NEW: Live classes are posted - Click here to see the calendar!

Ep 43: Knowing & Perfecting Your Trading Environment

June 25th, 2015

Listen to the Podcast

Welcome to this week's Rapid Recap. Today we are going to talk about the Trading Environment. I'm Sasha Evdakov and it’s June twenty-fifth 2015 and I hope you're having a great week so far.

Let's get into some of stocks and let's just talk about the market overall and what's going and what's happening you can see that over the last couple of days we've rejected higher prices and we’ve had a little bit of a sell-off and you can see that confirming on the Dow Jones.

You can also see that confirming on the S&P you can see it on the Spyders. So you can see those last two days. We have a little bit of a sell-off here going on so just looking at the Spyders you really you can tell that the volumes picking up to sell off here a little.

trading-environment-June-2015.0004

Something to pay attention then take a look at also the CBOE, you can see here we have the support line if we take it out to the weekly there's that support line. We were at the lows on this fear index and right now we've been bouncing the last few days which basically just means more people are purchasing puts.

Looking at individual stocks themselves this is really what the market is set up for at the moment and I am when you're looking at stocks right now in the current market conditions. You're looking at really specific stocks in the current market condition you know you're not looking at overall market as you can just throw a dart and you know everything goes up that's not the kind of market we’re In. That would be a bullish market.

Bearish market would be you can throw a dart in any stock that you basically land will go down so in this weird market environment where you can see we're going from March or even more so from about December. If we draw a line across we’re nearly at the same price level. We haven't really done too much.

You really have to watch and choose your stocks carefully if you’re trading in this environment take profits in the strength and if the stocks hit your stops or your exit points then simply just get out that's really the simple truth behind it is you know choose the right stocks allow them to run as far as you can take profits in the strength and if they hit your stop you exit the position. I know it sounds easy but it really it's a lot more difficult because you're struggling with yourself during this process.

A lot of the emotions come into play and that's really where a lot of people struggle. This last week here I've been noticing a lot of the health-care stocks been picking up and looking pretty good for higher prices so I want you to keep an eye on some of the healthcare stocks here that we tackle because that's kind of a little bit I guess you could say little bullish of an environment here that's happening.

Pay close attention to the environment that you’re trading in. Are you trading in maybe more railroads, are you trading more in energy stocks, are you trading in tech stocks. Pay attention to those environments and how those groups are moving and right now I'm seeing a lot of healthcare names pushing higher or at least having some movement in the space.

As we go through some of the stocks here on the list out right now just watch out for the healthcare names and just notice what's happening. I'm not telling you that you should be trading healthcare. I'm not saying that specifically because on some of the stocks that we’ll be going over, the move is already ended, the move, it has has been made and you should already have been in it and if you're not in it then what you can do is wait for the pullback.

trading-environment-June-2015.0012

There are always multiple opportunities to get into the stock you don't have to just trade specifically exactly when I tell you to make the trade. Instead what you should do is watch how the stock is acting and behaving and if the stock is power and higher and you believe it's a little too far extended then just wait for that stock to come back and if it comes back and bounces then it’ll give you an opportunity.

In either case pay close attention to the healthcare names here because I have a few health care names that I'll be covering so I just want you to take a look at what's happening. Usually if one of the leader of the healthcare names or the group leads those stocks then typically some of the other ones will follow.

They kind of work in groups, kind of like when you apply this concept to high school, you know if a certain cheerleader a popular cheerleader does something all the other cheerleaders follow. If a certain football player does something then all the other football players as well follow and do the same kind of thing or behave in the same way.

The same thing with stocks it's based on that environment. Let’s just start out with a popular stock we'll talk about Facebook and Apple because they are fairly popular and Facebook's been breaking out the here 2 to 3 days really it's been happening.

trading-environment-June-2015.0069

We started the initial breakout actually right here it’s where a lot of volume started to pick up. It was little bit subtle but volume started to pick up on these two days. Now I wouldn't have got into the stock until it cleared this or even that right there and the reason I say that is because the problem if you get into a stock right here it has the potential to reject those prices right at that level right before it clears the swing highs over here. Your entry point really would be over here.

Now you did have a second day follow-through right here which was great and it was also on fairly heavy volume so far so good the stock was moving fairly well. Today we did have a slight pullback and a lot of inexperienced traders will sell during these moments but oftentimes the professionals know what they're doing and notice that we pulled back on lighter volume.

Now you do want to take profits in the strength and if and if the stock goes up for two days you do want to take some profits if that’s your plan so don't get greedy here because of the environment that we’re in, the type of trading environment. So even though we're starting to pull back here you can still take some profits because what you really don't want to happen is you don't want that stock to come back in here and break lower and come back into retest this level right here.

Always take profits in the strength as those stock powers higher. Now this stock so far in the last two three days really has been moving fairly well and rippling back right now on lighter volume so if we come back to this level and the stock comes back here and then bounces this could be an opportunity to add to that position so watch it closely but so far it looks really good really healthy move the right price action the right behavior that's exactly what you want to see.

trading-environment-June-2015.0095

Now let's take a look at another big name we'll take a look at Apple. I know some people want to trade this because they love it. They love it more than their kids. You know they love Apple they love the Apple phones the Apple devices all that kind of stuff.

Me personally I don't like working with a lot of Apple devices because they constrain you and when we release the trading computer insights for building your own trading workstation or purchasing a trading workstation I'll give me some insight onto why I don't really care for Apple devices and to some other tidbits on that for my trading workstation but I usually do like their stock most of the time but I still trade it as a stock.

I don't really care how much I love or hate the company I look at the pattern I look at the behavior I look at what's going on underlying behind that company and then I make my trading decisions.

Really I don't care if they made raincoats. I don't care if they made socks. I don't care if they made note cards or even glass dishes. I care about the movement the behavior I care if the big boys want it that's what I care about.

I've mentioned this before about the stock but let's just start zooming out a little bit. As we start looking at the longer term picture it's actually tough to see because we're very close to the threes here. We want to zoom out.

What I want to do is I want to go to the weekly time frame and i want to start looking at it. You can see right here we start having a slight pullback this is considered our retracement or B to C pattern that means nothing is wrong with the stock and those of you that studied the technical analysis course know the B to C retracement, that is your B to C.

trading-environment-June-2015.0116

I’m going to zoom out even a little bit more because I want to really show you kind of the long-term picture but before we get there take a look at the volume here and what's happening. Look at this volume declining relative to 2009 even relative to 2010 and 2011 just take a look at where we've been to where we are now.

The previous volumes are here and now look at the volume that’s in the stock. It’s just to something to know. Let's take a look at the monthly chart whereas each bar represents a month so what I like to look at is the projected move and the projected move is calculated by calculating the A to B and here's our pattern A to B, B to C and C to D so the C to D leg right here, this leg is calculated by measuring this leg right here A to B.

Now if we do that I want to share with you, take a look at that box over here to the left if we take the lows of that stock and go to those highs we get about how 84 points or so let's just call it 80 to B even. Now let's take the lows over here at this point and just go to the highs over here look at it we're at 79 points, when a stock hits my projected move I’m out.

Listen to that carefully when a stock hits my projected move, I am out and now why is that it is because the risk to reward now is not in my favor. Now you have people looking at the stock like this and they see it going sideways to me I’m looking at it that it's over extended. So I'm looking at the bigger picture.

Of course we could trade it in here In and out Day trade, there's nothing wrong with that. I do it sometimes as well. I may come into the stock and here was the initial rejection then the earnings came out there's the next rejection and I may go ahead and short that stock.

It comes back up here I'll go ahead and short it again and every time it's running down I'm taking some profits. So you can trade that stock like that without a problem but the bigger picture if you want to breathe easy relax go to the beach you know you buy the right stocks at the right time and let them run.

trading-environment-June-2015.0148

Let’s take a look at GMCR this is a shorting example of allowing the stock to run again for looking at the daily you know you can see it's been running lower but I've talked about this multiple months and even critical charts we’ve talked about it.

If we look at the weekly chart talked about this supporting trend line right here it's been showing you signs. It bounced here so far we had a few bullish spikes here, then came back to retest, bounced here that's okay, worked out. Now bounced again when it broke here this was your short entry opportunity and now it's been going lower for let's just say two months almost, 28 points, 30 points.

Now if you're really nitpicky let's just say you actually were following me for a while. You could draw this trend line right here, draw that out right there then take a look at the volume that came with that spike and notice the decrease in volume here and now that volume broke out right there. Heavy wide price spread which told you what? The stock would eventually go lower.

Now I didn't do it right away it took a couple weeks but over time that energy the football jocks ended up doing the same thing or the cheerleaders ended up doing the same thing as projected so the stock goes in the projected move so that's what happens people typically do and repeat things time and time again because that's our environment.

We eat the same things normally on a day-to-day basis. Our routine is normally the same on a day-to-day basis. Some things to think about for you, let's rifle off some stocks and we’ll just go lightning round pretty quickly.

trading-environment-June-2015.0170

SSNC take a look at this, this is our resistance line. Still waiting for this one a pop higher but if it doesn't pop higher it's going to reject it because we have some volume that could kick in so be patient wait for this line to break but it does trade light volume so you do want to make sure you’re trading maybe 1,000,000 shares on the break if possible that would be safer.

trading-environment-June-2015.0172

We got RDUS talked about previously as well. Stock continues to hold up pretty well pass this resistance line, broke out and continues to hold.

DMRC by the way RDUS is a health company so check it out Radius Health. DMRC, Digimarc Corporation, technology. Look at the weekly chart here broke out on the daily had a couple days of push into the upside. Good heavy volume looks good for a higher prices watch out it's a little overextended now so has a potential to pull back to 37.

CI Cigna obviously a healthcare company. Here again consolidation break higher slight little consolidation gapped up pushing higher again nice solid volume right here nice volume here good volume here good volume here and when we consolidated right here in this level you can see a few bearish spikes but nothing major so we're just kind of moving sideways then we popped higher consolidate again popped higher consolidated and so forth.

trading-environment-June-2015.0192

We got EAT, Aetna whatever method you use to pronounce it. Then we ended up powering higher again so here take a look at these volume spikes boom,boom, boom. There was the breakout point and then we pushed and powered higher so this was a great stock again a healthcare company moving really well.

Again I wouldn't chase it here it is a bit overextended. Just be cautious and be mindful of where you are in the stock.

The next stock that I want to talk about is ADPT, again notice the healthcare company this one was building for some time right here powered higher volume was light, it's lighter traded company but again healthcare company powering moving higher.

If you take a look at the weekly you can see it’s been overall fairly strong.

Then we also have Zoe’s which we talked about before. This stock’s coming back to this support resistance line and it's trying to hold it up here for me I don't like moving and chasing stocks that sold off from highs and gaps down.

If a stock sells off from the highs and gaps down, to me that's trouble and I just take my profits and run. I move on to the next one and that's one of the things you have to learn about this business is you have to learn the word next you have to learn to move on you have to move learn to just not worry about it. There's always another trade out there.

CYH powering higher again Health Systems today was the day broke out 12 percent. Take a look at the weekly had a good almost half a year, nine months here of consolidation and now powering higher on not very good volume so something to take a look at.

Those are some bullish stocks and just a few stocks overall, we did talk about Hershey, I believe a week or two ago or maybe in the critical charts this is the weekly charts building for a short there’s some other shorts out there that I've been watching and looking for.

Let's just say SONC this could be building for a short right here if it breaks this on heavy volume. Take a look at the daily here I will post more charts for the critical chart members later on but those are the stocks that I wanted to cover here for this Recap but it's important to know and understand the environment that you’re trading in.

If you’re trading in an environment that's more about picking and choosing stocks then that's the type of trades you have to do. If you have more dynamic flexibility and you're able to trade options you can do spreads then again it gives you another tool, another option but you got to know and understand the environment that you’re in and every environment is going to be different.

You have to start learning to look at the longer term picture and learning to really just start to be aware the people that are able to be more aware of what's going on and what's happening are going to be more successful in this business and by this I’m talking about are you aware of what's happening with human behavior, are you aware of what's going on in the world, not in terms of the economic sense but in terms of projecting the future and being self-conscious of what is happening.

trading-environment-June-2015.0271

Let's just say with other human beings, if you're able to do that then you're also going to be able to be much better at projecting these stock movements because it relates and ties into the human behavior. You have to start learning to watch your environment what is character really happening on a day-to-day basis with a certain person, what is happening on a day-to-day basis with that stock. You start looking at these two things and start combining them.

Now in terms of looking at an environment on your own personal, let's just say workstation environment. You may be looking at something like driving. Let's just say driving and you’re driving a two-door sports car, it might be great on the highway if you’re going fairly quickly but if you’re trying to drive it at Denali National Park in Alaska it might be a little bit more difficult with the hills, the mound, you may want a Jeep or the Bus that they use to go up in there just because of the conditions the environment that's there.

By the way if you've never been to Alaska it's a fantastic and beautiful plac. I was there about Eight years ago and we just saw some beautiful things we also took a cruise over there and very remarkable nature sites, definitely I highly recommend that you go take a look even if it's just for a week to just see the landscapes and see the environment of how really some of that nature is over there so wonderful place.

In either case also the environment that you have setup with your trading setup, with the way that you do the trades execute the trades are you getting up and down frequently from your desk? For me personally I like taking periodic breaks.

I don't like sitting at the computer a lot it's really bad for your muscles so personally I use an Icare for Google Chrome it's a timer that constantly reminds me every 20 to 25 minutes to just get up and take a break and that's when I'll do some stretches, I’ll do some things like that.

Again pay close attention and if you're always getting distracted from your friends because you're trading at home or working from home or potentially they have your phone number then shut your phone off.

For me, most the time my phone is on silent or on vibrate and then once things are a little bit more settled throughout the day then I'll flip it back on, in case I get any calls and things like that but a lot of the times I'm just looking to keep my environment nice and clear so that way I can focus at what I'm doing.

A lot of people ask me like how are you able to create so much content, how are you able to do which you do and do this and write this many books so quickly and that really just comes down to building the right environment and also learning the things that optimize those tasks but of course having the right environment is really beneficial because it allows you to output things quicker.

It allows you to recharge your own body quicker and everything just works together to make things about and much better. Overall the totality of one plus one is actually almost three, you get much more output than what you put in, when you have all the pieces working together in your environment and the same thing goes with stocks.

If you start watching for patterns like let's just say Facebook for example if you start watching for patterns long-term trends you sit and be patient then you know the right time to get in. I mean for those of you that are veterans, those of you that have been with me for a while even if you just take a swing points and you noticed two points and that is the only way you trade and you wait for stock to break on heavy volume.

Even if you got in the second day right there on the opening bell and you got in on the closing bell you still would have made some good cash and a good trade but really if you got in at the right time and you know even took profits in the strength then you would have been ahead.

I'm not saying the stock is going to go higher. I'm not saying it's going to go lower. I'm saying it's set up for higher prices right now so really the run at the moment in my view is not done. Definitely, let's just say you bought about a thousand shares you should have sold maybe 100 shares are two hundred share so you’re always pealing and taking profits in the strength and if it comes back right here you know you would be out of the position.

Try to allow your stock to continue to run by watching the environment and watching the setup and the same thing for the downside if you're looking at GMCR, you take those swing lows and then the stock bounced so you just pick any swing lows. Now the stock bounced over here at this level, we don't trade or we didn't trade let's say here.

Let's say we're in March right here and now we're just waiting, stock is moving and moving it bounced again what do you know, that's a confirmation to us. That means this line is very important so I’m waiting now for this stock to break this line. It came back again, bounced a little bit now it's getting tighter and tighter the moves are getting tighter and notice how tight they're getting rather than this one very long this right here is very tight and then eventually the stock breaks.

What's the potential? What's going to happen? what's going to happen is that the stocks going to move lower it broke this critical line so now this line is going to be resistance and boom what do you have? You have an explosion that even if you miss that first day getting in that stock tried to retrace but if you know and you’re wise and you studied technical analysis you could go ahead and still enter two to three days late and you would have been fine and you’d still be up 25 points.

Imagine, 25-points, 25 points times a thousand shares 25 points times a hundred shares. Where you would be right now? Think about it, think about the big picture.

I hope that gives you some good insight about some tips about the trading environment just give you some insight you know it's not an in-depth thing that we went in detail today but I did give you some stock insight.

I did give you some stock things to look at and just watch your trading according to the markets according to these individual stocks. I will more charts out there in the next day or two for the critical charts and you know that should give you more insight for those of you that watch those critical chart.

Thanks for sticking with me, thanks for joining me and thanks for just being a member of the family and part of the community. I really appreciate it, I get great insight from all of you that give me great feedback about the courses about the teaching material.

I will have that free video about your trading computer workstation coming out in the next couple of weeks in fact it's actually more like a mini course. I would say it's probably about two to three hours maybe longer about choosing the right parts for your computer about the trading environment.

I didn't intend for it to be that way but I figure that going in depth about choosing the right computer workstation is probably better than just giving you a couple of model numbers to pick from.

We’ll go in detail about the right components the right setup and if you're serious about it's definitely going to be a great videos. It’s going to be absolutely free, absolutely free to anybody who's on the newsletter.

It'll be a free training course really and not just a lesson it'll be very in-depth and will get that out in next couple weeks as soon as it's finished running its editing process and so forth and of course the book is going to launch as well in the next two and a half weeks or so and I will get that out as well.

Thanks again enjoy your weekend be safe and spend time with the family and if you have questions don't be scared to email me.

I'll try to do my best to get back to you and answer any questions that you have.

Make it a great one take care.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

Join over 31,258 regular people who are bettering themselves in the stock market.

Click Here to Sign Up

This is a community that is motivated to learn & improve their skills.
Join us and get free training lessons, freebies, and exclusive promotions.

want some helpful advice?

pay per minute coaching

I am scheduling helpful coaching sessions for people who are interested in real-world advice & guidance where you only pay per session. No long term commitment required.

Learn more
This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.