Using Scaling Techniques To Stay In Trades When You Are Uncertain | Active Trading Strategies

Using Scaling Techniques To Stay In Trades When You Are Uncertain | Active Trading Strategies

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[Music] uncertainty what can you do about it the only thing you can do is work on your portfolio so what do you do when your portfolio is faced with uncertainty in the markets let's talk about that before we do that though let's jump into our strat our our uh slides for the day and let me get this turned on my name is pat malali and this is active trading strategies i'm joined in the chats by barb armstrong as well as all of you hello vj alfred robert david scott dylan george in texas mary wayne and everybody else in the recordings before we talk about uh you know uncertainty and how to deal with that in our portfolios let's go through our disclosures for today and as every day this is for educational purposes only not for investment advice or recommendations options not suitable for all investors short options can be assigned at any time up until expiration regardless of the in the money amount uh and the in the money and then the money option has the right to be assigned early has a risk of being assigned early or higher risk paper money uh virtual trading application will not assign those shorter option positions early that's going to be very different from a live trading account zero commissions on u.s exchanges and stocks etfs an option trades but option trades or option trades yeah i do have a 65 option contract fee this webcast is going to talk about technical analysis but there are other techniques of analysis out there such as fundamental analysis that can assert different views all investing involves risk including the risk of loss trailing stop loss and stop loss orders will not guarantee an execution at or near the activation price once activated they compete with other market orders past performance mini security does not guarantee future returns you are uh responsible for yourself uh your decisions in your self-directed account and uh let's get out there so we're gonna review the markets we're gonna take a look at some things we talked about yesterday maybe looking at the you know the the possibility that what we're going to see some more downside today but we want to really review some trade management techniques and that means what do we do what do you do when faced with those that uncertainty out there in the market there's a lot of information that comes at us a lot of people's opinions in active trading and technical analysis we really care about the opinion that's on the chart what is your trading plan how do you deal with it uh have you found yourself freezing at any point and not sure what to do and what do we do if that's the case uh sometimes it can be something similar to what you might do uh with trades that uh are just ongoing without the uncertainty that we're seeing in in the market so let's jump out there and pop into our platform our trading platform and we're gonna look at the uh first we have the s p up so we're gonna review the markets and uh presently the s p trying to gain uh somewhat back from what we saw today the interesting thing however when we talked about this uh a a few days ago is the fact and maybe yesterday the fact that we saw the up down volume okay this is important because typically the up down volume is going to be used as a as a kind of a bottoming tool more more often than not meaning that do we see capitulation out there in the market what do we mean by capitulation we mean is everybody just throwing you know just selling getting out of the market running away the issue that we have right now is that this um that what we saw on friday and i'm just going to put put a vertical line in there so you can see on what we saw on friday was a really hard down day as far as the up down volume now it was thinly traded uh that's neither here nor there because it's really the fact that the down volume came in to around 91 the up volume was only nine percent today we had up volume of about seven percent which means we had about 93 percent of the trades uh of the trades on the new york stock exchange uh that were occurring the buys and the cells that go together simultaneously if somebody's buying somebody's selling that only uh seven percent of those were on the uptick so fairly uh fairly bearish and typically we see this kind of action or where we want to see this kind of action is in uh the uh is in at the bottom of a of a downtrend now we're just we're really close to the top we're only down about off of the closing highs not the intraday highs but off the closing highs really only down about two and a half percent or so so we're relatively close to the top uh when we see that when when i've seen that happen in the past there oftentimes might be some more pressure that needs to be led off to the downside and of course we saw that today uncertainty with the uh omicron uh variant nobody knows what's going to happen with that there's all kinds of opinions out there but the one that we care about as far as our portfolio goes is are we seeing uh are we seeing extremes and we saw extremes today and on friday in the in the uh up down volume now let me collapse this side for a minute and i'm going to uh we're going to get in the wayback machine here and i'm going to not this week but we'll we'll start looking at we'll we'll go through a review of the up down volume and how it can be used here in a couple of weeks but i already promised somebody to do the uh ttm squeeze for this friday on advanced uh trading uh or advanced charting techniques so when we look for other instances where price was somewhat near the highs all the way back here in february of 2018 we look at the closing high here let me get a drawing tool so we can just measure this real quick here let me give us some upside a little more upside so we can read this box that's going to appear fairly quickly uh when that occurred uh the market was actually down about eight eight point four percent that was the second i want you to notice that um that was eight point four percent but where okay so where did that occur let me get a uh drawing tool and that occurred let me squeeze this up a little bit so you can see this a little bit better that occurred on the second down draft now remember this has nothing to do this has everything to do with just volumes up down volume nothing to do with price in other words if this is going down this this oscillator does not have to keep going down that's the point but this happened on the second day if we uh look at the day before i'm just going to slide this over the first day we saw the up down volume drift below [Music] the uh 10 line meaning that there was less than 10 of the stocks on an uptick and we come over here and we measure from the highs to the close of that day that was about a percent drop so four percent drop turned into another four percent uh on the next day and then you know and then it finally bottomed out now the mcclellan oscillator at the same time was sitting down here at uh a fairly deep extreme around 358 now fast now this is just one one example this is not you know anything to hang your hat on uh you got to go back and you got to test these things out but when we see that kind of fear near the top oftentimes you might find that there's going to be some more downside to go it doesn't mean there's going to be a lot of downside so what do we do what do we do so i'm going to i'm going to erase this right here and open this back up well we've talked about this before the possibility of reaching down into the september highs on the on the s p at 45 45 somewhere in that zone 45 50 45 40 somewhere in there remember it can just be a zone it's not a hard fast number uh but that's um that's one of the things we talked about yesterday that there could be some more uh some more relaxation to the downside as we see right now uh the market uh moving up with another hour and uh 20 hour and yeah 20 minutes left in the uh excuse me hour and 50 minutes left in the trading day uh we're we're flirting back and forth with going below 10 percent back above 10 percent on this oscillator but we see that the mcclellan oscillator sitting down here around 271 so sitting near an extreme when we see both of these together at extremes oftentimes we get a uh a bit of a bounce and that's something we want to watch for let's look at mcclellan extremes over here with the oscillator getting into the ten percent air or the excuse me the up down volume getting into the 10 area or close we might see a bounce and this one checked back here now just because it bounces doesn't mean it won't check back in uh to the downside right more information comes along but if you go and you double check all of this looking for this 10 mark down here at the bottom let me do something here it looks like i've got a bit of an issue nope this looks odd to me apparently um when we reach into this uh into these lower levels in here with the mclellan oscillator there there may be a tradable bounce it could be just a a reflex rally only time will tell but the what we're going to watch is this 45 50 45 40 zone over in here if it starts to break that then we may see the downside there's a possibility to see the downside of the september lows over here all right so there you go that's that for the for the s p 500 um let's see hello shoebee and tony and ashad and el diego uh stuart and dan and grace tm as well uh let's pop over here to the ndx the ndx and uh now the ndx has nothing to these lower uh the these lower ones we're just gonna look at for overall overall uh market structure but the ndx is the top 100 stocks in the nasdaq exchange so there's going to be a little bit of difference in the calculations that would go into these we see the nasdaq popping back up above its 20 period moving average not not pushing below friday's low we saw the spx pushing below friday's friday's low if i get this type there we go pushing below friday's low now back above it same with the well the ndx never made it that far uh this one that's really struggling again uh today is the russell 2000 pushing back below its fulcrum area it's a see-saw zone the midpoint of uh this long-term channel that it's been in so still struggling on the russell 2000 as people are still looking for what are they looking for they're looking for a little more clarity is what might be happening out there so vijay mentions healthcare looking comparatively well today so let's do that let's look at the the sectors over here and i'm going to make sure in the right order so the top sector is information technology it wasn't that way so much earlier in the day but it's uh strong is the strongest one down only 60 uh 67 hundredths uh as you know three quarters or two thirds of a percent uh followed by real estate down eight tenths percent almost four percent for utilities healthcare down uh one percent so you know all in all everything is on the downside communication services uh struggling uh as well uh and at the bottom at the bottom today the cyclical names we tweeted this out over the uh over the weekend which by the way you can follow me on twitter at pimalalli underscore tda and you can follow barb on twitter at b armstrong underscore tda who's barb barb's the one the person in there answering your questions in the chat most of you know her if you're new though barb is another uh inves or a td ameritrade education coach as well so let me pop up the uh my twitter account and i'm gonna this is just at pima lolly underscore tda you go to my profile page and you can find a lot of the scripts that i may use the conviction indicator is in here just click on it or you don't have to but it's sitting right and there we go sitting right there that's the script you can use for that along with several other things but this weekend uh i tweeted out somewhere a poll here it is a poll uh you know we're finding opportunities today's cove invariant market sell-off so that was friday that happened i i sent this out on uh i think friday afternoon yes i did it on friday afternoon 47 of the people said they may want to buy uh mega cap stocks that would be your apples your amazons your netflix so on your reopen stocks that's going to be your jets uh your your airlines your uh cruise lines those types of things uh out there and then came last place came in work from home stocks and then of course today you know what did i do do today here's an interesting click on this a few a few minutes ago or a couple of maybe a half hour an hour ago only two stocks in the s in the nasdaq 100 were green for the day the rest of the nasdaq 100 was down about the same time there was only about seven stocks in the s p 500 that were green uh for today and then of course i put out some information here on the ny on the up down volume the new york stock exchange talking about those extremes there so you can find a lot of good stuff from barb and i uh or any of the invest tools or excuse me the investor keeps saying investor in the educate td ameritrade education coaches all right uh let's get back to it so that's the markets uh and the interesting thing is yesterday yesterday when the nasdaq was rallying and let me i'm going to highlight this so we can look at some of the markets here real quick when the nasdaq was rallying information tech was very strong inside of information tech were were what industry group what industry group was strong yesterday and i i tweeted something out on that as well yesterday but you can see yesterday we had this these uh side-by-side lines uh that uh often time oh this a monthly chart no it didn't sorry uh daily charts side by side lines that can be uh at a support area can be considered some kind of a bullish have some kind of bullish intent along with that so we'll have to see because that was mostly driven by semiconductors and semiconductors were very strong in the open this morning but since then has given back a portion of their you know are given back most of the gains through the semiconductor industry group uh sqns and lrcx uh the ones that are holding up right now sequons is trying to pop to the upside lrcx is holding its breakout here so that might be something to consider you know what are you gonna do what are you gonna do if the market's fine footing and the and the extremes that we've seen in the mcclellan oscillator as well as many of the other breath issues start to turn what are you going to be looking to buy into or maybe rebuy so information tech strong we look at um put this back on it look at real estate really not making much headwinds just not down very far today utilities healthcare for vj healthcare breaking down below a is a kind of an intermediate term support here and maybe if this starts to rally back up maybe faking out several positions in here uh staples very weak uh today industrials very weak that's the cyclical trades that are not doing so well financials not doing so well that has to do oftentimes with the tnx uh the 10-year yield pop into the downside energy uh pulling back in materials pulling back in so right now it's it's the strongest out there even though everything's down is information tech so the question becomes what will you buy what will you be ready to add to positions put on new positions if the market turns back around okay so why is that important it's important because oftentimes oftentimes we find ourselves gripped with uh with fear in the market gripped afraid to do anything because what if we're wrong well that's that's just called regret and guess what there's always going to be regret regret in lots of different ways you buy a stock it goes up you might regret that you didn't buy more you buy a stock it goes down you regret that you bought it you didn't buy a stock and it goes up you regret that you didn't buy it we got to get past the regret we just got to follow a plan and so the regret the next regret may come with not uh being prepared to enter into new trades uh and find those trades that have been strong reasonably strong in any kind of a market pullback might be one thing the other kind of regret is what we see what we do which is part of our agenda how we manage our trades what are our trade management techniques and so what we want to do with that is pop over here we're going to do a little we're going to look at something we did last week over the last couple of weeks actually it was last week and see what we can see what we can learn from uh from short-term uh methods of managing trades when it comes to being uncertain uh so uh here's one we went to put on this is eli i left this in here we didn't get put into this trade or order to buy this trade was above that dotted line that never happened uh so there's no regret there right you're saying boy i'm glad i had that order above the market uh and the market came back down i didn't get put into that trade right well what if it had gone up what if it had kept going up then what do you do let's move on to one that we still have a position on and this is on semiconductors we bought on semiconductor over in here we've got a 130 shares with a stop loss order remember stop loss orders are not guaranteed to execute at or near the activation price we're going to look at some of that here momentarily with with some of our sample paper trades uh we have in here but what can we do here with on uh semiconductor we've got 130 shares we don't have an enormous profit let's go over here to the monitor tab here and see if i can find on here it is uh you've got we've got uh a 27 uh 30 dollar gain basically uh we get we've given up about 143 today if you still feel that the idea is still valid if somebody feels the idea is still valid then what do you do with this in in the face of uncertainty because what happens to people is they have that um they've got that the those two people uh sitting on each shoulder right sell it don't do anything keep it don't do it you know and you get confused right and then and then you might be faced with a strong sell down which then of course was going to bring in that regret why didn't i listen to myself well you always are listening to yourself you just get into arguments with yourself and arguments may not be uh a a good a good thing now uh you probably won't win those arguments with the market uh so what if it pulls back down like this well we have a stop loss in here [Music] sitting down here uh below uh below the market by a certain percentage points uh and but the stock is still in an uptrend right but it could come tumbling down at any time as a matter of fact it held up fairly well for this so you can just leave it on and leave your stop on you could move your stop up or you could just take some off we could take some of this off the table and then move our move our stop back to the upside so somebody might want to sell uh you know uh what's that 65 shares of uh avon owen uh semiconductor and uh leave the rest on to see what to see what occurs i'm going to leave this one alone for now because in the in the interest of time let's move forward and take a look at a few things now here's one uh tapestry we bought here and we exited here it ran up we could have entered we could have exited out uh but the trend was still up and we got stopped out today did we get stopped out where we wanted to get stopped out not necessarily we were stopped out uh actually closer uh to a little bit lower than where we are right in here so it wasn't right where it opened it was lower uh for the day so that is what we mean when we say that there's not a guarantee of execution at or near the x activation price it can always go lower because it's when you put a stop loss in it's at that price or lower it's not a limit order it's a stop loss at that price or lower uh limit orders have the other things you need to understand we won't get into that now so that got we were taken out of that now here is another example this is where or excuse me whirlpool now we went through this last week and we bought here 170 shares now this is more speaking towards what we might see to do with on semiconductor today we we we were long were we were long 170 shares price rallied fairly quickly and we sold we took half that position off now this was just maintenance really management on an existing shorter term trade we were getting uh fairly close to our upside target so we took half off looking to see if it could uh if we continue to move to the upside now we probably could have managed this a little bit better we left in the other 80 85 shares on which we were taking taken out of that trade the rest of those 85 shares so we made on this run here on the 170 shares we made about a thousand dollars sold 85 and then we lost on the pullback because we went in half a position we lost about 400 dollar paper dollars on the uh on the pullback on the sample trade we got stopped out we got stopped out right so that's one way and that's why some people might look at the uncertainty and say you know what i'm going to close out a portion of this position maybe a half maybe a third maybe two thirds whatever you feel is relevant and keep some of it on so you're paying attention and so that you don't give up too much remember there's the old saying cut let your winners run cut your losses short what it really means is that if your losses i want you to think about this think about this for a second if your losses uh are less than what the overall market loses but your gains are equal to what the market makes over the year guess what in theory from in the theory of compounding you should outperform the market so cut your losses short often times doesn't mean just uh waiting for that to turn around maybe it's closing out positions on the way up especially when you're faced with uncertainty all right um so el diego says please go over the business cycle uh i will do that tomorrow uh it's the uh uh first of december i think tomorrow and we're going to we and the market and sector analysis we will go through the business cycle take a look see if there's anything to that we should be worried about uh outside of uh the contagion that we've got going right now market contagion uncertainty right and then there's that covet thing all right so uh we might take half somebody might take half their position off on uh on on now let's look at another one this is this is a a another short-term trade that we put on uh this we had 1250 shares long that was uh purchased on the break uh on a flag uh break of that down on that flag and then on the on the rally up on this pink day over in here we sold half that position as price continued to run we got close to our target we sold the other half of that position so that's the that obviously is on the upside but if we're looking to hold on to the position because we we we think that maybe all the fear will resolve itself no reason to just sell everything then you may want to do something more along the lines somebody may want to do something more along the lines of what was done with whirlpool sell half the position on the way up move your stop up and then and then uh let it let it run if it doesn't get stopped out great you can add back to that position uh let's look at um aap this is one that was we bought here and we got stopped out here for a two dollar loss no no big deal uh in there but if you are facing a loss uh right now on on certain trades there may be something you might want to do that uh do with that and right now on on a couple over here in the monitor tab uh if we look at foot locker well it's hit it's it this is this doesn't have a a mechanical stop in we we know we fear in theory we only want to risk a thousand dollars well we're down a thousand dollars on this somebody may be hoping in making that mistake that can be easily made that uh hey wait a minute it's down near support so i'm going to wait for the bounce and exit out right famous last words as it may not balance and it may continue uh continue lower you've already given up a thousand if you can't be willing if you're not willing to the old saying is if you're not willing to take a small loss be prepared to take the mother of all losses now that's just an old saying uh but you get trapped with being willing to take smaller and smaller or or risking a lot more to to gain smaller amounts just to try to gain some money back so we're going to close out foot locker here hit confirm and send boom out of that one down money uh we know that oil is getting hit in a halliburton and this might be something else you consider halliburton we're only down a hundred dollars in halliburton but when we start looking at the technicals on halliburton really not looking very strong in here so you might look to put a stop loss or something under halliburton under underneath here right however so don't take a small loss turn it into a really big loss that might be the story there let's look at a ball corporation here we bought here had a bit of a and a a run it's pulled back it's holding support uh today it's trying to rally back up it's up about 24 cents for the day uh here is another idea that hey you know we're we're seeing a bit of struggle in here we're we're uh looking at the momentum continuing to weaken so maybe it's time to close out the whole position or close out half of uh of uh uh ball so what we're going to do is we're going to cancel and replace this order with half a position there and then i'm going to go ahead and close half of this so we have 182 shares on there we're going to divide that by two and that says we can sell our keep 91 at where we have the oops at where we have the the the stop loss presently so we're going to leave our stop in place we're just going to come up here right click and go to right click on the balloon here go to cancel and replace we're going to leave the order in the way it is as far as our exit but we're going to change the amount of shares to 91. hit confirm and send i just did this you might consider this to be a little bit backwards because oftentimes we will close out the full position first what we'll do now is we're going to come over here find ball and right click create closing order and sell half of this position as well so we're going to close out half that position uh confirm and send boom out and now what we have left is should have left is 91 shares with a stop loss of 91 shares remember the stop loss not guaranteed to activate or execute at that near that activation price so we'll see what happens if it starts to break out how many times have have you bought stocks on the breakout right this is just going to be the same thing you got a half position on it it starts to move to the upside in other words things we get more clarity and and things start to run to the upside you can always add your position that position back in but better safe than sorry uh don't get greedy i guess is the idea behind here uh okay so we know we've got uh big gains in amd we know semiconductors we've got 100 shares of amd do we sell half of that you move your stop loss up or you just so this is the heart this is the interesting thing i want you to think about are you so confident that this is going to keep going that you're going to keep the whole position right and there's one thing to be have conviction there's one thing to have confidence but you're going to have still have to look at areas where uh hey things are the market struggling uh the the this group is struggling perhaps i should take half half off but what do we know about semiconductors and this is where the whole top down approach comes into play we know that semiconductors were the strongest we look at the sox index uh the strongest yesterday right now struggling so depends on what you're what you're looking to do where is it down here in market sector analysis here's amd the the other mistake people make is well i've got a huge gain or what they might consider a huge gain depending on the size of their portfolio and they end up sticking with uh is with the trade when they might be considering moving their stop higher moving their stop loss up to have less of a loss if it if it pulls back or closing out half that position so in this case we're just going to move the stop loss up to below you know you know i kind of like where it is right now but we're going to move that stop loss up to just below this 20 period exponential moving average from a technical basis the reason somebody might consider doing that is because it has a tendency to bounce up from that area so a break below that area they might consider uh to be a uh a harbinger of uh of things to come so below the 20 period moving average below uh the the gap the bottom of the gap over in here let me zoom in on this here below the bottom of the gap over in here below these lows that might be a place and below the 20 period exponential moving average to move your uh to move your stop okay i think that's about it yep all right so that takes us to what we wanted to get done today uh let's take one quick look again at uh at the markets we'll go forward boom boom boom i'll get there spx coming back in the nasdaq itself let's put this on a five minute chart be careful trading around the five minute chart uh looks like it's trying to build some kind of intraday bottom there's no don't be if you're not a day trader don't try it uh stick to your rules nasdaq holding this flag in here we might see well we'll see if we can see a run into the end of into the end of the day but right now the market's trying to hang on the nasdaq still stronger than the s p uh 500 uh and as well as stronger than the russell 2000 but they're all trying to capture some upside move we're still seeing that up down volume at extremes and we're seeing uh the mcclellan oscillator holding right around that 270 area as well so with that remember there's the old there's the old saying about forest fires only you can prevent forest fires well you know maybe we think about our portfolio as that uh that uh old growth uh stand of trees out there that we want to protect and if we if we see a possible fire uh coming do you really want to wait until the fire is there before you uh uh you know start to think about how you're going to deal with it let's think about how we're going to deal with it now maybe take action or be ready to take action that's up to you how you do that where you take action it has to do has to be with your plan that action you have to be cognizant of your emotions if that action is pure emotion panic that you're going to that you that you're going to that the market's going to go back up and you stick with the losing trade or it's finally just capitulated and dropping through the floor and then you finally get out after weeks of wishing you had gotten out and then it goes back up these are all things that are going to impair our gains by the end of the end of the year so we want to be very careful with that so know how you're going to manage your trades in the face of uncertainty not just because you have winners and you want to in and they turn on you but the face of uncertainty uh can can breed errors in judgment and with errors in judgment usually bring in the next error in judgment so you want to be very careful with that for any pilots out there it's get their itis you fly into a storm you know you shouldn't fly into the storm the first error in judgment there and then you don't believe your instruments the second error in judgment and then things get worse from there so know what you're going to do when you're going to do it while you're doing it doing it recognize your emotions uncertainty the market hates uncertainty and that's why we see the market sell off in front of that uncertainty people are people are people no matter how long they've been involved in the markets with that if you like what you saw today please give us a thumbs up and if if you can just go down to the lower right hand corner of the youtube screen and there's a little box with an arrow in it that you can subscribe to our trader talks webcast subscribe subscribe subscribe i like to say and that is going to help you find all of the great webcasts that the td ameritrade education coaches uh will do and are doing uh as well and uh if you feel that somebody can benefit from this share it with them and please re-watch it think about uh those types of things write down notes uh and and try to get a handle on what you might want to do if the markets go awry remember this is for educational purposes only you are the one responsible for the decisions that you make in your self-directed account and everybody have a wonderful day we'll talk to you soon you

2021-12-06 02:56

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