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Welcome to the Rapid Recap I’m Sasha Evdakov and thank you for joining me today. I hope everyone's doing well this week and you know just making the most out of the week with whatever you're doing whether that's are planning your vacations here for the summer, whether that's some work and working hard or putting in some study time.
I really appreciate you joining me today and you know I appreciate you giving me your time and energy so this recap I'm going to just kind of go with the flow of some of the notes that I have. I'm not going to stressed about the length so we'll see how we go and the things that we cover.
I do want to talk about the 80/20 rule and also about buying food and how this really pertains to stock trading. I always try to do recaps that I can contribute to in a lesson format, some sort of skills and some sort of educational concept that you can take further maybe not only in trading but also in life whether that's running your own business, applying it to a job or just your personal life.
Today we're going to be talking about the 80/20 concept we’ll also be talking about buying food but before we get into that I do want to mention that the website did get read on for Rise2Learn and for those of you that have courses you do have a new layout, new version and some of the bonus videos also are on there.
Once you ago on the website just everything got updated for our mobile versions responsive versions. Everything just looks a lot different now and I think I'm you should be happy with the changes. We also added FAQ's for every course. Different FAQ's for each course and those are also in there so you can click on them and look specifically at the questions for that course.
We also have a course path, I'll be adding to these different sections such as recommended path for could be day traders and so forth in the future. So we'll be adding to this a little bit later and let's see what else if you would do me a favor if you've purchased a course in the past I would truly appreciate a testimonial.
We’ll be adding testimonials to this here shortly. I have been collecting them slowly but if you would just go ahead and sent me an email over here and you know sent a little note. It doesn't have to be long if you want to attach a picture we can add your picture or your website whatever it is and we’ll put that may be in a reviews section.
Whether you just watched YouTube videos and I've helped and contributed you to you in any way higher then I would really appreciate that it would be a great favor not only for me but also to other people possibly browsing the website.
In either case I have also been doing some planning for the books. We’ve been finalizing some of the books. I am pretty much done with the shorting book just going to have to review it and then it will be published.
If you want to look at all the projects it’s under Tradersfly and these are just some of the things I'm working on. So we'll do the charts for shorting and that book will be coming out soon, we’ll be calling it a 245 Money-Making Strategies for Shorting rather than the first one swing trading.
In addition I've been finalizing and we finished planning the Options Mastery Course so I'm pretty happy that I finish the planning process for that and if you think the Technical Analysis Course was large, the options course is supposed to be massive.
I don't even know how long it's going to be but it's going to be quite big. I would expect about 20-hours’ worth of training in that. I finished planning all that and I need to update progress bar but hoping to get that out by the end of the year. It's going to be probably the last course for this year because it's just so big and that's the one I'll be working on.
With that in mind let's get into some of the concept. So today we’ll be talking about the 8/20 and the buying food concept. Now I’ll start with a simple example of just purchasing food at the supermarket and we’ll just pop up here a little blank page and do some drawing.
In general when you're going to the grocery store let's just say the overall grocery store is this big. Now in theory you know we purchase products from all different places throughout the grocery store.
Me personally I like to oftentimes eat as healthy as possible and the more healthy than I can eat the better I feel, the more energy I have and just everything else just flows a lot better day-to-day if I tend to eat well.
Typically on if you look at the grocery store as a whole I tend to think that if you look at this as a hundred percent totality, take a look at the best twenty percent of the things that you can eat and the best 20 percent roughing at the estimate would be everything that's in this a region or area.
Let's say if this was the best 20 percent that you could eat then you should normally stick to purchasing the majority of your food in that region and for me I like to stay in the Greens section so from the salads, to the fruits, to the veggies so we typically have to purchase produce frequently because we buy fresh things.
If you buy more frozen things they tend to stay good a lot longer so for us we always look at that top food quality that we can the freshest things and the healthiest things. If you stick to that then you're picking the best of the best.
You can take the same concept and principle to stock trading. If here is all the stocks in the stock market you have all the stocks right here and between all the stocks there's you know let's say 6,00 different stocks that you could easily choose at any given time but what you want to do is stick to that top 20 percent.
Just constantly look at those the ones that you're comfortable with. Now the top twenty percent for you may not be the same as for me. That's the main difference when it comes to stock trading so whereas with groceries we kind of the body acts the same way but for some people that are diabetic they need to stay away from certain types of foods and so forth.
In stock trading it's going to be a little different, it's going to depend on your goals, your style, your risk tolerance. There are a lot of different factors but again you stick to the top twenty percent of the trades that work for you.
In fact there is usually no reason our point to even bother looking at those except from time to time there's almost no point. Now I do scan them from time to time to cut certain breaks to just take a look at certain other stocks that could be building cause and the effect that are great setups but you can look at this as a whole to the stocks that you're focusing.
So the top twenty percent are the ones that you’re focusing on right there, now you can take this concept and also talk about it in terms of patterns so sticking to the same familiar patterns also would be the top 20 percent right there.
If you're not use to trading the gaps and trading those kinds of style of trades then there's no need for you to be trading stocks in this region and area if you're not used to the gap and it’s not in your top 20 percent then you need to stay away from it and not trade that theory or that concept or those types of trades.
Now as we dig deeper, this is usually the surface level of how most instructors and many teachers talk about the top 20 percent and so forth the 80/20 rule and principle. For me I always look at things a little bit different and I like to take things a little bit deeper. So if we do our drawing again right here and we take our… I’m going to take our top twenty percent a little bigger.
We take our top 20 percent right here so this now is our top 20 percent. So here top 20 percent right here so let's say that's our top 20 percent. Now this is where most people stop is they look at this top 20 percent. What I want you to do is continuously zoom into the top twenty percent
This 20 percent actually becomes your 100 percent. So before this was your 100 percent. Now we have 20 percent of that, this is now your 100 percent. Now what I want you to do is zoom in a little further and do twenty percent of that.
As you start doing the multiplication and start getting less and less since this is that 20 percent right here of the hundred now we're getting into this cube. As we get into this cube this now puts us at even smaller percent bracket. This is in fact 4 percent.
We’re constantly downsizing our $20 percent and we go again that with the same thing you're always looking to make things smaller. So now we take that 20 percent and maybe we go here. So after you do this two or three times you're going to be left with at this small little square. Let's just make it a little bit of red.
You'll notice that if we do this twenty percent multiple times you’re really just focusing on the best of breed. Trading the leaders, the leaders for you, as for me the leaders are typically the most common leaders and that is because I like stocks that move. I like stocks that behave in certain way.
I like the liquidity and it's just my trading style because they move, I want the fastest moving stocks in the shortest amount of time but you know some of those stocks are a little more expensive and they may not fit with your trading plan and that’s perfectly ok.
For you if this is the penny stocks, that's fine there's nothing wrong with that but you want to trade the top twenty percent that are your most successful or most probable trades. As we zoom in then you're going to trade the top 4 percent and as we continue to zoom in again you're going to be trading even a smaller amount of that.
You constantly keep zooming in, more and more from the initial hundred to a smaller and smaller amount and that's your end goal, whether that goes along with shopping whether that goes along with anything that you really do.
You're always trying to zoom in finer and finer details to really just do the best thing that you can, and the most efficient thing to have the highest probability of success.
Typically as you progress, the behavior’s going to be consistently repetitive over and over again. You'll start doing the same type of trades but they'll have a higher probability outcome for you but that is exactly what you want
You want consistent trades, trades that look familiar and trades that look the same so that way you have a higher probability of success. Typically stocks behave the same time and time again especially if you’re trading the same stocks and this is really just due to human behavioral, the way that we act, the way that we behave is just our human nature and human behavioral traits.
If you take a look at just any regular person that for example go shopping, typically we eat the same types of food so if you’re used to purchasing your food at one place let's just say McDonald’s then you probably will do that time and time again.
Whether that's once a week, twice a week, three times a week whatever it is. For other people that like to eat eggs every morning then they’ll typically eat eggs every single morning. People that like to eat cereal every morning they will typically repeat and you know eat the cereal every single morning.
The same thing happens with stocks a lot of people out there and traders are comfortable with certain types of stocks. They get comfortable with them and this kind of makes them trade the same types of stocks time and time again.
As we get comfortable with the stocks we do the same behavioral patterns and this is why ABCD pattern support and resistant lines all these things really play a huge role and because of that the patterns are easily recognizable.
Now it takes time to learn to recognize these patterns but they are recognizable because of human behavior, they’re recognizable because human behavior is very difficult to change its kind of like those people that are always worried that hey you know I'm not driving I'm not a bad driver as everybody else is just horrible drivers but it's not me it's definitely not me you know I speed fast because I'm a great driver.
We always think that we're better than we are but that's just our thinking of being more naive than really where we should, we’re less humble about the situation and were less aware because we don't want to say that hey you know I'm just not a good driver just the reaction time that I have could be really bad especially if somebody jumps out in front in my car.
Just be mindful of these things because most people are not most people are not mindful or not aware or they just don't want to be honest with themselves saying hey you know I don't understand this concept especially if there's things that you don't know.
If you don't know certain things you don't you don't know the things that you don't know and if nobody brings it to your attention then it's hard to even gauge or relate to those things and concepts
With that in mind you got to always look at the bigger picture if possible if not you need some guidance and sometimes you just have to be honest with yourself and say you know what if I don't know as much as I think I know and for me personally I like doing this from time to time and just starting from scratch and whether that's flipping charts upside down which I can't really do on video and looking at things a different way.
If you take a chart and flip it upside down you start recognizing patterns in a whole different, you start looking at charts a little bit differently because you may spot different kinds of trends. For some people that didn't really even know about technical analysis that trade strictly on fundamental analysis, again once you're aware of technical analysis then maybe it becomes a more of an eye opener.
In either case, in wrap up or in summary for this lesson in this video I do want to mention that you know always focus on the best of the breed stocks and just be aware that the situations and things and concepts that you might be seeing be mindful and humble that you may not know what you don't know and you may not be aware of certain things.
Don't think that you're better than you are and this just helps keep your mind open to new possibilities this helps keep your mind open to learning new concepts and so getting into the stocks let's look at some of the stocks along with the application of what we just discussed.
Some of the stocks that I always discuss for example like the Amazon's, the Facebook's, we talk about CMG, we talk about the popular companies. I normally talk about a lot of these popular companies because I trade them time and time again and when you trade things time and time again these are my 20 percent or my four percent.
It just keep zooming in to my best of breeds or highest probability of success trades. So looking at these stocks let's look at some of stocks that move the way they behave it's all about that 'cause and effect energy.
Just like people with their behavior do similar repeatable things same thing with stocks baby they behave, they breathe of certain way and once you start learning how they breed how they act if you think of them as a person really it'll start changing your mindset, it will start opening you up to a whole different concept.
Looking at Apple here let's just take a look in the chart and see how it looks. So here looking at the Apple stock we talked about this one last week as the stock powered higher I didn’t trade this one on the previous week but the trade worked out great we're just allocated in different companies like CMG and IBM and shorting yahoo and so forth.
Looking at Apple we had earnings come out the stock popped and then it rejected the prices on volume so if you got into this trade right there and did a short for five points here it would've been a great win. Out of a 1000 shares and I know for some people a thousand shares would be a lot to short but you could have made five thousand dollars in just eight days.
The trade would've been great because here was the supporting higher resistance line right there at that at that swing point right there and the stock rejected it. The energy think about it, energy pushed higher but it didn't have enough energy, energy then sold it off so what's going to happen it'll continue to sell off further that's just natural behavior.
If you can't push a weight higher, if you have you know weightlifting and you're pushing away you got that little jolt you’re pushing it higher but you just don't have the energy you've been working out. Let's just say you've been working out right here for the last two months every single day you know you get into that jam on this day and you try to push yourself you're not ready.
You haven't put enough time and effort and energy into working out so maybe you need a few more months are to really build up that energy and it’s just all about the energy, just like human behavior just like anything with energy this is what happens. It tries to push it higher rejects it could’ve shorted it right there nice volume and stock continued to sell off further.
If you wanted to look at this trend line you could’ve done this as well and waited for different things. Now out where the stock comes back to well we don't know obviously but the swing lows right here would be nice.
The stock is a healthy stock and there's nothing wrong with the stock because if you look at the weekly and it’s just really consolidating but relatively speaking on the more inter-day trade you can see that right there was the rejection point.
Now if we take a look at let's just say Facebook also very similar point and concept here was our swing points right here, we talked about this in the critical charts the break was here. The initial sign actually was this bar right there because that bar was also a rejection.
If we go right here you can see it rejected those price bars right there sold off and another entry to the short side was right there giving you a nice run to this swing points so that as well gave me a nice three-dollar run to the short side just because it was weak you know the energy was there to the downside.
The market is at it’s highs, the stock was at its highest so what do you think is going to happen if it can’t push it higher, it’s going to push it lower so and that's another thing that happened. If you like trading big gaps gap related stocks, Amazon we played this one and here was the lows on that huge pop and typically stocks that gap up really high very quickly tend to fill the gap or at least sell-off quite a bit.
If you would have waited for that to break even if you are in it now it's still an eight-point gain to the short side. So typically these gaps fill but doesn't mean there's anything wrong with the stock. When you're shorting a stock it's a temporary position because stocks that go down they usually go down just for small time frame.
I don't like to use the word short time frame because people may get confused so typically stocks that move the lower and you want to short on stocks that are like this, that are powerhouse stocks they are short-able for a smaller time frame because there's energy to the upside, if you're shorting them it's a temporary move.
Now on the flip side you can do same thing with like Stamps.com here it is again this one took a little bit of time and energy to build and there was your lows right there and once it started to break coming down right here, two dollars and seventy cent gain right there to fill that gap.
We talked about Urban last week and did the same exact thing gapped up this was a small gap you got to look at the size of the gap sizes of gap does matter. Here also BOM, stock broke right here took a little bit of time to build but you know even if you like trading this forty dollars stocks which is fine there's nothing wrong with that dollar 42 for a gap fill thousand shares you know make a thousand four hundred and twenty bucks.
There’s nothing wrong with these trades, they’re good setups and clean set-ups if you like those kind of clean setups.
Let's take a look at Waste Management as well, good trading for the short side. Right here is that upward support line we talked about this one broke here out get out of this position, here were earnings and then again you could enter it short again for another few points.
Really on that trade rather than making five dollars you probably would’ve made only three dollars because definitely don't trade during earnings, remember what happened with twitter the previous week with the earnings here or Buffalo Wild Wings same thing you know their stocks can sell off very quickly for 13 percent and you can get stopped out for five to six months of gains wiped out in a single day.
When stocks pull back this is what people don't understand is when stocks are pulling back like CSX here the stock broke higher and oftentimes when stocks pull back just a little bit or more or less JetBlue actually people don't realize and understand that when a stock pulls back right here for just a couple days that doesn't mean there's anything wrong with the stock that’s just normal healthy profit-taking.
If you had a thousand shares which would’ve cost you twenty-one thousand dollars but if you had a thousand shares you know one dollar gain on a twenty dollar stock is pretty good so you would’ve made right there a thousand bucks on a thousand shares.
There’s definitely potential and opportunities but you know a thousand dollars on twenty thousand dollar investment that's pretty good in just a couple days right there. You got to look at the bigger picture that you know look at where's the energy going and how the stock is moving and reacting.
As far as CSX we’re at this position only because I saw this heavier volume coming in and a second day follow-through so I didn't want to risk it, raised my stop obviously after these breaks and got out at that position.
Same thing with Yahoo, we’re at the position only because Alibaba is highly controlled, Yahoo is highly controlled by Alibaba and with earnings on Ali Baba you definitely want to get out of the position of Yahoo you can see how that stock reacted right there but again it’s hitting the rejection of this internal trend line.
You always want to be mindful of what you’re trading on as far as IBM goes again you have a day or two pull back and you got to look at the bigger picture. Where's your stop, where did you get in and continue to raise your stop and if it hits your stop you're out.
Some of the other stocks, CMG, still have this one short but again sold most of the position and now you're just letting things run peeling some of in the strength and as the stock retraces you know you’re taking money off the table moving your stops to go with it and you know reducing your overall risk.
Simple concept and as it starts approaching this level the 610 level you know you want to get more and more out of the position, same thing here you’re the swing lows here at the 635 level as well. There are different price levels you should always be watching, Yum Brands acting fairly well so take a look at the swing point breaking higher.
Here's the daily you can see right there a clean break if you got in it right here on this day allowed it to-run you're up six dollars in seven days how many people love six dollars in just a few days.
Let's see MasterCard. I talked about this one, we got in this one the previous week it was pushing higher the way it was acting with heavier volume but it rejected it so got out of the position real quick and now we're waiting for the next segment to build, it just needs a little more time and sometimes things happen that way is that you get stopped out.
You're waiting for the highs here at $93 or potentially on the safer side 93.62 to get into a long position but the stock is building. Its building 'cause for higher prices it can make it pass that line. Those are some of the stocks that I’m watching.
GMCR as well breaking lower, here's the support line again this was earnings but you know watch how things were behaving or watch this line it was breaking and breaking on heavier volume with the earnings and if it bounces here chances are it'll continue to sell off further.
Activision as well, first day movement here is the swing high, swing high rejection and now it built enough energy pushing it to the upside. Looking at the weekly there it is, at the daily and if you zoom in on the intraday you can see that right here 24 was the break first-day pop right there 20 cents not a huge gain right now volume picking up lot of things moving well.
If tomorrow's a follow-through day it could definitely get some nice higher prices out of these stocks so there you go that's what I have for today just remember people typically trade the same stocks over and over again.
Focus on the top twenty percent that work for you the top trades and then continue to zoom that in to the top twenty percent of that 20 percent meaning the four percent. So you constantly keep zooming in and just watch for your behavior.
Make sure that you're not overly confident on your trade just stick to things that constantly work for you because these charts and these patterns they're very consistent with one another, they repeat time and time again because human behavior is more or less predictable. It’s easy to see how people behave when something happens.
For example if someone is choking you know typically people around them will behave even try do the Heimlich maneuver and so forth and get them to breathe better and get the item stuck in their throat out of there.
If somebody trips and falls you know you want to help them and you know give them a hand to get them up and if it’s another little kid they may laugh at each other. So as we start getting into specific different things in context these things start to get a little wishy washy.
That's what happens with stocks is we get a little more confused based on the stock and it's kind of like kids, kids versus adults they look at things a little bit different. So the same thing you have to start looking at the bigger pictures you have to see where more people are positioned and that's what the charts really tell.
Look at it and see is it more day traders that are positioned in the stock, does it appear to be more long-term positions because if the stock has very clean charts, charts that you know are set up some similar to this this chart right here similar to the right set-up or Jetblue the setup is there then you know people are positioned for more the long-term.
Some of the other stocks people are saying hey well on you know I lost a lot of money here I got into the stock right here and you know I was day trading it and I got in right here and then you know the stock went down 44 cents and I lost so day trading is risky.
Well, I mean you didn’t look at the bigger picture you got to look at the bigger picture, the bigger picture here was for the long term for the long position and if you simply just sit on your hands and ducktape yourself to your chair and allowed things to move to the upside you didn’t even have to do much.
You just got in the position and just sit and just relax, just relax and allowed it to run with the right stock. Trading becomes more loose and people wonder how am I able to write books or you know get things done and that's because I’m more relaxed.
You calm down you have to just be more calm getting the right positions and you sit and you let them run. Similar to how we did CMG you short it right here allows it to run. Yahoo we talked about if you missed the top look at the previous recaps.
Again we got into Yahoo right here allowed it to run for seven days a week and you know worked out normally I like longer runs on this but the market right now it's at its highs so we have a lot of the weird inconsistencies and with Ali Baba coming out with earnings you have to be little careful on that one.
Even IBM same thing you know right here multiple days, gains 11 days seven-point run. You got CSX the same thing right here multiple day gone, on the run 22 dollar gain, that's fine if you’re trading 10,000 shares you know it's a healthy profit but it takes time to get there.
It takes time to be patient, it takes time to see the bigger picture and most people are trading and trying to trade on the day-to-day basis and they don't look at the bigger picture they don't see these things because they look at the short term view and it happens a lot in life.
It happens a lot in just day-to-day the way people run their businesses, the way that people react to just things coming into their life rather than being proactive and knowing that you know. When you know that you know things become a lot more simple.
That's why for me it's more of an internal joke to you know where people say you got into the stock and lost a little bit on this one or you lost money and then three days later you noticed that the stock continues moving in my favor and that's because I know the bigger picture, I have a plan, I have an endgame.
Most people that trade they don't have a plan so have a plan you know find the trades that work the best for you, the top twenty percent zoom into the four percent and keep zooming in buy, it's like buying the healthiest food that you can.
Stick to the top twenty percent in the grocery store, stick to those things that work if you're buying a car you don’t have to have the most expensive car stick to the one that works you know most reliable you know everybody's got different things that they focus on.
If you want the social status fine that’s totally up to you but you know then really if you want to stand out then you know make your car pink.
Again it's totally up to you but if that's what you want then to stand out you don't need to spend a lot of money, you just have to stand out away from the other 80 percent of the people that have gray, white, kind of cars. If that’s what you want then do it that way but stick to the top twenty percent.
Be the outlier and then go into the four percent and I guess that's why some people you know paint their cars weird colors and have the big rims and you know do all kind of weird funky things. For me personally I just like the common things but I don't like standing out.
When it comes to stocks the same thing goes, stick to the things that work, stick to the things that are repetitive and it may seem dull over and over again but they work consistently.
If you're a basketball player and you're really good at shooting 3-pointers then shoot them all day long. If you're a hockey player and you’re great at shooting slap shots then you want to shoot those all day long.
Stick to your strengths and the trades that work out in your best interest because you want to trade the highest probability trades and when you trade the highest probability trades that's when you start becoming more and more consistent you start eliminating those trades that are just emotional trades or trades that make you feel good.
You stick to the ones that you know and you'll see your profit margins, you’ll see your success rate just turn around dramatically.
Thanks again for joining me enjoy the weekend, enjoy your family, the time with your family and spend some time.
Things are getting warmer so summer volume again usually lighter on the volume and trading because a lot of people take vacations so just be mindful that volume typically dips during these months but that's not to say that there aren't going to be trading opportunities out there or nice trades out there.
You just have to watch for the right setups, enter them at the right time and allow them to run alright enjoy and have a good one!