Investing 101: Beginner's Stock Market Investing Masterclass | Employed By WiFi | Skillshare

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Investing 101: Beginner's Stock Market Investing Masterclass

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

17 Lessons (1h 31m)
    • 1. Introduction

      1:29
    • 2. What Are Stocks?

      3:38
    • 3. How Much Money Do You Need?

      2:21
    • 4. Opening An Investment Account

      5:06
    • 5. Brokerage Account Walkthrough

      13:07
    • 6. Finding Winning Stocks (Step-By-Step Guide)

      24:20
    • 7. Earning From Dividends

      6:03
    • 8. Diversifying Your Portfolio

      4:56
    • 9. Creating An Investment Plan

      6:47
    • 10. Rebalancing Your Portfolio

      5:13
    • 11. Understanding Order Types

      5:25
    • 12. How Investments Are Taxed

      5:58
    • 13. Rule #1

      1:19
    • 14. Rule #2

      0:51
    • 15. Rule #3

      1:55
    • 16. Rule #4

      1:42
    • 17. Rule #5

      1:18
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About This Class

Investing 101: Beginner's Stock Market Investing Masterclass access also includes a free stock trading ebook download with in-depth trading strategies and education!

This class is a step-by-step beginner's guide to getting started with stock market investing. You'll learn how to open your investment account and everything you'll need to know to find and buy your first winning stock... and many others!

You'll be learning from a self-taught, full-time day trader & investor on a mission to help other investors avoid the same mistakes that he made early on in his career.

If you're someone with little-to-no experience in the market and are motivated to learn what it takes to be your own boss and earn some extra income from the stock market... this class is exactly where you should start!

What You'll Learn:

  • What are stocks?

  • How much money do you need?

  • Opening an investment account

  • Brokerage account walkthrough

  • Finding winning stocks (step-by-step analysis guide)

  • Diversifying your portfolio

  • Earning from dividends

  • Creating an investment plan

  • Rebalancing your portfolio

  • Understanding order types

  • How investments are taxed

  • + MUCH more!

Meet Your Teacher

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Transcripts

1. Introduction: Alright, first and foremost, thank you for joining the class. We're going to be going over a ton of very valuable information within this class. So make sure to stay tuned, to go through each section is I truly believe that it will help you improve your investing or help you start your investing career off on the right foot and first Vice. So before diving into the main topic of this class, I wanted to just give a little bit of background information on myself since I am going to be your teacher here today for class. So as I mentioned, my name is Travis grows more full-time day trader and investor and have been for over five years now. When I first started off in the market, I was only doing it part-time while I was going to school and I was still learning. I am now of course, fortunate enough to do it full time. But I seem to learn just about everything, the hardware and the hardware of course, being by taking unnecessary losses that I really could have avoided by following in the footsteps of other successful traders. So because of that, I wanted to create these classes to hopefully help other new traders and investors be able to avoid the same common mistakes that myself and many other new traders and investors seem to make. So really that's where I'm at today and that's what led me to start creating these classes. And I still be a trade and invest full time. This is just something that I do on the side. And I've gotten a lot of positive feedback about it so far. 2. What Are Stocks?: Alright, now that we have the introduction of the way, it's time to get into the main topic of the class, which is of course, investing in stocks. So before we get into any main strategy or types of analysis, it's important that everybody understands fully what a stock is. Since it is of course, something that you're gonna be putting your hard earned money into it. So a stock is essentially just going to represent a share in the ownership of a company, representing a claim and the company's earnings in assets. And really there are plenty of different things that you can invest in or mine, such as an exchange traded fund or an ETF, stock options, mutual funds futures, 4X, and so on and so forth. Of course, for this class we are going to be focusing on stocks. Because to me these are what I find to be the easiest to invest in. And they allow you to invest in actual companies rather than just the security itself. So for the sake of this class, there are three main types of stocks that we're probably going to be talking about. There are what are known as small caps, which are stocks of companies worth between 300 million to $1 billion. There are mid-cap sports between 2000000000.10000000000. And there are large caps which are stocks of companies worth more than $10 billion. The worth of a company is what is known as the market capitalisation, or just often called the market cap. You can find the market cap of any stock by simply going onto your brokerage account, which we are going to be talking about in the next section. And once you search for a specific stock, is gonna give you some details about that stock in about that company. And it will tell you the market cap of that company. But generally speaking, stocks below five or even $10 are going to be small-cap stocks. Large cap stocks, or really anything over $20 per share. And between those two is of course, mid-cap stocks. And you have to keep in mind that your large-cap stocks are going to be the more reliable and of course, the more reputable and financially stable companies to make apps in small caps. So generally speaking, these are going to make better longer-term investments than you would find with lower price stocks. Because the price of the stock, of course, represents how well the company itself is actually doing. So just to give you a better idea of how the stock market actually operates, you first have, of course, a company. That company has shares at their stock. And us as investors and traders would buy and sell stock in either profit or lose. The difference between where you bought and sold multiplied by the number of shares that you bought and sold. So for example, if you bought 500 shares of a stock at $20 per share on February first 2019. And then six months later you sold all 500 shares at $28 per share. That means that you made $8 per share on your 500 shares. So you would multiply 500 times $8. And that would equal, of course, a $4 thousand profit in six months. So that gives you an idea of what you're looking to do when it comes to investing in winning in profitable stocks. We're looking for great opportunities to buy low, and then later on in the future sell high and profit. The difference between our byproducts and our self-righteous, again, multiplied by the number of shares we bought and sold. 3. How Much Money Do You Need?: Now when talking about stock market investing, one of the first questions that most people have is how much money do you need to get started? And really there is no set number that you need to start investing. It's going to be different for each person. And my recommendation is to start small. Many people think that if you start off with thousands and thousands of dollars, then you're likely going to make much more and profits. And somebody that starting off with much less money. But the reality is when you're starting off, it can be hard to be consistently profitable until you understand the marketing more and you have a solid strategy to use in your investment. So by starting off small until you're confident in your investing, you're minimizing your risk and allowing yourself to learn from your losses in the early stages. So with that being said, you should really only invest money that you can 100% afford to lose. So if the money you're planning on putting into your investing account, money that you need for bills or any other payments. My recommendation is that you just hold onto that money and use money from elsewhere to start investing. Or simply save up and wait for a better time to start. But even if you don't have the money right now, it is very important that you do continue to study in go through the rest of this class because you want to be well-prepared when you do decide to start with your investing. But regardless, if you do have enough money to get started right now, I always like to tell new investors to use the average annual return of the S and P 500 to gauge your potential return. So what I mean by that is on average, each year the S and P 500 makes a return of about 10%. So on an average year each $10 thousand invested into the S and P 500 ends up being 11 thousand by the end of the year, which of course gives you a 1 $1000 in profit. Now that may not sound like a ton, so don't feel discouraged if you don't have a ton of money to get started. Because our goal is of course, to beat the S and P 501 to make as much as we possibly can without taking on too much extra risk. So we're going to be learning exactly how you can do that in the future of this class when we go through the different types of analysis and the different strategies that I like to use for investing and finding winning stocks. 4. Opening An Investment Account: All right, so at this point you may be wondering how you can actually get started with your own investing in which you need to do next. Actually start buying and selling shares. In for that you're going to need some kind of investment account. So I wanted to just briefly go over some of the main investing account options that you have and briefly describe some of the pros and cons of each one. So that way you're able to go ahead and get started with which one you are. And get started with your investing when you feel comfortable enough to do so. So first and foremost, this is what I personally use for my investing in my stock trading. And it's what is known as a brokerage account. So brokerage account, you can open up in just a few minutes. And it's going to be either an individual or join account, whichever you prefer. And this is not a retirement account and this is a simple investing accountants. Oh, it's going to be completely free or rules and restrictions that come along with most retirement accounts, such as the IRA accounts that we'll talk about here in a minute, and other type of investment accounts. So really with a brokerage account in there, it's going to be an online platform, which I'm gonna be showing you an overview of the one that I use in the next section of this class. Just, you know, how to operate and use the different tools and features within the platform itself. In generally speaking, you will often come with a mobile app as well. So that way you can do any buying, selling, or research that you need to do while you're armed and go. And it also usually comes with a downloadable app for your desktop or your laptop computer. The next type of investment account and you can open is a traditional IRA account. An IRA account is going to allow individuals to save and invest, paying taxes until the money is taken out of the account. So whenever you have money to put into this account, you can transferred into the account. You can then use that money to make any kind of investments that you'd like. And you don't have to pay any taxes on that money until you withdraw it in the future. One very important thing to keep in mind though about traditional IRA Roth IRA accounts is that there's a limited amount each year that you can pause it into the account. And to withdraw money from the account, you usually have to be a certain age. And if you try to withdraw before that age, there is usually going to be some type of fee or punishment. So that's one big reason why I prefer just using a simple brokerage account over any kind of retirement account for my investing. But again, it's entirely up to you, whichever you prefer to use. And the last main account type that I want to talk about is the Roth IRA account. And this is of course very similar to a traditional IRA account. But the one big difference is that the money that you invest is already taxed. So when you withdraw it in the future, you are not taxed. So if you're using money from another job that you work at or other capital gains that you may have made an already paid taxes on. You can then deposit that tax income into your Roth IRA account. And then later on actually make investments and decide to withdraw your money in the future. You're not going to be taxed again on your money. Here you can see I put together a short list of just a few different online brokers where you can open a brokerage IRA or Roth IRA accounts. So first we have E-Trade than TD Ameritrade, Fidelity, Charles Schwab, Merrill edge, and so on and so forth. And each of these are very reliable, very reputable companies. I actually have an account with both E-Trade and TD Ameritrade. In next section, Mike, I mentioned when we do a platform walk-through, I'll be using a brokerage account with TD Ameritrade. But just giving you an idea of some things that you want to look for when you are opening an account. Nice of course, have low fees and commissions, strong customer support, reliable software in low minimum account balances. And the reason that's important is because if there's somebody that starting off with a small amount of money, which is recommended, we have to be above your broker's minimum account balance. And sometimes that can be as little as a $100, but other times it can be as much as five or even $10 thousand or more. So it's just something that you should look into when you are opening a new account because you wanna make sure that you meet the minimum account balance when you're going to do so. Also, I highly recommend going online and searching. For example, fidelity brokerage accounts. And odds are there will be several different reviews on there that will give you detailed descriptions of the things that I mentioned above, such as their fees and commissions structures, their customers, or their software reliability, and other different pros and cons that that specific brokerage may have. So if you're looking for more information, it's specific information about one of the investment account options that we talked about. That's one very good way that I recommend looking into that and getting that information. 5. Brokerage Account Walkthrough: Alright, so as I mentioned, I wanted to take a section on it, this class to just go through one of my brokerage accounts and show you some of the tools and features that you're going to have with your brokerage account. Whether it be with E-Trade, TD, Ameritrade, fidelity, or many of the other ones. There are really going to have very similar brokerage accounts and similar features within the counts. So first and foremost, you're going to have a My Account tab here. And this will give you a brief overview of your account, the balance in your account and he positions that you add. This is of course not the actual investment account that I used for my own investing. That's why it says 00 there. But any positions or account balance things, that's where you're gonna find that you can also afford to go to my account to either deposit or withdraw any of your money that you have in your account. You can also use it to look at past transactions and look at different data from your past trading and investing history. Okay, so the next step we have is the Trade tab, and this is going to be one that you'll use pretty frequently if you do plan on getting into actual trading and investing. So since we aren't focused on stocks here, we're gonna go to stocks and ETFs. And that's going to pull up this page for you. And let's say for example, you are looking to invest, OK, Apple stock symbol is AAPL. However, if you don't know that stock symbol of the company that you're looking for. You can go to symbol look up. And it will pull this up for you and you can search the name of the company. And it's gonna give you the company name as well as the symbol. And then you use that for your investing. So I'm gonna go back to that page there. Put an APL. And you wanted to buy a 100 shares at a price of $210. So that's how you place your order here on TD Ameritrade platform later in the class and we'll go over some of the different order types. So if you don't know yet about limit, market, it stop orders that some number going to be talking about. So don't worry about that yet. But all the time in forest means is that this order that we'd be placing is for today. So if this order doesn't get filled and executed by the end of the day, which is over by four PM Eastern Standard Time because that is when the market closes, then this order would simply be canceled in. You'd have to place another one The following day if you still want to buy shares or if you still wanted to sell your position. And of course, the way we would change this from a buy order to a cell or short sell or buy the cover is by simply clicking there and selecting the type of action that we wanted to do for our order k. So if we go back up here to the Trade tab, we're going to see also the trade options, mutual funds, bonds and CDs, futures in forex. And those are a bunch of different things eat in, trade or invest in. But as I mentioned earlier, we are going to be focusing primarily on stocks for this fast when we get into diversifying. Later in the class, we will talk a little bit about each of these. But I do believe that stocks are generally going to be the easiest to get into when you first start off with your investing because you're able to focus on the underlying company and see how well. Forming, rather than having to rely so much on things such as technical analysis or even the overall economy and how well the overall market is performing. Okay, but the next tab we have up here is research and ideas. And Swift can do a lot of research about stalks that you're looking to invest in and even look for different stocks that may end up making good investment opportunities. So if you're interested in kind of seeing how the overall market is performing. Since many times individual stocks do seem to follow the overall markets trend. We can simply go to market and then overview. And that's going to pull up information about in dices. So you can see the charts of the indices. You can see information about them. He could see recent news that was released that impacts the price of these indexes. And of course, if you scroll down, you can see other information about the market, showing you how many stocks are at their highs as opposed to how many stocks are at their lowest. Of different sectors of the market are performing for the day. Different stock movers with the largest volume being traded for the day, as well as per cent and gainers. So the stocks that have gone up the most from the previous day's flows, as well as percent losers, which are of course, stocks that have gone down the most previous stays close. I'm, so that just gives you a very good overview of how the market is doing on any particular day. And now if we go back up to research and ideas and another very cool feature that they have here on TD Ameritrade platform is the calendar. So if we go to Calendar, you're able to see on any given day of the week different articles of news and catalysts that are being released or that were already released that could significantly impact a stock price. So for example, one major thing that companies release is of course their earnings and that's going to tell you how well the company is performing financially over the past quarter in over the past year. So if you go to Calendar here with TD Ameritrade, you can go to any day and see which companies are releasing their earnings for the day. And you can even see how well those companies are expected to perform with their earnings. So for example, if we click on this upcoming Friday, which is the 23rd of August, you can see that there's 82 total events planned for the day. So 19 of those are going to be earnings 57 and those are dividends. One of those is a split, four of them are investor conferences, and then there is one economic unit. So if we wanted to see stocks that are releasing their earnings on that day, you would click on earnings. And then if you scroll down here, it's going to give you a list of those stocks earnings on that Friday. And then over here I can tell you if the earnings are expected to be released before the market opens in pre-market or after the market closes in after hours. As well as sometimes you'll also see estimates for the earnings, which is of course just going to give you an estimate of how well a company is expected to perform in their earnings based on analysts predictions. Alright, so scrolling back up. Now if you're looking for news or events for one specific stock, rather than having a calendar with several different stocks. The way that you can get a lot of details and information about that stock in that company is by going to stocks and then Profile. Once you do that, a page like this is going to pop up. And you can simply search for any stock symbol that you're looking for. Or again, you could do this symbol lookup option to type in the company's name and find what's its stock symbol is. So for example, if we want to go instead of Apple, let's say we want to check out Amazon. It's gonna pull up a bunch of different information about Amazon stock and about the company itself. So here's where you can see the market cap of stock that you mentioned earlier. When we're talking about small caps, make caps in large apps. That is of course referring to the market capitalization or the market cap of that company. You can see here that the market cap of Amazon is $894 billion, which of course is a large app company. You can then go over to the news tab instead of summary. And this is going to show you any recently released news or press release is done by the company or other news services. So this is very important because a lot of times News and other catalysts can have a major effect on the stock's price. So it's very important to know what kind of news is being released for any stocks that you may be interested in investing in, or any stocks that you already have a position invested into. And of course, the way you would look into these articles of news is to simply click on the links. And it's going to pull up news for you. And you can go ahead and then read the news and go back to the results. And you can also be a little bit more specific if you're looking for just articles and news, press releases or even video. So that way it kind of limits the results a little bit more. And you're able to be a little bit more specific with your research. And another very important tab here is of course the chart tab. So if you don't have TD Ameritrade trading platform downloaded yet, which is called thinkorswim. And this is what the little symbol looks like. You can always of course, to receive their chartering, which is given to you here on their online platform. And you're able to look at one hour, one day to day, five, day ten day one month, three months, six months a year to date, one year, three year, five-year, ten-year, and even 20-year charts, as well as different timeframes within those charts. You can also change the chart style at different indicators and even compare the chart of one stock to another stocks chart and include any articles or news or events on the chart itself to see how well or how poorly the stock performed. Once that piece of news was released. Then moving on, you can then go to earnings and get a brief overview of recent earnings reports. And this is a very quick, the easy way to do some basic fundamental analysis. And by going up here, you can specify whether you're looking to analyze the quarterly earnings or even the earnings reports. Now going to fundamentals is going to give you an overview of how well the company has performed in the past. It's going to show you things like the historic growth of this stock, different information about the financial statements of a company. Information about these CEOs in the company officers, which is all of course, can come in handy once we get more into the analysis, in the analyzing of stocks and companies to find the best investment opportunities. So the last time that I want to go over here for the stock profile section is the essence of violins. And this is where you're gonna find different filings, whether it be for an annual report or a quarterly report, or even something just like news or insider trading. That's where you're going to find the SEC filings for that. So you can go to the SEC filings tab and which are also going to find out later in the class, is that there are several different websites that you can use, such as FCC.gov, where you can quickly look into the filings. But filings are going to be something that you're going to be looking into pretty frequently to properly analyzed before you're investing in companies. So having a tab here under the stocks profile section on TD Ameritrade is a great benefit because it can be done very simply and easily from there. Now the next time we have up here is the planning and retirement tab. And the reason I wanted to mention this is because if you are planning on opening an investment account with TD Ameritrade, you're actually able to find an advisor for that account. So somebody that will help you with your investing along the way. I don't personally use that, but I wanted to recommend it because I know a lot of people that are just getting started with investing preferred to have an advisor with them until they're more comfortable doing things in investing on there. Okay. But the next time that I wanted to just briefly discuss is going to be the client services and this is where you can message employees of TD Ameritrade and chat with him with contact them any other way. You can go to the Help Center and look over different FAQ's, which of course can be a great help if you're struggling with something within the platform itself, or even if you need help with your investing. So I hope that overview as helpful as I mentioned, depending on which brokerage you went with, whether it be E-Trade or fidelity or any others. They're gonna have very similar online platforms, but there is, of course going to be slight variations from there. So generally speaking, this should have shown you how you can use some of the basic tools and features within your platform to help you with your investing. Hokey weights, your research and analysis. Later on in the class, there's actually going to be a section that's going to be devoted to each trading platform itself, which is thinkorswim. And that's going to be a little bit more advanced. And that's going to have a more advanced charting software and scanners and screeners. So if you prefer to use that over the online platform, make sure to check that section down as well. 6. Finding Winning Stocks (Step-By-Step Guide): Or it's another, we have some of the more basic concepts of investing covered, such as how you can actually set up and create your investment account. And what even our stocks suddenly move onto a little bit more complicated ideas such as finding winning stocks in the market. And we're gonna go through, and I'm going to show you how you can find potentially winning stocks in the market. Do several different types of analysis on these stocks. And of course on the companies of the stocks as well, to set yourself up for success in your besting. So first and foremost, to do this, we need to note the two different types of analysis and how they differ from each other. First, we have what is known as technical analysis. And it's going to be a financial analysis type that uses patterns in the market data to identify trends and make predictions. So when we think of analyzing charts, but yet chart patterns, different indicators and studies on the charts and price action in general, that is going to be your technical analysis. Fundamental analysis, on the other hand, is the analysis of a business's financial statements, such as their sales profits, earnings per share, and so on and so forth. So when you go into the actual earnings and how well the company is performing financially, that has to do with the company its fundamentals. And that is going to be fundamental analysis. Now generally speaking, in the market, strong fundamentals are going to lead to strong technicals. So if you're analyzing a strong company with growing fundamentals, more often than not, that's going to lead to strong technicals meeting that stock's price is rising and moving in an overall upward direction. So because of that, we want to start off with fundamental analysis when we're looking for potential winning stocks in the market. Now to do or fundamental analysis we're really going to be using to make websites. You can actually use either or it doesn't really matter. They're pretty much the exact same and needs you're going to be websites to look into the violence of the company, use SEC.gov or ban SEC.com. Those are the two that I recommend. And they are both free to use and you'll be seeing how to use your shortly. Once we go through some examples and look into some of these SEC filings, Now there are countless different file types that you're going to see when you are doing your fundamental analysis. But for this class I wanted to focus on some of the main ones. So first we have what is known as a ten K filing and attend cave filing is an annual report required by the SEC that gives a comprehensive summary of the company's financial performance. So the companies at stocks listed on stock market are required every single year to file a ten K filing, which shows us the investors and the shareholders exactly how well or how poorly that company performed in its most recent year. So this is where you're going to see all the information about their sales, all the information about their revenue, their operating expenses, and so on and so forth. Uh, ten q is going to be a little bit different from a ten K. And this is going to be a quarterly report, seven annual report, again, required by the SEC that gives it comprehensive summary of the company's performance. So this is going to be filed by companies four times a year, every quarter. And again, it's going to show you how well or how poorly. The company has been performing in the past three months. As far as their financial statements go. An 8K, then it's a little bit different from a ten K and attend Q. Because an AK is simply a filing that notifies investors of important events or news released by the company. So for example, if you're analyzing a biotech company that is working with some kind of new drug to try to prevent migrants. If the company had some kind of update about how that drug was performing and affecting patients with migrants. They would put out an 8K filing which would notify that information to investors and potential shareholders. These are very important because the news release in an AK filing and make a major impact on the price of the stock, whether it be in the short term or even in the long-term spectrum. Now moving on, I wanted to mention some of the things that you're ideally going to see within your ten K and ten cute filings when you are looking for potential investment opportunities. So it's one thing to of course, just go through these filings and looked at their annual reports. But it's another thing to actually be able to identify a growing company and be able to use that information to create your investments. So first and foremost, what we want to see when we look into a 10 Q filing, and again, is, of course, a quarterly report showing BY financial performance. We want to see at least 25% earnings per share or EPS growth in the most recent quarter. What that does is tells us that over the past three months, this company has performed very well compared to the three months before that's remarks. And that shows us that the company is growing and getting stronger and stronger. And like we mentioned earlier, if the company is growing stronger and stronger, more often than not the technical meaning, the price action in the overall price of that stock. It's gonna follow those strong fundamentals in the stock's price is likely to rise from there. Also another reason that having at least 25% EPS growth and the most recent quarter is ideal for investing is because this type of EPS growth attracts institutional investors with billions and billions of dollars to best. Really the market is run by its institutions and these hedge funds and these multibillion dollar investment firms. So us with much smaller amounts of money investing in trading from our own homes, it's important that we follow the lead of these institutional investors when we can. And when you have a quarterly growing EPS of at least 25%, that's going to attract a lot of institutional investors. And from there we can follow the lead of the and missions and even invest with them. The next ideal fundamental that we'll see when we're looking for it and batsmen opportunities is at least 25% annual earnings per share of growth in the past three years. So in the previous slide we talked about 25% EPS growth and the most recent quarter. But when we're looking into ten K firings and annual financial reports, we want to see at least 25% EPS growth over the past three years. And this is going to show us that the company's growth in the most recent quarter is not just some kind of a fluke. And that company has truly been showing growth over the most recent years. Just look at the quarterly performance of a company. Sure, you may see that the EPS has grown at least 25% over the most recent quarter. But a lot of times that can actually just be because the company is temporarily fixing some kind of underlying problem that the company may have. So by looking further into the past of stock and looking into the annual reports and the earnings per share growth, you can make sure that the growth of the most recent quarter, again, was not just some kind of a fluke. And that the company has really been growing and getting stronger and stronger over the past few years. Next thing we want to see when we're looking for investments is that the institutional ownership in the stock at least 25%. So we are to talk to a little bit about this institutions, of course, to beat the market. And we want to be able to follow in their footsteps. So if they're putting a ton of money into a specific stock, in a specific company. A lot of times that company and that stock is going to make great investment for us with much less money because they are the ones that are pushing the stock price up. They believe in the future of the company. Or even accompany enough to put millions and millions, if not even billions of dollars into that stock. Then more often than not, that's a good opportunity for us to believe in that company as well and for us to follow along in invest in that stock also. So one very quick and easy way that you can look into institutional ownership of the stock is by going to the URL that I have here. It's going to be Nasdaq.com slash quotes slash institutional data ownership dot ASP x. If you just Google institutional ownership, this will most likely be one of the first ones that pops up. So just to give you an idea of what this looks like, we came to the website and then typed in the symbol for Apple. We know that Apple is of course a large cap stock in a very reputable company. So I'm expecting the institutional ownership to be pretty high. And as you can see here, it's about 60%. And if you scroll all the way down, you can actually see new positions that were opened, recent positions that were sold, and going down even further, you can see which firms and investment banks were embezzling or selling shares in the star. So when you're looking into these potential investments, ideally you're going to see more new positions. Then you're gonna see sold out positions. Because that's going to show us that regardless of what the current institutional ownership may be, it were recently new positions opened. And that shows that there are investors buying stock and that they believe in the future of this company. Right now, moving on to the technical side of investing. Those are gonna be the main fundamentals that we want to see when we're looking to potentially invest into its stock. We wanna see again EPS growth over the past quarter in, over the past three years of at least 25%. And we want the institutional ownership to be at least 25%. Now moving on, detectable as again, we wanna see that stock is following in the footsteps of the growing company. So the way that we do that is by looking for an upturn in the stock. An up trend is when the stock is making higher highs and higher lows on stock's daily chart, which of course means that it's moving in an overall upward direction. So what I mean by higher highs and lows. Is that we know of course stocks don't just go straight up with straight down. They have highs and yet peaks and they have boats or dips. So every time the stock makes it peak or high, in an up trend, that high is going to be at least slightly above the previous high. In each row that is formed is going to be at least slightly above the previous fit or low. And at the bottom of the slide here you can see what that is generally going to look like. I wanted to include an example of what an up ten looks like on an actual chart as well, rather than just the diagram we had on the previous slide. So this is the perfect example of what an up trend looks like. You can see very clearly that there is both higher highs and higher loads over the long term up the chart. So if you see this with fundamentals that line up with what we talked about in the previous slides. This would be a great investment opportunity because the stocks technicals are moving overall in an upward motion and again, following in the strong and growing fundamentals. Now one thing to keep in mind is that just because a stock is an up trend, doesn't necessarily mean that you want to just buy and hold all the way through the app trend. More often than not, there's also gonna be a lot of what is known as resistance at the top of the upturned and that's going to be worth it. Stock generally peaks out and begins to reverse back to the downside. And you can pretty clearly see that black line drawn on top of the chart. So as an investor, again, you can buy into the upturned. It's simply hold until you decide that you want to take your profits and move on. Or you can also use the overhead line of resistance to by themself more frequently and profit from the shorter-term fluctuations. So because we are looking at the daily chart here, each of these candles represents an entire day of action. So even if you're buying down at the upturned support, which is the blue line on the bottom. And then selling towards the upturned resistance. Again being black line on top. It's still generally be holding your physicians for at least a few weeks. And that allows you to profit again from the shorter-term fluctuations. And then allows you to rebuy, wants to stop, pulls back down to the transport. So that's just another way that you can actually trade up trends. If there is a clear line of existence overhead. But if you are just getting started with your investing and you prefer to take a little bit more of a hands-off approach than there is, of course, no problem with simply buying into the AP trend. As long as the fundamentals in other technicals aligned with what we're talking about in this section. Ms. Minorities, just to give you an idea of what a downtrend looks like. This is something that we want to avoid because we're looking for again, starts moving in an overall upward direction with growing fundamentals as well. You can see very clearly that there is no higher i's or hired loads on this chart. It's in downtrend, so we actually see a lower lows in lower heights. So even if the fundamentals of this stock with strong, this would not be a great investment opportunity because buying into a stock that is downturn ending like this would be trying to fight the trend of the star in a very popular and he talked about quote, and the market is follow the trend. The trend is your friend. And that will set by Jesse Livermore, who was a multibillion dollar trader in investor. You have read the book, market wizards by chance. He was one of the traders that was interviewed in that book. And he actually made a majority of his money by simply following the trend of a star. So if it was moving in an upward direction, it would use that momentum to bite into. And if it was moving in a downward direction, like we have an example here, e-book to short sell that stock. Which for those of you who may not know if short selling is a trait type that actually allows you to profit from the stock moving down. There in the last criteria that we have here for our potential investments is the average daily volume. The average team. The volume is how many shares the stock trades on any average day in the market. Ideally, this is going to be at least 100 thousand shares to ensure that you're able to buy or sell without having problems getting your position fill. What I mean by that is because you're buying shares, there has to be somebody on the other side to sell you the chairs and vice versa when you're selling shares, that has to be of course, a fire for their shares as well. That can be very difficult when on an average day of that stock is only trading. For example, 20 or 50 thousand shares. So by making sure the average daily volume is at least a 100 thousand shares. Or if you'd like to narrow it down even more, you can boost that up to two hundred thousand, five hundred thousand, or even a million or more shares per day. That's going to make sure that the stocks that you are potentially investing in are going to have the liquidity for you to buy and sell without having any problems getting your physician, phil. Alright, so I know that may seem like a lot and I know you're probably thinking calculate find stocks simply that meet all the criteria that we just talked about. And that's what the tool in the website.com, it's gonna come in handy. Then this allows you to screen the entire market for stocks that meet your specific criteria. And this is what we're going to use to find potential investment opportunities using both fundamental and technical criteria that we just discussed in this section of the class. So fitness is completely free and I'm gonna show you exactly how to use it here in a second. But I do want to mention before going on that they actually have a freemium services. Well, and with a premium service, there is no ads that pop up on screen. And I just wanted to mention that because as we go through some examples here on fenders, you may notice that there is quite a few ads popping up. And that is just of course, because I use the free version. The free version again works perfectly fine. Especially since we're not going to be using this on a daily basis. We're just going to use this every once in a while to find potential investment opportunities. So I'm gonna go ahead and go to thin bits.com. And once you're here, you can see that there is a tab up at the top for the thin bid screener. And that's what we're going to use to put all of our criteria and narrow the market down to the stocks that meet specific criteria. So first and foremost, you can see right now that there is a total of 7,625 stocks, okay? And once we put in all of our different criteria, that's going to narrow it down to a much, much smaller number. And that number of stocks is what we're going to potentially used to do are investing in the future arts or going back to the slides. First thing we talked about was an EPS growth about at least 25% in the most recent quarter. So we're gonna go onto the fanbase screener. And we're going to look for a screener setting with 0px broke. And right here you had EPS growth quarter over quarter, which is exactly what we're looking for. We're gonna select over 25% and then already narrowed the market out from over 7 thousand down to one hundred and five hundred and ninety nine. The next thing we talked about was an annual EPS growth over the past three years of at least 25%. So I actually don't think coinbase has a screener setting or EPS growth over the past three years, but they do have EPS growth past five years. And that's what we're going to select here for this one. And then from there you can of course, go further into the SEC filings and look into the actual 10 K filings, attend Q filings. If you want to be a little bit more specific, and if you want more information about the EPS growth. So I'm gonna go ahead and select over 25% again. And we narrow the market down from 1000 to 599, down to just 244. Now, the next thing we talked about was an institutional ownership of at least 25%. So if we go over here to institutional ownership, we'll go ahead and select over 20%. And again, you can go to the nasdaq website we talked about to be more specific and find out exactly how much of the stock is held by institutions. Now here's where things can get a little bit tricky when it comes to you scanning, because you can't actually just stand for stocks that are in an up trend or in a downturn. We have to be able to determine what kind of criteria stocks and an upturn actually follow. And we know starts moving in an up trend are of course moving in an upward direction. So we can use that to put into our standard setting. And what we want to see is a performance about at least 10% in the last month. So all that means is that over the past month is stock has gone up at least 10%. Which of course tells us that the stock is moving in an overall direction. And as you can see, we're already down to just 24 stocks from well over 7 thousand, which we started off with. And last but not least, we want to have an average volume of at least a 100 thousand shares. So we can go to average volume here and select over 100 k. And we have 20 total stocks, which are all gonna make potentially great investment opportunities. To narrow this down even more, as I mentioned, you can be a little bit more picky with the stocks are investing in. So you can have over 500 thousand shares, for example, for average daily volume. And that's going to bring it down to ten potential investment opportunities. And if you go down the price here and just hover over it, it's going to give you a brief overview of the daily chart. So you can see that it is backed up trending. And if it's not up trending, then of course we know that that's not going to make a great investment opportunity. So when I'm screening for different stocks, I like to simply put in all my criteria and then hover over the price of bees and keep a list of the ones that are upfront. And that do have strong technical to follow the fundamentals that we screen for. And right off the bat, I would say that HHS g, x is not, of course, in an upturn. So I would not include that in my list. Agc isn't a nights up trends, so that would be a potential investment opportunity. Same whats LSB. And dx g is in somewhat of an up trend, but it's telling a little bit sideways. So I'm not really sure that I would want to follow it through with investing in that. And you can see SQR is of course in a nice upturn as well. Okay, so generally that is how you use the screener here are then based. And that shows you how you can find investment opportunities that are going to meet all your specific criteria. Now I just want to briefly show you how you can actually go into the SEC filings themselves. If you want to be a little bit more thorough width your fundamental analysis. So I'm here on band scc.com. And as I mentioned, you can come here into your fundamental analysis or you can also go to FCC.gov. And I'm gonna go ahead and type in symbol for Apple. And you can see that they actually split up the filings into different sections. So we had a financials which is going to be your ten q and 108 filings news which supports is your 8A filings, respect to CES in registration, proxies, ownership, and other. So if we want to look into the most recent quarterly report, that's going to be the most recent ten q firing. So we go ahead and click on that. And it's going to pull that filing up for us. You can then scroll through and look for any type of information that you want. You have here for the operating expenses. Up here you have a net sales. Scrolling a little bit further, you have their current assets for in my abilities and so on and so forth. And one little trick that I like to recommend using when you are trying to briefly scanned through filings. And that is if you're on a Mac, your keyboard press Command F. And that's gonna have a little search box pop up on top. From near you can search in any keywords that you're looking for. And that's gonna highlight those keywords anywhere on the page. So for example, if you're looking for a company's revenue, you would search in revenue at the top. And you can see within this file and it's a very long filing of course. So there is a lot of matches, but there are 47 matches. And you can simply click through and look at every time that the work revenue is matching in the filing on. And that is again, for a Mac, if you are on a Windows computer, I believe you just have to hit Control F and setup command F. And you should be able to do the exact same thing. Okay, so I hope that was very helpful to be able to find winning stocks in the market. This is a great system for finding stocks with both strong fundamentals in technicals. And it's a great and very simple way to get started with your investing. 7. Earning From Dividends: Alright, another very important topic when it comes to investing in the stock market is potentially earning extra money from dividends that are paid by some companies. A dividend is a sum of money paid regularly, usually every single quarter by accompany to its shareholders out of the company's profits. So for example, if a company pays a $0.40 per share annual dividend, that means that each quarter you receive $0.10 for every share that you own of that company. So if you own 5 thousand shares in the stock, you'll make $0.10 per share every quarter, giving you $500 every single quarter, or $2 thousand per year if you hold the stock for the entire year. Now something to keep in mind is that dividends don't necessarily make a stock a good investment. You want to make sure that the company is still growing. And you wanna make sure that they do have both the fundamentals in the technicals in your favor as well. Because if the stock is moving in an overall downward direction, then the dividend that you're getting paid is not gonna be enough to outweigh the losses that you're facing and due to the stock moving in an overall downward direction. Okay, so at the end of the day, really a dividend should just be an extra bonus that you're receiving from picking winning stocks in the market. Another very important note about dividends is that the stock's value is going to actually decreased by the dividend amount after the payment date. Therefore, you can't buy a few days before dividend and immediately sell for profits after. That's one thing that many people think they can do. If the company is planning on giving a dividend, let's say a few days from now. They would plan on buying shares of the stock today, holding for a few days, getting paid their dividends and then selling immediately after for profit. But again, the day after dividends are paid, say for example, they will pay $0.40 per share. Then the next day the stock is gonna open $0.40 per share lower. And because you are a shareholder, the loss in the stock, in the dividend kind of cancel out. So you wouldn't make or lose any money in that case. That's why again, to reiterate, we should still only be investing in stocks with fundamentals, in technicals that are lining up with your investment plan, not simply because of the dividend. Now there are a few important dates to keep in mind when you are planning on investing in a stock and earning some extra money from the dividends. And that's going to be the ex-dividend date and the payment date. The payment date is of course, the date that the dividend is going to be paid to the investors. In the ex-dividend date is the date that you need to own shares in the stock before the upcoming dividend to we receive payment from that dividend or so if you buy shares in a stock a few days after the ex-dividend date, but still before the payment date. You're not gonna receive payment for that dividend because you were not a shareholder before the ex-dividend date. So it's just something to keep in mind if you are planning on earning some extra income. And we'd like to be a part of a company's upcoming dividend. Now, generally speaking, if you think back to the section when I did the brokerage account walkthrough on the stock profile section when you can see all the different information about the stock as far as the potential dividend itself, all the different news violins, market capitalisation and so on and so forth. There's usually going to be a section there that also tells you if the stock has a dividend, how much dividend is going to be each quarter or each year. And it will also usually tell you an ex-dividend date if there is one plan for that stock. However, if you don't see one there, one way that you could find that out is by going to the URL that I have down at the bottom of this slide. If you simply search in also dividend calendar, it will probably be the first one that pops up on your Google search. And it's going to be on Nasdaq.com. So I'm gonna go ahead and pull this up just to show you what it looks like. And you can actually go ahead and search for any stock that you're planning on investing in to see if they do have a dividend. And you can find out again the dividend amount as well as the ex-dividend date. So I'm gonna go ahead and search in apple. And you can see down here the history of Apple's dividends. You could see the cash amount that was paid to shareholders. The date that it was declared, meaning the date that they announced to shareholders they would be paying a dividend. Also on the far left here you see the ex-dividend date. Again, meaning the data you needed to own shares in the stock in order to receive this dividend and then of course, the payment date. So generally speaking, you can see that it's about six to seven days after the ex-dividend date. Okay, so if you wanted to find any dividend information about any stocks, we could simply go to this website and find that information. Also going back to the dividend calendar, which was the first page that we were on here. You can see that there's an actual calendar for ex-dividend date. So this is going to tell you every single day which stocks have that date as an ex-dividend date. And this is really another way that you can find potential investment opportunities if you are looking to earn some extra money from dividends. However, I do recommend that if you find a stock with a dividend on this website, they think might make a good investment opportunity. I urge you to always go through the filings, like we mentioned in the last section. Look into the institutional ownership, look into the company's financials and other aspects. Just to make sure again, that you are investing more into the fundamentals in the technical rather than just for the dividend itself. But regardless, this is a nice tool to be able to see which stocks are paying dividends in width day they have their ex-dividend date set for. 8. Diversifying Your Portfolio: All right, now one thing that's very important when it comes to investing in the stock market is being able to properly diversify your portfolio. Diversifying is simply a management style that blends several different investments into the same portfolio. So think of diversifying as a way of investing rather than having all of your eggs in one basket, so to speak. And generally this is going to limit your risk in the market because you're not putting all your money in one stock. So that weren't stock would happen to drop or go down significantly. You're not gonna lose a good portion of your portfolio because you're going to have other winners that are going to outweigh or potential losers. Ideally, of course you're going to have more winners in your portfolio. Then you do losers giving you an overall profitable investing portfolio. Okay, so like I mentioned earlier in the class, there are plenty of different ways that you can invest in the market. There are not only stocks, they're also ETF's, which are exchange-traded funds. There are bonds, there are mutual funds, there's even forex futures, options, and so on and so forth. So one way that you could potentially diversify your portfolio is by simply investing in stocks, but investing in several different companies within the stock market. And other way is to of course, invest in different securities, such as stocks, ETF's bonds and mutual funds. So because we've mostly focused on stocks in this class, if you want to go back through the section of finding winning stocks to remind yourself how we can find these potentially winning stocks in growing companies in the market to invest in. Then I recommend going back to that. However, I do also want to briefly go through some of the other things that you can invest in. And first we have what are known as ETF's, which again are exchange traded funds or ETFs combine assets into an easily investable pool. So for example, the symbol SPY isn't ETF or the S and P 500 Index. The S and P 500 is of course, a very well-known index. And actually over 500 stocks within that index. So technically by investing in the S and P 500, you're really putting your money into a diversified portfolio of over 500 stocks in over 500 companies. And again, the symbol for this ETF representing the S and P 500 is SPY. So that's one way you can invest in ETFs. And by investing in ETFs like the SPY that's already kind of diversifying work portfolio because it's representing the index which has hundreds of stocks within the index itself. The next thing that you can potentially invest in are called bonds. Bonds are going to be generally much less volatile than stocks, making them a good cushion in a volatile market. So a volatile market is one that has a lot of ups and downs. Ahmed has not really trending in one overall direction. So it's a lot choppier And this is when investors generally take on a lot of risk. So by having a diversified portfolio with something much less volatile and much lower risk, that kind of, again, acts as a cushion in your portfolio, is going to outweigh the volatile market that you're facing with your other investments in stocks, in ETFs and so on and so forth. And last but not least down here we have what are known as mutual funds. Mutual funds are a little bit different than the first, because the first three are simply invested in by you. And there's not somebody that's going to manage you unless you have an actual investment in filer. Mutual funds, however, are a professionally managed basket of investments containing hundreds or even thousands of stocks and bonds. And similarly two bonds themselves, they are going to be a much lower risk investment than your typical ETF or stock investments. Something to keep in mind about mutual funds though, is that there are several different fees that are usually involved in. If you're looking to invest in a mutual fund works, you want to check out the fees that are involved in that is of course, because they're managed by professional managers who take out small fees to actually manage your money for you. What regardless whether you're somebody starting off very small amount or even tens or even hundreds of thousands of dollars to invest with. I do recommend to of course, diversify your portfolio and to think a lot about your goals in the market. So if you're somebody that is looking for a little bit more risk and a little bit more reward potential, then you're of course going to want to put more of your money into stocks and ETFs. Then you do want to put into lower risk things such as bonds and mutual funds. However, if you want to take on less risk and you're hoping for more slow and steady gains over the long term, then I would recommend going a little bit less into the Stocks and ETFs and a little bit more into bonds and mutual funds. 9. Creating An Investment Plan: Now just because you fall it all of the previous steps in you found the best possible investment opportunities. The next step is going to be to actually create an investment plan. And think about the four main points that we're going to discuss in this section before you actually put your money into the market. So the first of those four points is going to be your position size. This is the amount of capital that you're going to be putting into the investment. You should think to yourself, how strongly do you believe in this investment? And how much risk are you willing to take with this investment? Depending on your risk tolerance, you made larger positions in individual stocks or lower risk investments, such as bonds or mutual funds. And this is something we briefly talked about in the last section of this class. If you are trying to go on the higher risk, higher reward side, then going more into stocks and ETX is gonna be your better route. Rather than putting your money into lower risk and lower reward investments such as bonds and mutual funds. Now the reason this correlates to position size is again because if you're, say for example, planning on investing a total of $100 thousand over several different investments to diversify your portfolio. And you want to be on the higher risk, higher reward side. Then when you're creating your investment plan, you would base your position size off of your risk tolerance, and what your overall goal is with your current investing. The next of the four points is going to be your actual risk level itself. This is the price that you're going to plan on cutting losses if the investment moves against you. So to find this, we're gonna use really some basic technical analysis to determine this price. For example, say you're analyzing stock ABC and you see that on the daily chart it has support at $100. Well, earlier in the class we talked about how stocks breaking below sport tend to go lower until new supporters formed. So if you're buying the stock slightly above that support level of 100, at $102 per share, you would know that you would want to cut losses quickly if the stock happened to break below that $100 for level. So in this example, your risk would be a little bit over $2 per share. Another very nice thing about having a risk level in mind before investing is that you can actually use that risk level to help come up with your overall position size also. Because, for example, say you're largest risk that you're willing to take on this trade or on his investment was $2 thousand. And you know that you're risking about $2 per share. And you can use that information to the conclusion that you should probably go no larger than 1000 shares into this investment. Because 1000 shares times $2 per share is going to be your maximum loss of $2 thousand. So these all are going to kind of correlate together in hope you've come up with an overall idea of how your investments should go, regardless of if it ends up being a prophet, or even if it ends up being a loss. So another, we have your risk level in mind. You should also have a potential level where you're going to lock in some, if not all of your profits, if the investment moves in your favor. This is going to really help you from getting greedy in the market. And it's really always a good idea to walk in. Your profits along the way, which is really going to help minimize your risk and even Cushing your overall investment. So your target price is going to be similar to your risk only instead of being the level where you cut losses, this is gonna be where you're going to lock in some or all of your profits. And again, we're gonna use some basic technical analysis for this. And when we're buying stocks, we're going to use the nearest level of major resistance as a potential initial target on your investment. And the reason for that is because we know stalks running into resistance many times bounce off that resistance and start to pull back lower from there. So by locking in some profits, you're able to avoid holding your overall position. Pull back that is likely going to come from hitting the resistance level. And last but not least, for your investment plan, you should have in mind a target goal. Like I mentioned, you can lock in some or even all of your profits at your target. And that's really where your target goal is gonna come down to you. You should determine whether you want to exit all of your position or only a fraction. It's the investment does reach its target. Exiting your position in small parts actually allows you to lock in some profits along the way as the stock continues to rise in is going to minimize future risks. So if you still believe when the stock is reaching your target, due to both fundamental and technical reasons that this is going to continue to be a good investment in the future, then it may be a good idea to walk in a small portion of your profits. And by doing that again, you're gonna locking some profits and minimize future risk. And you can always ribeye again in the future once the stock bounces in, pulls back down from that resistance level that you're of course using as your initial target. So just to give you an idea of how this works, if we look at the diagram that we have here on the screen, you can see that in this sample were buying 100 shares of the stock at $100. And the reason for that is because I go ahead and escape here. You can see that there's a bit of a support level form here and a stock and then starts to bounce off of that. So let's say that that's where we bought stock at $100 for 100 shares. Later on, let's say that there is a key resistance level right at about a $104. So that's where we set our initial target at when we're creating our investment plan. Once the stock does reach that $104 mark, we see that the stock is still very strong. We look back into the fundamentals and see that the company is still growing. And we decide that this is still going to be a good investment in the near future. So we only want to walk in half of our profits. By doing that, we sell 50 shares. Then at $104, the stock goes back a little bit off that resistance level, and we decide to rebuy are 50 shares at $102, giving us an average on our investment now of $101. Because when you revise stocks after already having a main position, it's not going to be two separate investments because this is the same stock. So you would have 50 shares still from $100. And then you would revive 50 shares at $102, again giving you an average of $101 on a 100 share investment. So that should just give you a good idea of how this works and how you can lock in some profits along the way and minimize your future risk by doing so. 10. Rebalancing Your Portfolio: So now that you're able to create an investment plan before even investing into the stock market. Another very important aspect is being able to properly rebalance your portfolio later in the road. Once you have several different diversified investment's already. So first and foremost rebalancing is when you periodically buy or sell assets in a portfolio to maintain your desired level of risk. Essentially, all this means is selling physicians that are performing pretty poorly. But maybe they haven't yet reached their potential risk level. And even adding more tier positions that are performing very well. The way that I like to recommend keeping track of all this using Microsoft Excel or Numbers if you're using a Mac to track each of your investments and to see how well they're performing. Again, you want to periodically look to exit your worst-performing positions, open new positions in add money to investments that are performing the best. So I'm gonna go ahead and right now actually go to Numbers and show you an example of how you can keep track of your investments using different information in different data about those investments to see which ones are performing the best and which ones are performing the worst. Alright, so generally speaking, this is going to be along the lines of how your spreadsheet is going to look when you are tracking data and keeping track of different information about your investments. You can see here I have three examples. Two of them are profitable and one of them is a loser. And if we go through here, we have first spy, SPY. And this was entered on 61 of 2019. And we entered at $275 per share with our total investment size of $27,500. Our risk level was $10 per share all the way down to $265, with a target of $295, which is $20 above the price that we entered. So we had a two-to-one reward to risk ratio. And right now the current price is at 281.6 above where we entered, giving us a, a $100 current profit and loss on this investment. So if you're going through and you're tracking your investment information, you can see that this investment is performing pretty well. And if you end up cutting in getting out of other investments in the near feature. And then you know that this may be a good one to actually add and go in a little bit larger. And so this investment, because it is on track to meet your target in the near future. However, if you're looking at the second one which is testlet T SLA, and you entered into that one on August first, 2019, $240 per share with a total investment size of $24 thousand, risking $20 per share with a $40 per share target. Again, giving you a two-to-one reward to risk ratio. However, on this one, the current price is $235, which is $5 below where we entered, giving us a current Profit and Loss of negative $500. You can see that this one is on target to actually hit its risk level. So if this is position that you've been holding for awhile and you go back to the fundamentals and the technical is, and you no longer think that this is going to be a good investment, then there is absolutely no harm in, of course, cutting your losses before they even reach her risk level that you have created from your investment plan. So this may be a good opportunity to then cut losses on this one and look to add that money to one of your better performing investments, such as five or such as our next example which is broke, you are okay you in, in this example, we entered into this talk on July first, 2019 with an entry price of $90 per share, giving us a total investment size of $18 thousand. And our risk is going to be $10 down to $80 per share with the target of $110, which is $20 above our entry price. Again, giving us a two-to-one reward to risk ratio in the current price of this one is very close to our target price, currently at $107 per share. So our current profit and loss on this one is $3,400. Obviously performing very well and is very close to the target price. So in this example of this would be one that you would look to potentially add into in the near future, you may want to wait for a pullback. Because again, in A's near the target price. And we know from the last section that our target price is based off of chart resistance. So many times the stock does start to pull back once it gets near that target price. But anyway, I hope this gives you a good idea of how you can track your investments and rebalance your portfolio along the way. Instead of just always holding and waiting for them to either hit your risk or your target, which is still a solid way to invest if you do have a great investment plan created. And if he did use all of the previous step to find the best stocks to invest in in the first place. However, it can of course be very beneficial to also rebalanced in exit out of your losers before they reach your risk level. And even add into your winners along the way to put more of your money into stocks that are performing well for you. 11. Understanding Order Types: Now before placing an order to buy, sell shorter cover, whether you're trading or investing. It's important that you understand the different types of orders that you can actually place. So I wanted to just briefly go over the three main order types that you're probably going to be using. And give you an idea of how they work in when you're most likely going to be using each of them. First, we have what is known as the limit order. A limit order is an order that will only execute if the stock gets to the price that you have specified or better. For that reason, limit orders are not guaranteed to be executed. Because there is of course, no guarantee that the stock's price is going to reach the price that you have input into your limit order. So if you look at the order entry box at the bottom, you can see that we have the stock symbol IB. We have 1000 shares selected, and we have the price type as limits. That's gonna be a limit order, of course. And then next to it, the price that you're selecting is the limit price, meaning that you're only going to get filled on your order at that price or better. So if you decide to buy, you would only get filled at 106 or anything less because less is better when it comes to buying. And if you're planning on short-selling or selling with a limit order of 106, you would only get filled at 106 or higher because of course, getting filled at a higher price when short-selling or selling is going to be you. For the most part, when I'm doing my trading and investing, I use limit orders to get in and out of my positions. Because generally speaking, based off of technical analysis and different key levels on the charts, I know exactly where I want to buy and where I wanted. So however, things of course don't always go that smoothly. So at other times you are going to use the different order types that we're gonna go over here. And the second and the next of those is what is known as a market orders. Market orders and order executed immediately at current market prices. So this does not guarantee that you're going to get a certain price and can cause what is known as slippage. To give you an idea of what we're gonna go ahead and look at the example at the bottom again. So we have the current bid of 109 for 500 shares. In the current ask for 112, which is one hundred, ten hundred shares. So for this example, if we were looking to buy 5 thousand shares immediately and we wanted to use a market order to do so. That market order is automatically going to buy into the current ask. So our order for 5 thousand shares is gonna get 1000 shares filled at $1.20. And then for example, if the next best ask is currently $1.13, for another 1000 shares, we would get our second 1000 shares filled at 113, and so on. So you can see that we're not going to be getting the best prices for our order BY using a market order. However, they do come in handy at times when you are urgent to get in or out of a trade or in and out of a position. Because it does let you do so immediately. And that can of course be useful when you're trying to manually cut losses quickly and just get out of a trade. Or if you're in a profitable position in the stock to starting to reverse against you, you can use a market order to quickly get out of the position and locking your profits. Now going to the third order type that you're going to be using probably pretty frequently. This is known as a stop order. It's going to allow you to automatically cut your losses on your trades are investments when the stock reaches your specified stop price. So essentially a stop order, or commonly known as a stop loss order, is going to allow you to again, automatically cut your losses. So that way if you're somebody that's new in the market and you don't quite have the discipline yet to manually cut your losses. Because we all know, of course it's easier said than done. You can use a stop order in what's the price of the stock? Gets the price that you have specified in your stop-loss order, it's going to automatically gets you out of that physician and cut your losses for you. So again, going back down to the bottom, let's say we bought the stock at $1.60 per share. Before getting into the trade, we know that our maximum loss that we wanna take is $0.10 per share. So we know that if the price gets down to $1.06, we would want to cut our losses and move on from the tree. So to set a stop-loss order, and for that example, we would set our price type to stop on quote. And we would set our stock price to $1.06. Meaning that if the price did happen to get down to $1.06, are ordered to seller position would become a market order and it would automatically sell at the market prices, getting us out of the trade immediately. And as I mentioned, this can be very beneficial for new traders and investors because having the discipline to manually cut losses is generally something that most new traders and investors don't have. So by having the option to use a stop order to automatically cut your losses can be a huge benefit and can actually take a lot of the emotion out of your trading and allow you to trade more based on your strategy, in more on your technical analysis. 12. How Investments Are Taxed: Alright, now before getting into this section, I wanted to preface this with an important disclaimer. I'm of course not a tax professional. My taxes are done by a professional accountant, which is of course recommended. Information in this section is simply general information about how profits and losses from investing in the stock market are taxed. So the information discussed in this will be based on a single investor rather than somebody filing joint are married. And it's going to be using the tax rates as of 2019. You know, of course will vary for those filing married or under other circumstances. Here. So I wanted to add this section just to give you an idea of how profits and losses, the stock market are taxed. So that way when the time comes to do so for you, you're not going to be totally in the dark. And you at least have an idea of how it's going to work and how much you are going to likely pay. So first and foremost, there are two main ways that your investments are going to be taxed. They can either be tax as long-term capital gains or short-term capital gains. Your profits will be taxed at long-term capital gains rates for any stock positions that you called for an entire year or even longer. The current rates for long-term capital gains are as follows. 0% with an income between 0.39375%.15 with an income between 39376.434550%.20, with an income of $434,551 or more. For the most part, long-term capital gains significantly lower than ordinary income tax in short-term capital gains tax, which we're about to talk about right now. So with short-term capital gains, any stock positions you hold for less than a year are considered short-term capital gains and are going to be taxed at ordinary income rates. So if you're doing shorter-term investing or trading, then you're most likely going to pay short-term capital gains on any profits made it by doing so, you made between 0, $9,700. Your tax rate will be 10%. Between 9701.39475 through tax BY 12391476.84200%, you'll be taxed at a rate of 22841201.160725% in your tax rate will be 242886.204100%. Your tax rate will be 323205.510300%. Your rate will be 35%. In 510,301 or more dollars, you'll be taxed at 37%. So as you can see, this is quite a bit higher than long-term capital gains for the most part. But of course, with taxes, paying more is actually a good problem to have because that means that you are making more money through your investments. Now unfortunately, we know that you're not always gonna be profitable. So if you have capital losses rather than capital gains, you can actually use up to $3 thousand of your capital losses to deduct from other income sources that you may have. So assuming that investing and trading is not currently your primary source of income. And maybe you have a rough year where you end up losing some money in the market, you can use $3 thousand of those losses too, and deduct from your other income sources, leading you to pay less in taxes from those other income sources. So that is of course, a nice benefit and something that you definitely want to keep in mind that's gonna give you incentive to always file your taxes regardless of if you had a profitable year or not. Now another great thing about trading and investing is that there's actually quite a few different write-offs that you can use for your investing in trading. For example, you can use computers, office supplies, chairs, desks, accountant fees, education like this class, service fees. So if you're in any chat rooms or signed up to any subscription services, stock scanners, and so on and so forth. All of those are examples of which you can use to actually write off on your taxes. And what that means is if, for example, you have $50 thousand in capital gains that you have to pay taxes on, but you have a total of $10 thousand in write-offs. That means you'd actually only be tax for $40 thousand instead of the total $50 thousand that you make. So keeping track of different fees and things that you pay for regarding your investing or trading and actually have a huge payoff when it comes time to pay taxes. So I recommend doing that and also make sure to ask your accountant because there are actually plenty of other things that you can probably use as if you are a trader or investor. And that can go along way, especially if it's going to actually bring you down to an entirely different tax rate. Okay? So I hope that at least gave you a good idea of how taxes work when it comes to investments. I know personally for me when I first started my first year paying taxes, I was completely confused and I had no idea about different types of capital gains. And I didn't know much about write-offs, let alone the different things that you can actually use for tax tradeoffs. So I hope this at least prepared to you a little bit for when the time comes to pay taxes on your investments. 13. Rule #1: All right, now as promised, I wanted to finish this class off with the top five investing rules that are going to set you on the right track to successfully investing in the stock market. First, we have, do not follow others. You want to avoid fallen buy or sell alerts from self-proclaimed gurus and even analysts. Majority of the time these tubers have absolutely no licenses to actually give you financial advice. And most of them probably don't even actually make a significant amount of money from their trading or investing. They actually make more from selling subscription services, telling when to buy and sell stocks, even though they're not successful by doing so themselves. So when you follow somebody else, you most likely don't know what kind of company you're investing in. And you can very easily be left at a loss when big company or a chat room or the analyst or so on and so forth, suddenly stops promoting that stop. The reality is that the best way to succeed in the long run is to simply learn how to invest properly and do so on your own, rather than following others who may have not actually taken the time to learn how to trade or invest themselves. 14. Rule #2: Rule number two is going to be respect your plan. We talked a lot about creating a solid investment plan in this class. But at the end of the day that investment plan is gonna be useless. If you don't remain this planned and you don't stick to it, it's entirely crucial to, again, remain this plan and respect your investment plan by exiting when your risk level or target price is reached. Now like we mentioned earlier in the class, it doesn't always have to be your entire position at your risk were Utrecht target price. But when it does get to those levels, you do have to keep in mind the reason that you created those levels in the first place. Generally there based off of a key level of support or resistance on your chart. It's important that you remember that in respect those levels by sticking to your plan and by doing so, minimizing your overall risk. 15. Rule #3: Rule number three is to not get emotional. We all know that this is of course, easier said than done. But if you think about it, a majority of Ball Street in institutions, hedge funds, investment firms and so on and so forth. The way that they do a majority of their trading and investing now is through computer algorithms. In one of the huge benefits of computer algorithms is that they are computers and their robots. They don't have emotions, they simply trade on best based on the strategies that their program to trade or invest on. So to succeed in the market, it's important that you try to be as emotionless as possible when it comes to actually doing trading or investing. You want to keep level headed while investing in avoid feelings of greed, anxiety, and fear. Which are three very common emotions that you're going to feel when you are doing you're investing. Wanted to avoid getting emotional about your investments, is to simply not look at your profit and loss until you've exited your position. Now if we go back to the section when we talked about rebalancing your portfolio. This may go a little bit against that because we talked about keeping track of your current profit and loss. And that is still very important to do. But what I mean by this, when it comes to this rule is if you're simply watching your profit and loss fluctuate Azure holding your positions throughout. And at different times of the day, you're gonna see yourself maybe go from, for example, being up a $100 to being up only $50. Or maybe can being a $50 to down $50 in watching that frequent fluctuation of how much money you're either up or down on your position is going to really feed into your emotions. It can cause you to exit your position based more on emotions rather than based on your strategy or on your investment plan itself. 16. Rule #4: Rule number four is do not buy all at once. Many times you may have the right idea about investment, which just had the wrong timing. At the end of the day, timing is really going to be half the battle when it comes to your investing. Yes, again, it's of course, important to find the best investment opportunities and to create a solid investment plan. But if your timing's off and you're buying at the wrong time, that's going to lead you to taking a lot of our necessary losses. So my recommendation to help avoid this is to start with a small position in adding to your physician wants the price confirms your plan. So for example, if you know your position size is expected to be $20 thousand, you may want to start off by only buying between 5, $10 thousand worth of stock. And then later on, once the price action or where the stocks movement actually confirms your investment plan and the stock begins to move in your favor and do what you're expecting it to do. And you can always add more into that stock and build your way up to your full position. Now keep in mind that this is entirely different from adding to a losing position. Like I mentioned, you want to wait for the price action to confirm your investment plan in the entire reason for this is to minimize our risk. So if you get into a position with a small position size to start with, and you start to lose money right away because the price action is moving against your investment plan, then you want to avoid adding to that losing position because you're going to only increase your overall risk. And that's of course not what we wanna do, especially when the price action is already going against your investment plan. 17. Rule #5: And last but not least, rule number five is to invest in the company, not the stock. At somebody investing longer-term and need to be investing because of the underlying company. Again, not necessarily the stock. You remember that if the company has strong fundamentals, meaning that there are growing company with improving financials. Generally speaking, the strong technicals are going to follow. So again, strong companies with improving financials are likely to have strong technical as meaning the price of the stock in the overall direction of stock are likely to follow and are likely to rise as well. So you have to keep in mind that the stock is not going to succeed in the long run if the company doesn't. It can be very tempting at time t or invest in a stock simply because of the technicals, even though the fundamentals may not necessarily follow. And I'm really urging you to avoid doing that. Because again, you want to invest in the company, not the stock. If you are interested in trading more based on technicals in a little bit shorter term, such as maybe just a few days or even a few weeks. That's called swing trading. And I actually have an entirely different class based on that. So I recommend checking that out next, if you are interested in doing that.