It is February 5th, 2015 and this week we're going to talk about Knowing Your Self it's very important topic but before we get there I want to thank you for joining me on this week's Rapid Recap and I just want to let you know that the technical analysis course is coming out probably next week.
I'll have all the all that information, all the stuff next week but unfortunately because I won't be able to create the video to explain to you what it's all about to later it'll probably be launched within two weeks.
With that in mind it's going to be fourteen discs, I think its 11 hours or 10 hours and 45 minutes. It's very in-depth and the study guide alone is around 260 to 270 pages and that's not a book size study guide. That's an actual 8 by 10 study guide.
It's a massive course and I'll let you know when that comes out, alright with that in mind let's get started with knowing yourself. Before we get into the stocks, I want to talk to you about knowing yourself and before you get into this business, before you start trading, before you place a trade, before you do anything you need to know that this is what you want to do.
A lot of people are jumping headfirst or they delay getting started and they do it in the wrong way. It's kind of like people that go to school to become a doctor they they go to high school they want to be a doctor, they go to a college they want to be a doctor.
They take all the courses then they start their internship you know six to seven years later into the business and they see blood and all of a sudden a pass out and faint and now they know they can’t handle blood and all of a sudden it just doesn't work for them.
The same thing happens in stocks people may study and do a lot and they never really pull the trigger and you got to pull the trigger to really know if this business is for you, yyou got to know if it fits your personality, if it fits your risk tolerance and if it fits your lifestyle and if you can handle it because if you can't handle it then sometimes it's best to just say it’s not for me and move on to something else.
There's nothing wrong with that there's just nothing wrong with saying next and really you should be saying that to a lot of stocks next, it just doesn't look good but that's beside the point. With this in mind you have to look at the bigger picture and you have to look at yourself and evaluate yourself what is it that you're good at.
Some people start trading options because they want to gain the leverage and it’s usually a beginner because they don't have enough money in their account other people do want to try Forex because you can make more than you got commodities then you know I mean you can trade so many things.
You got Forex commodities, options stocks, European markets and you can trade the Australian markets and there's so many things you can do in the trading world and the market gives you opportunities every day, every day you get opportunities that the market is open and even when it's not you have before market hours and then after-market hours.
You can be trading a lot but not every time is optimal for your style and for your personality or for your risk tolerance or maybe for your life lifestyle maybe you don't want to be on the computer screen all day 24 /7, maybe you have a family so you need to find the optimal trading business for you, it's kind of like what a lot of people do in business. I do a lot of businessmen touring and I write different books. I also do a lot of business coaching so its a huge passion of mine and I like picking brains and I like evolving things.
The stock market's it's really also about knowing and understanding businesses. The core is really knowing and understanding businesses. So it’s tied in for me with one and really the what a lot of business folks do when I coach or when I mentor them or when I go to the seminars and when I speak at seminars,
what happens is you have these people who develop a business and they run it for three months and then they stop doing that business and they start a new one but they didn’t make profits with the first one and they jump from one business to the next business.
Then they do the same exact mistakes and they repeat those mistakes in the second business. Then they go to the third business then the fourth business they keep closing down shop at their businesses hopping, their business serial entrepreneur.
They just constantly kill businesses and then they start new ones they kill it then they start the new one and I understand you do it for a little while or maybe you change career paths and this kind of thing it does happen it does because we all involved things and we learn new things.
Then again the thing is if you're getting up to the same exact point and you’re stopping and you're not improving that's where the trouble lies and with stock trading it's no different. A lot of people they make the same mistakes over and over in trading and they don't learn from their mistakes because we're scared to look at our losses, we’re scared to look at what's going on underneath behind our trades.
We don't get better really because it's a personal issue rather than the issue being you know we always blame it on external it's the markets but really the market is giving you opportunities all the time. It doesn't mean you have to jump in at every opportunity given to you and it's this opportunity blindness effect that happens.
There's so many opportunities most people are not selective enough in order to trade the right markets. It’s habitual, it’s just part of human psychology that we jump at opportunities and I know a lot of guys guy friends who you know jump one girlfriend to the next to the third to the fourth and they make the same mistakes with every new girlfriend that they date,
They’re usually very similar nature or they have the same characteristics and psych you know in making the same mistake.
In stocks you need to be really honest with yourself because it's going to cost you. It’s just like in business it's going to cost your time and energy and also money but you don't get to see a direct cause and effect result very quickly when it comes to business because you feel like you have physical tangible assets when you buy a new printer, when you hire someone you feel a little more arm proud I guess or you feel a little bit more real.
With the stock market it's a real direct very close connection of cause and effect. If you did something wrong you are going to have a loss, if you did something right you're going to have a profit so it's a very linear cause-and-effect relationship.
So if you're wrong then you’re wrong and if you're right you're right and a lot of people don't want to be honest with themselves. With that said you're basically not choosing your trades carefully you're jumping from one to the next to the third and then you just feel like you got to make it back, I got to make it back and you need to be selective and you got to be picky.
Let's get into this lesson today and let's look at some stocks because I’m going to show you how this applies to the market and I'll give it to you from my perspective and then you can see how it applies to your perspective so I'll give it to you from mine and maybe you can relate.
If you can't relate that's okay there's plenty of other people on YouTube you don’t have to follow me there's plenty of other a stock people out there not all of them are going to tell you everything though.
You know I've been through I've had looked at a lot of different people out there and that's one of the reasons why I make videos is because most traders by the way you know they’re either looking for a quick buck for you or from you and that's why they do what they do.
Then you have the others that they really know what they're doing but they don't post it as often or that's very expensive because they're either a trading or enjoying their life or they’re really just trying to put you through the ringer and just make a buck off of you.
For me I mean most my information is free and if you've been watching my Rapid Recaps honestly you can get so much information for free so just use it if you want to learn you’re determined and you don't have the money just study everything that I have available its direct as best as I can give it to you without holding back.
Let's take a look at the markets here and just talk a little bit about how things apply to you.
Dow Jones what are we doing here? Take a look at the volume normally I look at the volume I look at how it's acting and it's behaving if it's not acting right for me again this applies to me, if it's not acting right for my system, my style, my risk-reward preference, I don’t trade.
For me a market that's moving on an upward pattern on lighter volume is not something I like. I talked about it like energy, like cause and effect, if it's fake to me it's fake. If volume picks up then it becomes more real.
Now what we have going on here in the Dow Jones? We have this descending pattern, stocks popping. Doesn't mean it can't go higher, if it breaks here right here this level 18,100 you could see volume probably pick up and the stock market go higher and then I would be more long so that's kind of what I'm watching right now.
Me, personally I like longer trades I like trades that run for weeks, I like trades that run for multiple days. I don't like trades that last one or two days and the reason for that is you can only make a couple dollars on a few days run. Where if you do the right trade at the right time unit twenty to forty dollar gains in a couple months or in a month.
I look for prime opportunities where the things are in my favor if they're not in your favor step aside, you don't have to trade every day. Right here market I'm watching this top-line. Now if you are a day trader if you’re a day trader, I'm not personally a day trader I will day trade from time to time.
Really that's not the bulk of my trading. The bulk of my trading where I make the dollars is swing trading. Swing trading right here wouldn't do it, day trading no problem. You can go in on a day trader and you know peel some shares and do just fine.
If we look at the SPIDERS same concept, I was looking for this market to break and if it broke you know what we could have seen. Let’s take a look at the S&P it's just easier right here for the day trade this is nice a twenty one-point gain in the S&P is great and it's fantastic for the day.
Now if you talk about the break let's just say here the resistance, if we were to break and I'm just comparing relatively I was watching this line for it to break lower my reward potential was down to here and I do it based on the measured move up here, the volume and the measured move here and the lows of the swing points.
Let's just say it broke right here, this line my potential would’ve been 98, or call it a hundred points even. Let’s just say I got in 3 days and instead of a hundred points I got 70. Say I got in really late, let’s just say 60 or 50 points that's still three times more than right here in this one day.
The reward to go down here is much bigger than the reward to the upside for me. Remember it's gravity. Gravity is pushing down on the stocks when the markets’ in panic it's falling, it's like a rock coming down of that ground but when going up a lot of times it's not a rocket ship, a lot of times it's just a regular car driving uphill.
It takes much longer for those stocks to go up than it does to go down because when the market goes down its trading on fear. So I'd rather wait for the bigger opportunities or the right opportunities when everything from me is in alignment.
Let's just take a look at some stocks, let me give you a couple of examples.
Wynn’s a good one I traded Wynn, I posted this this one in a in a handful of critical charts and everything you can check the tweets on that one and the critical chart members as well just go back to right around December.
This stock was consolidating right here you could you could have traded right here in between this region and you could have made six dollars here, shorted it here and made twelve dollars here and it went back long maybe five dollars.
It made five bucks here but rather than doing that for me why waste my time and energy playing with these five dollars, seven dollars, three dollars or four dollars you know the these things to me are not relevant.
I'd rather read a book or I'd rather go do something else you know or make a good video or other people could benefit. Instead I'd wait for the opportunity right here when this stock broke this level these lows here's the volume spike right there.
It's a big down bar big one right there and I could’ve got in right there and I did and now we got to run for 22 dollars. You might be saying “oh I couldn’t trade on that day okay”, so let's say I got in that day, the second day.
Let's say 21 dollars and you still got in late. Let's say you got in the third day and you didn't even get the full move, thirteen dollars that's still more than right here ten dollar run, it's a bigger potential and that's you getting in three days late, three days late so think about that.
Here's another example TESLA. I talked about this one ABCD pattern A to B, B to C, and C to D. I posted this one in critical charts I was watching it, I was watching it like a hawk and here it is. Here was right here.
Yes, you could’ve tried to play it long here with these big spikes short here you could've played it intraday and maybe tried to get like a little pop here but the bigger picture it was short then long then short. So for me this B to C move is telling me it's going to calm down.
I also see that because of lighter contracting volume. For me why play around with that? I don't need the stress. Instead I’ll wait for the patient opportunities. Right here stock broke gap down and came back up playing around broke down heavier volume so you get two big volume down bars right here two red ones.
The up bar is were light that's a sign, let's say there's the line if you didn’t get in this first day fine, second day retesting that trend line fine then you missed it again. Third day you got in you would have made all the way down here 44 points, forty four dollars in 26 days.
Let's just say you missed that day let's say you let this stock continue going and going and let's just say you use these lows here and you went in even later you didn’t see that.
Here was the volume contracting, here's another big volume spike. Let's say you got in this day you still would’ve made 33 points. Fine you missed it that day too, you got in the next day 38-35 to 27 points whatever that’s big money.
Just multiply that times a thousand, multiply that times five thousand whatever share count you want you don't have to be in the first day and for me I'd choose my stocks carefully and I choose my picks carefully and if you're looking for the day trade if that's your personality then do those.
If you're a penny stock trader then do those, if you're an options trader than focus on options, focus on your strengths you don't have to trade exactly what everybody else is trading instead trade on the picks that are right for you, for your style, for your risk, for your reward system.
Let's take a look at some current stocks that just caught my eye, these are the ones I'm just kind of saying ah-ha! This could be interesting or wants to get into. I'm not in any of these next couple that I'll be talking about.
GRUB, right here this is a great one for the up side. It looks like here we have a weekly breaking to the upside and nice heavy volume moving. Here it is again: popping however the one thing I don't like is the gap and I also don't like that it's sold off at the end so if you're using this stock I would definitely use that 38.01, 38.23.
Right there the gap as that stop because it's got that gap and it pulled back at the end of the day, we got HA take a look BOM, broke. This stock sold off heavy, these stocks sometimes can come back up right here and then retest the gap.
Otherwise you could have a short entry point right there if it breaks 18.33ish or 18.23, it could be a nice shorting point.
Ralph Lauren, broke short or broke down majorly right here. This is why you don't play earnings you sell 80, 90, 95, or 100 percent of your shares and then you get back in it if you want. So if you're playing the stock long just for retirement since 2009 you know you don't play these stocks during earnings then you get back in them because sometimes they can be taken down.
CMG, same thing here we got major 59 points subtraction on your stock and then you could get back in right there.
Yes you may miss a few things like an Amazon on the little pops like this which was a 40 point pop, fine but you do know what Amazon's been doing lately right? It’s been selling off 112 points. Sell before earnings most the time.
You could say it's a 50-50 shot but most of the time you get burned on earnings just from past experience there's no need to play them.
Here Amazon's looking good very healthy here with heavy volume popping higher. I would use right here 359 as a stop if you're moving long on the stock. You have a little better resistance here at the 380 level but in general the stock is moving pretty well even though we have a gap here.
Of course eventually those gaps act like a little suction but right now it's holding up pretty well it's holding up.
We have ESPR, also moving well and here's our consolidation pattern popping, volume can come in, couple different bars three days. Remember what I said, it doesn't matter if you’re getting in first day, second day, or third day sometime.
Just when you do, if you do get into like stocks on the second day you have to give it a little more room, that's the only thing. You still have to have the same stop, the stops are based on the technical they're not based on your percentage.
It’s not how much you're willing to risk in the sense of dollar amounts, in the sense of use the technical as the stop.
COST, same thing here up two days pulling back then pulling back on lighter volume, take a look right here use this line as the stop. This is Costco so be patient if it bounces here this could be an adding opportunities even though it had a pullback today so just be patient.
If it bounces, BOM add, if it sells off, sell it quickly and get out because you never know sometimes they take that stock down quick.
SABR same thing here take a look at the weekly, BOM. Nice range bar break, stop at about 20.51 maybe 20.44 but it’s moving, look at that perfect clean break. On the first day nice little break, second confirmation break, third day BOM it’s moving and it’s cooking.
We got LWAY, same thing here but second day it’s pulling it down chances are it's coming back for a bounce to retest and then it may go higher if it breaks again get out and if it bounces possibility to add or get in if you're not in it.
GMCR, here we go A to B, B to C is sideways then C to D. Then you see it A to B, B to C and C to D. So you don't have to trade this and I remember trading the stock actually right over here. Here’s my trend line.
When this stock gapped up, I remember this one beautifully there was the highs right here on the previous came down. I was watching it there that was my trade K so that’s 11 points, not a big trade but I remember GMCR.
Any way you look for your opportunities then you set your, trade you set up your plan and then you execute. You don't have to trade every day, you just have to be in the right trade at the right time and you only need a couple.
DFS here's the upward trend line, broke. Here, take a look, it might be coming back up for a little bit and then it'll sell off again most likely. If it goes up on lighter volume and things start contracting, chances are it'll sell back off. It's just little bounce and that's all.
Facebook same thing here I was waiting for this one to break, multiple times. I was adding to my short position multiple times here. Advertising revenue just some business inside, I mean advertising stuff is not working for a lot of businesses on Facebook you know they’re hiding a lot of the likes and all this stuff within Facebook.
I noticed a lot of business owners that used to spend big dollars on Facebook and I'm saying 20,000 to 40,000 dollars a month on Facebook are not spending it anymore and that can’t be good for the company.
Although they are acquiring and doing other things but we'll see what happens. Here here's the lows here, I was waiting for it to break right here and in fact if we zoom in a little bit here was our A to B, B to C and C to D, little opportunity and this is the two-hour.
Then what I was looking at was too short here and short here but normally I don't play these. I did play these this time but in general, the way my style knowing myself my best opportunity is to wait for this line to break and if this line breaks I could see some nice run right down here 63.
Also I sometimes will measure it here how long's that distance 8 dollar run or so and then here we got about a nine dollar run and so it notches the run case. Normally those runs will be equal so what I want to do is find my best opportunity but here for two cents in a day, the day or here 60 cents and 60 cents.
I’d rather wait for the eight dollars because when they start breaking they do this nine dollars quick BOM, BOM, quick, quick, quick and that's what they do. Those are some other stocks.
MasterCard the same thing, look at it right here common popping up this is what I was waiting for. This one was in the critical charts and you know I was waiting for this one to break. BOM, got in it right there didn't have the volume yet came back up here, took it out and stop then BOM now you change your direction real quick you go long.
You’re watching for these different things on what's working, what's not working, where's your best opportunity and what's available to you but it's about knowing yourself.
Here’s a good example for you when I was trading caterpillar here’s a weekly chart, lets it to the daily. Here’s your A to B, B to C and C to D right there there's your pattern. Let's just say you didn't even see this here there's your pattern it starts breaking that's a high volume spike right there.
We're at 8.4 million the top up of that bar is 8.4 million. All the other bars right here were lower, you get in it right there. Even if you got into that 105, that's a sign, even if you got in it the next day 104, 105 or 103 you’re in the short, right?
Got a couple days, look at all this volume right here, look at it it's calling your name. BOM, stock continues volume still high. I move this out and look at the previous volume, right? Everybody wants that golden indicator and it's right there, there's the golden indicator. Stock continues BOM, BOM and BOM.
Caterpillar 13 points in one month and people here want to go long for two dollars, 13 points on 1000 shares how much would you make?
I hope you got a lot out this video those are just some of the stocks I wanted to cover. I was a little passionate today because I had a few emails of people just wanting to trade everything and you got to know yourself you can trade everything, you can in the sense of you can do it but are you going to be successful?
Probably not and the reason for that is because you just can't be as focused, you can’t be as disciplined and you just don't have the mental clarity.
I always say, if you got a million dollars in your account you shouldn't be trading more than five stocks there's no need. Just pick 4 to 5 good ones because your mental focus isn't there. It's kind of like trying to ride a bike without holding the handle bars as you’re reading a book in one hand and then exercising with a barbell in the other as you're riding the bike.
There's no way, it's so hard to focus. You’re doing so many things and add listening to music to that there's just no way. Stay focused, focus on couple trades, couple of trades max. You only need a handful to make your year and you only got to figure out this business once.
Once you figure it out you got it and you got to figure it out for you. You got to figure out for you it's not about figuring out for everybody else to learn how to trade Forex, to learn how to trade options, to learn how to trade on margin, to learn how to trade a commodities and to learn how to trade European markets.
No, It's about learning what is your best trades and trading those.
Thanks for joining me and I’m sorry for the long recap. I’m trying to keep it under 20 minutes but I’m just really passionate today and I hope you got something out of it today.
Thanks for joining and sticking with me. I hope you have a really wonderful week, great week ahead for you and do something for somebody else.
I plan to do some cooking and we had some eggplant the other night, love it, love the eggplant, love the vegetable stuff.
Enjoy make it a great one and I'll see you next time! Thanks again.