Today, what we're going to do is take a look at three different ways to scale into stocks. There are many more ways than just these three ways, but I want to show you three different ways to think about scaling into stocks or scaling out of stocks.
What scaling do?
The whole point behind this is to reduce your risk because you don't know if that stock is going to continue heading higher or continue heading lower. So, you break these things apart from your entry positions that way you hopefully have a better average.
The disadvantage is while if the stock continues heading higher into higher prices and it works in your favor, it would have been better to buy all your shares at the beginning because then you could get out sooner with a much larger profit.
But of course, in the other approaches, if the stock headed lower, it's good you didn't buy that many shares.
Linear approach is stacking things on a linear level.
Let's say stock increases. I'm going to go ahead and do this 500, 500, and 500.
What you could think about, as you start looking at things in this way, is you could almost break these apart in different trades. This first trade, you don't have to think about saying this is where my out position is. Instead, you could think of your early exit, your second exit, and your third exit.
So, you tie these together to your exits. You're staggering your exit positions as well. So, you could break it apart that way as you start thinking about scaling.
One of the advantages to this is you have a linear amount at every single entry point, and everything's balanced. It's a right approach in one way because everything is working out okay to the upside and it's working out the same way to the downside.
This is the approach where you're testing the stock. When you're doing the increase method, you're checking to see that's not going to go higher. If it does well, you'll go ahead and add a little more. That's where you add in 500, and then you could go ahead and add in 800 if it continues and the stock proves to you that it's working out.
The advantage to this is you're looking at stock to prove itself to you.
The problem with this is all give and take. Not one is better than the other. It's just a give and take.
The problem with this one with an increasing method is that you're already at way higher prices and you have a much more significant share amount at higher prices.
The advantage, of course, if you didn't have a lot of risk at the beginning. You didn't have to put up a lot of capital because if that thing actually started to go down, your loss would have been much smaller.
I could go really big at the beginning. Let's say 800 shares, then I might go 500 shares next, and then a little bit less 200 at the end.
This is another different approach. You're decreasing your share amount, and this is good when you're relatively strong about the stock. You have a reasonably stable break out, but you don't want to put all your capital in at once.
The advantage of this, of course, is that I'm getting in on a stable position at the beginning. I can peel off and take shares off much sooner and so I have an excellent position at a lower level.
The disadvantage, of course, is if this thing started actually to roll over it would create much more significant losses than it would if you did the 200 shares at the beginning.
If you're brand new to scaling and you're just trying things out, then I would say a good starting point does this balanced approach.
This is more of a balance where you're even, that's our linear way. Where you're going in 500 shares, 500 shares, 500 shares, and staggering things. It allows you to peel off those things as you move up in strengths or downward.
The increase approach is excellent if you're testing a stock and the decreasing approach is really when you feel right about the stock, and it's got a pretty strong breakout, but then you want to slowly get into it still through this different way of scaling.
If you're wondering how many times should you scale, the number of times I'd say for most people three to four times.
Once you start going into ten or twenty times, it starts to become irrelevant or not necessary or just more work than it's worth.
Today, what I'd like to do is share with you a little tool that you can use to journal your stock trades, and it's a tool that I've been experimenting with lately.
If you've used one of the other things that I've mentioned in the past to journal whether that's Evernote or even Trello, you can go ahead and see the links to those videos below the description of this video.
If you're looking to find a way to journal your trades, this tool that I'm going to share with you is a little more like a spreadsheet. So, if you're interested more in spreadsheet type and more calculations and auto-calculations, this tool should help you out because you can rearrange the views more like a Trello view or more like an Excel spreadsheet. There's a lot of things that you can do, and best of all it's free.
Let's take a look at the Airtable tool
When you go into the portable templates, basically what it does is you can use it for a lot of different things. You can set up things like launch calendar for products, for conference planning, job recruitment, art gallery. And you can rearrange the views.
If we look at an example, what it does is you can see right here it's like an Excel spreadsheet right there and you can have months years and even attached images which are not something that's easy to do in the Excel spreadsheets.
As you go through this, there are different views that you can create. That's the power behind it. You can see here it's more like a Trello view or if you go back, you can have just more of an Excel spreadsheet view.
You can do this for a lot of different things, so let's say we go into a kind of a real estate kind of management thing, you could have people like agents the names the email addresses, and you can hop into different areas here in the tables.
These things right here, this big item that this is called a base and then everything within that right there is called a table. Then everything else within that is rows or columns.
The power behind this is what you can do. The views and splitting these different views into different segments.
I'm going to show you how you can use this here within stock trading
In just a moment, as you get into it because that's the power behind it.
Here's the pricing. If you're interested, I've been on the free plan for the last couple of weeks. I've been experimenting with it to see how the Tool Works. You get unlimited basis right here, so that's the key.
The main difference between the free and the paid plans is that the records. You have 1200 records that you could do, meaning the rows that you could put in within your spreadsheet there. Whereas, the paid plan, you get up to 5,000 records and also the attachments. So if you're adding in like pictures and that kind of thing, that's the main difference.
You can see right here. You're going from 0 to $10. If you refer people, then you get credit in your account, and you can use that towards a plan. It's not that you get paid.
What you're getting is if you're on the free plan there's a lot of options and possibilities that you can use to use it as a stock trading tool for journaling. If you haven't journal before here's a good start.
What you do is I'm going to show you here. You start out with a new table. Let 's go into my account, and I'll show you if I go into the bases. You can see I've been using it as a test or a demo for my own overall online business. You can have tasks to do project roadmaps things. You're working on marketing training. We're slowly moving a few things over into this area. These are called bases, each one of these is a base. And what you could do is if you create a new one, you can start with a template - import one, or start from scratch.
If you start with a template, what you could do is go back to this template area. Then, let's say you want a blog editorial calendar. You can take a look at what this looks like and then go ahead and use this template, and it's going to add that template in.
So there, I have my blog editorial calendar. You could see here's a story date, scheduled, status, and just many other things that you could go ahead and do, and then there are some attachments.
What you could do is flip-flop to things that are in progress. You can filter things. You can even create a new view of the calendar, and then you can see okay well where are these things all scheduled and where are those records. So that's another great thing.
You could do things by the gallery right or the Kanban view. It's just like the Trello view which is the power behind it. You can flip-flop the opinions so you can see then I can go back and go back into my list and flip-flop back and forth.
So here's how you use it within stock trading
When we go into this, and I'll start with a new table, this is a new table that I went ahead and started from scratch. So right here, you'll get kind of a basic list of items.
Let's create an empty table. I'll move this over here so you can see they give you a name notes and attachments.
If I want to go ahead and start changing things around, I could go ahead and change this to a ticker. If I want to do it based on the ticker, I could go ahead and create date. When I went into a trade and changed that to date, go ahead, I can move that column over here. So, I'll fill this in, bought shares at a certain price. You're slowly filling out the table.
You could do it this way and slowly start expanding it. You're slowly building out some columns and the types of columns you want to do, and then you're creating these records now here I've already created kind of something based on the date so if you're going to do it date by date by date you could go ahead and start filling this in, and you can even create things like a formula
If you wanted to do calculations, just like in Excel, you could do price times the number of shares. I'll go down to the formula, and the formula is smooth, so if I type shares, you could see there's a shares item right here. Insert field or column, so I'll go ahead do shares multiply that times the price. As I type in price, you can see price comes up and now go ahead, and it auto calculates.
I could also format this to more of a currency with two precision, and now I'm good to go. You could see, as I go ahead and type this in a hundred shares - let's say $45.25 a share, it'll adjust those kinds of prices. If I did 75 shares and then I did $25.65. You can see it automatically does it.
Anyways, you could go ahead and continue to expand this further and further. If you don't need a column, you can delete a column. You can remove a column here if you don't want that and you can continue to make it very, very long depending on your needs.
As you get into further and developing your trading journal, take a look here, you have some stocks. I went ahead and created a few more things. Here's the date I placed the trade for example purposes. Here's the ticker, short and long price shares, total costs. You can see that's a formula closing price and then my P&L made money, lost money. You could see here what I've done is create a little drop-down. I could even create a scratch trade option here.
What I could do is now start grouping things
That's the power behind this tool so here pick a field I want to arrange it let's say made money or lost money so I'll go ahead and group it like this and you can see boom there it has some that are made money right at the top lost money and my scratch trades it all bundled it right there I could sort it again and rearrange it a little bit that's different on this so let's say made money lost money you could resort those things you can even filter things in anything where your long or short let's see short or long anything that's short right there it'll go ahead and do that and
What you could do is save these kinds of views, you could create a new look.
I could go to the regular view - without the filter, and then I can hop back to the short made money.
I could create another view. Let's add another aspect where it's just grouped, let's say long or short, so I want to see my long and short grouped right there. I can even do a double group.
This is the massive power behind this airtable system.
Here's how you use it when it comes to Option Trading
By the way, when you're doing some grouping, here's also the sums that you could go ahead and see. You could see it auto calculates. I can go ahead and do average. Just quickly hop things around.
You could see the average money lost right there would be there. The average for money made also is right there, so you could see how you can switch some of these fields around very quickly. Just hop back in for, and you can see the sum is also right there.
You could do an average if you want to do kind of an average. You can see 226 is the average. You're making on a per trade basis there.
Looking at some options, you could do it even more complicated. You could do drop-downs here for the month. I've set up some single select items for the four that you could say the year. Let me see here. Let's do a regular view. You could see here I've done dates. This is a formula that adds in how many days remaining and whether it's a put or a call. This is days remaining. This is the year, the percentage of risk. Put our call, again drop down, put-call vertical calendar. You could do buy or sell the VIX. If you want to note the VIX on those levels, the strike price the SNP at the current price, your range away from the current price level. The cost of that option contracts, your profit, and loss, how many are buying, in some notes, so you could see how detailed you can get.
If you want to go ahead and do some grouping, you could go ahead and group those things. If I change some of these to let's say a call, and now what you can do is - if I wanted to do things grouping by calls and puts I could do calls and puts group. I'll go ahead and pick a feel to the group, put some calls, so you could see there are all the puts at the top. There are all the calls here at the bottom.
Anyways, you can see the dominant way that you can use this from. Just basic stocks to Options Trading or even for your lifestyle - for to-dos and many other things. I'm experimenting with it for within my business to see how things play out. But you can see, there's a lot of high power behind it especially as you get into multiple views.
Again, if you're interested in signing up, I don't get any financial compensation but they credit my account in the case in the future I decide to go ahead and upgrade my airtable system. If you're interested in that, go ahead and go into this referral link right here and then go ahead and sign up and try it out. It doesn't cost you anything, and all the features that I've mentioned are free.
Today, what I'd like to do is do a quick little vlog and give you some insights about:
When to take profits; and
When you're looking at overall the stock market, you're trading. If you're new to investing and you constantly see a grind higher, and things are always moving in your direction, and you feel good about yourself, it's usually that exact time when the rug gets ripped out from under you.
The same thing to the upside or the other direction. Anytime you start feeling wrong about your positions, or things seem horrible, it's when things start to go in your favor.
The market likes to fool most people in the least amount of time. That's just what it does.
Here are some of the trading screens and things that I watch.
As you take a look here overall, this is the S&P, and it was up much higher about 30 points at the very peak. We're up still about 21,22 points, but you could see this little bit of a sell-off right here. That's coming up, but this is just the daily chart. That's just for today.
Frequently, also what I have here on my screens is a couple of other stocks.
If you look at the VIX here today, you can see how we had that pretty big significant spike right up here. That's actually at the same time when this market was moving up higher.
To me, when I saw this VIX spiking up to this upside and had me a little bit of a concern. What's interesting is as we're selling off, we have a lower VIX.
Anyways, when you're paying attention to these little divergences and little movements, they can be surprising. You have to take notice, for example, if you look at some of the companies the other day. When we look at Nvidia, how big or nasty of a sell-off, certain moments like this can take out a month's worth of gains?
If you look at Facebook also boom one big down day now.
The question: are we going to go up a little bit for like three or four days and then down further?
Right now, what's moving the markets is this tax reform mumbo-jumbo. You have these things like the banks - like the JP Morgan's. When you look at this JP Morgan, you look at this movement of how far extended we are, and you got these candles like going straight up which is pretty remarkable. I mean I got to give them credit for manipulating the market somewhat. In either case, you know buyers are stepping in, and you really can't deny that.
My point is that if you're looking to go into positions and you just new to trading, and you don't hedge your positions, trading with one or two thousand dollars of five or ten thousand dollars with no hedges. It's perfectly fine, and it's okay because you probably don't have a ton of money on the line relative to maybe a little bit more.
Once you start getting maybe fifty thousand, there are things that you need to do to hedge because what happens is that you get these nasty market pullbacks. When you get an ugly market pullback, then it can wipe out your account quite a bit.
Now the downside with hedging is that when you get market movements like this - when you get these crazy movements to the upside, they can actually stop you out and then within a few moments later they go in your favor because they get so far stretched. And I will tell you that today it took quite a bit of loss because of that movement that we had here.
What is it that you do in these points and situations? How do you know when things are going to work out? When do you decide what to do or take your losses?
The reality is if you're hedging, what I would much rather do is always take a little bit of a hit every single month on a hedge. You're taking hits meaning you're making small losses, but at least you're protecting your bigger overall picture for the longs. That is only because when those nasty down dates come, it can stop you out and it can create some trouble and problems for you.
If you don't hedge, you can get yourself in a lot of trouble. So I want you to be careful.
If you do hedge, you're going to be taking a few losses periodically - time and time again. Just like today, for me on those big up-days be like today you're going high you're moving to the upside, and it moves against your hedge positions while you take those losses.
So how do hedges work?
The way that they work and function is that you're looking to put on some small positions either to the short side or selling call contracts or selling some options or buying options to protect your longs. That way if the market does go against you or against the direction you're betting on, then what happens is at least you make it back on some of those hedges.
The inverse is true if it goes in your favor, but it moves too far too fast against your hedges. You lose money on those hedges.
When you have a small account, it's usually not a big deal. When you have a large account, you need to hedge.
What I'm saying is with a small account, most people don't bother hedging. But as your account grows and as you start trading larger, you'll probably want to hedge because when you get those nasty pullbacks or nasty movements, they can do some damage.
There's always going to be some debates that you'll have internally and mentally: Did I do this right? Should I have waited a little bit longer?
For example on this trade right now, I probably could have said hey I should have waited a little bit longer - an extra 15 minutes, 35 minutes. Probably my positions would have been fine. But in the marketplace, things can go much further either to the upside or the downside then you think or can expect.
So what do you do?
You take your loss. You choose the loss where it's at where you projected it. When you were in a clear state of mind. Because if you're doing this and your mental clarity is off-games over, you're going to take an even more significant loss.
If you do this and you're not on your game, if you do this you're trading emotionally, if you do this without a plan, if you get into a trade without setting up your trade or position or at least a rough estimate of a project, you're going to be in trouble.
So my point here for you in this video is to make a plan. Always have a trading plan for each trade that you take. Whether that's a rough idea, a guideline, a stop - whatever it is create some plan.
If you're not hedging yet and you're trading over $50,000/$70,000, you probably want to start trick a little hedging.
Whether that's taking on some positions that are opposite to your normal positions, doesn't mean you're going to be taking hits on them every single day. But in theory, you may be taking hits on them every month. That's to protect you for when things go against you.
You may think it's silly. You may think it's stupid. But when those days come, you're going to wish you had those hedges because you're like oh they saved me.
In either case, I hope you're having a great trading day even if you're taking a few losses. It's always a learning experience. Brush it off. Tomorrow's another day.
You got this tax thing that's coming out. It looks like they'll pass. Anybody making over $400,000 or $500,000 a year from their regular job should be doing quite well, and the corporations will be making more money. That's a good thing for the corporations. As a person based on what my account said and based on the consultations I had with some financial people, doesn't look like it's going to be too for the middle class, or pretty much anybody making under $200,000 a year.
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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