Ep 151: Stock Trading Webinar – Live Question & Answer Session

September 7th, 2017

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Today we'll cover your questions, and I'll give you some answers and insights.

Disclaimer

Keep in mind there are no recommendations to buy, sell or trade any of these vehicles. It's because I don't know your risk tolerance. I don't know when you're reading this. You need to consult your financial advisor that can look at your account and your risk levels before trading.

But I will share with you some insights into what I see in the marketplace. And that way you can get some personal ideas to know what you want to do in the future.

This Is What I'll Be Using Here

 

Here I have a thinkorswim platform. I'll be using TC 2000 as my charting platform to show you some insights. I find that this chart platform is high-speed and efficient. Trading view also is a good charting platform, and I use it periodically as well. But I like TC 2000 because it's lightning fast.

That's what I'll be using here in this example. What we'll do here is go down the list. I'll start backward and jump around depending on putting a few things together.

Quick Look at The Market

Look at the Standard & Poors (S&P). Also, I watch COMPQX. These are the two main ones. I check the VIX when you look at market volatility to see how violent the market is bound to move.

If we evaluate these things so looking at the S&P, we've had a couple of down severe drops in the past recently. But they've been getting bought out, and that's what usually has been happening since January.

Things are pro-business like. They say it's not always the case. But that's what's being said. The market still buys into the hype. Think of the market as being as gullible as possible. They will buy anything. They will believe anything. And there's a reason for that which we'll get into.

That's because if things do work out well, then it'll continue going higher. But if they don't work out well at least, you rode the wave up, and then you can sell it at that point.

Most of the time these dips have been bought out. We continue on the uptrend. When we get a couple of panic moments, they still get bought out.

The critical difference here on the last couple is we were making a lower high. This is a pullback that we've had, but we still did get bought out on those dips. You can see this trend line potentially is starting to make its way upward.

The problem here is this crucial level. It's a level; it's never a line. Even if I draw a line, it's always a range. It's like three to five points depending on a specific stock. It could be 10 to 15 points if it's a more extensive stock. It's always a range.

Your friend doesn't show up at six 3.00 p.m. for dinner. It's going to be within three to five minutes — the same thing with this.

If I draw a line, it's a range within that. Anyways, this is a crucial level of resistance right now in the marketplace. You notice as we got into that we had a significant enough sell-off. And our sell-offs have been with volume. The volume is easier to see when you go to the SPY. It's traded more heavily so you can take a look.

And the volume has been rising to the bearish side. Usually, when we get these sell-offs, we get a major bearish bar. Then we get huge bullish bars that come in.

In this case, it was average. The market has had pullbacks. And it's still by the dip market for now. Until we break that 2400 range and we start creating more lower highs. If we start building more lower highs, you become more negative. Until then still, things are looking ok. You also want to check the leading companies like Amazon. These are the ones that I trade more heavily.

You watch how they behave and react. You look at Facebook. These are the leading companies. People that trade the leading companies are the ones that usually move the markets a little bit more — usually the hedge fund guys.

The same thing is here with Apple as well. As these things start acting weak and you look at this carefully. Where we broke this and managed to hold, we cut it again but managed to stay. And it's like a jackhammer. It keeps pushing down, and if we break below it, eventually we break through that's what rolls a market over. That can get it into some even lower support levels.

That's what pools usually markets lower. If this along with Amazon, Facebook start rolling these things over then the market will go with it as well.

Quick question: Is the preparation of your option class going well?

Yes, I'm finishing the study guide for the iron condors section. I would say maybe another month. These classes courses I've been working on that one for about a year. I'll tell you that much 70 hours or so plus. Options are complicated. There's a lot of material there.

Ticker symbols

If we take a look at AMD, I always like to start with my process. Start with the monthly. You take a closer look, back check it. And even on some of these the quarterly. I look at what's the overall progression here.

I have a few lines of support resistance. What is it done, what's the stock been doing. When we're getting into AMD, the critical line that I'm watching is that level right here. At least when I look at the longer-term and look at the quarterly. That'll put us at around $16.

Then I go into the monthly. Does the monthly confirm that? You can see as I back recheck it's not going to be perfect. But as I again check it, you could see I have a couple of levels that'll put me around that $16 range.

I'm looking at $16. If I was in this stock and if it got into the $15,45 level I would say take half off or take most of it off. And the more value range depending on how long you hold things around the $10 range.

You want to see that level if you're an active trader. You could say $11,85 could be a value buy and that's only because of this level. But the reality is that the $10, $15,5, $16 is the range.

If I was in it already and I started to see weakness, then I'd probably take half off. Of course, depending on which price I was in. There is another scenario as well. If I'm looking at the shop, I won't get into the shop with stocks. The reason I wouldn't get into the shop with stocks is that it's stretched. The way that I would play shop is through the options.

Look at the VIX and the VIX is relatively even. If we look at this range, that means option prices are neither high nor low relative to the last few months. It's right in the middle.

But are they trending lower or are they trending higher? Well depends how you look at it. You get two traders to look at technical analysis; they have different perspectives.

My perspective is this: I could put on a calendar on this or I could do a vertical on this.

But I'm looking for a directional trade when I'm looking at the shop. Thatćs my way because it's stretched. If I were to do a calendar, I'd put it right in the middle. And my calendar range would be spread right there.

If I were to do a vertical, I would go ahead and sell a vertical depending on the option prices somewhere around that $90 range. I would probably do something around the $90 range. That way if it pulls back to 90 I'm still okay. I probably sell that premium or the calendar. You could do synthetic trades with this as well. Synthetics are interesting, but they're very advanced.

It mimics the stock, but this is way beyond our plan here. This is reasonably advanced stuff because you synthetically manipulate to get a stock. But use less capital, you use it through options. Anyway, that's beyond the scope of this content.

My Favorite Stock

What's your favorite stocks to swing trade lately and why?

I would say it's the big companies and that's because I know them. The second reason is they have options. It depends on which one's moving at the time. I'll pull out my list of favorites. I'll sort by price.

This is the list:

  • Amazon
  • Google
  • Tesla
  • Baidu
  • CMG
  • Facebook
  • Netflix
  • Adobe
  • Wynn
  • Buffalo Wild Wings
  • Autodesk

Those are probably the main ones. And anything else that pops up, but I like trading those. The main reason is that I know the clear lines. They make clear patterns, so if you look at Amazon, it's spotless to see things like our ABCD patterns.

Question about Cryptocurrencies

What do you think about cryptocurrencies? What might be their future?

I'm not sure about cryptocurrencies. I have to tell you the truth. I'm not a 100% sure about because they can be manipulated. There's a lot of hype behind it. I always think back to how risky do you want to get.

If you got into them a lot earlier and a lot sooner when it comes to cryptocurrencies I would say ride it. Take half off, take 1/3 off. But if you're trying to get into cryptocurrencies, it's similar to getting into stocks when it was the year 2005, 2006, 2007.

You don't know if you're in the year 2005, 2006, or 2007 when it comes to cryptocurrencies. I have no idea about that.

But if you're in somewhere around this region, there's going to be massive pullbacks. And if you look at cryptocurrencies, in general, there are some seriously huge pullbacks.

It's not something I would want to get into. It's a little way beyond the scope of what you want to trade. The main reason is the risk that is involved with it.

Take a look at World Currencies Exchange. There's so many of them. Take a look at the World Coin Index. You've got Bitcoin, Litecoin, all these different coins. You can also create your cryptocurrency.

Then you have people buy into it. But the fluctuation that you have sometimes they're up a 100%, down 25%. It depends on how much volatility you want. If you're going to make consistent returns, it's much better to stay to something more consistent or regulated.

In either case, that's what I would recommend. Anyway, that's just my thought.

Take a closer look at CYRX

CYRX Cyr is a cheap stock. It's overextended. I would instead look to short it coming up soon rather than buy into it. That's how I would trade it. Mostly cheap stocks they're cheap for a reason.

I would look to see when the weakness comes in too short it. That's the way because the overall trend of it is down. There is a lot of volumes that comes in, so it could run like this for a couple of months, years.

However, I'm too cautious to trade stocks like this — that breakout from a $2 range in a year to $9-$10. The majority of them I will say go lower. There are a few that go higher and stay higher. But the majority of them remain lower.

The Priceline Group

I posted this one in the critical charts - 1800 is the significant level. With big stocks, you always have to give them a lot of wiggle room. That means when you have a stock like at $1,800 there's a thing called confluence.

That's something I mentioned with your friend showing up 6:15 or 6:20. Here with these stocks, you got to give a more wiggle room. And you can see this stock and dipped below that $1,800 level. Even though we had 1800 at this price points, it fell here.

When you look at this, you can see that this price point dipped down this $1774. That's about 25-30 points from 1800. You got to give it at least a good 50 point stop on stocks like these. When I look at Priceline, I definitely would rather trade this one on the option side. The reason is that it has options.

But look for opportunity on how far stretched it gets. The volume right now seems okay. It's not too negative, but the market is acting sluggish this last week or two. Be a little more cautious, unless we break out to the upside beyond that SP higher level that I talked about.

What I would do is look for extensions. You could use a simple indicator like a Bollinger Band. If you take a look at weekly, you can see we're in a lower range. That's okay.

If you look at the daily, you can see that it is tough to read on big stocks. That's why you look at the weekly. You can see where we're at the near the lower range. And this shows you two standard deviation moves on relative to the recent volatility.

Interesting Question about Indicators

Some traders obsess over finding obscure technical indicators. Their "magic bullet" if you will. But aren't indicators only useful because multiple generations of traders have perpetuated certain conventions. Or do indicators have objective significance quite apart from group psychology? In other words, the most commonly used indicators should be the most useful ones.

Useful is depending on you. Is it a pen useful in situations when you need to do some coloring in a coloring book? It's not as useful. It can be helpful, but it's not as useful.

It all depends on you your strategy. When I got into technical indicators, I was looking for what do other people use. What a Sasha put on his chart? Why does he use Bollinger Bands?

I would always try to match myself with somebody else. That's because I always thought that knew better. In the end when I got rid of all those things and simplified it to price action volume, behavior and on one or two indicators. I simplified my life, and it made trading a lot easier. I didn't complicate things.

For you, if you're looking for an indicator, a moving average is good to have on screen. When you're looking at like a 20-day, 50-day those kinds of things. They're handy because a lot of traders watch them. And they break above them, or prices usually gravitate towards them.

Focus on price. The market, that price is the key. That's the dominant factor, and then beyond that, you have the volume that confirms the move. And then the behavior. How's the stock behaving is essential. All these things give you a lot of insight into the overall progression.

The indicators help you see that and confirm your analysis or give you another perspective to double-check things. But can you get the Bollinger Bands from looking at this moving average? Can I do that?

Yeah, you can. That's because I know the price is overextended there. If I look right here on the Bollinger Band right now, I know that's going to be at the higher.

There it is. It's straightforward if you have the moving average and you learn about price behavior. Observe what is overextended, what isn't fully overextended.

You could use more common indicators, but don't make your life more complicated. One or two is all you need or want. You don't want to complicate your life. I am moving average, price, and volume. This is how I look at my charts. From time to time, I will check Bollinger Bands to see how far extended are we. Are we way above it? How far stretched are we? Those kinds of things.

McClellan Oscillator

This also tells you overbought or oversold conditions. You can see we're a little bit overbought on this McClellan oscillator. That's just an oscillator. It doesn't mean much you can be overbought for quite a long time.

That's another one I peek at. But you can get a lot of things from price, action, and volume. Keep it simple. It means if you aren't getting stuff from price, volume and behavior you are:

  • overcomplicating things
  • you're unsure about yourself or
  • you haven't learned how to read the price, volume, and behavior of stocks

You don't know how they breathe. With a human, you know how you breathe.

It's just nice normal breath. When you're running, it's going to be faster. You don't need to see it. You know the difference in the pace. I hope that makes sense and you do the same thing with stocks.

Question about Trading Strategy

When do you start trading?

How long did you trade stocks before you tackle trading with options?

I'd say I stuck around with stocks a couple of years. Maybe 3-4 years, but I started learning options. My third year and I can't remember because things begin to overlap with time like that.

You start to look and learn about options. You might visit it and fine-tuning some things with options. Maybe you notice that some stock has options. Then you place a little trade with options and then it doesn't work out. Then you go more, and you keep learning upon it.

Sometimes you need different tools for the job. Depending on market conditions having different tools allow you to be more flexible. Can I use a highlighter on the glass board? Absolutely, but it won't be highly effective.

You have these specific tools because the conditions are set up in that way. And it makes things better. Can you still trade only stocks? Yes, you can. But the more tools you have in your toolbox, the better. You can coordinate things together.

Question about Quest Trade

Do you know any trusted discount brokers in Canada?

If you're familiar with what do you think about quest trade?

I don't know much about quest trade or Canadian brokers. I visited Canada. I've done some research. TD Ameritrade has TD Waterhouse, so if you want a thinkorswim platform, I know you need TD Waterhouse.

The other thing is I did the foreign account lesson here on the let's talk stocks. That one has a couple of notes and insights about Canadian brokers.

You can go to the TradersFly website, and you go to the blog. There you can go to search for a foreign account, and you can see what's there for you.

One post about that topic: How to Trade in a Foreign Account or as an International Trader

There's a couple of notes here that talk about Canadian brokers. Take a look at that when you have a moment.

Interactive Brokers is also another broker. A handful of brokers that do business within Canada will allow you to trade in Canada. It's a matter of filling out the appropriate paperwork. Unfortunately, TastyWorks don't let you do things. Some regulations go with specific countries.

These are the countries that are looking to expand on. But unfortunately due to restrictions cannot residing in Canada or Australia. They have their own rules and regulations. It's harder to get requirements and set up in certain countries. I know Canada and Australia is tougher on that, but some other countries will be available with tasty works.

That goes the same with other brokers. If they have a thing in Canada, then they're good, or they've got the paperwork. Anyway, I hope that helps. I'm not an expert on it, but maybe somebody else can shine in.

Question about Forex Trading

Do you think forex trading is riskier than stocks?

I don't think forex trading is riskier than trading stocks. I'm not an expert in forex trading. I think I've put on one forex trade ever to tell you the truth.

However, the thing about Forex is this: when it comes to trading and when you look at investing, you make money in trading through volatility. You need movement. Anybody who says you want a crushed VIX or they want the VIX to go lower is a person usually that does not understand trading. Or it doesn't understand investing or how money is made in the market.

It's through movement and fluctuations. The higher the VIX as an active trader, the more opportunity you have. That also means more movement. That's your breath, that's your air as a traitor. You need the Vicks to be higher, and you need movement in the market.

That creates opportunity. As stocks drop, you buy it at a lower price. Then they spiked up, and you sell it, and you do that rotation more frequently. The reason people like Forex is because of the leverage factor. When it comes to stocks, you get the margin account or portfolio margining.

When it comes to Forex, they give you fifty to one, a hundred to one or 500 to one leverage to use. The main reason is that movement is small.

Then you need that extra leverage to be able to make more money. Because the volatility is smaller. There's no blood in there. You're in are mixing with two different animals. And it's not something that I like.

I would instead buy $30,000 worth of the Euro and keep it and hold it. Rather than doing the trading. Anyway, that's beside the point. But that's not my thing; it's not my expertise. Is it riskier? It depends on how much you put on the table and what your experience is.

Question about The Time That Is Required

How many years did it take you to master options?

I wouldn't say I mastered them yet. I always tried to be more humble about the whole thing.

I don't know every single thing. However, I'd say where I was comfortable with options probably 4-5 years. There's a lot to learn. I wanted to first jump into iron condors. That was the main thing.

The first thing that was buying calls and buying puts. That's the classic rookie mistake. Then I got into iron condors. Then I got to calendars. After that, I moved into butterflies, and then I got into diagonals.

Recently I've learned about more synthetic trades and got into gamma and theta scalping. There's always more I'm learning, but I find that you don't have to get too complicated.

You can keep it simple as well. I'd say verticals is the core foundation that you always want to learn. Iron condors are the base because it's the base of selling. But in certain situations, calendars and diagonals are also very useful. That all ties to iron condors as well. You want to have multiple strategies usually put on. Then that way you can minimize your Vega risk and exposure. You need to learn how to cut your Vega risk especially when it comes to options.

The reason is there's no Vega when it comes to trading stock. That's one of the things people have problems with. And it's what I had to struggle with. Three to four years, maybe five years depends on what you study and what you learn.

I'm trying to get more insight on my courses and get those knocked out here this over the next couple months. Hopefully, we'll get more of the option series complete. That should be a good foundation to get you started and to learn a lot.

Question about Low Beta Stocks

What is your opinion about low beta stocks such as AGN or AEE with linear movements?

Do you think that swing trading them is a good strategy to start with (x 10 leverage and R/R ratio 1:2)...any suggestions.

I look at how violently the stock moves. It's not that I know that Apple is a beta of one point whatever or more or less. Some people like to use it. I look at price movement and volatility. That's the way I do it.

I teach about a beta, and I know how it works. Do I look at which stock has a specific beta of what? No, I don't. I will type in a ticker symbol of something like AGN. The next thing I'll do is I'll take a look at how big are the largest bars.

Let me look at some of these bars. How big are they? Whether they're to the upside or the downside. How far stretch does a stock get from a moving average?

If I look at it, that's our volatility. That's what I look at. Swing trading them is like trading any other stock. I'm looking at how clean is the price pattern. Again, I'll start with a monthly. How clean is the price pattern? What am I looking at?

Here I'll start evaluating things like retracements. How do they line up? You can see here these lines up to the 50% level. Almost exactly from our earlier breakout point. Then do we have a counter bounce? Will it come back?

Those are things I look at. How is the volume? Do we have a couple of bearish spikes? Is the volume decreasing there?

All these things you take into account. You trade them like any other stock. Do I care if they're low volatility or high volatility stocks? No, I don't. I care about the price movement. As I mentioned earlier - it all comes down to price.

How would you swing trade them? When you look at this range depending on if your short-term, 220 could be your area.

But if we have bearish volume coming in I ask two questions:

  1. Do I want to wait for a bounce here?
  2. Do I want to see it break through lower and short it?

Then come down to 188. Again, you're looking at the ranges. You're evaluating the charts, and you're putting your risk on the table. If it's moving against you - you're out.

It's that simple. Depending on the stock. Sometimes it's better for options depending on what it's doing.

Take a look at AEE: The same thing. You look at overall. How's the stock behaving? You take it out monthly. Are we stretched? Then you go into the weekly. You start looking at where some fundamental levels. How long do I want to hold the stock? Do I want to buy on the dip over here and see if it catches and bounces? Do I want to get in it? See if the volume is acting the same with the stock. You start combining these things.

If it comes by and bounces and volume picks up - that's great. But you decide at the time because you're looking at this and you're saying how's the volume behaving.

That's ultimately the key.

It's one of the reasons as I looked at spy. A few people message me on this big down day. And I told them and also if you look at the critical charts the volume on the pick up here was a lot lighter.

When we look at this movement, it was acting sluggish. And if you look at that volume bar as well this one very sluggish. And that created our second point. Now I didn't know it was going to be the second point at that time.

I knew the volume was weak and that's learning about behavior. I had no idea that would be our second point. But when it became our second point, now I had the opportunity to create a third point.

You're looking at the volume, and you see that volume is weak or is it strong. You can see that the volume is accelerating. That picked it up, but then again we're dying out at the upper level. It's learning about behavior.

Question about Algorithms

Do market-makers purposely configure their algorithms to incrementally move a stock's price to specific levels that they predetermine? 

Or are these nearly perfect angles of ascent and descent occurring naturally, perhaps as a form of group-think self-fulfilling prophecy among all traders of a given stock?

Technical analysis overall is based on human psychology. It's price behavior. How far things are stretched, people are taking profits. A lot of this is psychology group behavior.

But that's why sometimes they can go much further to the upside than you think. And also much lower to the downside then you believe as well.

If you take a look at WYNN, you can see this is a classic A to B, B to C, C to D pattern. You're a movement from C to D should be about the same as A to B.

We can do the measurement from a lower point to the upper position (about 142 points), and then we go here to here you can see about 160 points. Not perfect, but right around the same region.

It's stretched and creates the pattern. The thing with market makers is they usually try to get out when this euphoria starts to kick in. You see these three bars. They may start this final euphoria stage. This last bar is their last leg they'll buy a quick.

At this digestion period, they were buying lightly. Otherwise, they move the stock if they buy like 10 million shares in the day they move the stock.

The primary step is they buy lightly in this range. And then they might buy in a couple of days or a more compressed timeframe. Their last final buy and they play a psychology game.

It could be not always the case. But they play a psychology game to drive the price a little bit higher. It gets people more excited and then what they start doing is as new traders start coming in they start selling.

That's when they start dumping a lot of things. And that's why you get the distribution right here. Finally, they start taking it lower, and then they dump the remaining shares. You can see there's still way above that level.

When you talk about manipulation within a 5-10 point range or 1%-2% range, they do move things. They call it pinning, and they pin it based on option contracts.

Take a look at WYNN (since we're talking about) when we have nine days till the standard option expiration goes through. And when we go to open interest, there's a lot of open interest (here at the 142 level and 145 level). So depending on where the volume is on the option side (let's say a hedge fund has thousand or two thousand contracts around this range) they wouldn't have it at 145.

They may have a hundred at 144, one they may have a hundred or five hundred and 145. They might have another two hundred at 146. If they need those option contracts to be more valuable, they will pump up the price. That way they'll make sure that deal is more valuable because they can move the stock.

That's how they do it. Why wouldn't they roll it up? It gets too expensive. They may want to buy the stock. That's why they pin, and that's why at the end of the option expirations they have triple witching.

Everything coincides on the position. They have so much money that sometimes to roll things up then they need to buy a lot in one day. Whereas instead to move the stock you buy the stock in one day. Or sell the stock in one day. You short it.

Whereas with option contracts you have 5-10 different strike prices. Then you have to get in it; otherwise, you risk theta you risk the movement of the price of the stock. When you're trading larger, that's what happens.

Question about The Influence of The Season of The Year

What do you know about the different seasons of the year and times of the month affect the stock market as a whole?

What specific patterns do you see that a trader should take into account?

The seasons of the year, the best trading times is after September 1st, 5th. It usually tends to become a little bit better. Not always the September month. October tends to be more active. Take a look at stock market crashes which we talked about in the past. The stock market crash in 1929 on October 24th.

Now, take a look at other crashes in the 80s. A lot of them coincided around that October time. Let's take a look here at Black Monday. It was 1987 October 19th. This is when a lot of traders get back in. There's a lot of psychology that's involved around that. Because people are back in their work things.

Your mind as you get into mid-September starts thinking about the next stage, new job, holidays. November, December, January, February are the most prominent trading months.

I would say when you have more holidays be careful with the volatility. There's usually more movement in the stock market. But that's why they're the better trading times. Remember what we've talked about the volatility.

Volatility is high, sell-offs are significant because they create opportunity. A lot of new traders don't like it because it's not moving in one direction all the time. You become more experienced, and that's what you want.

You want to be able to buy those dips or to be able to short things when things pop higher. That's what you want to be aware of is that things usually get a little more volatile.

However, sometimes you get those surprised days where they're much larger than the previous months. Always be prepared for that.

Question about AVH

This stock is very lightly traded. Be very careful on this one. It's only 133,000 shares. If you get a 133,000 shares times $8 a share with just a million dollars. You can move that stock. That's not a lot of money in the market place.

Be very careful. You want liquidity in the stock market. If you're trading this, I won't trade more than one or two thousand shares. Overall when you take a look at the monthly stock is lower. The trend is down. The recent trend as you can see is to the upside.

The question you might be wondering: Is this creating an A to B, B to C, C to D pattern? 

Could it be? Maybe. Be careful with the volume down below. That could be more bearish, and now as we're heading higher, you can see the volume under that is bullish. But it's too light. It's so light that there's barely any of volume on the bounces.

What's the volume here? 3.64 million on the monthly, and then we got 1,8 million on the monthly. And to the downside, you got 3,7 million, 4,6 million, 6,3 million. Even this big bar was 6.1 million.

That big bar it sold off. It wasn't able to hold. Too far stretch. Anyway, be careful.

Otherwise, for a smaller time frame trade, you could trade it, but I would look to get out of it by the time it hits the $10 range.

There's some more trouble there. If you're looking for a long, but if you're looking for a short trade, I would watch the 740 range or 630 range. That's what I would do.

How to Start Trading?

When you go to TradersFly website go to Start Here Section and take a look.

Watch the videos, read books, educate yourself. You can take a look at the full list as well. There're recommended reading. Not all of these are my books. I think you should read these books if you want to be a trader.

If you want to be an investor, trade some stocks, it's a great place. It's not going to take a lot of time. Put some time into it; learn these things. Do you have to read all of them? No. but the more you know, the better off you'll be.

Question about FIZZ Stock

Could you explain how a stock like FIZZ can be so dominant on decreasing volume on daily (since three months) and with almost no pullback for a year or more.

The monthly chart of that stock is fantastic. It's never time to jump, but in the end, it's always time because it goes up every day.

The reason is that there's barely any volume. It doesn't take a lot to move the stock. A stock that's trading only a hundred and eighty thousand shares on average is not a lot of volumes.

That's why these stocks can run up high and fast. It's like the Ferrari company as well. It didn't use to trade as much. Four hundred thousand is still not a lot in the marketplace. You can see this one ran up quite a bit — ticker symbol race.

FIZZ is not a lot of volumes, you can see that on the monthly they got a lot of stock splits. That is a little bit of concern, and then as you get into it, it's doing well.  You can get in but how far stretched are you? How much more do you have to go?

You'd never know. They can go to 150 but then sell-off. If you're asked for how can it do it like this the answer is simple - emotional buying euphoria. That's what happens. The volume is there at the moment.

Look at the weekly. The volume is still there slightly, but it is decreasing on the weekly. When you look at the monthly, the monthly volume is enormous.

It's been moving up on volume. There is a volume. It's that the amount traded is not a lot. Relative to the stock there's still volume that fuels it. But overall compared to the overall regular stocks it's not a ton of volume traded on the shares. Here you're looking at 8.7 million on a monthly. And when you look at Facebook, you get that in one day you get 13 million. Twice that, so it takes two months of this stock to trade on Facebook.

Anyways, relative to the stock it is trading with good volume, but there's not a lot of volume. That also means when a pullback happens, it can get nasty.

It can because there's not a lot of people in it. Be careful. The way that it does, it is because it doesn't trade a lot of shares. These Spurs can last for a while, but then since you're so far stretched when the pullback happens, it can get nasty. That's my point on that one.

Question about Political Influence

Politics is an interesting thing. It didn't use to affect the markets too much. I think that it does it periodically only because people get unsure. The markets will believe anything any leader or president states. That is because of the hope factor.

Looking at the markets political and rest will happen, and sometimes it affects it more so than others. I would say be careful with more volatility as things grow like a fireball the more likely you'll have snapbacks. And those become opportunities.

America should survive and move forward I would think and so will the rest of the world. It's the market has panic movements. When you look at the overall big picture of the market, it's climbed since the 70s, and you've had some pullbacks.

You might get another two-year downturn. Who knows. One year could take it back to 1500. It could take it back to 2000. It's only 400 points, not too bad.

Then things can continue climbing higher. Anyways, be mindful that's all. With politics whether it's a government shut down. It depends on how the market reacts and behaves. It's like terrorist attacks or school shootings. When the Columbine thing happened. Initially school shootings and things people getting shot were much more affected the markets from what I recall.

When I used to watch the markets during all the shootings and then later with the time that people became more accepting of it, oh, it's just another shooting. We become numb to it. It's sad to say, but that's the way things work unfortunately within the marketplace.

Question about Your Personal Preferences

How are you personally continuing to grow and develop as a trader? 

For example, are there specific topics/traders/authors that you're seeking to learn about or from and what are they?

 Are there any trading strategies that you're exploring and experimenting with are new to you?

 Have you ever sought out a person-to-person mentor for trading or do you think you might do so in the future?

I'll give you some insight into me. I used to be all about studying, reading, courses, seminars. I would say I did that for a good 10-14 years even while I was trading. And I still do a lot of books and things than anything I can get my hands on.

I always like to learn. Education is the fire in me, and it's one of the reasons why I love teaching. When you first start with any subject matter, you want to get things in.

Take photography for example. You want to read a book. You want to learn about the camera, all those kinds of things. As you become better and more professional at it, you want to get things out.

Initially, you're getting things in later you want to get things out. As you get things out, it's about taking pictures and posting those pictures. That's when it comes to photography.

If you're doing videos - same thing, you're learning about videography then you want to get things out. With trading at the beginning, there was always a lot of things I wanted to get in. And now the higher level for me is to get it out of my head.

However, Is there more to learn? I think there's always more to learn. Is there more to improve? There's still more to improve. But what fuels your fire? How much more do you want to learn? How much better do you want to get?

There's always going to be better people than I am. There's still going to be better traders, more successful traders. It's about what fulfills you personally and how much money is enough for you when it comes to trading.

You reach a certain level where you say hey this is enough. I feel good with these strategies, with this consistency and I'll keep doing them. I'll move on to maybe the next purpose in my life. Whether that's to get married, have kids, those kinds of things. It depends where you're at personally.

Question about Advantages in The Market

Is there any advantages to one market in comparing with the other ones (like NASDAQ vs. S&P500)?

Usually, you look at the leaders. The tech companies like the NASDAQ typically lead the market. That's because it has bigger companies there. For like the tech companies it's more tech-heavy the composite the S&P is 500 stocks. Then you get the Russell, or the are UT IWM. That's the overall 2,000-3,000 stocks.

Most of the time they work together if you're looking for a market sell-off. But the composite is always much more critical. I would say, but I like the S&P because it's got about a little more average stock.

Five hundred stocks rather than the composite that's a little more tech-heavy. Anyways, which one you look up to is it's up to you depending on which one you trade more often. The reason I like the composites is that it gives me more like a tech-heavy of view.

And then I look at the S&P because I always trade a lot of option contracts with the S&P. Especially like retirement accounts and things like that.

That's the way I look at things. But can you look at IWM or the Russell? Yeah absolutely. So if you see like the Russell selling off notice how we got into the 61.8 level and pulled back right away.

As you start looking at things and one is coming into a certain level, then you want to be careful. The reason is that maybe the other ones will come back as well.

Question about Reading Companies Balance Sheet

I hope that you will also do a class or video on how to read a company's balance sheet or financial statements. Are you?

That's more business intensive. It's on my list, but it's not a huge priority. That's because I look at the technicals. When it comes to the balance sheets, I look at it in the sense of think about Enron.

What happened with Enron? These companies can manipulate these balance sheets. And you also have to remember what companies do. A lot of times companies pre-ship things in advance. Take for example stuff like water bottles.

Take for example digital timers or something like that. If you're selling digital timers to a store, you might say: Hey I'll go ahead, and every month I ship you a thousand times but I need to sell more inventory this month to hit my revenue for my shareholder. I'll sell you 1500 timers in this month, but I'll trade you the extra 500 at like 10%-20% discount.

Then financial earnings reports come out, and the sales figures come out. Those big companies say: Hey, Walmart bought an extra five hundred units of our timers. We made an additional amount of profit. Even though it's ordered and that is fulfilled in advance that's just the way things are. It's manipulated in a company. It's not illegal, but the balance sheets are a little unusual.

Instead, a better approach would be to look at earnings per share. See if they break by 20% of the previous year. That percentage because that ten percent could be that manipulation. Or it could be they just laid off a bunch of people. Companies are always trying to fire people to call it productivity and reduce their workforce. Especially the bigger companies

William O'Neal talks about this in this book How to Make Money in Stocks. When you look at any order type, you have a limit order — the basic one. There's also a market order if you want to do a market order.

There's a stop, stop limit, trail stop, trail stop limit, and most see I don't even know what that is. I always use limit orders. Very rarely I use market orders unless you're day trading. That you do in volatile days which have been good recently over the last week.

In either case, then you also have advanced order types like:

  • blasts all
  • 1st trigger sequence

When you have a 1st trigger sequence, you could stack orders. You could go ahead and put this order in. So when the first one gets filled the next one goes in, and you can go ahead and set up additional orders like that.

You can stack these orders more complicated, but that's beyond the scope of this post. You can contact your broker, and they'll go over these things with you.

Question about Problems if You're Starting Young

Going beyond your experiences of "the curse of the 16s" and your realization of how important volume is, have you had any other especially eye-opening experience or a significant epiphany relating to the stock market that has shaped your approach to trading?

If so, what are they?

Yeah, I had some serious issues when I was 16s. I made a boatload of money when I was young. It wasn't by luck. It was through my web design, business, my photography business. Relative to that age it was a good amount of money. I put that in investing, and I had some key losses there when I was young trading in my mom's account.

At the time with my money and my funds. And then there were some significant eye-opening experiences about trading options. When you get into options, and you don't understand what you're doing, or you don't have a mentor you'll struggle badly.

I think the biggest eye-opener is that people don't invest in themselves. And they hesitate to invest in themselves whether that's to buy books for yourself. Whether that's to take time to stretch your hamstrings for example.

Or you are maybe investing in your coach if you need it. Even just one time. That becomes a lot more valuable. Push yourself a little bit more, look at things more into personal growth and psychology because that's where things start to come together. It's all about the outer game.

The outer game is all this technical analysis all this order entry money management. But the inner game is all about how you react when things go against you. If you can keep those pretty well, you'll have a lot of things together.

Another Question about Politics

Is there any change in your stance about your opinion from what you discussed in the political side of Democrats versus Republicans and Clinton versus Trump?

No, there's not. With Trump when I talked about that, I assumed that we would have a market sell-off when he got elected. We did on the future side. I would have expected a lot more of a sell-off. But I had to switch on my position very quickly on that.

When I saw the market buying in with heavy volume, and you can see the heavy volume right there by day two I flipped my stance.

But I still think overall. Whoever's in an office I still think we stretched on the market perspective. And we're due for a pullback. Whether that pullback comes in another year, two years, five years I don't know. But I still think we're stretched.

If we continue to have little digestion periods as this and we do it again, I think we can go much higher.

We can continue with that process. The problem is when you go too much of a straight line. If we get little digestion here go a little higher and another more healthy digestion. But we need a good flush.

When it comes? I don't know. It'll hurt. You'll have to whip things around. You may not believe it. But you'll have to be quick to recognize it. Sometimes it's tough because the things have been doing the same thing for like eight years.

Question about Pre-market and After-market Order

Stop orders can be executed or not during the pre-market or aftermarket if that box is checked. Otherwise, it will be executed only regular hours. Even if it hits your stop price during the after hours.

I don't know this would be a broker question — something to ask your broker. I'm not a 100% sure on that question only because I always put on market orders during day trading. And then limit orders during the majority of the day and limit orders when I do aftermarket.

But it's rare that I do an aftermarket or pre-market order. There's usually no need.

Conclusion

We've had a Mac-style session for the number of people that registered. I capped it at 75 I think 30 showed up. I'll have to bump that up, later maybe 200 people. And I'm going to check this content and see how I can improve it.

I'll also do some tests, and we try to do one of these free webinars every single month. I hope they're helpful. Especially to those of you that have questions, who are just starting. It's like a consultation, almost like a one-on-one, but with with a group.

Thank you so much, genuinely appreciate it to everybody that came. I'd do this for you guys. I do this because I know how tough it is out there. It's sometimes the information can be confusing. I try to explain them as best as possible.

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

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