Stock Trading Simplified: The Complete Guide for Beginners! | Nayem Khan | Skillshare

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Stock Trading Simplified: The Complete Guide for Beginners!

teacher avatar Nayem Khan, Here to Help you be a Pro Stock Trader!

Watch this class and thousands more

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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

21 Lessons (1h 34m)
    • 1. What is a Stock/IPO?

    • 2. What ACTUALLY makes Prices go up and down?

    • 3. What is a Broker? (Traditional vs. Online)

    • 4. Types of Buy & Sell Orders

    • 5. Long Terms Investing vs. Swing Trading vs. Day Trading

    • 6. Technical vs. Fundamental Analysis

    • 7. Risk Management: Techniques

    • 8. Popular Charting Systems

    • 9. Reading and Understanding Charts

    • 10. Reading and Understanding Charts: Heikin Ashi

    • 11. Understanding and Using EMA (The Magic Line)

    • 12. Real Techniques: Gap Up Technique

    • 13. Real Techniques: Flag Pole Formation

    • 14. Real Techniques: Bounce Back Reversal Technique

    • 15. Bonus Lecture: Low Float

    • 16. Bonus Lecture: Shorting Stocks

    • 17. Bonus Lecture: Virtual Trading

    • 18. Bonus Lecture: How to Analyze Stock Market News

    • 19. Bonus Lecture: Risk Management Mindset

    • 20. Bonus Lecture: Trading Psychology

    • 21. Bonus Lecture: Sure Trader 100K Demo

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About This Class

Stock Trading Simplified : We make the learning process of trading stocks very simple, and break down key principles and fundamentals for all our students to learn and benefit from the knowledge which is available to only the industry leaders. Our goal is to give you a simple explanation of how to make money in the stock market by trading stocks, not only do we make it easy to understand, but we are also straight to the point, teaching you the techniques and strategies you need to know, to secure profits, and reduce loss. A complete course with all the basic fundamentals and technical analysis and techniques to use, all in one simple guide. For all level of students to benefit from.   

Trading stocks can be risky, especially if you're not equipped with the proper knowledge to reduce the risks to a minimum, but successful stock traders have unique strategies and techniques in place to reduce loss and make consistent profits over time. 

Before jumping into the stock market and risking your hard earned money, what if there is a proper guideline of fundamentals and principles, which every successful stock trader implements and follows, and now you can learn them as well and avoid making emotional decisions which are costly.

Not only do we simplify the entire learning process of trading stocks, but we cover the basics to advance level concepts, so there is something to learn whether you're a beginner, intermediate, or advanced level trader, you will attain investment and trading knowledge, which will benefit you for a lifetime. 

Regardless of how much money you want to start out with or make, the principles and fundamentals of finding, and executing a winning trade remain the same, we give you techniques and strategies that can be applied for different style of traders. 

With well over twenty topics covered in our course,  it’s designed to provide the most value for the buck. We teach you actual stock trading techniques and strategies, which you can start using yourself to make money. 

Not only do we focus on the technical aspects of stock trading, but in this course, you will discover how to train yourself mentally, in the “Psychology of trading”. To be well prepared for negative and positive days. Ultimately learning to be prepared to reduce losses to a minimum, using mental and technical techniques. 

Meet Your Teacher

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Nayem Khan

Here to Help you be a Pro Stock Trader!


Day Trader at Project Capital Investments

I used to sit in my calculus class, secretly reading Stock Books. After 6 Years of Studying the Stock market and being a trader myself, I'm here to share my knowledge so I can help new and upcoming traders by helping them get a head start into becoming a successful trader and avoid some of the mistakes that I made. 

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1. What is a Stock/IPO? : what is an I p o. And what does it have to do with a stock understanding? What an I. P. O. Is is one of the major building blocks of understanding how the stock market works. I peel stands for initial public offering Before we get into what that means. Let's first understand that companies doing AIPO to raise capital or money companies have various reasons to raise capital. It could be for expansion of business marketing needs or raising funds for a new product. Say you have a bakery called Adrian's Bakery. You've been in business for six months at one location, and you got a lot of positive feedback from your clients and customers. You want to expand by opening up five new locations and five different states. In order to do this, you need money. You know you will make that money back, but as of right now, you don't have the capital necessary to invest. So you have several options. You can go to a bank for a loan, in which case you'll have to potentially pay high interest. You can go to investors who may want a large percentage of your business and return you can try to go to your friends and family and ask them for money, but they may not be able to offer you enough, or you can file for an I P O. Which brings us to the topic at hand. An initial public offering, or IPO, is basically a company or corporation asking the public for a specific amount of money in exchange for shares of that company. That amount of money is divided up into hundreds, thousands or millions of pieces called security, also known as stocks, and then our purchase herbal by anyone trading in the stock market. To further explain, say you need $5 million to open up these five locations. That $5 million can be divided up into 100,000 pieces, which would make each stock price at $50 because five million divided by 100,000 is $50. The stock price of your company would then be at $50 say Investor A has $40,000 wants to buy shares of your company. He would be able to purchase 800 shares of your stock, the price of the stock and how much money and investors willing to trade will determine the number of shares they will be acquiring. A definition that I want you guys to remember is the following volume is the amount of shares equally being treated at any given time. This is important, since it will come up in later videos. The collection of all the stocks in the market are split up into different groups. These groups are called indexes, depending on the type of stock and various other factors given stock we place in a specific index. Here are the most popular index is the 1st 1 is the Dow Jones, which is basically 30 major companies with a track record of stability such as Apple, Disney, Walmart, Microsoft, etcetera. Next, we have the New York Stock Exchange, which is the largest stock exchange that includes stocks from every industry. Next, we have NASDAQ, another large stock exchange that is comprised of 4000 comments socks. There is also the S and P 500 which is a midsize stock exchange comprised of 500 stocks. And finally we have ot CBB, which stands for over the counter bulletin board, which is comprised of penny stocks and new stocks that are generally deemed to be unstable . Hey, stop can also be listed in multiple indexes at once. It is generally assumed that the popular stock indexes mentioned are more stable than some of the other less popular indexes. I hope this better helps you understand what an I P. O. Is and how it relates to the stock market. In the next video, we will discuss how exactly a stock price goes up and down and how investors can lose or make money. I'll see you guys at the next video. 2. What ACTUALLY makes Prices go up and down?: Now we come to the next topic. How does the stock price move up and down? And how does trading actually occurred? So now that we know what an AIPO is and where stocks come from, we're going to get into how and why stock prices go up and down. Another term for stock prices going up and down is called price action. Pre section is the term many traders use when they're describing the movement of a stock price in the upside or the downside direction. Two more terms that I want you guys to learn are able move is when a stock price moves up aggressively or quickly, and a bear move is when a stock price moves down aggressively or quickly. Now that we have the terms out of the way, we can look into what exactly causes the prices to change in real time. First, let's tackle some of the misconceptions that people have regarding price action. Miss number one. A lot of people assumed that stock prices are directly affected by profits and losses of a company, and Miss Number two is that people assume that stock prices air directly affected by changes in the company's management, for example, a new CEO being appointed. At this point, you must be thinking everything I thought about. The stock market is a lie. Remember, the key word is directly. The stock price is never directly impacted by the things such as profit and loss and changes in management. The stock price is indirectly affected by these factors. And so you must be asking, How exactly is a stock price indirectly affected? And the answer is psychology. The price of the stock goes up and down based on what the traders and investors think it's worth. And now you're probably thinking I'm crazy. How can a price change because of how someone thinks it's worth? That's exactly what I will explain to you guys. Now let us go back to the example in the previous video, if you recall Adrian's bakery stock prices at $50 and he is trying to raise $5 million eventually, traders will buy up all 100,000 shares that money and that money will go to the business owner. That $5 million went from the investors who exchanged their money for stocks to the business or company, and for the duration of the life of that stock, However, along the company remains public. The stock will also remain now. Before we proceed, there are a few definitions that we need to cover. First, we have the online broker, which is a website that allows the buying and selling of securities. Next, we have the cell limit order, which is a type of cell order which allows for the seller to determine the exact price that they want to sell the shares. And finally, the by limit order, which is a type of by order, which allows for the buyers to determine the exact price that they want to buy the share. We will cover the different type of buy and sell orders, along with a more detailed explanation online brokerage in the next video. But for now, let us continue. The act of a trade in the investing world is basically when a stock goes from person A to person B. So say one investor whose name is Jimmy purchased 100 shares of Adrian's Bakery. He purchased all shares at $50 per share, so he spent $5000 total. Of course, he wants to make a profit so he decides to sell every single one of his shares at $51 each and $51 times 100 is $5100 giving him a profit of $100. But in order to make that money, he would have to convert his shares into cash by exchanging the shares for US dollars, so Jimmy would then have to put a cell limit order at $51 waits. Then the buyer comes along, whose name is Lisa. Lisa was doing research online and came across an article in the local Towns newspaper and read about the success and expansion of Adrian's Bakery, and she decides she wants to invest in that company. So she gets online on an online broker and puts a by limit order at $51 instantly through the online brokerage website. The transaction is made in 100 Shares of Adrian's Bakery goes into Lisa's accounts. Due to this trade, the new price of Adrian's bakery has increased to $51 from $50. Thus, price action has occurred now that Lisa has acquired 100 shares of Adrian's Bakery for $5100 she of course, wants to make a profit, so she now decides to sell her shares for $55 each. She then puts a cell limit order at $55 waits. The next day, there is another news article about Adrian's bakery. In the news article, it explains how a customer reported finding a dead fly in one of the cakes purchased as a results. Health inspectors are re inspecting the big Guerry for hygiene and cleanliness. After the article gets out, people are no longer interested in buying shares of Adrian's Bakery. After waiting. Investors like Lisa cannot find anyone to buy their shares. Lisa decides that investing in the company is not a good idea, since the reputation is going down. So she decides to sell her shares at $48 instead of $55 out of fear that eventually no one will want to buy her shares, and it will be a total loss for her. So she then puts a cell limit order at $48. Then Jimmy, who is confident in Adrian's big Guerry since he already made a profit, buys Lisa shares at $48. Despite the negative article. The price has now gone from 52 to $48. Price action has once again occurred. This is how psychology indirectly affect stock price. Now let us consider the question. What if Jimmy also worried that Adrian's Bakery has lost a reputation for good and there's no buyers at even $48? Lisa would then lower her asking price even more. She may put her order at $40. Her loss would then be $10 per share, and since she has 100 shares, her loss would be $1000. Similarly, if the very next day there is another article that comes out with positive news that stock price could go up to $70 anyone who purchased their shares at $40 and then sold at 70 would have a profit off $30 per share at 100 shares. That's a $3000 profit. I think you guys are starting to see the full picture now. This is how human psychology, influenced by the news media and current events, can cause price action in its core. This is how stock prices go up and down. In reality, there aren't just Jimmy and Lisa. But thousands of investors and traders trade for a certain stock can happen multiple times per second. It all depends on what sort of stock you're in. The stocks of more popular companies are traded more quickly, and companies that are not as popular maybe traded more slowly. I hope you guys are now better able to understand price action in the next video. We'll go more in depth into the different type of trades of all my brokers and discuss what sort of feezer are See you guys in the next video. 3. What is a Broker? (Traditional vs. Online): So what is a broker? A brokerage account is a type of taxable account that you open with a stock brokerage firm . You deposit cash into brokerage account by linking it with your bank account. Once your account is link and you deposit cash, you can use this money to acquire stocks. Brokerages charge a flat fee for every buy and sell order, which is why it is always important to research fees and commissions before choosing a brokerage. Different brokerages have different prices and fees. The difference between a cash brokerage account and a margin brokerage account is that a cash brokerage account is an account that requires you to deposit cash and full before you can make any traits. With the cash account, you can only trade the money that you already have deposited. A margin account, on the other hand, allows you to borrow money based on the amount of cash that you have available in your trading account. So when an investor uses margin to buy or sell a position, he pays for them using a combination of his own funds in borrowed money from the brokerage . By using margin, you gain access to about 4 to 6 times the buying power of your account balance. For example, if you start off with $5000 your buying power can be up to 20 to $30,000 because of margin . Even then, margin could be very dangerous in complex. If you lose money using margin, you immediately get a margin call from the broker as soon as the money goes below the minimum requirements. This is called maintain its margin. Different brokers have different rates, but the minimum maintain its margin established by federal law is 25% of the bar money. I wouldn't recommend trading margin unless you are truly confident in your trading abilities and developed proven strategies over a period of time. Now that we understand how a broker works you to find the right one, which fits your trading and investing style and would be a good fit for your starting capital. But before we get into that, it is important to know that there are two types of brokers, traditional and online. Traditional brokers are what people used to use before the Internet. A traditional broker is an actual person that you can call and tell which stock how many shares and what price you would like to buy or sell the stock for. It's a person who input your order and manage your entire portfolio. Depending on the type of traditional broker you go to. They may manage your entire portfolio and even make investment decisions on your behalf, depending on what they deem to be profitable. All of which is done manually by the broker a few decades ago. This is how most people bought and sold stocks. The only way for people to trade was through a professional broker. There wasn't much control or flexibility, and definitely not as many features that we have today. Nowadays, due to the rise of technology and the Internet, any person who chooses to invest has the freedom to do so. In all, I broker is a website or software that we can use to do everything from transferring funds into the account, researching what stocks to buy, putting in the buy and sell orders, and managing everything from a to Z. Some of the reasons why I personally prefer all in brokers versus traditional brokers are the following. I have full control over the trading process without any third person involved. Falling brokers are almost instant versus traditional workers who naturally take longer. Fees are almost always higher with traditional brokers because you're using a professional's services instead of doing it yourself. When it comes to the online brokerage, the best way to go is using a software broker. Even though there are websites that you can trade directly from, they are almost always slower with executing a transaction than software's. Treating soft words are almost always instant versus using a website, which may require you to go through multiple pages before you could put in a trade. When it comes to day trading, the most important factor is speed. A second delay can cost you a lot of money. It's important to remember that the stock market moves very quickly, especially if you're dealing with highly volatile stocks. Which is why the faster the speed of the trade, the more money you can make. So even though there are many website based online brokers, the software's are the ones we will cover. In my opinion, the best three Softwares that are good for day trading are speed trader lights, be trader and short trader. We will go over the basic features you need to look for when finding the right brokerage firm that fits your need and starting capital. The way all brokers make money is through charging traders fees and commissions. A commission is what brokers charge per transaction or trade, so they will charge you a flat feet every time you buy or sell a stock. For example, a popular online broker is Straight King, which charges $5 for trade while e trade charges $10 portrayed. The amount of commission you pay is not affected by the number of shares you buy or sell, but instead it's a flat feet per transaction. Traditional brokers can charge you anywhere from $3200 portrayed, depending on the company you're using. Some online brokers will charge you per share. Usually they are a few cents, or just a fraction of a few cents per share. There are many important differences between brokers, so make sure to ask plenty of questions about the brokerages with the customer service department. Even though online brokerage accounts offer plenty of tools and features, the possibility of losing Internet connection is still out there, so make sure you have a stable Internet connection. You should be asking questions like, How can you access your latest transactions? Or is the brokerage mobile compatible? Can I access a live broker to sell a position at any given time and other questions that are related with many brokerages specializing in different areas and so many options? Comparing all the possibilities is key to finding the right online brokerage. The most important factor. I always look for our trading commissions. These commissions and fees can add up, and if you're not careful, it can add up to a big loss in your overall portfolio. You want to keep the cost down as much as possible so you can focus on making profit. It is also important to note other fees, like direct routing fees, especially for trading, which occurs when you deposit and withdraw money from the account. The second factor, as mentioned earlier, is customer service, 24 7 Support is ideal, whether it is live online chat, email or direct phone call. Having access to quality customer support can really save you from having bad days turned into really, really bad days when a trade isn't properly executed due to the Internet connection or speed. The third factor is the training tools. All in brokerages, which offer a variety of tools on their software, is extremely useful, especially when you have access to a live news feed and multiple displays of charts. It saves time to have everything in one place with multiple screen setups, which is always beneficial, especially when you dive into technical announces using advanced charting tools. Screeners to find stocks hot keys also make the training process much easier. Double two puts is another thing to look for because they provide live bids and asking prices and option tools to test out trading strategies. These are just a few commonly used tools, but there are plenty more tools offered by online brokerages. Some also offer a free trial so you could get a feel for the software before you start trading in the next video, we're going to cover the different type of buying sell orders 4. Types of Buy & Sell Orders: In this video, we'll be covering the different types of buy and sell orders, which will execute the transaction to either buy or sell a stock, their two main types of orders. Market orders and limit orders. You can either have a market by order if you are buying or a market sell order. If you are selling. Likewise, you can have a limit by order if you are buying or a limit sell order if you are selling. So what is the difference between these two order types When you choose to execute a market order, whatever the prices in real time, that is the price you will either buy or sell shares of the stock. If you recall in the previous video, there can be many trades, a second or even multiple trades within a single second. Due to this volatility, price action can be quite aggressive, meaning stocks can quickly go up or down in price and fluctuate. And if you want to buy shares of a stock at a certain price by the time you submit the market order, the order price of the stock may already change. The same thing can happen if you're trying to sell. You may want to sell the stock at a certain price, but by the time you complete your order, the price may already have gone down and you can lose potential profits. So the solution to this is putting a limit order. A limit order allows you to specifically assign an exact value at which your online broker will either buy or sell your shares. There are, however, many successful traders which only trade using market orders. The reason that ISS is because some stocks that these traders trade moves so quickly sometimes wasn't even fractions of a second that there is literally no time to put in a limit order, since you have to type in the exact value, these traders use special software that allow them to buy and sell as quickly as double clicking with a computer mouse. We will cover this type of trading and the types of software necessary for it in later videos. But for all other stocks that don't necessarily move as quickly as a second or fraction of a second, using limit orders would be most appropriate. There are two type of orders that are important to know stop orders and training stop orders. It stop order is a specific type of order that allows for reduced risk in today's volatile market. Depending on the type of stock you are trading, it can dramatically go down after you've gotten to a stock. For example, let us say you purchase 1000 shares of Company X at $5 a share. By investing $5000 Company X may dramatically go down to $2.50 within seconds, leaving you with your loss of $2500. To prevent this, you may put a stop sell order at $4.50 which basically communicates to the online broker. If this price goes below 4 50 than sell right away, it's sort of like a price action safety net to reduce losses and manage risks. This way, if the stock price of Company X goes to six or $7 you make a pretty good profit. But if it starts going down, you are stopped out at $4.50 was a small loss of $500 versus the hefty loss of 2500. If you sold at 2 50 it is highly recommended to you. Stop, sell, order or stop loss, which is a more common term used by traders. The final type of order is a trailing stop order. A truly stop order can be considered a smarter version of the stop loss. What a truly stop order does is it trails or follows the price as it moves up, also moving the safety net higher and higher as a price goes up. Let me give an example to better illustrate this concept. See, you have a training stop order at $4.50 while the price of Company X is at $5 you're trailing. Stop amount is 50 cents, which is basically the difference in amount between stops. If the price of Company X becomes $5.50 the stop loss would automatically be moved up to $5 securing you from a loss. And if the stock price of Company X becomes $6 your stop loss with trail to the next stop, which is $5.50. As the price of the stock increases, the stop loss follows it up, securing your profits along the way. So if after it reaches $6 it tries to go back down to five. You will automatically be stopped out at $5.50 securing you a profit of $500. This is how the mechanism behind the trailing stuff functions. It follows the price instead of being just a fixed amount. So again, it's like a moving safety net that follows you as you climb up the mountain higher and higher instead of being in a fixed position at the bottom. Truly, stops are also a commonly used type of order by many traders. I hope you are now better able to understand the different types of orders. In the next video. We're going to be discussing the different type of traders. I'll see you guys there. 5. Long Terms Investing vs. Swing Trading vs. Day Trading: There are three major types of traders. Long term investors. Swing traders in Pattern Day traders, also known as Day trader. Over the past several years, the term day trading has developed a bad rep. Many people have been unsuccessful, but just like everything else in requires discipline and proper knowledge to be successful at the end of the date. Whether you become a profitable trader depends on your knowledge and the skills you obtain over the years. If you rush into trading without the proper knowledge and discipline, you will inevitably have higher chance of losing money. So it's crucial toe follow through with discourse to minimize the risk and maximise potential profits. Now let's go deeper into the three top of traders. The three type of traders are classified, depending on two things. The duration of the time that a specific stock is held and the type of stock that is being traded. For example, in long term investing, the types of stock that are traded are usually higher in price. There is no exact number, but these are usually the stocks that are not as volatile. These air stocks that may go up 5 to 10% per month. Traders air usually in these positions for months or even years. The purpose behind long term investing is like a savings account with a high interest rate . But instead of interest, you enjoy actual profits through dividends and the increasing stock prices. This sort of trading is not for those looking to make a living off trading. Instead, For those with extra capital looking for investment opportunities, the second time of trading is called swing trading. Swing trading is a slightly more popular type of trading, where the stocks are usually medium sized companies with average amount of volatility. The traders that swing trade don't usually hold a stock longer than a few days or weeks at max. These stocks, due to high volatility, can go up 30 to 80% of month or more. In some cases, swing trading is considered high risk compared to long term investing. Because of the nature of the stocks, these stocks can move up 1 to 3% of day and two weeks of consistent upside price action can be an increase of 14 to 42%. Pattern day trading, on the other hand, involves traders buying and selling multiple stocks in the same date. During market open hours Pattern day traders can stay in a position for a few hours to just a few seconds. The main difference between pattern day traders and swing traders is that in pattern A trading, you never stay in a position longer than a day. These are the stocks that can move up 20 to 30% or more in just a few minutes in either direction. These air considered the riskiest traits but also have a huge upside if done properly. Many of the traders that trade for a living are patterns traders and in this course, and the later chapters rule go deeper into discussing techniques on how to be on the safer and more profitable side of pattern A trading because pattern trading yields the highest amount of profit in the shortest amount of time. But be advised, you always will have losses. But understanding how to keep the profits higher than the losses is where the work goes in . You can lose thousands within seconds, or you can gain thousands within seconds. Your grasp and expertise of the crucial concepts in this course will influence your success as a trader. In the next video, we'll be covering technical versus fundamental analysis 6. Technical vs. Fundamental Analysis : in this video, we will cover two very important topics. Technical versus fundamental analysis before any trader gets into a trade while he or she is deciding what stopped to get into there was a certain degree of analysis that is required. There are many different methods to analyzing a stock, but no matter what method you may uses a trader, it would fall under either technical or fundamental analysis. Technical analysis is active Analyzing a stock's chart. It means looking mainly into a chart and trying to identify potential patterns. Technical analyst may use the previous price action of a certain stock to predict the future price action. There are many ways to analyze a chart, and special charting software or certain website will allow you to use specific technical indicators to provide more insight in the chart of a stock. Fundamental analysis is the active analyzing a company by primarily looking at the company's essentials, such as the amount of income, profits, sales and losses of a company. They also look at earning reports and how well they measure compared to previous years or quarters. They also may look into who the CEO is or the board of directors or other fundamental essentials. These analysts pay close attention to all other essential information pertaining to the actual company and not so much to the actual chart itself. Many traders will use both technical and fundamental analysis to paint a full picture of the stock they're getting into. Yet many traders primarily use technical analysis. Depending on the type of trader you are or want to be. You may either use one method of analysis or both. In the next video, we'll be discussing trading psychology and the emotional discipline that is required when trading. 7. Risk Management: Techniques: when it comes to stock trading, the absolute biggest risk will always be losing. Like if you don't implement proper risk management techniques, you can lose tens of thousands of dollars within minutes or even seconds. I've seen extremely experienced traders whose discipline for a moment and lose over $25,000 within minutes. The last thing you want is your hard earned money going down the dream. The first rule when it comes down to reducing risks is the usage of trailing stops. If you remember from the previous videos, we covered the different types of buy and sell orders. One of the type of orders was trailing stuff by using a trailing stop. You provide a tight safety net that will follow your money as the stock price goes up. But if it tries to dramatically come down, it will protect your funds. The mechanism behind implementing the trailing stop varies from broker to broker. It is extremely important to learn how to use this function properly, whether it be a software or on a browser. The trailing stop can be implemented in two ways. Percentage trailing, stop or amount truly stop. In the previous video, I gave an example of how the amount trying Softworks. It basically gets triggered once the price of a stock decreases by a fixed amount. The other method is by percentage. A percentage based trailing stop will automatically sell all your shares once it decreases by a certain percentage. The percentage that you should assign for the trailing stop may vary on the type of stock you're getting into. Stocks with higher volatility will naturally need a looser stop loss, while stocks with less volatility can use a tighter stop loss. Despite this hour, recommended trailing stop would be a percentage trailing stop 3%. The strategies you will learn later in this course fit quite appropriately with this amount , but it is also very important to understand at this value will not be most appropriate for every stock. But if you have to choose a value and there is even the slightest amount of confusion as to what value that should be, you would be safe with a 3% chilling stuff, the next rule that you can easily implement to reduce potential losses and secure profits. It's selling half of your shares when you reach a decent profit for example, if the stock you purchased made a profit of 10% you would sell half and keep the 5% profit . Then let the other remainder of the shares carry on in the case that the stock keeps going up. That way, if you make a profit, you'll add to your profit. And if it doesn't, you still meet 5% profit. One things that I must tell you from one trader to another. Never, ever give a stock the benefit of the doubt. Never trust a stock with your money for too long. As soon as you make a decent profit, you've reached at least 50% of your goal or target price. You should instantly sell half of your shares. By doing this, you do the following first guarantee profits, and second, the other half of your money can either go up, in which case you can make even more money. Or if it goes down, you at least made a good profit on the first half of your money. On top of that, remember that you have a 3% tight trailing stop on the other half of your money, so even if it does go down, you only lose 1.5% of the total amount that you initially entered. This technique that I mentioned is extremely important, and when coupled with the training stopped rule, you can drastically reduce your potential for major monetary loss. If you're treating with a software, you should assigned hot keys for each one of these rules, so you can quickly implement them while trading. The next rule is slightly more advanced, but definitely something that should be utilized. There will come times when you put a by order for X amount of shares of a certain stock. Your order may not get filled fully. What I mean by that is, say, request to buy 100 shares of a certain stock at a limit order of $5. Maybe just 20 of your shares will get filled because there weren't enough shares being sold at $5 now that exact stock that didn't get filled has gone up to $6 and you're feeling frustrated that you could have made more money and as a result, you just go ahead in and try to get 80 more shares at $6. This is a huge mistake that a lot of traders do the moment you get in at $6. You broke discipline because of frustration instead of getting in at a higher price than initially planned, wait for another good trade opportunity to emerge or get into a different stock overall. But don't get the rest of your shares at a higher price. If your shares didn't get filled, just let it go and sell whatever shares you did get at a profit and call it a day. The next rule is don't hold on to a stock that doesn't go as planned. Before you get into a trade, you analyze the stock on the chart. You make a certain prediction of that stock, and you think it will go up for a certain time at a certain amount and you will cash out when it reaches that amount. What do you do when you get into that stock and it doesn't go as planned? The answer is, you get out whenever a stock doesn't go his plan. That means your prediction was not as accurate as expected, and the stock immediately becomes dangerous territory. Yes, it could be that the stock will go up later in the day. But instead of waiting around, you can invest your money elsewhere and make it into a profit. So once again, if that stock doesn't move as you expected to, don't hold on to it. Sell it right away at whatever profit you have. The final rule is Do not revenge trade. There will come times when you think you will make money, but it will be a lost day. Lost days are normal, and it is something that even the most experienced traders go through. Don't get angry and frustrated and try to take your revenge on the stock market by aggressively looking for a profit. To make the moment, you feel that anger and frustration you are no longer qualified to trade. Stock trading is all about keeping a clear and logical head. The biggest mistakes are caused when we get too emotional. If you had a bad day, trading are feeling angry or frustrated, it is time to turn off the computer and take the day off. The rules discuss in this video are extremely essential and should definitely be implemented every single day that you trade. The last thing we want is for our hard earned money to go down the drain because we were not careful enough. I definitely recommend watching this video once again at the end of the course just to refresh your memory. That's how important risk management is. In the next video. We'll get further into the psychology and general principles of risk management. See you guys in the next video. 8. Popular Charting Systems: Hey, guys, welcome to our first computer presentation based lesson on our course. Certain things need to be shown on actual computer, and not just with visuals and animation. So here. So, first of all, there are hundreds of different charting software and Web sites where you can view a chart . So the first thing you should know is that there are a few components or features that majority of the main shining software's or websites will have, and those are the ones that we will be focusing on. I personally use East Signal. It's really comprehensive and detailed in its functionality, but it is a paid system, which costs about $152 a month. So if you're looking for a free or cheaper option, I would definitely recommend going with either trading view or FINBIZ, even though East Signal does have Super plan for $47. Unfortunately, that option does not have the streaming real time data, which is required for any pattern the trader, so they can kind of see live updates of the stock per second per minute instead of, um, the 15 minute delay. The other option is FINBIZ, which does provide real time streaming charts for just 39 50 per month, which is way cheaper if you get the annual option, which is here, UM, which ends up being 24 96 per month. You just have to pay up, I think, to 99 50 up front. And then we have trading view, which does charge 1995 per month for streaming charts. So it's really up to what you want to go with. But from my experience, East Signal would be the best option for the most pro traders. I don't have an issue with using a highly technical software, and the good news is they do have tutorials if you don't know how to use it right away, finishes. On the other hand, I like just because it has a lot of screening abilities and allows traders to sort through thousands of charge and a very clear cut straight forward method. And finally, trading view is good if you're just looking for a straightforward Web based charting system . Unfortunately, it doesn't have all the screening abilities that fingers has, which is why I personally preferred over trading view. But the interface is pretty smooth and easy to the eye. But I did want to mention before you guys go ahead and jump on one of these charting systems that most desktop based trained software's already come with their own charting system, which is almost as comprehensive as the signal. When choosing a desktop based software, I would either go with lightspeed trader sure, trader or speed trader. You can look into all three and figure out which ones you would prefer. There are, of course, other Softwares you could use, but these three are my top recommendations just because they're pretty flexible when it comes to pattern trading. With that being said for the sake of the course, just because not everyone will go with East Signal, which is the most pro option, I will be showing you guys how to reach arts on trade view and Finn vis specifically. All right, that's all for now, for popular trading platforms. I'll see you guys in the next video. We'll be covering how to read and understand charts 9. Reading and Understanding Charts: Hey, guys. So in this list we will be going over an extremely crucial part of the training process, which is reading and understanding charts. My go to method of analysis is technical analysis. You can say I use 90% technical analysis and just 10% fundamental analysis. The main thing that leads me into making the decision off trading a stock or not is the chart itself. The chart needs to speak to me, and what I mean by that is it needs to be very apparent through a specific set of technical criteria that a stock is going to give us some good upward price action. But before the chart is able to speak to us, we need to first speak the language of charts, and that's what we will be going over. Now. We will figure out what the main components of a professional chart are and how to read and understand each component. At first look, it may seem intimidating, but once you understand what everything is on a chart in what each thing stands for and what it tells us, reading charts will become second nature. So with that being said, let us continue So here I am sign into my trading view account. It is not pro version just because, like I mentioned before, it's not my primary charting system. But that's okay because we'll be able to view what we need to view, especially since its after market hours. And it's not like I'm live trading, so I don't even need streaming charts for this presentation. So the first thing you should do is go ahead and sign into trading view. You want to first search for the stock of your choice by putting in the ticker symbol in the search bar. So I'm gonna look for a company called Future Fintech Group, which is F T f t OK, and then when the company loads, you just want to click interactive charts just because here we don't get much information. But when you go to interactive charts, you can see a lot more stuff. So once that pops up, I'm just gonna click settings, and I'm gonna go ahead and change my theme to Dark just because this resembles most pro level charging systems. The next thing you want to do is go in and click here and then change your interval to either one minute or five minute charts. But I'm gonna go with one minute chart just because you are day trading, and it is important to use either one or five minute chart intervals. The next thing you do want to do is change your bar styles to hike in ASCII. It's basically candle bars, but a smoother look that connects all the price action. We will cover how to read this type of chart in the next video, but for now, let us continue. The first thing you'll notice is that on the X axis, this is a representation of time, and they do use military time and using military time for charting. Software's is universal, so you definitely want to get used to the 24 hour clock system. The Y axis is, of course, the price of the stock at any given time. There's also a lot of red and green going on. The main chart represents upward price action, with green in downward price action with red off course. This could be customized on charting platforms, but I would not recommend doing so just because green and red are standard and has always been standard for charging systems. One thing you want to go ahead and do is make sure that you have volume enabled on the bottom. Now, when you first log in and you search for a stock, it should be shown. But I just want to show you guys just in case it's not showing. What you want to do is when good indicators that pops up. You want to search just for volume and then just click volume, okay? And then we'll be able to see volume right here and in terms of understanding the volume charts right here, never. The bar is read. There was a spike in volume during the price going down, and vice versa for a green bar, which basically means there was an increase in volume while the price was actually going up . Now that we have the basics covered in the next video, we will be covering how exactly to read hiking ashi candlesticks. So you guys there 10. Reading and Understanding Charts: Heikin Ashi : So now let's figure out how to read candlesticks. The first thing to note is that actual, with of the cattle stick represents the set interval. So since we have our interval set to one minute, the with represents one minute. The next thing on explained is that there are several pieces of information that we can get from a single candlestick. The first piece of information that we get is did the price go up or down relative to the last candlestick? This is obviously shown by the color of the candlestick itself. It's the next piece of information that we get is what was the actual open time of the stock meaning when the new interval started. When this minute started, what price was it at? And that is signified by the top bar of a red candle or the bottom bar of a green candle. Okay, so just drops a marrow seed. Gasquet, I kind of see Okay, So once again, the first piece of information that we get is did the price go up or down compared to the last candlestick? And that is signified by the actual color itself and the second piece of information that we get is what was the actual open price at the start of the interval. Okay. Which is represented at the bottom of a green candle or the top of a red candle. The next piece of information that we get going to change the color of the Aral for this example. It's going yellow. Is at what price did it close that? Okay, so it is just like the bottom is opening price of a green candle. The top of a green candle is the closing price, and the bottom of a red candle is its closing price. All right, so right here. This right here is the closing price. And this right here is opening price of a red candle. On this right here is Theo opening price of a green candle and destroyed. Here is the closing price of a candle and the final piece of information that we get. And I'm gonna change the color to Let's say pink. It's from this guy right here. The wick. This is called the week. Now the wick basically represents the actual range off the price. So even though this guy right here, this green candle opened over here and closed here. It actually went up all the way to the top of the week and ended up closing here. So this was the range of the price during that one minute window or interval. And similarly, this guy right here, this candlestick, even though opened over here at 5 15 and ended up closing around for 90. It did dip all the way down to about 4 69 before closing around here. And this is the exact reason why most traders used candle bars because line or area charts don't provide all this information. They only give you one piece of information, which is what the price was at. But with hiking, ASCII, candle bars or any type of can a barge, you're getting a lot more information than just where the prices that and as a day trader, you want to have as much information as possible at any given time so you can get the full picture. In the next video, we are going to be covering the most important technical indicator, which is what's called the moving average. See you guys there 11. Understanding and Using EMA (The Magic Line): Hey, guys. So one of the first things that I like to do when it comes to technical analysis is enabling the viewing off the moving average. So you want to click on indicators, which is right here, okay? And you want to search for the moving average. There's many different types of moving averages, but the best, in my opinion, is called the exponential moving average. So you just want to search that up. So first of skin looking at look up, moving average and right here moving average exponential. So once that's done, just gonna excel. If you notice right here, it's called Emma Exponential Moving average. There's a little number right here, okay? And that basically represents the interval at which the exponential moving averages being told to calculate the moving average out, and it basically represents the interval of time that the average price is being taken from . And it's not just a static average. It's a moving average because the window is moving according to the window off the time interval itself. So the first thing that I want to do is set the interval to 20 and the way you do that is there's a little settings button right here. OK, cold format. Just gonna change that to 20 and then press, OK? As you can see, the number on the right side is the same that color as the actual line itself. And that's how you know that a specific indicator is represented here by matching up the same colors. Basically, the reason why we go with an exponential moving averages because it favors the recent prices more than the past ones. So it's more accurate and serving its purpose for us. So now we come to the question, What's the point of the moving average signal? It is also referred to as a magic line. So I want you guys to notice something. Pay attention to the magic line, how it reacts to the chart itself, okay? Or how the chart prices react to the magic line. If you pay close attention, you'll notice that every time it touches the magic line, something happens. Right? So here it touched, starts jumping up, touched again, touch again, touched again, all right. And the best piece of information that we can get from this exponential moving average or the magic line is we can basically identify whether the stock itself is an uptrend or downtrend sore right here. If you pay attention, it's kind of going below the actual magic line itself. And as the stock prices went down, the magic line also started curving. Okay, so the actual direction of the magic line itself tells you whether or not the stock is in an uptrend or downtrend. So, for example, here, if you look at the direction of it, it was so you know that the stock is gonna basically go up since it's in an uptrend. And right around here, it did kind of like a curve. And, for example, if say, you know, we don't know what's gonna happen next If we seem this right, if this is always see and this is the time for were at any given moment, we basically can tell that. Okay, there's a downtrend coming right, and just like we predicted, that's kind exactly what happens. All right, And then when the stock prices start going up again, there's a bit of a reversal. Is a very aggressive reversal here, okay? And we see the magic line kind of just curve upward. And that's how We know that we're also going up in an uptrend and usually when it meets for extended amount of time, then that kind of represents consolidation, where the stock is kind of breathing or taking its time. It's basically catching its breath from the run itself. Knowing whether a stock is in an uptrend or downtrend is extremely important. To know what's really cool about the magic line is that if I see that the stock is in an uptrend and I get to jump into it, I might be able to profit just by the mo mentum and the uptrend price action on the stock itself. Even though this alone is not one of our strategies, it does give us a lot of good information that we could use to gain deeper insight into chart itself. So definitely used the exponential moving average when analyzing charts. Fortunately, the things that we covered on this chart and in this video and the previous one are the major tools we're using in pattern a training. There are more features that other traders would need, toe, learn and utilize. For example, he would need to use our site or relative strength index if you are swing trading. But since this isn't a course on swing trading, it won't really be necessary. If you just understand the concepts in this video, you should be able to understand all the strategy videos that we have coming up. I also did want to mention the training view allows for a lot of cool features, such as drawing trend lines and like arrows like I was before, which can help you identify chart patterns and illustrate ideas and concepts if you're sharing your stock ideas on your trader dashboard or other social media. But that being said, it does wrap it up for understanding reading charts and knowing the functionality and usefulness of the magic line in the next video, we'll be going over the importance of Level two quotes and how it can give you a deeper insight on price action. 12. Real Techniques: Gap Up Technique: Hey, guys, welcome to the first actual trading strategy. And of course, the strategy is what I like to call the gap of strategy. So first thing, first, I'll be using FINBIZ in the screening process for the strategy. FINBIZ, as I mentioned earlier, has pretty decent screening abilities and even provides premarket data, which is exactly what will need to use for the gap of strategy. Unfortunately, you won't be able to see intraday charts with the free version, so you'll have to get the pro version. I posted a link below the course video so you can sign up. You can also use other screeners, but just make sure they have the ability to set specific criteria for intraday trading. Some free screeners give you decent screening abilities, but unfortunately they don't provide much intraday data. In my opinion, FINBIZ is not only one of the most cheapest options, but very functional and versatile in its screening abilities. The market is currently closed at the time of making this tutorial just because it's not a good idea to multitask while training during market hours. When you trade, you need 100% focus and so we will be discussing the process in which you would follow for the strategies instead of doing them in real time. But typically, in order to do the gap of strategy, you'll need to start doing research at around 9 a.m. On the reason why that is, is because stock prices gap up when the market opens at 9:30 a.m. And a lot of price action occurs in the first few hours of the morning, so make sure you wake up early enough, so you're good to go during premarket hours so you can do enough research. But one thing that I need to know is that pre market data starts being available at 9 a.m. On FINBIZ. So if you're going to due process, so if you're doing this process before nine AM, you'll just have the results of the previous day and not the same exact date. So you need to start exactly at nine AM in order for the process to work. So let us continue. The first thing you want to do is sign in, defended is, and once you're signed in, you want to click on screener, which is right here once you're here you will notice a wide array of screening abilities. You have different tabs here. Descriptive, fundamental and technical. You want to click All right here on the right side. So it shows you all the screening criteria at once. And if you notice here, there are a total of 7113 stocks available to us, and we need to know the exact right stock to invest in. So we really need to filter out a lot of stocks by doing plenty of research. So the first thing that you want to do here in the Gap criteria I want you guys to set it up to this value right here, which is up 2%. This is a minimum gap. I would recommend trading with anything less than that I wouldn't really recommend. So when you set the criteria to up to 2% and we'll show you all the stocks that are at least gapping up 2% the next thing that I want to do is all into left side. There's a price since pressure here, you wanna click this scroll all the way down and set custom. Okay. Here. I'm basically able to put a range and I want my range to be a $1 to $15. This is going to further now the stocks that I could trade. I prefer stocks above $1 just because they're considered safer. Don't get me wrong. In many cases, stocks that are under a dollar can be stable. But here we have a nice number of stocks available to us, and I'm okay with this result. If you have too few stock showing, you can always adjust this according to how Now your results are there to future shown, and it's probably better to make a looser arrangement set of such a tight price range. I'm going to set a few more criteria which almost always air good signs for a stock. The 1st 1 is having decent volume. So you want to go over here on average volume and a nice range is under a 1,000,000 by experience. I've had a lot of walk with stocks that are usually under the range of one million average volume. Next, you definitely want a positive GPS growth. So if you recall from the previous video, he P s stands for earnings per share, it basically, is the amount of earnings increased, divided by the amount of shares available. Positive GPS represents positive company. So here's consent. My E. P s growth quarter to quarter to positive. And finally, I want a company that has a nice low debt. Having lower death is almost always a good sign and show stability. So here you can see lt depth equity, I'm going to set it toe low, and now we have a nice 20 stock shine right here, which is a great amount to work with. So now that we have a decent amount of treacherous at, the next thing you want to do is search for a catalyst. What I mean by that is you need to figure out why is the stock gapping up? The gap up has occurred for a reason. There has to be a reason why the stock price will jump up so high right out the gates of opening, and that's what we need to find out. There could be major breaking news. It could be new earnings report or public relations announcement. Your job is to identify what's causing the gap up and process that bit of news to give you more insight little stock itself. But before I show you guys how to do that in FINBIZ, there's a few more options that we need to set. So once we have a list of stocks, you need to click on charts right here. Here we can finally start seeing charts, but this is not going to give us intraday charts. So in order to do so, we need to click Line, which is right here instead of technical technical view, is basically designed for swing trading or investing, so it's not as helpful when it comes to pattern trading. Now, if you'll notice we have more options for timeframe, I want you guys to click one minute charts and then set your auto refreshed about 10 seconds. This will give us constant live updates. Here we can finally start seeing charts in nice premarket data. Now that we have our view set up, the next thing I want to do is click on the news tab, which is right here. Now. Each stock has expanded to show us even more information since we're trying to identify a good catalysts. You want to pay close attention to the new section, which is right under the chart itself. We're looking for a headline that comes out most recently, and it's causing the gap. So as I'm scrolling, I'm looking here at the actual date itself. And the last trading day was the 22nd. So we're looking for a headline that came up either in the morning of the 22nd or the evening of the 21st. Okay, so here we have to send 14. That's not too recent. Uh, dis company Chief Life Science, Nowhere 14. That's definitely not recent at all here. December 22nd was the last trading day and perfect here. Okay, so this is this news article came out at 7:30 a.m. Which was the morning of December 22nd was, which was the last trading day. Okay, so I'm gonna go ahead and open this news article in your tap, and if we open up the news, it reads. Arrowhead Pharmaceuticals files regulatory clearance to begin phase half study off arrow HBV and further basically reads. Ariad Pharmaceuticals incorporated today announced that filed regulatory submission to begin phase house of, uh, it has been developed to potential curative therapy for patients with chronic hepatitis B virus infection pending approval are had intense. Proceed with these, uh, healthy and well is multiple. Does escalation study develop safety talk? This is really great. Any pharmaceutical company that gets an approval to continuous study is progressing. As a result, Traders will most likely react in a good way, causing an influx of traders. So this stock right here would basically be in play. And before going any further, I'm going to switch to Candle so we get a nice view. And, as you can see, if you got in the morning during the open time, you definitely would be able to write us the top for a nice profit by afternoon time. The Gap technique is one of the less popular techniques in comparison to the strategies that are coming up next, but definitely one that could be used to generate profit. The main thing to look for it's positive news. Just make sure to always get in with a tight 3% trailing stop, which you should automatically have set up through your brokers software. Some mornings there will be plenty of stocks can be traded using the gap of technique and some mornings, there will be none. That's why we teach multiple strategies and not just one. Next video will be covering the flagpole formation technique, which is probably my favorite training strategy. See you guys in the next video. 13. Real Techniques: Flag Pole Formation: Hey, guys, welcome to the Flagpole Formation Strategy Video. This is probably my favorite trading technique in the book. It is really a beautiful set up, and with enough practice, it becomes really easy to identify. Identifying Flagpole doesn't require the same screen process as the gap technique. All you need to do is catch a stock that is having an uptrend, meaning going up in price and wait for the visual flagpoles. It's actually super easy, so easy you'll be wondering why more people don't use this technique. So if I go finbiz dot com in this area here, I can basically view the hottest stocks at any given time. These are the stocks that are going up the most. So during your trading morning, you can log in and click on the stocks that are Training center should go ahead and click on this, uh, great here, which was the hottest starting Friday, going up 151% in one day. Okay, and the first thing that I want to do is over here on types of charts. You will definitely want interactive, all right, and by default. The time frame is such a daily, but That doesn't help us with a pattern trading. So you wanna either go with the one minute of the five minute option. But luckily, we have a three minute option, which is kind of right in between here. I wanna show you guys something really cool. So let's basically go back to Friday morning. Okay? Around here. So it's curly antennae. Um, okay, tell me up and the stock is breaking through the ceiling first thing in the morning. It pops up on finbiz, and it starts moving. We to keep watching. Right? So if we keep watching, say, you know, it's on friend is already got, You know, it's green. It's going up 7% pops up on the trending list on a lot of different screeners. And we're watching, watching, watching, and eventually we'll see a black hole form. So it might be a little difficult to see at first, but could help you guys out, but actually drawing one here. All right, so they have the number here. Okay, so this this basically represents the pole and can easily kind of see little flag there. Okay, You see that? That's perfect. And the best part about it is, and this is absolutely essential. But make sure you pay attention the actual volume itself, which is right here. Okay, While it is absolutely essential if you see a flagpole and there's volume coming in strong , that's definitely a bull flag right there. That's a really good sign together, okay? And not only that, if you go to the new section pre level who look here at around December 22nd ADM. Which is premarket basically, before the market actually opens, you can read the headline Signal Labs awarded contract with leaders and from Ward Footprint , right three d to certify its I P Q A methodology prosciutto production. Now here comes important part, right? So as soon as the price hits the top of my poll, which is right here, right here, Okay, this price, it's my poll, actually, Should I'm gonna readjust, it'll it won't make a little more accurate. So, realistically speaking, this is not my ball. Right? Move over a little bit right there. Have a nice, accurate line going on. And, of course, remember that this headline It's good. They basically got a word. A contractor made a new business agreement which led to this spike. So it's backed up by news. First of all, we're seeing the flagpole form right here. We've got a nice bike and volume as well. Everything's lining up. It's looking great. Okay, so So now we just need to figure out what the entry point would be. Right? So the first thing I have my pole right here and have my flag right here. So basically, one thing that you have, you know that this right here, this line right here is the top of my fault. Right? So what I want to look for is, when does the price cross the top of my pole? Right. And when it does, it's the perfect entry point. Okay? Because if we have a flag form and it, it's not moving up. If it's moving down and it's not really a flag, right, it's not a bull flag. Right? So in order to have the complete signals kind of lineup and and you know, for you to know for sure that this is a bull flag, you gotta make sure the stock is breaking through that price point right here. So the moment it starts crossing, I'm in. All right, I'm in at $3.50 right there. So I mean at 3 50 And as you can see, it doesn't really nice. We're on, right? It goes up until around noon, right? So there's a lot of potential profit right around here, okay? And only that. But there's another. Another way that kind of comes in, right? So realistically speaking, if my gun in at 3 50 had hit about $4 I probably get stopped out about, let's say, 88 right? So if we calculate from 3 50 23 88 let's about 9.7%. All right, 9.7% for a day of trading is excellent. You know, that's about that's 10% right there. Three days of you trade even three days a week. You're already up 30% for the week, and if you ask me, that's great. And the cool thing is, it's not just this stock, but many stocks will have this really cool flagpole formacion. So if you see it, you know you could make a nice profit. It's true. Not all stocks will have a flagpole, and some socks may have it, but are not supported by the volume spike. And if that is the case, then don't trade it. If you're going to trade a flagpole first, make sure you have a nice clear flagpole. Make sure it is also supported by a nice volume spike. And make sure to get in on Lee at the designated entry point, which is when the stock price breaks the top of that poll. Don't force yourself to see a flagpole formation that barely makes the cut. You'll only be risking your money. One thing that I want to tell you guys is that cash is king. Always remember that your money is safest in the form of USD, so if there's any doubt at all, don't trade. And finally, once again remember toe always use a trailing stop of 3%. The training stop will do the job of selling your stock for you. Sorry, guys. That's all for the flagpole. Formacion. In the next video, we will be covering another one of my favorite techniques, which is bounced back reversal technique. See you guys there 14. Real Techniques: Bounce Back Reversal Technique: Hey guys. So in this video we're covering the reversal strategy. There are a few things that you guys need to know. Person. There's a famous saying. Everyone knows what goes up must come down, and the opposite is also true for good stocks. What goes down must also eventually come up. And that's what the strategy capitalizes off. Through this strategy will be able to specifically understand the proper signals required for a stock reversal Move. So, without further ado, let's get to the criteria. So the first thing is that it should definitely have a low RSC are size stands for relative strength index, and I'm going to use Bitcoin transfer this example Even though this is not a crypto currency course, crypto currencies have the same technical presentations as stocks do. So if I pull up the chart of Bitcoin on trading view which I have here and then click on indicators right here and in the search war I search are as I write with that pull up OK, relative strength in next acts, right. So here we have this nice little area public here and it basically shows are sigh for change, right? So what This basically means is within this range of the stock, price is closer to 30 were under 30. It is considered underprice or at a discount, you can say, And if it's at 70 or higher, it's considered over price, which may be a risky price point to enter because it's probably coming back down. So there's basically mathematical form of that kind of calculates and figures out what the price is in consideration to our side. So by looking at the price at any given point, you can kind of tell how overpriced or underpriced the actual stock price is at any given time. So, generally speaking, any time the price ends up going a ball breaking at 70 point like it did here it's considered over price. It's generally deemed to be a risky right. So if I got in here for example, room, I'm losing money, right? And here where I actually see the stock price going way below the 30 which is underpriced. I got in here. As you can see, it could easily write it out for a profit right around here, right, So you want to be careful when you're getting in both the 70 line of the RC, and you don't have to worry too much of your entrained under 30. Matter of fact, it's generally considered to be a good price point as long as good stock. So here in the, uh, I just pulled us up. Have a window open of Boris. Why has pulled up? OK, so this right here is a really good example of a reversal. Okay, first thing that you notice is that there are several consecutive red bars which signify a dramatic decline in price. And not only that, but if you notice here are side dips below 30 and as a result, it is closely followed up by a reversal. But the buy signal is right here when the first green bar breaks the top of the previous red bar. That is your buy signal. That is your entry point when it comes to the reversal strategy. So once again, the first thing you want to notice, right? The first thing you definitely want to notice his the set off consecutive red bars. Okay, going down. And the next thing you want to notice is that the price has successfully dipped below the 30 on the RC, which is another great buy signal. And once again, remember, that's your entry point. Draw this out for you guys and then kids say sky blue, Uh, my hair color, Um, right here. Bam! The moment it breaks the top off the previous red signal, that is your entry point. You're already seeing nice movement here, going up, and you know, there's a reversal coming, and just as predicted, it does do that really nice reversal. And once you get in at that point, you let the stock run until you get stopped out and within a matter of minutes, you already making 6 to 7%. The best part about the strategy is that it's very common, and it can happen multiple times within a given trading day for a single stock, the main signals to pay attention to, or the consecutive red bars once again the our side that dips below 30 and the green signal that breaks the top of the last red candlestick. Out of the strategies mentioned in this course reversal, trading can easily be called the most common trading strategy for day traders. Just like the flagpole formation strategy, there is not much screening process required to identify this training strategy. You can just analyse charts of the stock that are trending on a given day and wait until the signals matchup. I hope you guys were able to learn a lot from these trading strategies in the next video. I'm giving you guys a great way to practice everything you learned so far. See you guys there. 15. Bonus Lecture: Low Float: Before we get into this topic, there is one definition that you need to understand float the number of shares that are available to be purchased. It is important to understand that volume and float are two different things. Volume of a stock refers to the amount of shares actually being traded at any given time, which is a collection of shares that are being exchanged between the seller and the buyer of the stocks. The volume will vary by the time period being measured. For example, the volume of the whole day will be different from the volume of the hour or the trading week float. On the other hand are the untouched shares of stock thes air, the shares that are available for purchase and have not yet been traded. When an AIPO is filled, 100% of the shares of that stock are available to the public until the trader comes in and starts purchased single shares. There is a very interesting relationship between supply and demand and the price action of a stock. It is known that when a product has limited supply and high demand, the price is higher. Similarly, when it comes to train stocks and the available float is low. Traders will quickly react to any good news, which will increase the demand right away. Since the availability of those shares are very limited, thes stocks can very easily increase in value. The general range to look for when it comes to float is about 500,000 to 10 million shares . Stocks was float in this range that are on your watch list or come up as a result of your screening process. Have a decent trading potential. Low float size is definitely a factor. You should keep in mind when you're screening for the right stocks. 16. Bonus Lecture: Shorting Stocks: you'd be surprised to know that stock prices going up is not the only way to make money in the stock market. You can actually make money off stocks when they go down. That's where shorting comes in. Shorting basically refers to the act of borrowing shares when they are at a high price in returning those shares at a lower price for a lower cost. For example, say you borrow or short 100 shares of Adrian's Bakery when the price is at $10 per share. The price then goes down toe $1 within a few hours. All you need to do is give back the 100 shares At the time of giving back the shares, the broker buys 100 shares of the stock at the new discounted price of $1 instead of paying $10 for them, and then returns on Lee the number of shares back to the original seller that you borrowed the shares from. So when you short a stock at $10 sell it at $1 you basically made a $9 profit per share. Traders that are adequate at shorting can easily make money both ways, by the stock's going up and the stock's going down. Shorting is considered slightly more risky just because most traders are betting against them, meaning that most traders are hoping for the stock to go up and not down. Shorting takes practice and should be done sparingly. Shorting stocks should only be done when you're absolutely sure that a stock has become overpriced, and it is certain that the stock is going to turn around and plummet. Traders who short lose money when the stock goes up and Onley make money when the stock declines in price. The techniques presented in this course are designed for regular stock trading and not for shorting. So if you're planning on shorting, I would highly advise doing extensive independent research on shorting and the effective techniques that could be used before getting into short selling. In the next video, we'll be covering virtual trading 17. Bonus Lecture: Virtual Trading: One of the biggest mistakes I personally made earlier in my trading career was jumping directly into real trading with Saturn of practice, I lost thousands of dollars and as a college student and hurt me financially, the most effective way to become a top trader is through virtual or paper trading. Virtual trading is the best way to learn whether you're strategies are working or not. The worst thing you can dio it's start to trade without first practicing virtually and putting your hard earned money at risk without first testing your trading strategies. It is extremely crucial that you first trade virtually for a long period of time before you trade your first real dollar. There are many ways to virtually trade. One is by paper trading. The process is very simple. You making notebook and record the traits everything from the amount of shares to the exact entry and exit point. By doing this, you can keep track of your profits and losses and figure out what works and what doesn't. If you want to trade directly on a computer investor, peter dot com has a trading simulator that you can use. Google Finance also has a portfolio tracking feature. You can even use Google spreadsheets for an even simpler approach. Another way is by using the free 100 k demo that sure trader provides. For one week, you'd be able to trade with demo money, but with real stocks. This also allows you to become familiar with the rial. Trading software tried to be as analytical as possible. See where you went wrong when you lose money and how you can alter your strategy and make it better. Keeping track of your good traits is just as important as keeping track of the bad ones so you can understand what works and what doesn't adjust your strategy accordingly and never stopped the learning process. Once you see that you are consistently making profits and your trading abilities are solid Onley, then should you begin trading with real money. 18. Bonus Lecture: How to Analyze Stock Market News: as mentioned before, research is a major part of being a successful trader, especially nowadays, with information being easily accessible, it's important to know where to look. On the flip side, not all information is necessarily accurate information. Most of it can be unnecessary, too much of it is known as noise. I will explain how to navigate through the noise in the media and find only the most essential and useful information. Some factors to keep in mind. Political agendas, insider agendas, motive of source and fact checking whether you're researching about a company or reading an analyst report on a financial website. Always consider the motive and agenda of the writer Ask yourself, Does this person or organization have any personal or political agenda? The Internet is a wild place. Finance or Hollywood. Not all information is accurate information. It's always a good idea to take everything with a grain of salt before making important decisions, especially in trading. Always research the source of the information and look for any political agendas of those sources. Fact. Check all information, look at multiple news outlets and compare all facts before you come to your own conclusion . Based on all the information gathered from multiple sources and news outlets. One of the most important factors are government regulations. Regulations can influence companies in many industries. For example, the health care industry is more regulated than other industries for the protection of the consumer and the market. These regulations have a big influence on the product itself, including timing of the launch, off product, press release and other factors. A new product, maybe an anticipated one, including new medicine or medical equipment. Breaking news on a new medicine or product would be considered major news, which affects the movement of the stock from the company directly associated with the health care industry. These are the key indicators which stock traders are looking for, but mostly day trading. You confined good trading opportunities during the time period based on major news releases . It is important to research any regulations with a particular industry. You are planning to trade stocks in new two factors which can play a big role in the movement of the stock prices. All this and companies in the stock market, our public companies, which also means all financial statements, press releases. Annual reports are also public and easily accessible online or directly from the company's website. Assembling the necessary information will provide you the bases for your complete understanding of a company or industry. It is in statements and letters from CEOs to investors. Also give a good overview of the direction of the company. Researching senior management team and board of directors, including the CEO, is also a good way to understand the company overall and the people who are managing the day to day operations. The most anticipated financial report, which investors and traders alike look for it is the earnings per share commonly referred to as E P S. T. E. P s report is what most investors are interested in, which creates a lot of volatility in the stock market on the day of release. Volatilities is ideal for trading stocks. The more people trading and more movement in the stocks, the better it is to find good trading opportunities. While the E. P s report creates a lot of buzz in the media, it is only part of three factors of a financial report. The other two are balance sheets and the statements of cash flow. By looking at the annual and quarterly earnings report, you can see the profits and loss, also known as P NL, which is not only important for investing but in certain cases, trading as well. Gathering information from the company's website and the other new sources is crucial. Companies are always expanding and change is constant. New products and services, press releases and statements from the CEO are all example the factors that can affect the stock price, analyst reports and predictions can also provide valuable insight for a company. Make sure all the reports are recent and the analyst have proven solid reputation in the industry. But even then, don't believe in everything you read. Gather all necessary information and based on all the information gathered, make your own conclusion before making a trade decision. Depending on what news comes out related to the stock you have in your watch list, it is your job to determine if the news is positive or negative for the company and how the stock will react to it. Researching ahead of time and following a watch list can provide you the insight necessary to make a good trade. A few major websites that you can use to research the top headlines for the stock market, our CNBC routers, Yahoo Finance, PR news and Market watch. Some of these websites will also allow you to directly access new press releases. There are also many websites and trading Softwares that give traders access to live instant news streaming and breaking news. The sooner you can access the news, the faster you can react to the stock movements. There are also many online brokers and free online websites such as Google Finance and Yahoo Finance that offer tools to create a list of stocks, which you can follow closely By creating a watch list, it becomes more manageable to research stocks by following them very closely. You can have much better insight of the stock by following the patterns and trends, and by analysing the reaction and the movement of the stock based on news releases relating to the stock or industry it is in, it becomes easier to find good trading opportunities when you follow this tactic. When it comes to trading, major breaking news will affect the stock very quickly. A stock can react for a number of different reasons, but if there is a major news related to the industry or sector that the stock is in, it will have a reaction now. Figuring out if the reaction will have a positive or negative outcome is where all the research and analysis comes in. For example, if Company A has released a negative earnings report, then most likely the reaction of the stock would be a decline in price for a certain period of time before it comes back up. It can be anywhere from a few minutes, hours or even days, depending on the stock. A bad earnings report scares investors away from buying more shares because it creates fear for the company since it's losing money for the shareholders. Likewise, there would be an opposite reaction. If Company B has a good earnings report, then the stock would go up in price. In this case, investors would become more hopeful instead of being fearful for the company, and would buy more shares of the stock, which would cause positive reaction to the price. And it will most likely go up in order to be ahead and take advantage. As a trader, you need to consistently follow all the news and buzz that surrounds the stocks you follow based on the information you can plan and adjust your trading strategy to take advantage of the movement of the stocks and the reaction off other traders as well. The speed at which you interpret news is also critical to success in trading with trading. It's all about being ahead of the other traders and being on top of all the market news and current events. In conclusion, the key points to note are. Always research the source of all information you consume. Investigate the source question everything. In fact, checked multiple sources. Research the top headlines and interpret them quickly. Follow stocks on a watch list to see how they react to news usable, fundamental and technical analysis to get the full picture. If you follow the strategies in this video, you should be better able to understand analyzing news and research more efficiently on your own. 19. Bonus Lecture: Risk Management Mindset: in this video, I will cover general principles when it comes to risk management. Since we've already went over specific risk management techniques in the previous video, we will go over rules and principles to follow managing risk and preventing loss. The market is in constant motion, and it changes every day. So it was very important to keep up with the stocks you follow in the industry they are in . The biggest mistakes you can make as a new trader is sticking with a position when the stock goes down and hoping it will go up and not selling it after you've made a profit, hoping the stock will make more profit. This is one of the most common mistakes made by new traders. When this happens, it is a sign of your feelings. Overpowering logic. Avoid greed when you make a profit and avoid hope when you lose money, it's important to keep your losses small and your profits high. These mistakes are avoidable. If you stick with a plan and having a strategy before making a trade, sticking with that plan, for example, by having a stop loss point at a specific price to sell or take a loss, depending on the stock movement, will avoid the emotional mentality of hoping for the stock to turn around. When you just stick with your plan of losing a percentage and getting out right after the stock price hits that amount, you avoid losing more money. For instance. Say you said the limit for yourself to take a loss of 3% and you sell as soon as it hits that number, and you follow this rule in most of the trades you do for that day. If you don't trade anymore or don't see another trade opportunity to make another trade, your loss for that day would only be 3%. By following this method, you avoid having a loss of more than 3%. When it comes to making profit, it works the same way. For example, say your stock goes up and you make a 5% profit and a stock is showing a good trendline support and going up. But you don't want to risk that 5% profit by holding on for too long, so you sell at a 5% profit, or depending on the stock. You can use the strategy mentioned in the previous video sell 50% of the shares, taking in half of the profits, while keeping the other half riding on the shares in case it goes higher. So even if it goes down, you have made a 2.5% profit instead of losing 5% position at a loss. Making 2.5% profit is better than losing money or losing all your money for day Trading, a 1 to 3% profit a day is considered an excellent day. It may sound low, but it adds up to 10 to 30% profit by the end of the month, which isn't bad if you stay consistent. Having a plan before you trade and trading the plan is the approach most successful traders follow. Developing your own strategies is an essential part of becoming an active trader consistently researching beforehand and being aware of the market can greatly improve chances of making winning trades. Another way to manage risk is by sticking with one or few industries which you easily understand or are familiar with. Some traders Onley trade, tech stocks or some trade only biotech stocks. The strategy helps eliminate distractions and focus specifically within familiar industries . There are thousands of stocks in various industries. By choosing between 2 to 3 industries, you can greatly narrow your research during the screening process. Another very important note to remember is that stocks usually trend with their industry and sector. If you better understand the industry that this stock is a part of, you, convey better predict the movement of that stock. If that stock is trending in a different direction than the industry it's in, it's very important to try and identify why that is the case, and it becomes easier to identify the position. But in general, trading stocks in a familiar industry is very helpful in conclusion. By using the advice in this video in the techniques advised by name in the previous video, you should be able to drastically reduce your risk. 20. Bonus Lecture: Trading Psychology: achieving success itself from cries discipline, whether it is a goal to stay, fit, eat healthy or starting new business, it takes discipline to do things consistently every day to start seeing positive results. Trading stocks is no different. It actually requires much more discipline to control emotions. Stick to a plan not to lose. Focus ongoing education by learning from mistakes and adjusting your trading strategies. Before we discuss trading psychology, it is important to know the type of trader you are depending on your personality and to also take into consideration your availability. Whether you want to be a part time or full time trader and the amount of money you are willing to begin trading with, everyone has a different risk tolerance. Depending on your personality, you need to understand what your risk tolerance is before you start trading with a lot of money. Second point I've mentioned is time availability. Don't start trading full time until you've practiced enough with simulated trading or small amount of money, which you can afford to lose here and there, start low and develop your trading skills. In the world of trading, it's crucial to understand that losses are unavoidable That is a fact, in fact, why most people are turned off by the idea of trading. But with the proper plan and approach, your trading skills will be sharpened. Every trader has losses and it's part of the game. And as a trader, we have to look at that as a cost of business. Now that we understand this, our job is simple. Buy low, sell high and stick to plans. Make sure to keep up with the latest news and do consistent research of the stock before you trade it. By developing strategies based on research and information and sticking to a plan, you will naturally cut down your risks and will improve over time. Discipline is a major part of a trader psychology. Without discipline, you cannot control your emotions, which can have a major impact on decision making. Making the wrong decisions can prove very costly In the world of stock trading. Your emotions can play a very negative role in all aspects of decision making. For example, greed is an emotion that can hinder your trading performance. When they stock goes up and you've made a profit, don't let greed kick in and make you stay in that stock longer, making you believe it will keep going up Onley to lose profit when the stock price comes back down. We have to look at things from a logical perspective on how things are connected and how one thing affects another by always analyzing all outcomes and keep track and data to improve results. Always avoid thinking. From an emotional perspective, we have to learn to keep our motions out and learn how to make the right judgment. Colds and decisions Trading stocks is all about judgment, colds and decisions. And making those split decisions as quickly and accurately as possible requires a clear mind. Avoid emotions or it will cloud your judgment. When it comes to trading, you have to make decisions quickly. It's important to always have a clear mind when trading and be aware and conscious of your thought. Do not let your environment cloud your judgment. When it comes to trading, you have to make decisions quickly. It's important to always have a clear mind when trading and be aware and conscious of your thoughts. Do not let your environment cloud your judgment. Some people have morning rituals before they start trading to clear their mind of all negative thoughts and emotions. Whether it's meditation or a morning run, find something that helps you clear your mind mentally. Before you start trading, find your oases. Approach trading stocks with a logical and clear mind during market open hours. There is no room for emotions. Onley logical thinking based on data and research is allowed. When you know all the things that you shouldn't do, the ones you should do become clear. Onley, fax and data count. By practicing this daily, making clear decisions become a habit and over time, with practice, you get better at collecting data and analyzing with a clear mind before making any costly decisions. There may be days where you were feeling down or emotionally negative due to a personal issue or whatever it may be. We all experienced this at some point, but if that is the case, you shouldn't be trading. Give yourself a day off and come back another day with a clear mind. Being aware of this is extremely important and will save you from making bad, costly decisions and, just like we discussed, agreed there's no such thing as belief and hope in the stock market. These things do not affect price action whatsoever. In other words, the stock market can be very volatile and quick changes happened constantly. Making proper judgment, colds and decisions and making them fast requires a positive mental state of mind. Always remember, the market doesn't care how you feel. It changes any time for the worst and sometimes within a matter of seconds. It is important to adapt to the changes by being alert and focused. Avoiding emotional thoughts and having unique plans for all possible scenarios of the market will help you be prepared. This will help you make logical decisions and also cut losses sooner. It is as important to have a plan to get out with a profit, even if it's not what you expected to make. Greed can be very costly. Always remember, profit is profit, big or small. Always cut your losses and using our risk management techniques, you shouldn't have more than 3% loss. The way I managed this is by sticking to my plan. I create a plan based on research on a particular stock before I decide to buy it. I have price targets, which means I already know the price entry and exit point in my mind. Based on the chart analysis, I also have a general idea of what amount of loss I'm willing to tolerate and, at which point I'm willing to walk away with a profit. All of these things must already be planned. Before you even execute a trade. The worst thing you can do is trade with an emotional mindset. Doing so can cost you big time by having a plan ahead of time. You take out the emotional factor and you make decisions based on your plan and principles . This helps the process of decision making faster and more efficient without the emotional clutter. As you continue to trade, you will keep improving your plan and have better understanding of all the factors necessary in making a successful trade. Your mind will also get into the habit of making the best trading decisions as quickly as possible. Most importantly, it's crucial to learn from every single mistake that you make and adjust your strategy accordingly by keeping track of the trades and calculations off profits and losses. I personally keep a trading journal where I keep track of everything I learned from a trade , whether it's a loss or a profit. This helps me refined my strategies and consistently learn new ways to adjust my strategy based on many different factors of the stock market, which may include things like buying a stock with a low volume or going in at a wrong time . We're not following news life and many other factors. In the next video, we will cover how to interpret news and headlines off stocks that you are interested in trading. See you there. 21. Bonus Lecture: Sure Trader 100K Demo: Hey, guys, this is a quick bonus video. I just wanted to show you guys the short trader 100 k demo. I'm not advertising for sure, trader. And at this current moment in time, I'm not even an affiliate, even though I might be later on. I just really like their demo and out of the top, the recommended softer broker. Short traders on Lee, one that actually provided demo money, playing with demo money and practicing trading a super duper important in the later lesson . We do cover virtual paper trading, but I just wanted to show you guys wait actually practice always easy to use Investor PD a simulator or Google Finance or a journal for trading. But in the real world, you'll be using an actual software, so why not practice with it directly and familiarize yourself with the whole process? The shirt traitor platform, like any other platform, is quite technicals, so it's best to start getting used to technicality of it and understand the whole trading process. You can practice with stocks and real time and make virtual profits, and the fact of the matter is, if you can make money practicing, they can definitely make money training in the real stock market as well. The main reason why I want you guys to try this is because the strategies Tom in this course may seem straightforward, but implementing them in real time with real money is not easy. Trust me. You don't want underestimate the training process. So go ahead and sign up for the demo. It's free, and you don't even have to put any payment information. Just get to practice what you've learned so far and get a feel for the rial trading software. All right, that's all for now. I'll see you guys in the next video.