we gotta type well what's the entry price now well if the investor bought the stock down to 15.56 what's the potential support
area well the support area that we're trying to hold above the closest might be to 1666 and the second area might be the 30 period moving average to 11 96 now we know this the tighter your if you use a support that is closer to the current price it has a greater chance of getting stomped out so setting a tighter stop does not necessarily always mean good that's not true okay be careful of that okay now when you take a look at this what you're going to notice is the trade risk per share is really about 99.96 and it's saying if it was going to for example be let's say a full position and this might even have to be docked on top of that but it's going to really say about seventeen thousand dollars worth of capital there's a problem with that because we said the paid money account at least in the margin was really going to have between about 11 000 and 15 000 of stock this is saying that if they bought if the investor bought 80 shares total it's 17 000. so it's going to need to come down a little bit okay and if we kind of shaved off maybe down to 75 shares 70 shares that's going to be more in the ballpark of that capital that's going to be used per position remember we're talking about a stock position two in a row okay so now if you take a look at this let's say the paid money account says you know what it's going to buy half the position buy custom with stop now what's going to happen is when you come back the paper money account is going to actually pick up 35 shares of stock now wait wait it says 80. remember it's gonna cut the position in half number two the stop stop initially is at 205.60 so it's going to go back 205 60. day no gtc okay now that's step one it's setting up the initial trade the first allotment of capital now this may be always the hardest for some people well where would the investor consider adding the other half well never kind of already pointed that out that if that stock starts going above let's say 216 and a half maybe even let's say 217 they might consider buying the other half now let's show that in this case so on the first position there's the 35 shares check okay we know how the stop works if the stock is purchased and the stock actually goes down it triggers the cell at that price and or lower okay that's the first position what's the second position well the second position is well where would the investor consider adding to the position well remember a market order is just saying buy it at whatever it is okay you go to grocery store you're doing market orders my daughter said yesterday dad everything to you is the stock market everything okay so it could be true yeah you go to the grocery store they just tell you the price and if you if you're willing to buy it at the current market price you put in your car you're doing market orders but if you do what's called a buy stop market order you're saying no do not get in until it goes at or above a certain price why what does it matter well the investor's saying i only want to get in if the price surges okay to the upside now i want to talk about this okay so how many of you in the last year have missed stocks that broke resistance how many of you think that maybe in the last year that if you knew what buy stops were that you could have caught those stocks that were shooting to the upside right now again sometimes people have a hard time really with that idea of buying it at the high well it's at the highest of right now the stock has been higher okay but the whole idea behind this 217 and change is buy the stock if the price trades at or above that price level but the investor says but i don't like that order because i don't know what i'm buying it for or is there a ceiling okay now i'll make this quick when i bought one of my cars the guy that went down to the auction i said look i know this car is going to be about x price and i'm willing to let you bid at that auction up to this price but if you cannot get it between 17 500 and 18 500 if it goes over eighteen thousand five hundred the bids do not buy that car i'm i'm only willing to kind of buy in that bracket i know it's gonna be this but there's a ceiling of what the what the buyers willing to pay for well that's called a buy stop limit the investor's saying look buy the stock if it gets above this but then don't get don't buy it unless let's say if it's higher than let's say 218.33
so it gives the broker permission to try to buy the stock in between 217 33 and 218.33 so if the price opens up at 219 and never goes down to 218 33 or lower it never buys so there is a risk to that because one of the gaps and never falls down well that's that is a possibility but now the investor can sleep at night knowing okay so i'm i'm allowing the stock to be purchased in between that buck okay but no higher than 218.33 all right now let's go back set the stop date gtc let's go back to that little sheet of paper and now what you're going to see is the stop is 205.60. now if that stock the first initial 35 shares was purchased and then the other 35 shares was purchased the investor can just bring those stops or cancel one of those stops and then just combine the stops they don't have to have individual stops okay so here it is confirm and send now we actually come back down to is buy the 35 shares if the stock gets added above to 1733 but so there's not a blank check completely the the it's allowed to buy it no more than a dollar higher and if that stock is purchased then the stop actually becomes this now if the stock goes to that price that means that all the shares were purchased and this is what i think causes some investors to be well unnecessarily nervous they're putting all their position in at once you don't have to okay stop stop thinking that the investor has to put in 100 of their position at once the only one that thinks that is you okay you don't have to if you want to kind of allocate that capital over time based upon what the trend is doing that's why we're covering this and this i think is what really causes a lot of investors to miss out on trends because they're nervous nelly nervous cameron nervous james i'm getting in now we also remember that second point if the investor is buying halfway up in the train at the bottom of the trend or the top or at a high it doesn't matter there's risk in all the entries so the investor just has to get really comfortable with how much capital they're going to invest and what are they willing to risk the more comfortable they are with that the less they become nervous nellie james or cameron okay now let's kind of go back to other uh questions can we do a buy stop with a stop you know with the target uh yeah so i'm gonna actually kind of bring up just fast fire a couple stocks so when i also look at a sock let's say like nike i'm just gonna kind of mention this we mentioned this yesterday this is actually a stock for that for example is maybe trying to mount and i'm going to draw truck oh there it is so if you don't mind so the question was can we do okay so i'm going to kind of bring this up the question was by tyler okay tyler says can we do a buy stop with a stop and a target okay and you're really calling that an o-c-o now i was actually looking at some pictures when i was in pisa italy and if you go to pisa there's actually a statue of leonardo fibonacci the 12th century mathematician now when i saw the statue i started crying because i just realized what a great mathematician he was and if you've never studied any of his stuff uh you don't understand why i was crying at the feet of leonardo fibonacci some of you were going to go out there on the internet say is there a statue is he making this up does this affect you okay now if you take a look at this the investor might look at this in the shorter term and say hey there's kind of a recent bull flag here and what you'll notice is there's a strong upside move and it's a kind of a shallow pullback and so far a lot of these touches we haven't even gone down below the 38 retracement okay don't look at google right now and say fibonacci statue okay it's there just trust me now if we take a look at this the investor might use a fibonacci line as maybe a level support they actually might kind of use that line maybe to set a stop uh below but they also might actually use the line and say look james if the price gets let's say up above let's say that line of zero could they actually do a buy stop so let's answer tyler's question okay now if we actually i'm gonna kind of just put this the buy stop maybe just let's say a half percent above one percent above in this example how does someone do a buy stop with an ocl bracket well let's discuss that so what it's actually doing on this is we right clicked on the chart right click went down to where it says buy custom with ocl bracket okay here it is and then number two this is not gonna be a limit this is saying only buy a stock now again i'm gonna i'm just gonna kind of pound something in for just a sec if someone just had some buy stops okay on any of these up training stocks in the last year do you think they could have wrote a trend any of them i mean take your pick of the hundreds of stocks thousands of stocks so here's the deal the buy stop is a commitment to buy the stock at or above a certain price and the investor could place the ceiling so sometimes and when you drive you know who likes to make decisions and who doesn't some people when they drive they don't like to make a decision unless they have to this is committing the investor even if they're a little nervous and i don't know what's going to happen so in this case data gtc so the investor says i don't know what's going to happen but the problem is i i got to get comfortable with what i'm going to risk i'm going to go back to those basics again and say okay what's the entry price well if the investor bought the stock at 145.48
okay so i'm going to kind of bring the nervous nellie and the james and the cameron down the support level the investor might say you know what i'm going to set that stop right underneath 139.78 now that's really the 20 excuse me that is really actually the 38 fib so i'm going to use 139.68 and the stop is going to be 135 135.49 so if that stock goes below not that level but this level that means in the short term the stock is making a lower low boo that would not be good and so that's why the stop is actually sitting there at 135 49. now by the way this is our third stock example i said to you that we talked about half about stock half but options we did three options example this is the third stock example that's half half so now what you're going to notice is the trade when we look at the trade risk per share what is that well that's the entry price minus the stop loss now the member the stock does not guarantee an exact exit okay it's just saying if the stock were to get stopped out at that price that risk would be about 9.99
now the risk is actually saying the position size 80 shares and so in this case if the we're going to show this way could the investor say james i'm going to buy all of those 80 shares of money yeah they're good they have more risk up front okay what if it doesn't work in the stock goes down and that's up to the investor if they want to spread out their capital okay and pros and cons of that but if we actually go back and say okay let's say the investor says you know what james i'm gonna buy the full position with 80 shares okay now what we haven't talked about we talked about the stop okay the stop we said is that 135.49 okay 135.49 dated gtc dated gtc so the bottom is actually the stop but this right here is the target so let's go back to fibonacci okay so let's say the ambassador says now in basic bull flag university okay in bold flag university now there's not a university of bull flag okay but if we actually said okay bull flag technical setup really is actually really taking a look at from 131 up to 145. so the distance between those two points is 14 now when i was actually teaching with ray and scott last week on the technical analysis and personal event we said we identified the lowest point in the pattern i don't know if this is accurate but it's probably pretty close 140 is probably the lowest point in the pattern so now what the job of the investor is to see if it can do put the stock try to travel let's say from 140ish up to let's say add 14 now if the investor added 14 it's really going to be about a potential price target and i didn't say it's i mean it's we call it price target for a reason gonna see if it can't go up to that target it's gonna really be about one three fifty four now that's one way to do it but the other way to kind of do it is to flip the arrangement of the fibonaccis okay who said that uh someone said yes oh yeah les gold says i was there and saw the statue last when you saw the statue did you cry like i did okay i know i i asked everyone when i was standing around the statue if they were a technician they said yes you're the stock market okay a little fun there so uh but they knew so now when we manually drew okay the 14 price target we said 154. now sometimes you can see these patterns okay and if we actually were to draw it i don't think it's dead perfect i like the example shown here is we draw really from the bodies of the candles and what you're really going to see in this case is it's going to give about a 153 ish price target i think that could maybe be moved just a little bit as far as where i drew it from but the price target in this example is really going to be about 154 bill that's so true i'm going to defend the statute okay here we go so 154 now it's just kind of interesting when we manually drew it it was 154. when you flip the fibonaccis
it gives an extension target if the stock were to go higher nike to 161 extension of within a dollar of what we manually drew so this is kind of where you can kind of see those repetitive patterns sometimes as well so we would set the price target at 154 okay now i had a little issue there so i can't complete that but i will put that example in so let's kind of just recap and i'm just going to kind of put that the 154 this was the pt the potential price target we don't know if it's going to go there so it was the stock position and it was the stock position okay with a stop of 135.49 and it was 80 shares price target 154. yeah so uh their standard summit those are standard okay so i'm out of my time here today uh john mcnichols coming up next at the top of the hour he's talking about uh verticals and diagonals okay and that'll be long verticals and diagonals coming up right at the top of the hour i said today that we were going to talk about trends longer term and shorter term did three option management examples we also did three stock examples we talked about triple m we did the example of mcdonald's we also did the example of nike okay now when you look at the nasdaq when you also look at the s p there's quite a few other stocks that are really showing a double basing pattern or and or a tilted up w pattern and there's also a number of stocks with volume that are also really breaking out of basing patterns okay uh so in a market you kind of think it's kind of maybe pulling back slightly there's still actually a number of examples out there that are kind of still showing not only a longer term trend but also a shorter term trend as well okay now uh i don't teach on friday so this is where i have to tell you uh i'm gonna see you on monday and uh i really mean it you guys are my investing friends and so it always means a lot to me to talk to my fellow investing friends about stocks and options today we discussed the indexes we talked about individual positions management wise going into the expiration what we also did is we demonstrated the function of the platform we needed to use actual symbols we did to practice remember that td ameritrade does not make any recommendations or determine suitability of any security or strategy and also remember practice some of these basic things that we actually see like position sizing like how to see a bowl flag etc and then i want you to practice also scaling into positions and understanding some of the basic concepts of what is a buy stop when would an investor use that what's a buy stop limit what's the benefit of that okay what's the risk of maybe the stock where the gap above that's very important to practice because if most people would have practiced that they might have been able to really ride some trends in about the last year obviously good chance they would have okay so with that said remember we always talk about thursday as being trend thursday trends are so important need the trends to be able to grow the money okay because one day you're going to need to live on that money okay so that's the whole idea of what we actually get together now remember coming up throughout the top of the hour uh we have uh john mcnichol coming up talking about long verticals and diagonals if you like today's class reach out both hands smash that like button you can also subscribe to the trader talk channel and you could also with that as well uh follow the investor insights that we you can see all of our upcoming videos and recordings with that said i want to wish you a great day and uh i'll be on twitter it today and tomorrow i'll be posting some educational examples of different types of uh patterns and also some examples of relative strength and with that said i want to wish you a great day and stay tuned for john