Copy of Book Bundle

The Only Trading Book You Need

First and foremost, the first step is to choose a brokerage for you to trade
on.

Choosing a Platform / Brokerage

TD AMERITRADE

TD Ameritrade is excellent for active traders and beginner investors and it

provides a great trading platform, $0 commissions on online stock,on
options and ETF trades and a great selection of mutual funds. There is a
$0.65 fee per contract.

Pros

Commission-free

Free research
High-quality platform

No account minimum

Great customer service

Cons

Very slow fill - time on some days.

TD AMERITRADE has a trading platform called thinkorswim (which is

what I use) that's aimed for stock, ETF, options, futures and forex. It
literally has all the features active traders need, including advanced
trading capabilities, a huge lineup of tools, screeners and charting,
backtesting, real-time news, quotes, etc.

TASTYWORKS

Tastyworks was created for active traders. According to research, The

company says that more than 90% of the trades placed by its customers
are derivatives, so there are going to be a lot of tools for options and
futures traders.

Pros
Customizable platform with real-time quotes

Options-focused charting that helps you understand the probabilities of

Options

Cons

Newcomers to trading and investing may be very overwhelmed by

tastyworks at first. All trading platforms have a learning curve, but
tastyworks' is steeper because it is designed for active traders. Other
platforms start with basic functions for their retail crowd and hide the more
advanced tool set in the expanded trade tickets.

Robinhood

Robinhood provides free stock, options, ETF and cryptocurrency trades,

and its account minimum is $0

Pros

No account minimum.

Simple interface.
Cryptocurrency trading.

Cons

No retirement accounts.

No mutual funds or bonds.

Limited customer support.

E*Trade

E*TRADE actually offers a lot of value to both beginner investors and

frequent traders with a lot of resources, a great trading platform, and tools
to help you create a well rounded portfolio.

Pros

Easy-to-use tools.

Large investment selection.

Excellent customer support.

Access to extensive research.

Advanced mobile app.

Commission-free stock, options and ETF trades.

Cons

Website can be hard to navigate.

If you want to use more advanced brokerages, you can use Interactive
Brokers.

Chapter I

What are stocks?

There 2 different types of Stock.

Common & Preferred

Common Stock: an investment security which represents ownership in a

company. If someone you know says they own “Stock” it usually means
common stock, “AAPL,FB,etc” . They are referring to common stock. If your
friend or relative owns a few shares of that company, they are therefore an
owner of the company.

Preferred Stock: Preferred stock typically is a debt instrument of a

company. When purchasing preferred stock, think as though you are
loaning the company money. When loaning money to a friend, you expect
to be paid back with interest.

Stocks are essentially shares of a company. It also means you have a

claim on a company's assets and

earnings. Put it this way, imagine the company as a big giant pie. By buying
a share, you own a tiny piece of the pie. The more shares you buy, the
bigger pieces of that pie you own.

Example: FACEBOOK stocks are worth $200. You decide to buy one
share. The stock then increases from $200 to $210. You just made $10. If
you had bought 2 shares($400 in total), you would’ve made $20. Simple,
right? The same Principle applies to a stock that’s worth .50 cents or $10.
Stocks are also known as “Equity” or “Equities”. Stocks are given to or
bought by you (shareholders) in order to raise money for the business/
company to grow or for them to take on new projects.

What are Dividends?

DIVIDENDS are payments made by the business/company to its

shareholders(AKA you!). These payouts can be given to you in cash (Cash

Dividends), or in additional shares (Stock Dividends).

Basic Equity Research

What does the company do?

To get a basic understanding of the business.

What do they manufacture (in case it is a manufacturing company)?

To know their products better, helps us get a sense of the product’s

demand supply dynamics.

How many centers / factories do they have and where are they
located?b

To get a sense of their geographic presence. Also at times their factories

could be located in a nice, prime location, and the value of such location
could go off balance sheet, making the company highly undervalued

Are they running in full capacity?

Gives us an idea on their operational abilities, demand for their products,
and their positioning for future demand

What kind of raw material is required?

Helps us understand the dependency of the company. For example the

raw material could be regulated by the government (like Coal) or the raw
material needs to be imported.

Who are the company’s clients or end users?

By knowing the client base we can get a sense of the sales cycle and
efforts required to sell the company’s products.
For example, Apple, will have no problem crushing their competition
because the majority of the modern world has iPhones.

Who are their competitors?

To give you an idea of who they are competing with and who is dominating
that industry.

Sectors

The economy and stock market are basically organized into two tiers. The
highest tier, a sector, is a broad grouping of companies that have similar
economic characteristics. There are currently 11 major sectors that most
investors use when breaking down the corporations and other issuers of
securities such as stocks and bonds.

Sectors are broken down into sub-categories known as industries. This

allows a closer grouping of similar businesses. For example, Big Lots, the
discount retail chain, and Fossil,the watch store, are included in the
consumer discretionary sector. However, they are sorted into different
industries.
Financials

The financial sector consists of banks, investment funds, insurance

companies and real estate firms, among others. In general, the majority of
the revenue generated by the sector comes from mortgages and loans that
gain value as interest rates rise.

$AIG // $GS (Goldman Sachs) // $JPM (JPMorgan)

Utilities

The utilities sector consists of electric, gas and water companies as well
as integrated providers. In general, the sector generates consistent
recurring income by charging consumers and businesses that provide
higher-than-average dividend yields.

$NEE // $ENB // $DUK

Consumer Discretionary
The consumer discretionary sector consists of retailers, media
companies, consumer service providers, apparel companies and consumer
durables. In general, these companies benefit from an improving economy
when consumer spending accelerates.

$AMZN // $HD // $NKE // $SBUX

Consumer Staples

The consumer staples sector consists of food and beverage companies

as well as companies that create products consumers are unwilling to cut
from their budgets. In general, these companies are defensive plays
capable of withstanding an economic downturn.

$COST // $MKC // $CHD

Energy

The energy sector consists of oil and gas exploration and production
companies, as well as integrated power firms, refineries and other
operations. In general, these companies generate revenue that’s tied to the
price of crude oil, natural gas and other commodities.
$WMB $DVN $HES

Healthcare

The healthcare sector consists of biotechnology companies, hospital

management firms, medical device manufacturers and many others. In
general, the sector is considered to be both a growth opportunity and
defensive play since people will always require medical aid. $BMY $UNH
$CVS

Industrials

The industrial sector consists of aerospace, defense, machinery,

construction, fabrication and manufacturing companies. In general, the
industry’s growth is driven by demand for building construction and
manufactured products like agricultural equipment. $LMT $HON $CAT

Telecom

The telecom sector consists of wireless providers, cable companies,

internet service providers and satellite companies, among others. In
general, these companies generate recurring revenue from consumers, but
some subsets of the industry are facing rapid change. $TMUS $VZ
Materials

The materials sector consists of mining, refining, chemical, forestry and

related companies that are focused on discovering and developing raw
materials. Since these companies are at the beginning of the supply chain,
they are vulnerable to changes in the business cycle. $VALE $BHP

Real Estate

The real estate sector consists of companies invested in residential,

industrial, and retail real estate. The main source of revenue for these
companies comes from rent income and real estate capital appreciation. As
a result, this sector is sensitive to interest rate changes. $OLD $MFA

Why Do Companies Pay Dividends?

Well companies sell stock shares to the public to raise their money, which
is then used to fund their operations and expand their business, like I
mentioned above. So basically, a dividend is a “reward” given to
shareholders(YOU) for owning shares in the corporation.

Not all companies give out dividends. If you want to receive them, you have
to find the companies that pays them out to you, and buy their shares. Lots
of investors like these kinds of stocks because they can produce a valid
flow of income, and they have potential for compound return down the
road, or “rate of return”.

Example: XX (XX) is a company that pays dividends and let’s say it trades
at $44 per share. The company pays a dividend of $1.50 PER SHARE
annually, broken up into quarterly installments of $0.30. If you own XX
stock(1 share), you can expect to receive a cash payment of $0.30 every 3
months, for each share that you own.

If you own 100 shares , you get $30 from dividends every 3 months.

What are Quarters?

3 month periods on a company’s financial calendar that behaves as a

foundation for the reporting of earnings and the paying of dividends. A
Quarter refers to one-fourth of a year.

What is a Quarterly Earnings Report?

“Quarterly Earnings Report” is a quarterly filling made by companies to

report their performance. This can include their net income, earnings per
share, earnings from different operations, and net sales.
By ANALYZING these quarterly reports, investors(YOU) can begin to
understand and estimate the financial health of the company and determine
whether it deserves your investment.

Every quarter, analysts and investors wait for the announcement of

company earnings. The announcement itself can actually move the market,
and the price of that stock can fluctuate wildly on the days of the actual
earnings release!! If the company fails to fulfill or go above the estimates
announced before the release, you can expect the stock to sell off, causing
a huge decline in price.

Stock Trading VS. Investing

Stock TRADING is basically buying and selling stocks for

SHORT-TERM profit.

Investing is when you are buying stocks for long-term

gains(Months,Years)

Traders jump in and out of stocks within minutes, days, even weeks.
Traders mainly focus on a stock’s technical factors(by performing
Technical Analysis) rather than a company’s long-term prospects. To
Traders, it’s all about where the price will be in a minute, hour, week,
or maybe a few weeks and how they can profit from that price
increase, or decrease.
Investors have a long term outlook. They buy their shares and think in
terms of years. Since they are long term, they’ll hold their shares
through the market ups and downs because they know that it will go
up regardless over the months and years.

Example: If you bought $1000 worth of Amazon shares in May

15,1997, when it initially sold at $20 per share, you would now have
about $150,000.

Because Amazon is now approximately $3000 per share.

1000 divided by 20 = 50 shares

50 x 3000 = 150,000

Institutional Traders

Institutional Traders trade using accounts that their institution manages for
people.

Endowment funds, commercial banks, hedge funds, pension funds,

insurance companies.

These are the big fish on Wall Street.

They are usually what drives supply and demand.

They usually engage in block trading.

Institutional traders have a very high advantage over us retail traders due
to the simple fact that they work for institutions, thus giving them better
tools, etc.

Institutional traders have very good risk management, and use different
strategies to hedge different positions.

Traders who work at hedge funds use investors money, and a lot of the
times, they get a percentage of the profits.

High Frequency Trading

High frequency trading is the use of software and algorithms for the
purpose of faster execution in order to essentially out pace everybody else.

Basically, HFT involves trading in very high speed, and I mean split
seconds.

HFT is used by a lot of firms and institutions.

We are what’s called, “Retail Traders”.

We use our OWN money.

Due to this simple fact, Institutions and banks already have a huge upper
hand because of the psychological barrier that separates us two.

We do not work at investment banks. We do not work for hedge funds.

We trade in our own time.

Our knowledge comes from Videos, Books, and things we’ve picked up on
our own.

There is a statistic about the failure rate of retail traders and it’s somewhere
around 80-90%.

This is alarming, yes.

But the root of this lies within our failure to follow trading plans, if we even
have one.
A lot of psychological aspects also come into play when finding out the true
reasons why a lot of traders fail. And we’ll get to that at the end of this
book.

Types of Retail Traders

Scalpers: Scalpers make several, dozens, maybe even more trades per
day. Scalers are trying to “scalp” a small percentage(profit) from each trade.
Basically taking profits on small price or percentage changes, soon after
the trade has been entered and has become profitable. In order to Scalp,
you have to have a well defined, and strict exit strategy. Scalping has to do
with jumping in and out as the market flows. You also should use a large
amount of capital to be able to capture decent profits.

Day Traders: Day Traders are traders who get into trades in hopes of
selling it the same day. Whether it takes them 10 minutes to a few hours,
the purpose of being a day trader is to sell your position the same day.

Momentum: Momentum trading has to do with waiting for a big market

move and jumping in, riding its momentum which this requires a lot of you
to be patient. Momentum trading works well if you understand the stock.
The reason why momentum trading depends so heavily on your knowledge
of the market or stock is because if you have a clear idea as to why the
stock is heading Up or Down, then you can choose where to exit wisely.

Swing Traders: Swing traders are somewhat fundamental traders,

because time value allows them to have more time for the trade to play out.
These are people who hold their positions longer than a day. According to
research, most fundamentalists are actually swing traders since changes in
a company’s fundamentals usually require several days or even weeks to
produce a price movement that is adequate enough for a profit.

Technical VS. Fundamental Trading

Technical: Technical traders are consumed by charts and graphs.

Watching different lines/signals on stock for signs of confluence/
divergence that might indicate buy or sell signals.

Fundamental Trading: Fundamentalists trade based on fundamental

analysis. Examining things like corporate events like actual or anticipated
earnings reports, stock splits, reorganizations or acquisitions.

Technical Analysis

Technical Analysis is based on few key assumptions. One needs to be

aware of these assumptions to ensure the best results.

1) Markets discount everything – This tells us that, all known and

unknown information in the public is reflected in the latest stock price. For
example there could be INSIDERS in the company buying the company’s
stock in large quantity in anticipation of a good quarterly earnings
announcement. While THEY does this IN SECRET, the price reacts to
THEIR actions thus REVEALINGto the technical analyst that this could be
a good buy.

2) The ‘how’ is more important than ‘why’ – This is an extension to the

previous statement. Going with the same example as discussed above –
the technical analyst would not be interested in questioning why the insider
bought the stock as long he knows how the price reacted to the insider’s
action.

3) Price moves in trends – All major moves in the market is an outcome

of a trend. The concept of trend is the foundation of technical analysis.

4) History tends to repeat itself – In the technical analysis context, the

price trend tends to repeat itself. This happens because the market
participants consistently react to price movements in a remarkably similar
way, each and every time the price moves in a certain direction. For
example in up trending markets, market participants get greedy and want to
buy irrespective of the high price. Likewise in a down trend, market
participants want to sell irrespective of the low and unattractive prices. This
human reaction ensures that the price history repeats itself. This is also
why SUPPORT / RESISTANCES always repeat themselves. You can
create Support and Resistance a year ago, and it would work today.

The open – When the markets open for trading, the first price at which a
trade executes is called the opening Price.
The high – This represents the highest price at which the market
participants were willing to transact for the given day.

The Low – This represents the lowest level at which the market
participants were willing to transact for the given day.

The close – The Close price is the most important price because it is the
final price at which the market closed for a particular period of time. The
close serves as an indicator for the intraday strength. If the close is higher
than the open, then it is considered a positive day else negative. Of course
we will deal with this in a greater detail as we progress through the module.

The closing price also shows the market sentiment and serves as a
reference point for the next day’s trading. For these reasons, closing price
is more important than the Open, High or Low prices.

The open, high, low, close prices are the main data points from the
technical analysis perspective. Each of these prices have to be plotted on
the chart and analyzed.

How to choose stocks

There are different ways to find stocks. You can familiarize yourself
with certain industries by finding a Niche through Sectors
(Biotech,Pharmaceuticals, Energy, Healthcare, Technology, etc). You
can use Screeners. Screeners allow you to see real time percentage
increase on different stocks during the market. You can research an
individual company you are interested in, and look at their track
record, look for future releases, look at their past earnings, or see if
they might have a good earnings report coming up. This is choosing
stocks from a Fundamental perspective.

We trade Options (which I will explain shortly) so our main goal is to

simply find stocks with the most liquidity and volume. Which usually
will be the Top 10-30 stocks.

Liquidity

A measure of how many buyers and sellers are present, and whether
transactions can take place easily. High levels of liquidity arise when
there is a significant level of trading activity and when there is both
high supply and demand for an asset, as it is easier to find a buyer or
seller. If there are only a few market participants, trading infrequently,
it is said to be an illiquid market or to have low liquidity.

Volatility

Amount of price change a stock experiences over a given period of time. If

the price stays relatively STABLE and does not fluctuate much if not at all,
the stock has low volatility. If a stock has a high volatility, it hits new highs
and lows, moves erratically, and experiences rapid increases and dramatic
falls. Highly volatile stocks can provide huge money moves opportunities
for patient investors. Patient meaning waiting for the right entry and exit.
But it can also take a toll on your portfolio if it’s not traded correctly.
Investing is essentially about risk, but risks work both ways. Each trade
carries with it the risk both of failure and of success. High Volatile stocks
are what Day Traders usually look for. They can get in at one price, and
once it moves up a couple cents or even dollars, they’re out. As the prices
sway back and forth, short-term(day traders, possibly swing) traders can
use chart patterns and other indicators to help time the highs and lows.

Chapter II

Options Trading

“Options are derivative securities. Securities with values that are reliant
upon or derived from underlying assets, or group of assets. They are
considered derivatives because the price is essentially linked to the price of
something else.”

Options trading is considered a

“low capital, high risk, high reward” method of trading stocks.

An Option is a contract! It allows (the right, but not the obligation) you (the
investor) to buy or sell an underlying stock at a certain price within a certain
amount of time. You do not own these shares of stocks. An ownership is
when you buy the actual shares and hold it in hopes that it will eventually
go up in price where you will then see profit. An option contract allows you
the right to buy stock, but you aren’t required to.
The main goal here is to buy a contract and wait for it to go up in value, so
you can sell it.

A stock option is a contract between two parties in which the stock option
buyer (holder) purchases the right (but not the obligation) to buy/sell 100
shares of an underlying stock at a predetermined price from/to the option
seller (writer) within a fixed period of time.

Every contract you buy is equivalent to 100 shares.

The two types of stock options are puts and calls. CALL OPTIONS means
the buyer has the right to buy the stock while PUT OPTIONS give them the
rights to sell them.

Call Options mean you want the stock to go up, and vice versa for Put
Options.

A strike price is the price in which we choose to become long or short

stock using an option. Unlike stock where we are forced to trade the current
price, we can choose from different strikes that are above or below the
actual stock price, that have different values and probabilities of profit.

When you are choosing these strikes, there are a few concepts to consider:
The probability of the option expiring completely worthless(where you lose
all premium), and whether the option is in the money (ITM), at the money
(ATM) or out of the money (OTM).
All Option strikes are made up of Intrinsic and Extrinsic value. Extrinsic is
TIME and VOLATILITY. AKA External Factors.

The Intrinsic Value of an option represents the CURRENT value of the

option, or in other words how much in the money it is.

For options that are out of the money or at the money, the intrinsic value
is always zero. This is because a buyer would never exercise an option that
would result in a loss.

Options are a decaying asset. Decay accelerates as the expiration date

approaches. If the move you predicted doesn’t happen within the time
frame that is expected, get out of that trade and move on to the next trade.
A lot of people have this issue and problem of holding on to their losing
positions.

Be realistic with your expectations.

Stock trading and Options trading are different. I can explain stocks to a 5
year old, but i can’t explain Options to a 5 year old.

Options have a lot of aspects to it. Option pricing, Option strategies,

Expiration, Time decay, Greeks, etc.
Options trading isn’t considered “investing”. Investing is something that is
long term. Businesses, Real Estate, Companies, that’s investing. You’re
essentially a speculator when you trade options. You don’t give a **** about
how the company will do in 5,10 years, or what products they are currently
making. You just want to make sure that the stocks move enough in the
direction you want it to, before the expiration date. Simple as that. I don’t
care if Tesla is creating a spaceship, as long as my calls or puts are good,
then we’re good, because i will be in profit.

In options trading, the difference between "in the money" (ITM) and "out of
the money" (OTM) is a matter of the strike price's position relative to the
market value of the underlying stock, called its moneyness.

An ITM option is one with a strike price that has already been surpassed by
the current stock price. An OTM option is one that has a strike price that
the underlying security has yet to reach, meaning the option has no intrinsic
value.

An OTM call option will have a strike price that is higher than the market
price of the underlying asset. Alternatively, an OTM put option has a strike
price that is lower than the market price of the underlying asset.

Being out of the money doesn't mean a trader can't make a profit on that
option. Each option has a cost, called the PREMIUM. A trader could have
bought a far out of the money option, but now that option is moving closer
to being IN THE MONEY(ITM). That option could end up being worth more
than the trader paid for the option, even though it is currently out of the
money. At expiration, though, an option is worthless if it is OTM. Therefore,
if an option is OTM, the trader will need to sell it prior to expiration in order
to recoup any extrinsic value that is possibly remaining.

A trader wants to buy a call option on TCX stock. They choose a call option
with a $20 strike price. The option expires in five months and costs $0.50.
This gives them the right to buy 100 shares of the stock before the option
expires. The total cost of the option is $50 (100 shares times $0.50), The
stock is currently trading at $18.50.

Upon buying the option, there is no reason to exercise it because by

exercising the option, the trader has to pay $20 for the stock when they can
currently buy it at a market price of $18.50. While this option is OTM, it isn't
worthless yet, as there's still potential to make a profit by SELLING THE
OPtiON RATHER THAN EXERCISING.

For example, the trader just paid $0.50 for the potential that the stock will
appreciate above $20 within the next five months. Prior to expiration, that
option will still have some extrinsic value, which is reflected in the premium
or cost of the option. The price of the underlying may never reach $20, but
the premium of the option may increase to $0.75 or $1 if it gets close.
Therefore, the trader could still reap a profit on the OTM option itself by
selling it at a higher premium than they paid for it.

Time Value
The time value of an option is an additional amount an investor is willing to
pay over the current intrinsic value. Investors are willing to pay this
because an option could increase in value before its expiration date. This
means that if an option is months away from its expiration date, we can
expect a higher time value on it because there is more opportunity for the
option to increase or decrease in value over the next few months. If an
option is expiring today, we can expect its time value to be very little or
nothing because there is little or no opportunity for the option to increase or
decrease in value

Time Value = Options Premium - Intrinsic Value Option Premium = Intrinsic

Value + Time Value

Why Extrinsic, Intrinsic, and Time Value matters

Helps investors understand what they’re paying for Intrinsic represents

what the Option would be worth

The Time value represents the possibility of the option increasing

Extrinsic helps you figure out what can affect the Option

Open Interest
Open Interest is a number that shows the amount of currently open
positions of options contracts. The higher the open interest of a contract,
the more open positions there are for it. Quite simply, it represents the
number of options contracts in existence.

The liquidity of options contracts is very important to traders. Liquidity gives

you an idea of how easily specific options can be bought and sold at the
market price. Highly liquid ones are generally easy to buy and sell, and
orders will be filled quickly. Ones with low liquidity, on the other hand, aren't
necessarily that easy to trade. Ideally, you want to be trading ones with a
high liquidity to ensure that you can enter and exit positions with relative
ease.

Options contracts that have a high open interest tend to also have high
liquidity, but as mentioned above, there are other factors to consider too.
Those other factors are the trading volume of an option and its bid ask
spread. High trading volume of an option generally indicates high liquidity.
Only by looking at all the relevant criteria is it possible to get a reasonably
accurate idea of how to determine how liquid an options contract is.

Delta, Theta, Vega, Gamma

The Delta value of an option is usually expressed as a number between -1

and 1, although it can also be between -100 and 100. This number
basically tells how much the price of the option will move for every $1 the
price of the underlying asset moves by.
For example, a delta value of .60. It would mean that the option price would
theoretically increase $60 for every $1 the price of the underlying security
increases by, and fall $60 for every $1 the price of the underlying security
falls by.

Delta value isn't fixed, and it changes based on market conditions. It will
increase as an option gets deeper into the money and decrease as it gets
further out of the money.

The extrinsic value of an options contract will diminish over time as the
expiration date of that contract approaches, due to the effects of time
decay, and Theta is basically an estimated measurement of the rate at
which this happens.

The theta value of an option essentially shows the dollar amount at which
the price of an option will fall each day, assuming all other factors remain
equal.

An option with a theta value of -.01, for example, would lose $.01 from its
price each day due to time decay.

The vega value of an option shows how much, in theory, the price will
change for every percentage point the implied volatility of the underlying
security increases by.
The gamma value of an option indicates how much the delta value of that
option will increase for every $1 price increase in the underlying security or
for every $1 price decrease in the underlying security.

For example, imagine you have a call with a delta of .60. If the price of the
underlying security rises by $1, then the price of the call would therefore
rise by $.60. If the gamma value was .10, then the delta would increase to
.70.

The primary use of DELTA is to give you an idea of how much money you
will make if the underlying stock moves as you expect it to (or how much
you will lose if the underlying stock moves in the opposite direction). This
can then help you determine which options give you the best value for
money in terms of taking advantage of what you expect to happen.

Ideally, if you are speculating on small movements you want to be trading

options that have low theta values so that the effect of time decay doesn't
wipe out any profits that you make from those small movements. This is
why an understanding of this value and what it means is so important.

Given that vega can be very useful in forecasting how the price of an option
is likely to move, it really is worth putting in some time to understanding just
what volatility and implied volatility is all about. Once you have a clear idea
of how the price of options is affected by implied volatility, and changes in
implied volatility, you will be much better positioned to gauge the risks
involved in any possible trades you identify, and may even find
opportunities based on the volatility of particular underlying securities.
Generally speaking, high gamma means high theta. A high gamma means
that you can make potentially higher exponential profits if the underlying
security moves significantly in the right direction.

Historical Volatility VS. Implied Volatility

Historical volatility is also commonly known as statistical volatility and

often referred to simply as SV. It measures the price changes of the
underlying security of options, so it is based on real and actual data.

The IV of an option is determined by taking a number of factors into

account: the strike price, the price of the underlying security, the SV, the
length of time until expiration, and the current interest rate.

The term volatility crush is used to describe an occurrence where a high

IV drops dramatically and quickly. It typically happens to stocks following a
significant event that was expected such as the release of earnings reports
or important news (like in the above example). A volatility crush can have a
huge impact on the extrinsic value of options and it means a sharp decline
in price.

What is a Bid-Ask Spread?

A bid-ask spread is the amount by which the ask price exceeds the bid
price for an asset in the market. The bid-ask spread is essentially the
difference between the highest price that a buyer is willing to pay for an
asset and the lowest price that a seller is willing to accept.
The option chain shows you all of the available options contracts/premiym
(both Calls and Puts) for the stock.

This chain shows you all of the strike prices and expiration dates for the
stock option. The option chain gives you alot of different information
pertaining to what ties in to the option (Greeks) and how the value of the
contract can change under different market conditions.
Call Options: A Call Option is a contract between a buyer and a seller. It
gives the buyer the right (or option) to buy the stock at the price (strike
price) within a creation period of time (expiration date).
Ex: Say you’re bullish AAPL or expect its price to increase over the coming
days, weeks, etc. You could buy a Call Option to profit from upward
movement in Apple’s stock price.

Put Options: A Put Option is a contract between a buyer and a seller. It

gives the buyer the right (or option) to sell the stock at the (strike price)
within a certain period of time (expiration date).

The option chain is broken down into two columns. You’ll see there are
different metrics in the column, providing information about the option. Calls
are on the left, and Puts are on the right.

What Are Expiration Dates?

For new Options traders, expiration dates are the dates when the contract
expires.

When you’re deciding to buy or sell an option contract, a key note is how
much time you want to give yourself for the trade to ‘play out’. Which is its
time value.

You choose depending on how much you want to pay, and how long you
want to hold for. If you sell options, time decay is on your side. You do not
really want to hold your contract until expiration because of time decay.
When people hold their contracts, it’s usually because they’re already in a
loss or they do not understand options.
White and Yellow contracts

White : Monthly

Yellow: Weekly

Monthly Contracts

The white contracts are referred to as ‘Monthly Expiration’, which occur on

the third Friday of every month. Monthly contracts have a lot more
contracts traded when you compare it to weekly contracts making those
options more liquid and easier to get in and out of.
Weekly Contracts

The contracts in yellow are ‘Weekly’ Expiration contracts.

The strike price is the price that the underlying asset can be purchased at if
the option contract is exercised before [Link] choose the strike
price of the option at the time of purchase.
The strike price you choose and the price of the stock at the time of
purchase will determine if your strike is considered In-The-Money,
At-The-Money or Out-Of-The-Money.

A mistake of new traders is confusing price and value when buying options.
Although the OTM option is much cheaper, there is no intrinsic value.
Where with an ITM option, you’re paying more upfront but the options
already have intrinsic value and gain more value with a movement in price
in the direction you wanted it to.

Implied volatility is always expressed as a percentage. Vega is always

expressed as a dollar amount. A 1% increase in volatility will raise the
option's price by the Vega.

Let's develop this into an example. You have a long call on XXX (sym:
XXX) with a premium of $5.50, Vega of 0.20, and implied volatility of 18%.
If the implied volatility increases to 21% your long call is now worth $6.10.

5.50 (original price) + 0.20 (Vega) x 3 (increase in volatility) = $6.10

When volatility begins to drop, it also drops our option premium. If our
implied volatility goes from 21% down to 16%, our option will be worth
$5.10.

6.10 (original price) – 0.20 (Vega) x 5 (drop in volatility) = $5.10

Volatility is always expressed as a positive number for both puts and calls.
A put's option price will increase as volatility increases in the same manner
as a call’s price.

As volatility goes up, option price goes up, as volatility goes down, option
price goes down.

Chapter III

Technical analysis is a tool, or method, used to predict the probable future

price movement of a security– such as a stock or currency pair – based on
market data.

According to research, the The theory behind technical analysis is the

notion that actions of buying and selling – from all market participants
reflect all information pertaining to that, and therefore, continually assign a
fair market value to that stock.

Technical Analysis allows us to believe that current or past price action in

the market is the most reliable indicator of future price action.

Technical analysis is not only used by technical traders. Many fundamental

traders use fundamental analysis to actually determine whether to buy into
a market, but having made that decision, then use technical analysis to
find good, low-risk price levels.
Supply and demand is driven by many factors including: fear, greed,
financial incentive, herd instincts, crowd behavior.

These factors create repeatable patterns which we can recognise and profit
from.

Technical analysis covers a wide range of charting techniques used to try

and predict the move of a certain market.

Technical analysis includes the use of:

Time Cycles

Trendlines

Candlesticks Formations

Moving Averages

Chart patterns
Other Indicators

The time frame a trader selects to study is typically determined by that

individual trader’s personal trading style.

Intra-day traders, traders who open and close trading positions within a
single trading day, favor analyzing price movement on shorter time frame
charts, such as the 5-minute or 15-minute charts.

Long-term traders who hold market positions overnight and for long periods
of time are more inclined to analyze markets using hourly, 4-hour, daily, or
even weekly charts.

Moving Averages

MA is a very popular indicator. It is used as a trend-following indicator and

a sometimes as a counter-trend trading indicator.

Moving averages represent the average of the last #-period closing prices.

(9EMA)(21EMA)(50SMA) for example. With every new closing price, a

moving average drops the last closing price in its series and adds the
newest one. Moving averages are usually plotted on the price chart itself.
Moving averages can be grouped into simple moving averages (SMAs) and
exponential moving averages (EMAs).

SMAs are the simplest form of moving averages, as they take the
arithmetic average of the last #-period closing prices.

This means that each closing price has an equal weight in the calculation of
an SMA.

SMA’s generally also move slower than the EMA, because the EMA reacts
to the price faster. Since moving averages are lagging indicators, i would
rather have the EMA than the SMA.

EMA’s, on the other hand, use the exponential average of the last n-period
closing prices, which makes them quicker react to new closing prices than
their SMA peers. If you don’t know which type of moving averages to use, I
would recommend you to start with EMAs and see how they align with your
trading strategy.

Moving averages are also often used as dynamic support and resistance
lines. Traders often use longer-term MAs, such as the 200-day or 100-day
MA, to find areas where the price could retrace and continue in the
direction of the underlying trend.
I personally use the 9 EMA / and the 21 EMA.

If the moving averages cross over one another, it could signal that the
trend is about to change soon, thereby

giving you the chance to get a better entry.

One thing to take note of with a crossover system is that while they work
beautifully in a volatile and/or trending environment, they don’t work so well
when price is ranging because they tend to bounce off of the support /
resistance.

You will get hit with tons of crossover signals and you could find yourself
getting

stopped out multiple times before you catch a trend again.

This is why you must use different indicators to help you have better
conviction.

For every trading strategy, you must find the right stocks to trade, along
with the right entry/exit points and risk management rules. Bad risk
management can make a potentially profitable strategy unprofitable.
When trading Options, we usually stick to the most liquid / most volume
stocks, and these names are usually the biggest names in the market.

Why do we choose these?

Because they’re very easy to get in and out of.

Intro to Spreads for small Accounts

Debit Spreads

Call Debit Spread:

Buying 1 In the Money Call Selling 1 Out of the Money Call

Ex:

XXX is trading at $40 a share.

Buy $43 call for $0.60

Sell $45 call for $0.30

This trade creates a net debit of $0.30($30), thats why its called “debit:”

Max profit is limited, Maximum loss is defined. Risk level is: Low.

Debit spreads are best if you are moderately anticipating a significant up or

down move in a stock.

There are 2 Legs in this Contract. Thus, 2 different strikes.

You are hoping to profit from the lower strike price. The call with the higher
strike price helps you mitigate losses. Another difference between single
options positions and debit/credit spreads are the changes in volatility.

Call/Put debit spreads have the same number of short contracts as it does
long contracts, therefore changes in volatility is nearly unimportant. Where
as, a regular call/put position, if the volatility crushes that normal call/put
position without any price movement, the option itself would lose value.

Call and Put Debit spreads are Bullish/Bearish with a defined risk. Time
decay works against this strategy. Money is made if the stock appreciates.
Call and Put debit spreads are generally a Hedged version of buying calls
and puts.
Put Debit Spread:

Buy 1 In the Money Put

Sell 1 Out of the Money Put

You are hoping to profit from the higher strike price. The put with the lower
strike price helps you mitigate losses.

Technical Analysis

Dow Theory has been called the grandfather of stock picking theories.
With over a hundred years behind it, it is the oldest major idea for selecting
winning stocks. This also makes it the most enduring and long lasting idea
in the modern financial markets.

According to research, There are 6 basic

ideas to the DOW THEORY:

The Market Takes Everything Into Account

This first critical idea states that all relevant current, past, and also future
information on the markets is already known by them and demonstrated in
the indexes and individual stock prices.

This covers all influencing factors from interest rates and inflation,
investors’ emotions, and even imminent to be released earnings
announcements. It tells you that only information which cannot be known is
not covered by the prices, yet even event risks are factored into the prices.
Changing events, information, and risks cause adjustments in the market
prices.

The Market is Made Up of 3 Trends

Markets usually move in an overall direction but usually never in a one way
line. These trends are comprised

of three different types, primary, secondary, and finally minor. Primary

trends are the biggest and typically endure over a year. Secondary trends
are counter to the primary ones and usually run for from three weeks on to
three months. Minor trends are commonly shorter than three weeks in
length.

Primary Trends Undergo 3 Phases –

The first Accumulation Phase begins the upward price movement. At this
time the knowledgeable and

smart money investors move into the markets.

Mass Participation Phase is where the negative sentiment that

surrounded the markets in the accumulation phase has been overcome
with improving business conditions. The longer the better news comes out,
the more investors pile back into markets causing prices to go higher. This
is the phase which lasts the longest and provides the biggest movements in
price.
The final period is appropriately known as The Excess Phase. By this time,
markets have notched significant gains as more and more people have
entered the markets and the price move begins to get tired. Most all of the
investors are in, but the smart money investors are already beginning to
sell out to those just coming into the markets. “Alan Greenspan” has called
this the EXTREME ENTHUSIASM / EUPHORIA phase of the stock market.

Market Indexes Have to Confirm One Another

Major changes from bull markets to bear markets or the other way around
only signal when the two main

ORIGINAL indexes the Dow Industrial and Dow Transports agree with each
other. While one is in a downward trend and the other is beginning a
primary uptrend, you should be careful in believing new overall trends have
started.

The DOW JONES INDUSTRIAL AVERAGE is the second oldest U.S.

market index after the DOW JONES TRANSPORTATION AVERAGE,
which contains 20 transport stocks such as railroad and trucking
companies.

There are 6 basic ideas to the DOW THEORY:

The Market Takes Everything Into Account

This first critical idea states that all relevant current, past, and also future
information on the markets is already known by them and demonstrated in
the indexes and individual stock prices. This covers all influencing factors
from interest rates and inflation, investors’ emotions, and even imminent to
be released earnings announcements. It tells you that only information
which cannot be known is not covered by the prices, yet even event risks
are factored into the prices. Changing events, information, and risks cause
adjustments in the market prices.

The Market is Made Up of 3 Trends –

Markets usually move in an overall direction but seldom in a one way line.
These trends are comprised

of three different types, primary, secondary, and finally minor. Primary

trends are the biggest and typically endure over a year. Secondary trends
are counter to the primary ones and usually run for from three weeks on to
three months. Minor trends are commonly shorter than three weeks in
length.

Primary Trends Undergo 3 Phases –

The first Accumulation Phase begins the upward price movement. At this
time the knowledgeable and

smart money investors move into the markets.

Dow Theory

Dow Theory

Mass Participation Phase is the point where the negative sentiment that
surrounded the markets in the accumulation phase has been overcome
with improving business conditions. The longer the better news comes out,
the more investors pile back into markets causing prices to go higher. This
is the phase which lasts the longest and provides the biggest movements in
price.

Dow Theory
 Dow Theory

The final period is appropriately known as The Excess Phase. By this time,
markets have notched significant gains as more and more people have
entered the markets and the price move begins to get tired. Most all of the
investors are in, but the smart money investors are already beginning to
sell out to those just coming into the markets. “Alan Greenspan” has called
this the EXTREME ENTHUSIASM / EUPHORIA phase of the stock market.

● Market Indexes Have to Confirm One Another

Major changes from bull markets to bear markets or the other way around
only signal when the two main

ORIGINAL indexes the Dow Industrial and Dow Transports agree with each
other. While one is in a downward trend and the other is beginning a
primary uptrend, you should be careful in believing new overall trends have
started.

Dow Theory
“The DOW JONES INDUSTRIAL AVERAGE is the second oldest U.S.
market index after the DOW JONES TRANSPORTATION AVERAGE,
which contains 20 transport stocks such as railroad and trucking
companies. The Dow Jones Industrial Average was designed to serve as a
proxy for the broader U.S. economy.”

Dow Industrial Average ETF = (DIA)

Dow Transportation Average ETF = (IYT)

An exchange-traded fund (ETF) is a type of security that involves a

collection of securities—such as stocks—that often tracks an underlying
index, although they can invest in any number of industry sectors or use
various strategies. ETFs are in many ways similar to mutual funds;
however, they are listed on exchanges and ETF shares trade throughout
the day just like ordinary stock.

Some well-known example is the SPDR S&P 500 ETF (SPY), which tracks
the S&P 500 index.

Volume is Required to Confirm Trend

The volume is the amount of shares that have traded. This is the secondary
measure that confirms a
new trend is beginning as demonstrated by the movements in price.

This simply means that if price movement is going in the trend’s direction,
volume will be greater. Conversely if price is moving against the trend,
volume should drop.

Trend is Ongoing Until A Clear Reversal Emerge

A trend continues until and unless an overwhelming amount of evidence

indicates that is has reversed.

You should only buy into the idea that the trend has changed if the
evidence is clear enough to make a safe assumption. Otherwise you end
up trading contrary to the trend, which is generally a terrible idea.

The trend IS your friend.

Trends help you to have a clear definition in your mind so you can easily
interpret when a trend is occurring.

Uptrend
An uptrend can be described as a sequence of higher lows in conjunction
with higher highs. When plotted on a chart, it will look like the candles are
going up.

Downtrend

A downtrend can be described as a sequence of lower highs in conjunction

with lower lows. When plotted on a chart, it will look like the candles are
going down.

The easiest way to identify a trend is if you can draw a trendline.

Trendlines are far more reliable and simple to use than moving averages.
With an uptrend, the easiest way to trade is if you wait for the trendline to
be hit and the price bar to bounce upwards off it, continuing the trend.

With a downtrend, the easiest way to trade is if you wait for the trendline to
be hit and the price bar to bounce downwards off it, continuing the trend.

A break of the trendline, particularly with rising volume, may signify the end
of that trend.
If we draw a parallel line at the same angle of the uptrend or
downtrend, we will have created a channel.

To create an up (ascending) channel, simply draw a parallel line at

the same angle as an uptrend line and then move that line to position
where it touches the most recent peak. This should be done at the
same time you create the trend line.

To create a down (descending) channel, simply draw a parallel line

at the same angle as the downtrend line and then move that line to a
position where it touches the most recent valley. This should be done
at the same time you create the trend line.
When prices hit the LOWER trend line, this may be used as a buying
area.

When prices hit the UPPER trend line, this may be used as a selling
area.

Flags and Pennants are short-term continuation patterns that mark a small
consolidation before the previous move resumes. These patterns are usually
preceded by a sharp advance or decline with heavy volume, and mark a
midpoint of the move.

Fierce Move: To be considered a continuation pattern, there should be

evidence of a prior trend. Flags and pennants require evidence of a
sharp/fierce advance or decline on heavy volume. These moves usually occur
on heavy volume and can contain gaps. This move usually represents the first
leg of a significant advance or decline and the flag/pennant is merely a pause.
Flagpole: The flagpole is the distance from the first resistance and or /
support break to the high or low of the flag/pennant.

The sharp advance (or decline) that forms the flagpole should break a trend
line or resistance/support level. A line extending up from this break to the
high of the flag/pennant forms the flagpole.

Flag: A flag is a small rectangle pattern that slopes itself against the previous
trend. If the previous move was up, then the flag would slope down. If the
move was down, then the flag would slope up. The price action just needs to be
contained within two parallel trend lines.
Point A is at the level of the top of the flag. As such it is the most
conservative entry point, because it is where the stock is making new
highs. You must make sure that volume is increasing as the new high is
made. Increasing volume means there is conviction behind the move,
which makes it more likely to be sustainable.
Point B is where the stock breaks out of the flag itself. This is more
aggressive than Point A, and again requires increasing trading volume to
demonstrate conviction in the move.

If the entry is activated then we need a stop loss. Point C is the level
where, if we're already in the trade, we'd exit with a small loss.

This is your basic trading plan for a Bull Flag, within the context of an
upward trend.

Point A is at the level of the bottom of the flag. This is a conservative entry
point because it is where the stock is making new lows. Make sure that
volume is increasing as the new low is made. Increasing volume means
there is a lot of conviction behind the move, basically a lot of people
participating which makes it more likely to hold.
Point B is where the stock breaks out of the flag itself. This is definitely
more aggressive than Point A, and again requires an increase in volume to
show decent conviction in the move.

If the entry is hit then we need a stop loss. Point C is the level where, if
we're already in the trade, we'd exit with a small loss.

This is your basic trading plan for a Bear Flag, within the context of a
downward trend.

WEDGES are very common. They usually represent to channels with a

up/down bias. Wedges are the same as trend channels except the lines are
not parallel. They are slightly slanted which means fake outs occur. Rising
wedges give rise to bullish breakouts most of the time.

Wedges can be bearish or bullish so always wait for confirmation.

BEARISH RISING WEDGE

As you can see, the price came from a downtrend before consolidating and
REACHING higher highs and even higher lows.
Just like the rising wedge, the falling wedge can either be a reversal or
continuation signal.

As a reversal signal, it is formed at a bottom of a downtrend, indicating that

an uptrend would come next.

As a continuation signal, it is formed during an uptrend, implying that the

upward price action would resume. Unlike the rising wedge, the falling
wedge is a bullish chart pattern.

In this example, the falling wedge serves as a reversal signal. After a

downtrend, the price made lower highs and lower lows.
Notice how the falling trend line connecting the highs is steeper than
the trend line connecting the lows.

A symmetrical triangle is a chart formation where the slope of the

price’s highs and the slope of the price’s lows come together to a
point where it looks like a triangle. Easy right?
Reading Candlestick Patterns

Hammer
Small Real Body

-Occur after a decline in price

-Sellers driving price lower

-Followed by strong buying pressure to end the day. The close can be
above or below the open, but the close should be near the open for the
body to be small.

-The next day should be able to confirm the bullish reversal.

Hanging Man
-The stock has been in an

Uptrend

-The candle has a small

Body and a long lower shadow.

-Since the Hanging Man hints at a price drop, the signal should be
confirmed by a price drop the next day.

Doji
Doji candlesticks form when a stocks opening price and closing price are
basically equal. The DOJI tells us that during the market, the price moved
higher and lower and neither the bulls or the bears were esteemed. Stock
went up, sellers stepped in, and the buyers stepped back in. Indecision.
When this candle is combined with other trends and candles, its a very
important reversal candle.

Shooting Star
The shooting star iis a bearish candle and it usually forms after an
uptrend. The price has basically advanced for multiple candles, days, and it
tries to continue this uptrend. The price action of this candle is as follows:
Opens, trades higher, gets rejected by the sellers, who then take over,
pushing the price back down (creating the long upper wick) then closes the
price below or near the opening price. This is a warning sign for a reversal.

Spinning Top

A normal spinning top conveys indecision as both bulls and bears were not
able to influence the markets. However when you see the spinning top with
respect to the trend in the chart it gives out a really powerful message
based on which you can position your stance in the markets.

Bearish and Bullish Harami

The bearish harami is a candlestick pattern at the top of the uptrend. Its
shown by a large candlestick which forms on a negative day and it signals
a change may be coming. It is then followed by a smaller candlestick with
its body in the vertical range of the larger candlestick. This pattern means
that SELLERS have stepped in. This usually means that a top has been
placed, and a reversal is soon to happen.

The bullish harami forms at the bottom after a downtrend. The large
candlestick is then followed by a smaller candlestick with the body in the
large’s candle vertical range. This pattern is a sign of a reversal to the
upside.

Bullish Engulfing
The bullish engulfing pattern is a pattern that forms when a GREEN
CANDLESTICK fully engulfes a red candlestick signaling BUYERS
overcoming the sellers.

This is a signal to go LONG.

Bearish Engulfing
The bearish engulfing pattern is the OPPOSITE of the BULLISH
ENGULFING pattern. This pattern forms after an advance in trend and
signals a reversal. The RED CANDLE must fully engulf the smaller green
candle in order for this to be a bearish engulfing pattern. This is a signal
to go SHORT.

The rising three method is a BULLISH pattern used to predict

continuation of an uptrend.
Price has been advancing but there are 3 red days in a row. These RED
days never trade lower than the GREEN CANDLE to the left. This indicates
that the uptrend will most likely continue.

The OPPOSITE goes for the FALLING THREE METHOD. Bearish pattern
used to predict the continuation of a downtrend. The 3 GREEN days never
go above the RED CANDLE on the left.

Here are cheat sheets you can find on the internet.

Bulls - People who want the stock to go up

Bears - People who want the stock to go down

An observation of how spinning tops work during a trend is the fact that
there is an uptrend in the market, which means the bulls have been in
control over the last few trading sessions / candles. However with the
spinning top the situation is a bit tricky:

​ The bulls are no longer in control, if they were, spinning tops

would not be form on the charts
​ With the formation of spinning tops, the bears have made an
entry to the markets. Though not successful, but the emphasis
is on the fact that the bulls gave a leeway to bears, therefore
leading to a more bearish attempt at the price.
The color of the spinning top does not matter. What matters is the fact that
the open and close prices are very close to each other.

Resistance & Support

Resistance is something which stops the price from rising further. The
resistance level is a price point on the chart where traders expect maximum
supply (in terms of selling) for the stock/index. The resistance level is
always above the current market price.

The likely hood of the price rising up to the resistance level, consolidating,
absorbing all the supply, and then declining is high.

The resistance is one of the critical technical analysis tool which market
participants look at in a rising market. The resistance often acts as a trigger
to sell. Or a trigger to buy once price is above.
Having learned about resistance, understanding the support level should
be quite simple and intuitive. As the name suggests, the support is
something that prevents the price from falling further. The support level is a
price point on the chart where the trader expects maximum demand (in
terms of buying) coming into the stock/index. Whenever the price falls to
the support line, it is likely to bounce back. The support level is always
below the current market price.

There is a maximum likely hood that the price could fall till the support,
consolidate, absorb all the demand, and then start to move upwards. The
support is one of the critical technical level market participants look for in a
falling market. The support often acts as a trigger to buy. Or a further tank,
if price breaks support.

Long term S&R – is useful for swing trading

Short term S&R – is useful intraday and scalps

S&R are price points on the chart

Support is a price point below the current market price that indicate buying
interest.

Resistance is a price point above the current market price that indicate
selling interest.
To identify S&R, place a horizontal line in such a way that it connects at
least 3 price action zones, well spaced in time. The more number of price
action zones (well spaced in time) the horizontal line connects, the stronger
is S&R.

S&R can be used to identify targets for the trade. For a long trade, look for
the immediate resistance level as target. For a short trade, look for the
immediate support level as target.

Volume

Volume are the bars you see below the candlesticks.

Volume plays a very integral role in technical analysis as it helps us to
confirm trends and patterns. Consider volumes as means to gain insights
into how other participants perceive the market. Volumes indicate how
many shares are bought and sold over a given period of time. The more
active the share, higher would be its volume.

Volumes are used to confirm a trend.

The end of day volumes indicates the cumulative volume across trades
executed throughout the day.
High volumes indicates the presence of smart money.

Low volumes indicate retail participation

When you initiate a trade to either go long or short always make sure if
volumes confirm.

Avoid trading on low volume days.

Technical Analysis: Continued

“A type of past price analysis which uses mathematical models and

calculations to predict future price movements”

Supply and demand is driven by many factors including: fear,

greed, financial incentive, herd instincts. These factors create
repeatable patterns which we can recognise and profit from.
Technical analysis encompasses a wide range of charting
techniques used to try and predict the move of a certain market.
Technical analysis includes the use of:

Time Cycles

Trendlines

Candlesticks Formations

Moving Averages

Chart patterns

Other Indicators

The time frame a trader selects to study is determined by their personal

trading style. Intra-day traders, traders who open and close trading
positions within a single trading day, usually like analyzing price movement
on smaller time frames, such as the 5-minute or 15-minute charts.
Long-term traders who hold market positions overnight and for long periods
of time are more inclined to analyze markets using hourly, 4-hour, daily, or
even weekly charts.

Movement that occurs within a 15-minute time time frame be very

significant for intra-day traders who are looking for opportunities to profit
from daily price fluctuations.

However, that same price action that you see on the 4h, daily or weekly
chart may not be particularly significant for long-term trading purposes.

With all of this being said, make sure to look at the correct time frames
when you are planning to Day trade, Swing or Scalp.

Use Multi Frame analysis to help you with your conviction on trades.

Apply the 15 minute chart, while looking

at the hourly, while also looking at the Daily.

This gives you an idea of what’s happening on each time frame.

Day Trade Time Frames: 1min, 5min, 15min, 30min, 1h.

Swing Trade Time Frames: 30min, 1h, 4h, Daily, Weekly

Trading Range
According to research, The concept of range is a “natural extension to the
double and triple formation”. In a range, the stock will go up to the
resistance level and the support level multiple times for a certainperiod of
time. When this happens, it can create what’s called a sideways market.

So, when both the buyers and sellers are not confident or when one isn’t
stronger than the other, the price would typically move in a range. This is
why it can even be annoying to trade in these market conditions.
However , by identifying the range , it can help you find multiple
opportunities to trade the breakouts or the bounce. There is a lot of
opportunities for reversal trades as well as breakout trades.

The Range Breakout

Stocks break out of the range after being in the range for a long time.
Before we explore this, it is important to understand WHY stocks trade in
the range in the first place.

Stocks can trade in the range for two reasons:

When there are no fundamental triggers that can move the stock –
Accoridng tonresearch, These triggers are usually “quarterly/ annual result
announcement, new products launches, change in ownership, buyouts,
mergers, acquisitions etc. This can be the leading catalyst for a potential
breakout.

The range under these circumstances could happen for a while unless
something triggers a breakout.

Sometimes the stocks can move violently due to anticipation of an event.

You have to be mindful of when these companies may come out with news
pertaining to the growth of their company.
Stocks will almost always breakout of the range after consolidating,
whether it be to the upside or downside.

The breakout can indicate the start of a brand new [Link] amount it
goes up or down depends on the severity of the catalyst. Regardless,
ranges give you tons of trading opportunities if you look at it the right way.

A trader will take a long position when the stock price breaks the
RESISTANCE and will go short after the stock price breaks the SUPPORT
level.

Think of the range as a compressed bottle where the pressure builds up

on each passing day. By poking a small hole, the pressure eases out with a
great force. This is how the breakout happens. However, the trader needs
to be aware of the concept of a ‘false breakout’.

A false breakout happens when the trigger is NOT STRONG enough to pull
the stock in a particular [Link] to research, a false breakout
can happen when a ‘not so trigger friendly event’ occurs and impatient
retail traders react to it. Watch out for low volume during breakouts,
because low volume usually means there is no smart money. After false
breakouts, the stock will usually fall back into its range.

A true breakout has two distinct characteristics :

HIGH VOLUME
FAST MOVEMENT

Day Trading & Strategies

When you are Day Trading, you are essentially buying and selling the
same day.

A single Day trade can take about 5 minutes - several hours.

As long as you sell it the same day, it’s a DAY trade.

ALWAYS RISK what you’re WILLING to essentially LOSE. Of course

you don’t want to lose it, but make sure ego always have that in your
conscience.

Always come in to the market without a [Link], don’t come

into the market expecting a stock to go a certain way.

Always be OPEN to directions.

Whenever I come into the market, I never have a bias of where a

stock may [Link] a stock that I’m looking at, meets my requirements for
an entry, I will enter it in the direction that the stock price is potentially
pushing / breaking.

For example,

Let’s say the Market just opened.

You are looking at stock XXX because there was great news the
previous day.

You should never have a bullish BIAS, just because of the news.

The price will always usually react to sentiment, not news. Although
news can create sentiment, it may not be the case for some
occasions.

Back to the stock, let’s say stock XXX falls at market open, and
continues to go down, and passing the support line.

In this case, if it meets your requirements for a potential PUT entry,

that’s what you execute.
Just because it had great news the previous night, does not determine
its “bullishness” the next morning.

With that being said, NEVER have a BIAS.

Make sure to have SUPPORT & RESISTANCE

lines drawn on your chart.

To have an established SUPPORT & RESISTANCE, you must use the

2-3 touch rule.

Here is an example of an ESTABLISHED Support & Resistance.

Notice how SUPPORT & RESISTANCE also creates ZONES.

Since the prices can’t be PERFECT all the time, this creates “zones”.
If the past resistance is .50 cents away from the new resistance, that
.50 cent difference turns into a zone.

Notice the top “RESISTANCE ZONE” and the bottom “SUPPORT

ZONE”.

This zone acts as a support area.

This means that whenever the price retraces to this ZONE, the stock
may bounce.

Which essentially means…….

The BUYERS control this support zone.

The SELLERS control the resistance zone above it.

The next time you create SUPPORT & RESISTANCE,

Always use the concept

“BUYERS” & “SELLERS”.

Here is an example of how your SUPPORT & RESISTANCE should
look like.

You can see that the SUPPORT & RESISTANCE from the left, retests
itself on the right.

What does this mean?

This means that once buyers & sellers establish their levels, these
levels will continue to serve as areas where the buyers/ sellers will
then buy or sell back at that same level.

This is why you’ll have resistance & support levels from the past retest
again in the future.

The buyers and sellers continue to hold the area.

This is why it’s important to identify these levels because once you’re
able to find the most established levels, you can GAUGE buying &
selling strength just from the amount of times these levels retest over
the time frame.
Going back to the example….

Look where there was a

“HARD INDECISION AFTER GAP UP”

You see how far apart the “Hard Resistance” & “Hard Support” is from
each other?

That is your potential move for a trade.

Let’s use the first strategy we’re going to talk about.

We’re going to be using the “TTM SQUEEZE” as our first indicator.

The TTM SQUEEZE captures the moments where a market is in a

period of consolidation right before a big move.

Now.. you can see that it made a HUGE move to the upside but failed
to continue and instead started to consolidate HEAVILY, thus
triggering the squeeze indicator to indicate a consolidation.

When you see this consolidation, especially after a big move, the first
thing you want to look for are the candles.

Just by judging the candles, which seem more likely?

In this case, after the big move the sellers stepped in and pushed the
price down to the “HARD RESISTANCE” which turns into support.

When a resistance turns into support it is usually a good sign for a

continuation to the upside.
But in this case we had an EMA crossover to the DOWNSIDE as the
price was squeezing.

The exponential moving average is a line on the price chart that uses
a mathematical formula to smooth out the price action.

An exponential moving average tries to reduce confusion and noise of

everyday price action. Second, the moving average smooths the price
and reveals the trend. It even sometimes reveals patterns that you
can’t see. The average is also more reliable and accurate in
forecasting future changes in the market price.

Now, when you have a SQUEEZE + a CROSSOVER,

This is usually a good signal. In this case, this is a signal for PUTS
because the 9EMA crossed below the 21EMA.

What about the profit target?

Since you entered at the “HARD RESISTANCE”, your profit target is

the nearest support, which in this case is the “HARD SUPPORT”.

ONLY MAKE CRITICAL / HARD LEVELS YOUR PROFIT TARGET /

ENTRY.
The reason why you make the critics levels your profit target / entry is
because these are ESTABLISHED areas.

You have to find the levels where the buyers and sellers are known to
test the most.

The more times it becomes tested, the stronger the level.

How far back can I look?

You can go as far back as you want when looking at levels.

There’s been times where a level has tested years prior, and it
continues to test in the present.

Be very vigilant and thorough when making these levels.

MAKE SURE WHEN YOUR PROFIT TARGET HITS TO TAKE YOUR

PROFITS.

ALWAYS FOLLOW YOUR RULES & PLAN!

This strategy is called the “CROSS - SQUEEZE”

This is very similar to the last strategy, it’s just that in the case, you
don’t need an established support / resistance as an entry.

In this example we have a small consolidation range,

And our entry in this example would be the breakout of the range.

But before that, you want to have a Squeeze followed by an

INCREASE in VOLUME with the crossover.
You enter as the candle breaks out!

Your profit target can be the next support.

An example of what an actual “BUYING ZONE”

looks like.

“BUYING ZONES” are essentially just areas where the stock was
previously trading at, but is now trading higher than, because of an
INCREASE in DEMAND.

When you get an increase in DEMAND, it pushes the price higher.

When the DEMAND increases right at a Resistance line (as you can
see on top), the resistance then TURNS into a SUPPORT level.
In this example, you can treat this bottom area as “BUYING ZONES”
because the support has held for a few days.

This means that in those few days, the buyers have been strong
enough to sustain the price ABOVE the support.

Once you have the “BUYING ZONES” established, you should color
the box GREEN.

This way everything is color coded and you can spot these areas
better, at least that’s what I do.

The green area let’s me know that these are “BUYING ZONES” so
that I won’t easily sell my position just because it’s going against me.

I can use the BOTTOM of the “BUYING ZONE” as my stop loss.

This is a REOCCURING sequence that forms so very often.

The BEST way to use the AHPMB (After Hour / Pre Market Breakout)
strategy is by FIRST looking at the previous days HIGH / and or
previous days CLOSE.

Then what you want to happen is you want the previous days HIGH or
previous days CLOSE to be a resistance level throughout after hours /
pre market.

This means that this high or close has been established as a HARD
resistance.

Because what usually happens is.. after hours / pre market you can
see very big moves because this is when Institutions will step in to
buy.
In this strategy.. you want to trade the OPEN, or CLOSE to the open,
and what you want to do is wait for the VOLUME to SPIKE, and the
9/21 EMA to cross.

You want to set your STOP LOSS a little BELOW the RESISTANCE
and you want to be patient because sometimes it’ll RETEST the
resistance turning it into a SUPPORT, and then finally launching up.

Here is another example of establishing HARD SUPPORT and HARD

RESISTANCE.

If you have it simply like this, you can’t really tell if there is more
BUYING STRENGTH or if there is more SELLING STRENGTH.
What about when I color code the zones?

See how much easier it is to understand SUPPLY & DEMAND when

you have this zone on?

Treat the NON colored zone as a NEUTRAL zone.

The NEUTRAL zone can have either buyers/ sellers within the zone,
but as it gets closer to its RESISTANCE or SUPPORT, depending on
which color it comes close to, expect the buyers / sellers to come in
according to its respective color.

Let’s take a look at a 1 HOUR RANGE strategy.

In this example we have a 1 hour RANGE that lasted about 6 days.

In this example you want to first wait for an EMA CROSSOVER to

happen.

Once the crossover happens you want to look for RESISTANCE

ZONES to break and HOLD before entering the breakout.
Look at the first ORANGE arrow.

You can see it broke above the first RESISTANCE zone and sold off.

Look at the GREEN arrow.

You can see the price broke above the zone again, and this time you
have it HOLDING.

Look at the EMA’s on both occasions.

You can see one started to point down and eventually cross,

And the other stayed pointing UP.

You can also GAUGE the VOLUME bars on the bottom.

On the left example the VOLUME kept repeating red and the right,
BUYING volume came in every hour.

You want to either enter at the PRE MARKET high level or the level
where it actually breaks out of its range.

Let’s look at this GAP on HD.

We are currently looking at a 1 hour time frame.

We are looking at a span of 19-20 days.

You can see the GAP on Day 1.

You can also see that on DAY 6 it FILLED its GAP but then SOLD off.

What does this mean?

This means that there are LOTS off sellers sitting at that GAP level.

You can see on DAY 10, it sold off again after retracing back.

When you see a level that has such strong sellers, you ALWAYS want
to establish this on your chart.

Yes you guessed it.

Color code!
This selling zone let’s me know NOT to TRADE CALLS whenever we
get back to this ZONE.

There’s no point because it’s already rejected 2 times in the past.

The only way I would trade CALLS on this is if it BREAKS OUT of the
zone and is ABOVE the ZONE.
Let’s move on to the 5 MINUTE chart.

In this example, you want to make sure to use the PRE MARKET /
OPEN RESISTANCE LEVEL.

You want to wait until the RESISTANCE level has been tested multiple
times… especially on the first 5-20 minutes.

We’re going to do some price action analysis here.

Look at the HAMMER formed on the 2nd 5 minute candle.

This lets us know that there are ALOT of buying interest.

The only times that CANDLE formations are considered

SIGNIFICANT is when these candles formed RIGHT AT the
RESISTANCE or SUPPORT.

Always remember that!

Let’s look at the example here.

We are going to be looking for

AFTER HOUR / PRE MARKET RANGE.

You want to make sure the RANGE starts at the CLOSE / AFTER
HOURS.

This is a PERFECT setup.

We’re going to use the RESISTANCE LEVEL as the ENTRY for

CALLS.

In this example there are 2 WAYS to trade this.

You can use this SIMPLE BREAKOUT as a factor in why you should
enter, or if you look CLOSELY, you can actually see a Triangle formed.
You can actually combine these two,

Which gives you a HIGHER CONVICTION.

By using the triangle + the range + the resistance as a reason for

entry, you are taking advantage of FACTOR COMBINATION.

In this next example we are going to utilize Pattern Recognition on the

hourly frame.

This strategy is simple.

You want to spot a pattern,

And trade the breakout.

Since you are looking at an HOURLY CHART,

The breakout will be significant so essentially you can even SWING

the breakout.
Let’s look at another Pattern Recognition example.

Here we have an Ascending Triangle on the 1 hour frame.

Look at the bottom Trendline as moving up.

This is showing you that the Buying interest is increasing.

This is why you see the support sloping up.

When it slopes up, it means the buyers are holding this down.

Another Pattern Recognition strategy, this time using the 15 min chart.

You want to find the next RESISTANCES ABOVE THE BREAKOUT,

and USE THOSE levels as a profit target from the breakout of the
pattern.

In this case, this stock does not move much in a day, but that’s
besides the point.

Having levels that are ESTABLISHED, is KEY in finding a

CONSISTENT strategy.
You see how AFTER the breakout, the price retested to the
PREVIOUS RESISTANCE, and it STRUGGLED to break it for the first
2 hours.

Pattern Recognition on smaller time frames.

This time on the 5 minute chart.

Here we have an ascending triangle that formed beginning in pre
market throughout the first half of the market when it finally broke out.

So, here’s the thing.

When you find a PRE MARKET RESISTANCE, and when price

OPENS, it can’t break that resistance, EXPECT THE PRICE TO BE
SIDEWAYS AND FORM A PATTERN, especially if it can’t break its
support either.

In this case, you want to WAIT UNTIL a PATTERN FORMS and trade
the VOLUME breakout.

Why the VOLUME BREAKOUT?

Because if the stock can’t break RESISTANCE OR SUPPORT near

the open,

Then it never HAD VOLUME to begin with.

This is why the VOLUME BREAKOUT is CRUCIAL.

Here is another PATTERN RECOGNITION strategy, mainly used for
swings because it’s most beneficial, but this applies to daytrades
depending on when the breakout happens.

In this case you FIRST want to have the RED stochastics line cross,
THEN the EMA CROSSOVER.

You want all of this to HAPPEN RIGHT BEFORE the Breakout.

Execute on the BREAKOUT.

When using STOCHASTICS SLOW INDICATOR,

When the red line goes above the BLUE line, this means that the
BUYING momentum is strong.

Same goes for the red line going below the BLUE LINE.
ALWAYS, ALWAYS make THESE RESISTANCE LINES.

For 4 consecutive days, trading the RESISTANCE BREAKOUT by

itself worked on TSLA.

To help trade breakouts like these, you can utilize the EMA CROSS /
STOCHASTIC CROSS / VOLUME.

Here is an example of EMA CROSSOVER + STOCHASTIC

CROSSOVER at OPEN can help you trade the OPENING
VOLATILITY.

You want to execute AT THE BREAK of RESISTANCE,

AFTER the Crossover but MAKE SURE the STOCHASTIC comes
first.

Why does the Stochastics have to come first?

It doesn’t HAVE to, but it’s better when it does.

Why?

Because when the stochastics cross.. it signifies a SHIFT in

Momentum.

When the momentum has been bearish and it crosses up, you get a
SHIFT in momentum.

Momentum shifts indicate a potentially strong BUYING pressure

coming in.

In this case, the LONG BOTTOM WICK that formed on the green
candle at the resistance also indicates buying pressure coming in.
Here is another example of how you can utilize the Stochastic Cross +
the EMA Crossover.

In this example,

You want to MAKE SURE you have an ESTABLISHED resistance that

has happened on the SAME TIME FRAME.
HARD SUPPORT #1 becomes your ENTRY.

HARD RESISTANCE #1 becomes your PROFIT TARGET #1

HARD RESISTANCE #3(typo) becomes your PROFIT TARGET #2.

Notice how on ALL OF THE EXAMPLES I’m showing you,

Spotting False Breakouts.

ONCE a BREAKOUT happens, you have a 2-10 minute window for a

false breakout signal.
In this case we are going to use the STOCHASTIC cross DOWN as
one of the signals for a false signal.

The first signal of a false breakout are the PRICE action of the candles
itself.

You can see as the price breaks out, the first BREAKOUT candle
shows a lot of selling pressure shown by the 2 LONG wicks it’s formed
on the top.

This is NOT A GOOD SIGN after a breakout.

The stochastic slow indicates a SHIFT in momentum so this should

LET YOU KNOW that there MAY be a potential SHIFT.

Look at the 2 resistance LEVELS.

These RESISTANCE levels are very close together.

When you have resistance levels that are this close together it
becomes a ZONE.
Just like the very first example here.

Here we’re going to focus on the Squeeze.

The After Hour / Pre Market Squeeze.

You want to focus on the SQUEEZE only when it’s happening ALONG
THE RESISTANCE LINE.

You want to then use the STOCHASTICS to guide you on the shift in
momentum.
You want to make sure this shift in momentum happens RIGHT
BEFORE the market opens.

In this case, you can see that as the TTM is SQUEEZING

(Red dots on the bottom)

The Momentum SHIFTS upwards as the squeeze is released.

As the momentum shifts, the price is already at its breakout point..

therefore the breakout ended up being HUGE.

This Guide was made to guide you on your journey as a trader.

It’s not for you to necessarily copy the strategies I have listed for you,

But for you to develop your own.

In this example, we are going to utilize the EMA lines as a means of
Resistance / Support.

In this example you can see that the previous day was bearish.

After hours / Pre market formed a Support and turned into resistance
all before market open.

The first candle we’re going to look at is the first 30min candle after
previous days close.

This green candle with a long top wick was a full green candle until
sellers came in and pushed the price down causing the long wick.
This indicates selling pressure.

Now, during pre market, as the candle (red candle with arrow) retested
the resistance (which was support)

Sellers came back in and rejected the price.

Now why is this important?

Because this is all happening right before the open,

Where the most volume usually comes in.

You can see that the sentiment because BEARISH.

The rejection of the EMA + the RESISTANCE line indicates a potential

sell off at open.

When do I enter in this occasion?

You want to enter at the opening rejection of either of the EMAS (9/21)
or the break of the NEXT support line.
At the end of the day, what matters is your execution without
hesitation.

In this example we’re going to look at the Price action on AAL in 2

days.

First, we can spot the PRE MARKET resistance.

The price then formed a pre market high the next day

This pre market high will be used as an entry, and the previous day
high will be used as your PROFIT TARGET.
In this trade, you want to make sure the STOCHASTICS cross up
RIGHT AT THE RESISTANCE level.

In this last example we’re going to be looking at the previous days

support.

The previous day’s support is used as an entry level.

In this example, if you got in at the breakout, the price would have
retraced back up SLIGHTLY, but notice how the SUPPORT held and
the sellers MAINTAINED control at the support level.

In this case, the BEAR FLAG that formed was a perfect indication of a
continued sell off because it could not break the resistance line AT
ALL!
ALWAYS USE SUPPLY & DEMAND to your ADVANTAGE.

Scalping

Everything that we look at will mostly be with the 1 minute chart.

I personally, only refer to the 5 minute chart once 10-30 minutes of the
market has passed.

I use the 5 minute chart to figure out when i can possibly get into a quick
scalp after the initial market open run.

If you didn’t know this, the market usually runs in one direction until 7AM
(10AM EST) where it can potentially reverse / pull back.
Of course its not a fact because everything in the market is unpredictable.

Market movements are always changing due to many reasons.

Trump can say one word and make or break the market.

Any reports that has to do with a Trade deal, Jobs reports, Fed talks,
Unemployment rates, Trade deficits, CPIS, retail sales, etc can be
detrimental or beneficial to the market.

ALWAYS BE AWARE.
TESLA SCALP // (Duration: 1-4 minutes) (Day Trade potential:15-30
minutes)

These are only based on what happened that day. But keep in mind, these
types of movements happen often. There is a lot of scalping opportunities
in the market every day.
You can see here TESLA opened up the first candle, only to be rejected,
thus creating a range for the first 11 minutes.

The 7th candle you see here can be considered a *fake out* because it
looked as if buyers were starting to control that resistance level and push
price up.

This is why its almost always important to wait for a clear confirmation.
Now… PRICE formed a support level on $332.40. You can base this
support off of the first 2 candles that has formed, that tested this twice.

You can see the 13th candle actually closed below the support. Since TSLA
does not have another support until 330, this can be a pretty huge scalp
($2 move) to support.

Now in this case, you want to enter at the highlighted OVAL.

After this, its going to be up to YOU when you want to take profits.

Me personally, i still have trouble taking profits sometimes but thats the
rule.
When you scalp, you’re going in somewhat heavy, and getting out after a
minimal price movement.

Do not be angry if you take profits after 1-3 minutes just because you see
that it kept going your direction.

You decided to be a scalper, so follow the rules.

What if you had held, and it reversed? And the fact that you went heavy,
the more you will lose.

Please spend the next 3-5 minutes to fully ANALYZE the above price action
and figure out why i made these marks on the chart.
This example could have been used for a DAY TRADE because there was
some what of a CLEAR downtrend after the first break of SUPPORT.

Day trades are best formulated when you look at the 5 minute charts and
not worry too much about 1 minute charts. That’s why its 2 different styles.
One is more laying back and watching it here and there, where as scalping
you would need to be a HAWK.

Moving on to the next one….

These types of setups happen too often.

Half-hour power sell offs.

You can see that,during pre market, Amazon attempted to take a little stroll
to the suburbs when Papa Bear brought him back to woods.

The 3rd candle is a momentum candle breaking through the support.

The top wick of that candle and the previous candle should already tell you
that the bears are in control.

With Amazon, expect a nice little run when it chooses a direction. It is such
a volatile & expensive stock that it has a huge daily range.

Your target should always be limited to only a few candles when scalping,
but when the stock is showing a CLEAR bearish direction, it does not hurt
to hold longer than usual as long as it doesn’t affect your scalping mentality
for your next trades.

The point of scalping is to get the most out of the minimal time you have
and to get out.

When you scalp and get too greedy, sometimes it will pull back for an X
amount of minutes to where your scalp is no longer a scalp but a normal
day trade.

Try not to turn scalps into normal day trades, or worse, swings.
The general rule of thumb in scalping is looking at VOLUME & Price Action
// combined with Time and Sales / Level 2 / stochastics, it may be an even
better “edge”.

But remember..

The #1 edge you can have in your arsenal is self control.

Here is an example of how to use the 1 minute wicks to your advantage,

especially if you are trying to get into a scalp with the most profit potential.

Now when you move into the 5 minute chart..

Once you switch over to the 5 minute chart after a certain time has
elapsed, it becomes easier to see the bigger picture, if let’s say.. you
wanted to find a potential pattern forming, by using the 5 minute frame, the
picture becomes clear.
Watch how the buying pressure increased through the wicks + volume
spiked.

Definitely a good entry here to catch the next leg up.

Especially when the HAMMER candle formed.

The top shows a very good reversal candle showing you an EXHAUSTION
candle.
HAMMER candle formed.

The top shows a very good reversal candle showing you an EXHAUSTION
candle.
This is where scalping will get very hard unless you become a HAWK and
is able to EXECUTE.

This breakout candle is crucial for entry and riding momentum.

Getting into this candle move means that you are riding the momentum.

$2 move on one candle.

At this point you could almost take profits, or trim….

When the consolidation starts to prolong itself, you must create a range in
which its trading.

Once the consolidation period (usually a couple of minutes on a 1 minute

chart) you wait for a breakout out of that range.

As it breaks out, you ride the momentum for 1-2-3 candles.

Wait for the next EXHAUSTION candle for profit taking.

This is easier to trade..

Sometimes Setups are very clear and it gives you more confidence to enter
because of CONFIRMATION.

When you scalp, you always want to take profits. You’re not here to ride a
$5-10 move.

You’re in here with SIZE. and you’re looking to maximize momentum, and
get out.
Most of the time, people who attempt to scalp get too greedy and turn their
scalps into a day trade, and once the trend reverses they get shook out
because they have so much size that they don’t want to risk losing it.
GOOGL had this MINI consolidation.

This is a 50 cent consolidation, GOOGL has been known to have crazy

breakouts and become a real runner.

When you see this very tight consolidation, you want to get your Sniper
ready.

All you need for this scalp is a $1-2 move.

Do NOT HESITATE.

NEVER HESITATE.

EXECUTE.

Here, it shows a decent scalpable trade in the first 5-6 minutes, but the way
down shows you an even better setup.
Watch for the EXHAUSTION candles and the break of SUPPORT.

Watch out for the wicks.

This is nasty price action. ALOT of indecision at open.

Alot of people were shaken out, etc.

When you get shaken out of a trade, ALWAYS cut your loss immediately
and wait for the next PROBABLE opportunity.

Be patient.

Sometimes the market will be so sideways, there won’t be an opportunity.

ITS OKAY.

A lot of people have the misconception of having to trade every single day.
Thats not right.

You don’t HAVE to.

Watch how the support became resistance.

Look at the fake out at 7:20-7:25

These things WILL HAPPEN.

Nothing is 100%

What matters is whether you are able to quickly cut your losses, and move
on to the next one.
Notice the first FALSE Breakout here.

You have to cut your loss here. Wait for the next opportunity.

The next opportunity came about 20 minutes later.

This is when you attempt AGAIN.

No hesitation.

This is a VERY nice breakout.

You want to take profits after the momentum, or trim down.

You can see that a Symmetrical Triangle formed after..

This is when you say, Okay, there may be another opportunity here.

As soon as that breaks out you want to add more, or re enter.

When the price is currently on the way up to resistance, and its close
enough to it to where you can still scalp a move, then why not do it?

You want to take profits for this last entry at the rejection of resistance.
Check out this price action on Google.

Had strong selling volume but the buyers were able to hold that SUPPORT.

You don’t want to immediately enter calls.

You want to PREPARE to enter.

For the next minute or two, pick the contracts you want, and are
comfortable buying.

Watch the price action.

Watch the candle on top of the red line and the 1 below the red line. These
candles are momentum candles.
Here is an example of a DAY TRADE SETUP with a CLEAR BREAK of
RESISTANCE, ASWELL as a BREAK of the TRIANGLE.

But first obviously, you want to enter at this break of resistance, you may
sell at the top of the triangle, or trim down, but once this triangle has
formed, it is showing a very high probility trade, regardless the direction.

So what you want to do is, as its getting closer to the breakout point of the
triangle, you want to switch over to the 1 minute chart and wait for the 1
minute candle to close above the triangle line.
This allows you to catch the upwards momentum, if it goes your way.

ALWAYS WATCH AFTER HOURS/ PRE MARKET GAPS

They FILL alot!

And sometimes the price goes up just enough to FILL, only to reverse and
bounce.

This Gap Fill is a good scalp at the first minutes of open, if you can catch it.
The Previous day close should always be the level where you look for a
breakout, or a reversal.

Notice the doji / Bear exhaustion candle in the middle indicating a potential
run up.

A couple of minutes later, you see a huge green candle, indicating that the
bulls have taken over and is pushing this price above resistance, which will
then turn to support.

As soon as it turned into support, the bears were no longer able push the
price down.
The first 2 minutes formed a NICE support where buyers are controlling the
area.

The 3rd minute candle shows a strong momentum candle.

Check out the volume on the 3rd candle.

This is a good indication of a potential, high probility trade.

The next 2 candles shows just that.

2 strong buying wicks.

These wicks

Here.. you might see “NICE price action”

BUT, the 2nd, 4th, 5th, 6th, 7th, shows a lot rejection. This may fool a lot of
people who are attempting to scalp.

The best entry here would be the 3rd minute candle where the buying
pressure massively increased at the support after a selloff attempt.

This CONSOLIDATION period is perfect for an entry.

You can see that it has formed a CLEAR support.

When you’re watching this as it goes you will see this support being
formed, every minute.
So you can see that this area of value, is where BULLS are holding the fort.

You can see also, the bears have been controlling the resistance area, and
the bears are doing

everything they can to prevent the price from breaking above.

As the minutes go by, It makes sense for one side to become exhausted, or
for one side to increase in volume and push the price in their direction.

In this case, the Bulls won this battle and presented a clear breakout.

You can see that there is a resistance level about $2 away from the
breakout.
Now, here is where it gets important.

Sometimes, you have to understand the stock itself that you are trading.

Find out its daily range.

Find out how much it can go in a day, by looking at how it has been doing
the past week, month, etc.

You’re going to get an idea of the range that this can trade.
So if BOEING has a range of $6-10 a day, you immediately start to look at
things differently.

If the stock is barely up $2-3, you immediately know that it can RUN more
than what its currently doing.

So do NOT hesitate and think that its already at its peak, if you dont know
its RANGE.

Alot of people are always like, “oh its already up $2, its too late”... next
thing you know.. It moves up another $7.

This is one of the many common issues that beginner traders have.

Key Note: UNDERSTAND AND FIGURE OUT THE RANGE

So you see a choppy market, but still want to scalp?

There are potential setups for that.

You just have to be patient.

Here you see some SERIOUS consolidation on the left.

Only until a FULL red candle has closed did the buyers step off and let the
BEARS take over.
The candles after that first red bar shows you how weak the buyers
became after the selloff.

The price then immediately tanked.

If you did not decide to get in puts before this full tank, you would need to
wait for another confirmation of a possible leg down.

This is why it consolidated again.

The 2nd consolidation shows a STRONG reversal attempt here.

This reversal ATTEMPT was CONSTANTLY being rejected for 8 straight
minutes until ANOTHER red full candle showed up. Just like the first
consolidation.

Guess what happened next?

It broke the consolidation support and tanked.

So by SEEING this 2nd FULL CANDLE that showed up in the 1st

consolidation, this should tell you that there is a high probability of a leg
down.

This is when its best to enter puts.

As soon as the momentum increases, you can actually size up and ride the
way down.

But remember, if you are scalping, the main goal is to take profits. You’re
not looking for a big move here.

5 min candle setup.

Here you see a nice run up… as soon as it reaches its 4th resistance level,
it got rejected, but not fully, because you see the long wicks under the
candles.

Bulls are attempting to hold the price up and potentially push the price back
up the resistance.

Eventually it did.

After it broke the resistance, the resistance became support and is now
consolidating on TOP of support.

This is actually a pretty bullish consolidation because the price thats being
held is above the crucial support, so buyers are technically in control at this
point.

You can see the big bullish candle that created the momentum for AAPL to
go up for the next HOUR.

PATIENCE is key.
Especially if you want to find SOLID setups on the 5 minute for you day
traders.

Check out the rejection of resistance which caused a selloff at the next leg.

Selling pressure increases (look at the wicks)

Tesla then traded in a range and the wait for confirmation was the
resistance that was once support.

This break of resistance caused a momentum that caused a huge rally.

After the rally, it formed a triangle which had the potential of breaking to the
upside, but due to the over extension, my guess is people were selling off
for a pullback (also on top of that TSLA is the most shorted stock on the
market) so you really have to be cautious when trading this.

The bounce led to a range, which presented another opportunity for a

breakout.

Swings

1. Find the Stock you want to Trade

In this first example, we’re going to look at BYND.

Now, with BYND, our team have swung this up and down this past year.

So this is an example of the trades we actually took.

2. Go to its WEEKLY time frame

Start off by creating Support / Resistance Levels on the Weekly Time

Frame.

In order to create GOOD Support and Resistance levels, you must use the
2-3 touch rule, UNLESS it is the TOP/HIGH or the LOW/BOTTOM.
Look how i started the S/R levels from the TOP and BOTTOM. Then what
you want to do is work your way down the middle of the chart.

3. Start off by identifying the Top / Bottom and work your way down the
middle to create S/R levels.
Work your way down the middle, and create the levels.

[Link], you want to go to the 1YEAR 1DAY chart, and do the same thing.

Work your way from the top/bottom, down to the middle.

Here is what your BYND chart should look like after creating these S/R
levels.

After this, move on to the 4h frame, and do the same.

5. Here is the 4h frame, after you do this on the 4h, you want to go back to
the Daily and spot patterns.

Now you have your swing levels.

6. Go back to the Daily Chart and spot the Patterns

These are the ACTUAL patterns we traded for our swings ON BYND.

I will go over these patterns shortly, but you can already see the RANGES,
and BULL FLAGS.

Now move back to the 4h frame.

7. Go back to the 4H chart and see if you missed any patterns.

The BLUE highlights are patterns we missed on the Daily, that we are able
to spot on the 4H.

Now move to the 1H.

8. Now on the hourly chart, you can see how CLEAR everything looks.
You can easily spot what MAY happen. You can trade using better
conviction, using Anticipation and analysis.

9. Ranges:

Watch for a Breakout on Ranges. Whether it be to the DOWN side or the

UP side.

Ranges are very important because it shows you that the price is trading
within a
 Range and it struggles to break either above or below. Once it gets
enough volume and

Push, range breakouts is one of the best setup to trade. Especially if you
can find where

The next critical S/R level would be.

Previous Support became Profit Target on this Range that broke to the
downside.

Check the price on the left. The breakdown of the 2nd RANGE was a
potential $55 MOVE.
10. Other than ranges, PATTERNS are very important aswell. If you can
spot these patterns,

You can use these patterns with the indicators you use to help you have
better conviction

On your trades. Especially Swings. Look at this example. Look at these

Bullish Pennants

& flags. Once they broke out, you can use previous S/R to have as
Profit Target.
You can see that these LEVELS tend to re test. We caught the DOWN
move, and the UP move on BYND.

11. In this next example, we’re going to look at how the Stochastics
Oscillator can help you determine where the stock may go. The Stochastic
Oscillator determines MOMENTUM.

Once you see that the RED line has crossed the PURPLE, it means that
the

Momentum has shifted, in this case to bullish.

12. Let’s look at the same stock, but a different pattern, and see if the
Stochastics is the same

As the previous example.

Here’s another pattern on the same time frame, and it actually happened
before the PREVIOUS example. You can see in this example. The
stochastics crossed as the
Breakout happened…. Indicating a shift in momentum, in this case the
breakout of this

Pennant.

In this example, we have a trendline on the 4h chart.

When you are looking at the 4h chart, you want to try to find a trendline that
has been tested more than 2 times.
When a trendline re tests itself more than 2 times on the weekly, daily, 4h, ,
it establishes itself as a crucial support line.

In this example, we can see a range BREAKDOWN on MMM.

We can use this 21 EMA as a reference point.

Once you see a pattern breakout, and if the breakout leads the price to go
below the 21 EMA,
On the 4 HOUR frame, you can assume that the price will be bearish for at
least 1-2 candles.

It’s not 100%, but it works VERY often.

You can see the triangle pattern after the range, and it shows the price
going above the 21 EMA, indicating a potential uptrend after the breakout.

You can also see at the top there is another triangle breakout, and this time
it broke to the downside, but also broke below the 21 EMA, anc continued
to create a downtrend for at least 1-2+ candles. Since we are looking at the
4 HOUR chart, each candle represents 4 hours.

The next pattern that we were able to spot is the bear flag.

You can see the bear flag caused a prince rejection on the 21 EMA.
This is an indication of a potential downtrend continuation.

You can see the first range.

You can see that there was an established hammer and the price broke out
to the upside and continued the uptrend once it stabilized above the 21
EMA.
Also the stochastics on the bottom, for the first range, crossed and that
cross alone, since it happened ON SUPPORT should give you a heads up
on a SHIFT of momentum.

Since the Stochastic Oscillator determined momentum, this cross indicates

a potential shift from BEARISH momentum to BULLISH momentum.

In the second range you can see that there was a hammer and the price
has established itself on the support.

On top of that, the price stayed above the 21 EMA and the stochastics (red
line) did not point down, so it did not indicate a shift in momentum.

The third range, there was another hammer, now why is this example
different?

It should have broke up?

Look at the stochastics.

The (red line) pointed straight down, indicating a SHIFT in momentum, from
BEARISH to BULLISH.

Here is a Weekly Example.

This is BABA.

You can see a nice 20 WEEK range.

You can see that at the breakout level, the price held above the 21 EMA.
The STOCHASTICS also crossed (red line crosses purple) above the
BLUE line indicating a STRONG bullish momentum.
Thus the price moved from 185 to 220.

WEEKLY RANGES are one of the best patterns to trade.

You NEED TO LEARN how to RECOGNIZE PATTERNS!

In this example, we are looking at another Weekly chart.

Now in here, you can see that there is a range.

The price broke down the range, through the support, and it could not
break the RESISTANCE, OR THE 21 EMA.

You can see that the Stochastics crossed on the bottom as soon as the
price broke down the support.

Like i said earlier, a cross down in stochastics indicate a SHIFT in

momentum.
In this example we’re going to add the 9 EMA on.

The Blue line is the 9 EMA.

We are going to be looking at Confluence for swings.

In this example, we have the 9/21 EMA Cross + Bull Flag as Confluence.

The stochastics (red line) above the BLUE line indicating a STRONG
momentum.

When you have the stochastics cross and go above the top BLUE, it is an
indication of a very strong momentum!
Look at this EMA cross + Bull FLAG + Stochatics Cross,

This is what i like to call a “PREMIUM” setup.

You have 4 different Confluences.

9/21 EMA cross

Bull Flag
Stochastic Cross

Volume

AND the price is at a support level which has established itself as an area
of value.

Look at the confluences here.

You have the 9/21 CROSS + Stochastics cross + a bullish candlestick at
the cross of EMA.

ALWAYS LOOK FOR THESE CONFLUENCES especially when you are

SWINGING!

Look at this 4h chart on GOOGL.

ANALYZE: Left to Right

You have a nice run up, into a bull flag / pennant, and the 9 EMA bounces
off the 21 while the stochastics cross up, indicating a breakout, then you fall
into a range and the stochastic crosses back up above the blue line
indicating a potential continuation in bullish momentum.
Look how much $$ you could have taken advantage of during this run.

You see in the middle, the stochastics starts to point down and cross down
indicating a shift in momentum to the downside.

So in GOOGL, alone, you could have capitalized on BOTH the UPSIDE

move, and the DOWNSIDE move.

So, just in case you forgot what to look for,

21 EMA (price above / below)

9/21 EMA crossover

Stochastic Cross

Patterns
Using the 1hour Time Frame to your advantage.

Watch out for Continuation patterns like:

Pennants and Bull Flags

Especially when the EMA is looking to cross or if the price is treating the
EMA as support.
You can use the stochastics to help you determine whether the price will
bounce or break, because the stochastics help determine momentum.

If you see that the stochastics is about to cross up or down,

Or if its below the blue line or above the blue line and its about to point up/
down,

That will indicate a potential shift in momentum, so if the price is currently

at a HIGH and you see the (red) stochastic line point down after flowing
above the blue line you should already anticipate a potential reversal
because the fact that the line is pointing down indicates a potential shift in
momentum. Now if it CROSSES AND POINTS DOWN, thats an even
better indication of a reversal.
Look at this price action on TSLA.

These patterns, are patterns that i traded, and these are patterns that i
used to signal trades on TSLA in our group.

These patterns work!

Especially when you combine these patterns with stochastics + EMA.

Patterns are essential in PRICE ACTION trading.

When you combine patterns with GOOD INDICATORS, you will have
GREAT strategies in your arsenal.

Patterns ALWAYS FORM!

This is an example of using Pattern Recognition to your advantage.

THESE ARE THE SAME patterns used in our TRADES!

Watch for potential STAIRCASE SETUPS

STAIR CASE SETUPS are only GOLD when you have a nice consolidation
period in the middle that FALLS INTO A RANGE.
KEEP AN EYE ON THESE PATTERNS
Do you see how VERY OFTEN you can trade these types of Patterns?

You can find these setups on low volatility stocks like LOW, EA,

Aswell as high volatility stocks like AMZN, NFLX.

Being able to spot these patterns is the #1 key in finding potential swings.
Whichever time frame you’re looking at, for example. If you’re looking at a
4h frame, and you’re expecting a 2-3 candle breakout, understand that
since you are looking at 4hr candles, it may take 1-3 days for a breakout.
Thus swinging it is a GOOD play.

When you are swinging, you want to find out what the ATR of the stock is.

What is its average daily range?

Amazon can have a daily range of $40-80 and it goes even higher on some
days.

On the other hand, AMD has a daily range of maybe about $3-6.
Once you find and understand the concept of ATR’s and incorporate the
use of indicators, 4hour frame, or even 1 hr frames in that same equation,
you can develop a good swing strategy.

Remember that when you swing, you have TIME on your side.

Psychology

I will keep the psychology short.

You have to understand you are playing a game of risk.

Playing a game of risk means that you cannot be afraid to risk your money.

If you are afraid to risk your money then trading is not for you.

Greed and Fear are the two biggest psychological factors that traders
struggle with.

In order to eliminate both you must have a definitive plan of action.

You must determine the areas in which you will be entering and the areas
in which you will exit.

This doesn’t mean that you don’t sell until your target hits. The whole idea
of this is to have a plan.

A lot of traders completely disregard their plan due to fomo.

The fear of missing out can cause you to act irrationally.

In addition, suffering from losses can also cause you to act irrationally.

I’ve suffered from heavy losses, and it has caused me to act irrationally.

I’ve chased my losses plenty of times, and sometimes it’s hard to practice
what you preach because you get so in the moment while you’re trading.

At the end of the day, the market does not give a s** about you or your
money. It will take, take and take, if you are not cautious about your
behavior.

Your personality type also has a lot to do with your trading style.
So make sure, if you’re a person who is very impatient, you stick to
scalping instead of day trading or swinging.

Because these emotional triggers can also cause irrational behavior.

Take a Surgeon or Lawyer for example.

Some of these occupations require people to become Perfectionists and

that can affect your trading.

Good trading doesn’t require you to be perfect at all.

It simply requires you to have solid risk management.

Losses are a part of the game!

People will take one single trading loss and automatically think their system
is sham.

That’s not the case.

The market won’t always go your way.

As long as you know your strategy works, you just have to focus on your
execution and following a well defined plan.

Profits will also compound.

Instead of focusing on making big returns every trade, take your eyes off of
your P/L and focus on the chart.

Your P/L will add up.

Your P/L will compound so long as you’re consistent.

At the end of the day, again, you are playing a game of risk.

Have a well defined plan,

And stick to it while maintaining the composure that you need, and develop
a good, solid risk management.

Hope you enjoyed this mini book, and I hope you can utilize this as a
reference for your trading.

-Kevin
When you are attempting to grow a long term portfolio you first
have to figure out what your objective is. What is your goal with
this portfolio?

Are you trying to make a safe portfolio that can provide you with
income through dividends?

Are you trying to make a portfolio that can potentially grow fast
but requires more risk?

Are you comfortable with investing money in the stock market

knowing you can lose some if not all of it?

What is your plan?

Have a plan.

Create it before you even put money in and start tossing it

everywhere.

What kind of investing do you want to do?

This ties back into what your goal is.

For example, a 20 year old might want to invest to be able to

retire in 10-20 years or maybe this 20 year old might be willing to
be more aggressive for a potentially faster growth.
And let’s say you have a 30 year old investor, who has a family to
take care of, and do not want to be too risky, and want to take a
more conservative approach.

For example, if you are investing to potentially retire in your 60s,

then you might want to use traditional methods like IRA’s.

IRA’s are Individual Retirement Accounts.

IRA’s allow investors to save money for retirement (and they can
contribute up to X amount annually to this account),allocate the
funds into investments and grow it either tax free or tax deferred
(depending on whether you choose a traditional IRA or a ROTH
IRA).

The difference between the two is how they are each taxed.
If you choose a traditional IRA, you don’t get taxed on your profits
until you decide to pull your money out (which is usually when
you’re ready to retire)

If you choose a ROTH IRA, you do not get taxed when you decide
to pull out for retirement.

Here is the difference:

If you make $50,000 in a year, and decide to contribute $5,000

into a Traditional IRA, this means that for this year, you are only
getting taxed for $45,000 of income (the $5,000 put into the IRA
won’t be taxed until retirement).
But if you decide to put the $5,000 into a ROTH IRA instead, you
will still be taxed for $50,000 of your income.

Back to investing goals, what are you trying to accomplish and

what is your endgame?

My investing goal may be completely different to your investing

goal.

I might be more comfortable taking more risks than you are.

And this is one of those things that you have to figure out for
yourself.
For example, with me,

I try to look for and invest into stocks that i think may have a lot of
room for growth and what i try to do is PROFIT from that growth,.

Let’s look at the S&P 500 real quick.

To calculate how much an average investor expects in terms of

returns from the stock market let’s take a look at the S&P 500
INDEX.

“Index” is the measure of performance.

The S&P500 is shown to return about 8-10% on average
annually.

8-10% annually.

This means if i essentially invest $10,000 into an index fund that

can mirror the performance of the SP500, i can expect to grow my
money 10% annually.

This sounds great right?

It is great, but i prefer to outperform the market if i can.

The companies in the SP500 (you will learn more below) are very
big companies who have shown alot of growth and are already
established.

With the approach that i’m currently taking, i like to allocate more
of my money into smaller companies who don’t have this type of
growth yet.

If i invest my money into smaller companies who have a growth

potential, i can eventually outperform what the overall market
produces annually.

What is the downside to investing into smaller companies?

It’s riskier. Of course it is.

But this is where diversification comes in.

Just because i want to invest into a lot of smaller companies who

have a lot of room for growth, it doesn’t mean that i won’t buy any
of these big names. Of course i will still buy them. But the key
here is allocating your funds correctly in a way where your
portfolio can grow a little bit faster but also be protected on the
downside.

Now a good method that i have been doing recently is, moving all
of my profits from these growth moves, and using them to buy
dividend stocks.
Now when it comes to dividend stocks, you can choose from
stocks who have high dividend yields, stocks who have steady
dividend payouts, or stocks who have a nice dividend growth.

What is dividend growth?

Dividend growth stocks are stocks that increase their dividends.

Dividends are when the company pays you every quarter for
investing with them.

There are people who live off of dividend income.

But yes, it does take a lot of capital to be able to earn enough
dividend income to replace a job.

When we look at dividend growth stocks, this essentially means

that the company not only is capable of sustaining and increasing
them every year, but this also means that they are growing as a
company and basically generates some solid cashflow.

A lot of investors fall into the trap of buying dividend stocks with
the highest yield.

For example, you might be more attracted to a stock that pays out
8% over 3%.
The key things to remember when searching for dividend stocks
is to look at its dividend growth, its stability, how the company is in
comparison to its competition, etc.

If you don’t know where to begin with dividends, you can take a
look at the “Dividend Aristocrats”.

The Dividend Aristocrats are companies that have increased its

dividend for 25+ consecutive years (wow!)

These companies are usually also considered recession proof.

As of July 2020, there were 66 stocks in the Dividend Aristocrats

list.
Here is a list of dividend stocks i found from [Link]

Company Sector Consecutive

Years of
Dividend
Growth

3M (NYSE:MMM) Industrials 57

Coca-Cola (NYSE:KO) Consumer 57

staples

Colgate-Palmolive Consumer 57
(NYSE:CL) staples

Dover (NYSE:DOV) Industrials 57

Emerson Electric Industrials 57
(NYSE:EMR)

Genuine Parts (NYSE:GPC) Consumer 57

discretionary

Johnson & Johnson Healthcare 57

(NYSE:JNJ)

Procter & Gamble Consumer 57

(NYSE:PG) staples

Stanley Black & Decker Industrials 52

(NYSE:SWK)

Hormel Foods (NYSE:HRL) Consumer 51

staples
Becton, Dickinson & Co. Healthcare 48
(NYSE:BDX)

Illinois Tool Works Industrials 48

(NYSE:ITW)

Leggett & Platt (NYSE:LEG) Consumer 48

discretionary

PPG Industries Materials 48

(NYSE:PPG)

Target (NYSE:TGT) Consumer 48

discretionary

W.W. Grainger Industrials 48

(NYSE:GWW)
AbbVie (NYSE:ABBV) Healthcare 47

Abbott Laboratories Healthcare 47

(NYSE:ABT)

Federal Realty Investment Real estate 47

Trust (NYSE:FRT)

Kimberly Clark Consumer 47

(NYSE:KMB) staples

PepsiCo (NASDAQ:PEP) Consumer 47

staples

VF Corp. (NYSE:VFC) Consumer 47

discretionary
Nucor (NYSE:NUE) Materials 46

S&P Global (NYSE:SPGI) Financials 46

Archer Daniels Midland Consumer 45

(NYSE:ADM) staples

Automatic Data Processing Information 45

(NASDAQ:ADP) technology

Consolidated Edison Utilities 45

(NYSE:ED)

Lowe's (NYSE:LOW) Consumer 45

discretionary
Walgreens Boots Alliance Consumer 44
(NASDAQ:WBA) staples

Clorox (NYSE:CLX) Consumer 43

staples

McDonald's (NYSE:MCD) Consumer 43

discretionary

Pentair (NYSE:PNR) Industrials 43

Walmart (NYSE:WMT) Consumer 43

staples

Medtronic (NYSE:MDT) Healthcare 42

Sherwin-Williams Materials 40
(NYSE:SHW)

Sysco (NYSE:SYY) Consumer 39

staples

Franklin Resources Financials 38

(NYSE:BEN)

Cincinnati Financial Financials 37

(NASDAQ:CINF)

Aflac (NYSE:AFL) Financials 37

Air Products & Chemicals Materials 37

(NYSE:APD)
ExxonMobil (NYSE:XOM) Energy 37

Amcor PLC (NYSE:AMCR)* Materials 36

AT&T (NYSE:T) Communications 35

services

Brown-Forman (B Shares) Consumer 35

(NYSE:BF-B) staples

Cintas (NASDAQ:CTAS) Industrials 35

Ecolab (NYSE:ECL) Materials 34

McCormick & Co. Consumer 34

(NYSE:MKC) staples
T. Rowe Price Group Financials 33
(NASDAQ:TROW)

Cardinal Health Healthcare 32

(NYSE:CAH)

Chevron (NYSE:CVX) Energy 32

Atmos Energy Corporation Utilities 32

(NYSE:ATO)*

General Dynamics Industrials 28

(NYSE:GD)

A.O. Smith (NYSE:AOS) Industrials 27

Linde (NYSE:LIN) Materials 27

Roper Technologies Industrials 27

(NYSE:ROP)

Caterpillar (NYSE:CAT) Industrials 26

Chubb (NYSE:CB) Financials 26

People's United Financial Financials 26

(NASDAQ:PBCT)

Carrier Global Corp Industrials 26

(NYSE:CARR)**
Otis Worldwide Corp Industrials 26
(NYSE:OTIS)**

Raytheon Technologies Industrials 26

Corp (NYSE:RTX)***

Albemarle Corp Materials 25

(NYSE:ALB)*

Essex Property Trust Inc Real estate 25

(NYSE:ESS)*

Expeditors International of Industrials 25

Washington,
Inc(NASDAQ:EXPD)*

Realty Income Corporation Real estate 25

(NYSE:O)*
Ross Stores, Inc Consumer 25
(NASDAQ:ROST)**** Discretionary

If you look in the example above, the NASDAQ and NYSE are the
names of the stock market exchanges.

The letters next to it is the stock TICKER.

These are the letters you will input when you are searching for
stocks.

The stocks in the above example should help you get started in
your search for which dividend stock you want to eventually own.

These companies are all in the SP500 aswell.

In my opinion, depending on how many dividend stocks you want
to own, its always best to have multiple dividend stocks from
different industries, so you can be diversified, from a dividend
standpoint.

Inflation is also a good reason why choosing dividend growth

stocks is the better route because it can help “outpace” the
inflation.

When looking at dividend paying companies, if a company only

focuses on dividend payouts, this itself can be a red flag because
its hard to think that they have more room for growth when most
of their profits is thrown into dividends.

But before you start to invest your money just remember to follow
some basic rules that is almost common sense.
-Have a Plan

-Long term investing is not the same as daytrading especially

when it comes to the emotions and patience

-Don’t be so easy to buy into the hype

-Don’t be so easy to catch FOMO (Fear of Missing out)

-It’s okay to cut your loss on stocks. If you’re losing more than you
expected on a position and you want to reposition yourself, it’s
always okay to back out of it instead of buying more right then
and there. Some may argue otherwise, but readjusting my
portfolio during unexpected downturns has helped me.

Again this is all up to you.

The S&P 500 index is the weighted index of the United States top
500 companies in the stock market by market capitalization.
Market capitalization is essentially referred to as how much the
company is worth.

Market capitalization allows investors to understand a company’s

size compared to another company.

How to calculate the market cap of a company.

Lets say we have a company called TCX

TCX is trading at $10 and has 100 million shares outstanding.

$10 x 100,000,000: $1,000,000,000 ($1Billion Market Cap)

“Outstanding” shares represents all the shares that can be bought
andsold by the public plus any restricted shares owned by
employees and executives.

Restricted shares are sometimes given by the company to its

employees as an incentive of working for the company. Restricted
stocks are restricted because people who own them can only sell
a certain amount during specific time periods, or the company can
say that a specific employee will get x amount of shares if he/she
performs well in the next 2 years.

“Outstanding shares” may also be confused with the “Float”.

A company's "float" means the shares available for trading on any

given day meaning these are the SHARES OUTSTANDING
minus the restricted shares.

1. “If the public float is well below the shares outstanding, it

means a high proportion of the company is employee-owned”

2. “If the public float is well below the shares outstanding, the
stock price has the potential to be volatile as there are fewer
shares trading at any given time; a larger public float can mean
less volatility”
3. “If the number of floating shares is very close to the shares
outstanding, it means there is little employee ownership in the
company”

Market Capitalization:

Large Cap companies are companies with a market value of $10

Billion +

Large Cap companies are usually companies who have already

established a good reputation as a company and they are usually
very big companies, therefore a lot of the times, large cap
companies can produce less returns because they are already so
established and don’t have much room for tremendous growth.
The good thing about companies who have a large market
capitalization is that they have such an unlikely chance of failing
and going tip top.

Large Cap companies have also been considered a “dominant”

player within their respected industry.

Examples of large Cap stocks:

AMZN (Amazon)

MSFT (Microsoft)

AAPL (Apple)

NFLX (Netflix)

When you invest into a lot of large cap stocks, it can be

considered conservative because large cap stocks reduces your
portfolio risk and in turn your portfolio is somewhat safer but less
aggressive, ALTHOUGH there are still large cap companies who
still have ala lotot of potential to be bigger than what they already
are.

If we are looking at a company like DKNG (DraftKings Inc.) they

currently have a market cap of about $25B but we all know that
this company still has a lot of room for growth.

Large cap companies can be looked at as CORE investments.

CORE stocks are stocks that have shown to be profitable
companies that have a history of solid returns (like large cap
stocks) and are relatively low risk.

Again, back to the dividend aspect of large cap stocks, a lot of

these big companies are well known dividend paying companies.

Some examples of large cap stocks that pay dividends:

-KO (Coca - Cola Co.)

KO has a 3.30% dividend yield

-VZ (Verizon)

VZ has a 4.54% dividend yield

-IBM (IBM Corp.)

IBM has a 5.4% dividend yield

-PFE (Pfizer)

-PFE has a 4.2% dividend yield

Market Capitalization (continued):

Mid Cap companies

Mid Cap companies have a market capitalization of $2Billion -
$10Billion.

Mid Cap companies are also known to be established companies

but also are in the process of becoming bigger and or expected to
have a strong and rapid growth.

Examples of Mid Cap stocks:

-PTON (Peloton Interactive)

PTON is a good example because PTON is establishing its name

in its industry and have had a tremendous growth in the recent
years and is expected to keep growing.
GRUB (Grubhub), FSLR (FirstSolar) are also still mid cap
companies.

Mid Cap stocks can easily turn into a Large Cap stock.

Investing into Mid Cap stocks can be a good diversification

strategy because they are still growing and buying them before
they turn into a large cap stock can give you a nice return.

ETSY is an example of a company that recently went from

Mid-Cap to now Large-Cap.

Here is an example of a Mid-Cap stock that has a lot of growth

potential according to Zacks Rankings.
YELP Inc.

Yelp is an online platform where it can connect consumers with

businesses.

We all use YELP right?

YELP has an expected earnings growth of 98% in 2021.

An “expected earnings” is basically an estimate for a company’s

future earnings and most of the time, when you see news about a
company’s expected earnings growth % it is determined by
analysts.

Market Capitalization (Continued)

Small Cap
Small Cap companies have a market capitalization of $300 Million
- $2 Billion.

Small Cap companies have a ton of room for growth, which can
be very attractive but since they are still very small, they can pose
a lot of risk to a portfolio.

ENPH (Enphase)

Let’s take a look at ENPH.

Enphase is a company in the solar industry. They sell

Microinverters. Micro inverters convert direct current (DC)
electricity into standard (AC) electricity. The crazy thing is, this
company was at the brink of bankruptcy a few years ago. This
year, they earned their spot in the S&P 500.
Why am i talking about ENPH?

In 2019, ENPH had a market cap of $700 Million.

In the beginning of 2020, ENPH had a market cap of $4Billion.

In the beginning of 2021, ENPH had a market cap of $26.7Billion.

This company went from SMALL CAP to LARGE CAP in almost 2

years.

What helped ENPH get so big?

As you’ve noticed over the recent years, there have been a big
push for clean energy sources. Not only in the United States, but
in the whole world. Renewable energy is now one of the hottest
sectors. Keep in mind, that just because the industry started
booming, it doesnt mean that stocks like ENPH (who have had
massive growth in such a short amount of time) is simply piggy
backing off of the sentiment. ENPH is actually a very good
company. They were one of the first companies to successfully
create microinverters from a commercial standpoint. They are
very disciplined with their product costs,etc and they have
thousands of solar companies using their products.

“Enphase Energy annual revenue for 2017 was $0.286B, a

11.29% decline from 2016.”

“Enphase Energy annual revenue for 2018 was $0.316B, a

10.48% increase from 2017.”

“Enphase Energy annual revenue for 2019 was $0.624B, a

97.47% increase from 2018.”

Year after year, they have successfully and tremendously

increased their revenue.
Their numbers clearly speak for themselves.

In 2018, ENPH was trading at $2.

If you had invested $10,000 into ENPH at that time, your

investment would now be close to $1M ($950,000 ish to be
exact).

Of course, you would have never known that ENPH would get this
high.

But i truly believe that if you invest money into companies you can
believe in, and it makes sense to you, you can reap great
benefits.

Let’s take a look at more examples of some big companies that

you may have heard of.
SHOPIFY - In 2017, Shopify was trading at around $40. A
$10,000 investment into SHOPIFY is now worth about $300,000.

TESLA - A $10,000 investment into TESLA in 2019, is now worth

about $226,000.

THE TRADE DESK - a $10,000 investment into TTD in 2017, is

now worth about $377,000.

AMD - a $10,000 investment into AMD in 2016, is now worth

about $534,000.

These are just a few examples of companies that have had

massive growth in the recent years.
Secular Growth VS. Cyclical Growth

Cyclical stocks are stocks that perform well when businesses and
consumers are spending money.

Let’s use car companies as an example.

If the economy is doing well, if people are working, it only makes

sense that car sales will increase.

What if the economy starts slowing down, and unemployment

increases?
The car sales will decrease.

Cyclical stocks move up and down depending on the movement

of the economy.

Are Automobiles, Airlines, Hotels, Luxury goods companies

cyclical?

Yes. When the economy is doing very well. You can expect these
companies to do well aswell.

But if the economy starts declining, then these companies will

more than likely decline as well.
Essentially, cyclical stocks are very SENSITIVE to the economic
cycles.

On the other hand, Secular stocks are companies that are

somewhat insensitive to the economic cycle. Secular stocks will
usually be in line with the market if it does well. If the economy
starts declining, secular stocks can even end up outperforming
the market.

The demand within these Secular companies will remain the

same, regardless of the economic conditions. Essentially, Secular
stocks can be looked at as “recession proof” in some ways.

Now that we have a better understanding of what secular and

cyclical is, lets focus on secular TRENDS.
Secular trends are trends that is probably going to continue
moving in the same direction for a good chunk of time. Research
says that 5 years is a good minimum number.

What are some secular stocks that we can think of right now that
has been following a secular trend in the past 5 years?

Stocks like AMZN (Amazon), SHOP (Shopify), Netflix (NFLX),

GOOGL (Google) are some great examples. The most recent
secular trends that you may already be familiar with is probably
the EV (Electrical Vehicle) industry and the Renewable Energy
industry.

When we are thinking about Secular trend stocks, we know that

regardless of short term economic downfall, the outlook of these
companies are still positive (because we are looking at it from a
long term standpoint).

Having a combination of both SECULAR & CYCLICAL stocks can

help your portfolio balance out because if you just focus on
cyclical stocks, you may have to stomach a portfolio dip (lose
money) for a good amount of time while waiting for these stocks
to rebound.

But when you add both of them together, your secular trend
stocks can essentially offset the poor performance of your cyclical
stocks.

What are some good cyclical stocks to invest into in 2021?

Again, everything i write in this book / guide is not financial

advice. This is simply opinion and research.
Lets look at some industries who have taken big hits during the
pandemic.

Just off the top of my head, i can think of Restaurants, Retail,

Airlines, Hotels, and maybe Automakers.

I think that the pandemic has hit Airlines / Hotels, and restaurants
the most.
Let’s take a look at this chart above.

This is a chart of BOEING.

Every single candle that you see in this chart will represent 1
week.
Therefore when you look at the overall chart, this represents a
span of 3 years.

At one point in 2019 (you can see the date on the bottom of the
chart), Boeing actually hit a high of $446.

After the pandemic hit (as well as a lot of bad news on Boeing),
the stock plummeted to $89. This means that this company lost a
lot of its value during the pandemic. And right now (if you see on
the right), they are still on the brink of recovery.

Depending on how you want to look at this situation, you might

think that Boeing presents a good buying opportunity right now.
And this is up to you to decide whether you think it will recover.
This is where as an investor, you must always do your own
research, so that when you want to buy a stock, you are confident
in what you are buying.

To me, Boeing does present somewhat of a buying opportunity,

but i cannot forget about the fact that they’ve had problems with
their airplanes that have caused multiple malfunctions / safety
risks during flights, and this can affect the sentiment of the
company in addition to the slow rebound due to the virus.

So when is a good time to buy into cyclical stocks?

It’s almost common sense to buy into cyclical stocks as the

economy starts ramping back up right?

But here's the catch.. You cannot predict anything.

You simply can’t predict when companies are going to bounce
back up, you can’t predict when the economy is going to start
going down.

This is why it’s important to diversify holdings into different

industries, and a combination of both cyclical and secular stocks.

Now i want to go back to stocks that fall into the term

“SECULAR”.

We discussed both Secular stocks and Secular TREND stocks.

When we are discussing Secular trends, we are talking about

trends that can be long lasting.
A few more secular trends that is happening now is STREAMING
(NFLX), POT STOCKS, and even something like PAYMENTS
(PYPL).

Streaming services are only getting bigger, and when it comes to

payments, it’s becoming easier to pay for things with anything
else other than cash. These are secular trends.

The word secular just means that the company’s earnings can still
remain constant regardless of the economic conditions.

Now when we look at it this way, lets look at some stocks that are
considered to be more defensive.

Stocks like WMT (Walmart) and COST (Costco) are considered

defensive.
Why are they considered defensive?

Because even if the economy goes haywire, consumers still need

to purchase necessities from these companies.

By having stocks like WMT, COST, TGT (Target), you can offset
your losses from cyclical stocks or maybe even some secular
trend stocks that you own that may suffer a small dip due to a
weakened economy because more often than not, these
defensive stocks will not go down as much (if at all) as everything
else in the portfolio.

EPS

What is EPS?
EPS stands for Earnings Per Share.

This is a measure of how much profit a company generates.

Companies will report their EPS on either a quarterly or yearly
basis.

How to calculate EPS?

EPS = Net income divided by Outstanding Shares

EPS is important because it gives investors a way to determine

how much profit the company is generating per share.

EPS is also considered a “fundamental measure” of how healthy

and profitable the company is.
Alot of investors don’t really focus on EPS too much, but
understanding EPS can be useful if you use it to compare a
company’s EPS to its previous years in order to gain insight on
whether the company is growing or not.

If a company has an EPS of $1, then the next year it goes to $4,
then it shows that the company is growing.

A good EPS # varies. It depends on the companies, and they are

all different. It also varies from one industry to another.

If you compare 2 companies in the same industry with similar

business models, you can use the EPS to compare how they are
different from each other, but if you look at a company from the
Energy industry, and another company from the Health industry,
the EPS numbers can be very different, because it all varies.

Its also important to look at other factors that determines the

health of the companies, such as P/E ratio.
P/E ratio is the price to earnings ratio.

P/E ratio is a measure of the stocks price relative to its earnings.

P/E ratio is usually used to “gauge” the future direction of that

company and whether its considered cheap or expensive.

P/E ratio: price per share divided by earnings per share

Different industries will have different P/E ratios. A normal P/E

ratio in the tech industry may not be a normal P/E ratio in the
health industry.
Thanks to google, investors can easily find the EPS, P/E ratio of
stocks.

But remember to always take these numbers with a grain of salt.

Companies with higher ratios can mean that they have higher
growth expectancy.

According to research, companies with a P/E below 15 are

considered cheap, and ones with ratios above 18 are considered
expensive.

Keep in mind that alot of the fast growing companies will have the
higher P/E ratio. And investors are always going to be happy to
pay more for earnings if they can see that the company is
expected to do very well.

On the other hand, companies with lower P/E can also provide an
opportunity that investors may be getting into a company that has
a lot of room for growth.
But if the ratio of that company is significantly lower than other
companies within its industry, then that can also be a red flag.

Now let’s talk about how to allocate funds into a portfolio.

First of all there are 11 sectors in the stock market.

-Consumer Discretionary

-Communication Services

-Consumer Staples

-Energy

-Financials

-Healthcare
-Industrials

-Information Technology

-Real Estate

-Utilities

-Materials

There are also 24 industry groups, 68 industries, and 157

subindustries (which I will not cover here, you can research it
yourself).

But here are the sectors that the stock market is essentially
divided into.

This is key to understanding diversification.

I like to have stocks from many if not all of these industries I listed
above.
One of the strategies that I’ve been following goes something like
this:

25-30% ETFs

20% DIVIDENDS

30-40% GROWTH

15-20% SPEC

Now let’s go from the bottom up.

Speculative stocks.

Speculative stocks can help my portfolio when it comes to

outperforming the market.

Speculative stocks have little financial history and they often

develop new, untested products or explore untapped s markets.
A lot of “traders” are more attracted to speculative stocks because
it is usually more volatile.

Examples of speculative stocks:

DKNG

PLUG

SPCE

FUBO

GRWG

When it comes to speculative stocks, or even growth stocks, I like

to focus on emerging markets.

What is “emerging markets” to me?

Emerging markets are essentially industries that are on the come
up.

Cannabis is an example.

EV is an example.

Renewable Energy is an example.

Cloud Computing is an example.

Artificial Intelligence is an example.

And there are some growth stocks AND even some dividend
paying stocks that can fall into these “emerging markets” category
as well.

For example, NVDA / AMD are both growth stocks that have large
market caps and they are really big when it comes to Artificial
Intelligence.

When you look at EV, you instantly think of TSLA.

TSLA has been the hottest growth stock for the last 2 years.

My perspective is, I want to try to invest into companies and or

industries who can be disruptive.

By disruptive, you can say that I like to look for industries and or
companies who are both disruptive and innovative.

Disruptive innovation can change industry patterns and can kick

the competitions butt and maybe even take them off of the food
chain.

That’s what disruptive is.

Disruptive innovation can change the way people think and can
change the way people do things, in most cases, make people
lives easier.

Take Amazon,

Disruptive right?
Netflix,

Disruptive?

Remember when you used to go to blockbuster to rent out

movies.

Now you have it all on your TV.

One thing I like about companies who can be disruptive is that

they can also pave new waves for other companies. And by pave
new ways I’m also talking about companies emerging in other
industries as a snowball effect to the first disruptive company.

For example, without Amazon, or Shopify, you probably won’t

have companies like Stripe, or Affirm do so well.

Here are some of the industries that can have a potential huge
room for growth:

-Cannabis
-ESports

-3D Printing

-E-Commerce

-Solar

-Biohacking

-Cybersecurity

-Artificial Intelligence

Back to Speculative stocks, the % of money you invest into these

stocks have to be aligned with your risk tolerance.
Speculative stocks have higher risk, so you have to be more
comfortable with knowing that you can potentially lose the money
you decide to invest into these speculative stocks.

The heavier you go (in terms of percentage) on speculative

stocks, it’s best to make sure the rest of your portfolio is heavily
diversified.

Of course the goal here is to outperform the market, but you don’t
want to overdo it by putting in too much and instead doing the
opposite.

There are a lot of people who put too much money into
speculative industries and regret doing so when that specific
industry goes through a major sell off because they refused to
diversify.

The goal of having a stock market portfolio is to reduce your risk

and exposure.

Let’s talk ETF’s

ETFs hold a basket of stocks.

ETFs are exchange traded funds.

These funds track different indexes.

An ETF everyone probably knows about is SPY, and it tracks the

S&P500.

IWM is an ETF that tracks the Russel 2000 small cap index

(It looks at 2000 small cap companies)

QQQ is an ETF that indexes the Nasdaq 100

And then you have what’s called sector ETF’s where it focuses on
certain sectors.

XLE - Energy
XLF - Financials

IYR - Real Estate Investment Trusts

and so on.

My favorite ETFs are not the ones I have listed above but they
are:

ARKW (Next Generation Internet)

They focus on artificial intelligence, big data, cybersecurity,

Blochchakn, etc)

ARKQ (Automatic technology & Robotics)

They focus on autonomous transportation, robotics, 3D printing,

space exploration, etc.

**and all of the other ARKs**

ARK is a fund that has multiple ETFs that they currently manage
and their ETF’s focus on disruptive innovation which I like and
support.

DHS

DHS is an ETF that I like aswell because it holds the top dividend
paying stocks.

This ETF is dividend oriented meaning investing into this ETF

means you are investing into dividend stocks which gives your
portfolio a boost when it comes to reducing risk.

Another good ETF is WCLD.

They focus on US companies who are growing at a fast rate and

focused on Cloud Software.

There are many ETF’s out there for investors to choose from and
it all depends on what you like and what your risk tolerance is.
For example someone might feel safer investing into QQQ than
ARKQ only because QQQ has stocks in there that are more
stable and established.

When it comes to GROWTH stocks, these are companies that are

expected to have high earnings.

You can think of companies like SQ (CashApp), SHOP (Shopify),

Peloton (PTON) as companies who have already made a name
for themselves and are still expected to have higher earnings.

When it comes to starting a long term portfolio it’s important to

write down the numbers.

How much are you starting with?

For example let’s say you are starting with $10,000.

So if you were to write this down along with the allocation % you’ll
have something like this:

$10,000 Total
$3,000 = ETFs

$4,000 = Growth Stocks

$1,500 = Speculative Stocks

$1,500 = Dividend Stocks

Now don’t expect to turn this account into $100,000 in a month,

two months, etc.

You have to have realistic expectations.

What you can do is continuously deposit money into the long term
account month after month and this will compound.
For example, if you start with $10,000 and put $200 every month
in there, while being able to earn a 15% return annually, by 20
years time you will have contributed about $58,000 but you would
have made $351,000 in profits.

Obviously as the years go on, and as people’s income gets

higher, you’re more likely going to be investing more.

So this all depends on where you start and where you want to
take this.

Since we went over dividends earlier in this guide, it’s up to you

how you want to allocate your funds into dividends aswell.

What helped me get around 100% return on my portfolio?

As I mentioned earlier, I like to shift my focus onto emerging

markets and I tend to buy more highly speculative stocks but also
not hold them for very long.

What I will do is, I will enter the stock and once it grows a bit I sell
half (if not) all of it to take profits and use SOME (usually half) of
these profits to re invest it into either my ETFs or more dividend
growth stocks.
If I’m going to invest into a speculative stock, I do not hold these
forever because if I do that, then I’m opening myself up to either
*more risk or *losing my profits that I had previously earned.

The current portfolio I have almost acts as its own ETF.

The reason I say that is because I’m using over $100,000 in

capital which allows me to buy more stocks and be more
diversified.

My portfolio is HIGHLY diversified in terms of industries and

topics.
Here is a list of my holdings as of February 5th, 2021.

As you can see I have a lot of growth stocks and speculative

stocks.
But it doesn’t mean I have a majority of my capital in them.

I like to diversify my speculative plays so that I don’t end up taking

a big loss if these companies don’t do well.

I have a lot of weight in growth stocks and some of these ETF’s

as well as dividends because I know these 3, can help my
portfolio essentially stay afloat.

If these speculative stocks do well, they can help propel my

portfolio and give me the returns that I want, but just in case they
don’t do well, I have to make sure I’m taking every measure to
limit my downside risk.

But that’s not the whole point. The point is getting started.

Sometimes people have money, and they finally come to an

understanding that money in the bank doesn’t pay them. So what
do they do?

They put it into certain assets that can produce a return.

Below I have a website that I use to essentially do some research
on stocks.

This website is called

[Link]
This is what the finviz website looks like.

If I search up the name “AAPL” on the top left corner in the search
bar, something like this will come up.
That box that you see with all the numbers tells you everything
you need to know about AAPL.

From the income that they make, to their EPS, their P/E, to their
float, their performance, etc.

This is good for investors because you don’t have to do the math
on these things.
I can also use this website to figure out which sector of the stock
market is out performing another.

This gives me an idea of which sectors are hot and which are not.

What sectors tend to do, is they tend to rotate.

By rotate I mean that some of these sectors that haven’t been

performing well will end up performing well EVENTUALLY.

There’s a method that I also use when I try to find stocks.

This method is through ETF searching.

There are several ways to do this but i want to show you another

great site i use to do my scanning.

Another great website you can utilize is [Link]
Barchart and Finviz are very similar, but Barchart may be easier
on the eyes.

Here is one feature i like about barchart.

I can see the hottest industry, and it will give me a list of stocks
within that industry and i can see the list and arrange them by its
technicals (historical volatility, relative strength, etc) by its
fundamentals (market cap, P/E ratio, EPS), and by its
performance (1 month change, 3 month change, etc).
**barchart example

Here is an example of how a company’s fundamental statistics

will look. And you will see this a lot when you start doing your own
research.

Now let’s go through each one.

Market Capitalization: we went over this previously but this is
essentially the VALUE of the company.

Shares Outstanding: the number of shares owned by all the

shareholders including institutional investors, and restricted
shares owned by the company’s officers and insiders.

Annual Sales: Annual shares represents the Revenue of the

company.

Annual Net Income: Annual net income can be looked at through

this equation:

Total Revenues - Cost of Goods Sold - Selling, General and Administrative Costs
- Depreciation Expenses - Interest Expense - Taxes = Net Income

Net income is basically the companies revenues minus expenses,

interest, and taxes.
Last Quarter Sales: a “quarter” is 3 months. There are 4 quarters
in 1 year. Companies report their earnings every quarter.

January | February | March (Q1)

April | May | June (Q2)

July | August | September (Q3)

October | November | December (Q4)

Last quarter sales is referring to how much the company made in

terms of revenue.

Last Quarter Net Income: Revenue - Expenses

60 Month Beta: Beta is a metric. It measures market risk and

volatility. It measures the volatility of the stock and how it

fluctuates

when you compare it to the overall market.

If the beta is more than 1, it means that the stock is more volatile

than the overall market. If the beta is less than 1, it means the

stock is not very volatile compared to the overall market.

If the beta is 1, it means the stock basically mirrors the market’s

volatility.

Insider Shareholders are shareholders who own more than 5% of

the company or they are either an officer or director of the
company.
When the insider ownership is high it can mean that the people
running the company are going to make sure the company works
hard so they can be successful. And it makes sense.

Institutional Shareholders are insurance companies, banks,

mutual funds, pension funds, hedge funds, private equity firms
that own shares of the company. Higher institutional ownership
can cause volatility as well because institutions are always buying
and selling stocks. Institutions are the key players in the market
when it comes to supply and demand.

According to research, institutions who want to position

themselves

in a stock because they think is going to go up may take weeks to

fully buy their shares. It makes sense because if institutions are

going to be buying a lot of shares, they wouldn’t want to buy it all

at

once because that can bring a lot of unwanted immediate

attention

to the stock due to the fact that they haven’t entirely filled their

whole position yet.

How do we determine when institutions may enter a stock for a
long term position? (this goes for daytrading as well, except in a
smaller scale)

We want to essentially look for consistent volume that appears

over a 3 week period of time (if we are looking at this from a daily
or weekly chart). Other than the volume itself, big candles can
show you a day where there are a lot of institutional presence.

There are other ways to figure out institutional buying in a stock

but when you are looking at it from this perspective you want to
have certain parameters set up.

The parameters you can use can be:

(Example)

Stock A has to have a bigger volume bar then the previous 3-6
bars (Daily Chart) (Weekly Chart)

Stock A has to create an uptrend during this period

Check out this price action that you see above. The platform i used for this
chart is THINKORSWIM by TD Ameritrade.

This price action from the beginning of the green trend line
shows you a period of consolidation.
You can see between July and December the stock traded in a
range. This period of time (especially when it ranges a few
months) is crucial because it can determine where the next leg up
is going.

When you are looking at consolidations, the price is essentially

trapped in a range where there is almost an equilibrium between
the buyers and sellers.

Accumulation phases or areas where the stock is nearing a trend

change is usually the best time for institutions to enter.

If a stock is in a downtrend, but has strong fundamentals,

institutions will more than likely be interested in buying.

The float is the amount of shares that are available for investors
to trade.

The price / earnings ttm is the company’s price to earnings trailing

12 months (ttm) and it is its price to earnings in the last 12
consecutive months.
The price / earnings forward can be used to measure the health of
the company and it is based on PROJECTED earnings where as
a normal price / earnings is based on past earnings.

The price / earnings to Growth or (PEG) is the company’s price /

earnings ratio divided by the growth rate of its earnings. When
you are looking at PEG, you’re adding the growth rate of the
company into the equation.

PEG ratio is one factor that can help in determining whether a

stock is undervalued.

PEG is like an extended version of P/E. Just like i mentioned

before, when you are looking at PEG, you are factoring in the
growth rate and the lower the PEG ratio, it can mean the stock is
undervalued or underpriced which can give you an idea that this
stock may be a good buy. But keep in mind these numbers will
vary by industry so when you are looking at a certain stock with a
certain ratio, you need to first find out what the average ratio is for
that industry so you can get an idea of how the numbers between
different stocks within that industry compare to each other.
Return on Equity is another metric that we can use.

ROE is basically a measure of a company’s NET income divided

by the shareholders equity. ROE allows us to essentially see
whether we are getting a good return on the investment that we’re
making or not. According to research, if we want to use the ROE
to our advantage, we HAVE to look at the HISTORICAL ROE and
the AVERAGE ROE of the industry the company is in.

Return on Assets (ROA) represents the return from the total

assets the company owns. Basically how much profits the
company earns based on its capital. This % represents the growth
rate in profits generated by the company’s assets.

Profit Margin is the profitability ratio. The % shows how many

cents the company generates in profit for every $1 sale.

There are different types of profit margins.

For example, you have the company’s GROSS profit margin, the
OPERATING profit margin and then you have its NET profit
margin.

Formula:

GROSS - Gross profit divided by revenue x 100

NET - Net income divided by revenue x 100

OPERATING - Operating profit divided by revenue x 100

What profit margin is good when it comes to these companies?

Any profit margin around the 20% and above is good, and
anything around 5% or below is not so good.

But depending on the company, you also have to think about

where they are as a company, because some companies that we
invest in are new and haven’t even turned profit at all.

Debt / Equity measures leverage compared to its shareholder

equity. In this case, Leverage is basically the company’s debt.

If the company has a lot of debt, is that a bad thing?

Not necessarily because debt can be used to finance things that

can help the company grow.
High debt is actually considered common practice for a lot of
companies depending on the sector and industry.

For example, if you take a look at the Financial sector, it only

makes sense for them to have a very high Debt / Equity ratio.
Their job is to borrow money.

Airlines, Auto Industry, Aerospace, Defense, Insurance are also

industries where you will find a relatively higher debt to equity
ratio.

Price / sales (P/S) is a ratio that compares the share price to the
revenue per share. This ratio is used to value shares. If the P/S
ratio is on the lower end, investors usually see this as a good
thing because it means that investors are essentially paying less
for each unit of sales.

Price / cash flow ratio is used by investors to help them gauge

whether a company is a good investment. You can think of this
ratio as a ratio that helps investors determine whether a stock is
“attractive”.

Price / Book ratio measures the market price of the stock and can
be used as a sentiment factor when valuing a stock.

High P/B = Overvaluation

Book value / share takes into account the equity of shareholders

against the number of outstanding shares there are for the stock.

Assets - liabilities (on a per share basis) = Book Value

The book value is basically the total of all of the assets that are
owned by the company, tangible or intangible (physical / non
physical) after subtracting the liabilities like debt, etc.

When investors come across something called the Interest

coverage, it tells investors how the company is able to pay its
debts. More importantly how well it can pay the interest expenses
on their debts.

If a company’s interest coverage is high it means that the

company is good standing financially.

Interest coverage above 5 is considered good and anything

around 2 or below is not so good.

But like we mentioned earlier, when you are looking at these

ratios individually, you want to be careful about being bias on a
company based on one ratio.

Let’s take a look at some indicators on charts that can help when
it comes to determining a direction the stock may go to.
The platform i will be using to show you these indicators is:

THINKORSWIM by TD AMERITRADE

For those reading that do not know how to add these indicators
on to your platform i will write down a step by step guide.

Go to the top right of your chart where it says “Studies”

Go to “Edit Studies”
Once you click “edit studies” you will be directed to this page
and what you want to do is type in “rsi” on the side and click
the first one.

Once you type in the indicator and click it, you should see it
on the right side next to where it says “lower”.

All this means is where the indicator will be placed on the

chart. By “Lower” it means it will be placed on the bottom of
the chart. The placement of the indicator is something you
can’t control.
Now, as you can see, the RSI is the bottom indicator that you see.

The RSI is the Relative Strength Index.

The RSI is used to determine whether the stock is overbought or
oversold. People use this as buy / sell signals but it is not how you
want to use it. Indicators can be more helpful if you were to
combine them together with other indicators.

The RSI uses a reading between 0 and 100. The RSI takes into
account extreme conditions of the market.

When the RSI is above 70, the price is considered to be at an

overbought level and when the RSI is below 30, the price is
considered to be at an oversold level. Let’s look at some
examples of instances where this has worked and instances
where this hasn’t worked.
Look at the areas of the RSI i have highlighted.

Now, what time frame am i using for this example?

I am looking at the weekly time frame. The weekly time frame can
be more beneficial to figure out oversold / overbought levels
because every single candle that you see in this chart represents
1 week of price action.

Let’s do a quick breakdown on candlesticks.

I will try to break the candlesticks down as best and as fast as i

can.
**[Link]

Now as you can see when you have a green candle, it means that
the price is going up, and when you have a red candle it means
the price is going down.

But what i want to explain about candlesticks, is how they are

formed.

Look at the example from above, and notice where it says OPEN.
This area of the candle is where the candlestick started and
where it says CLOSE is where the candlestick ended. If you are
looking at a WEEKLY time frame, this means that one single
candlestick represents one week so if you have a big green
candle on a weekly time frame, this means that there was major
buying that week.

Now notice in the example i provided, these candlesticks have its

own HIGH and its own LOW.

What does this mean?

For Green candles, the LOW means that at first the candle went
DOWN and THEN it went up. So essentially, at FIRST, the green
candle was actually red before buyers came in and pushed the
price up turning it green. Then it reaches a high to where it gets
pushed down again but the candle remains GREEN as long as
the price is higher than where it opened.
For Red candles, the HIGH means at first the candle went UP and
THEN went UP. So essentially, at FIRST, the red candle was
actually green before sellers came in and pushed the price down
turning it red. Then it reaches a low where it got pushed back up
again but the candle remains RED as long as the price is lower
than where it opened.

Now let’s look at more examples of the RSI indicator, and we will
also look at this indicator across different time frames.

We will look at the RSI on a weekly time frame, the daily time
frame, the 4 hour time frame, and the 1 hour time frame.
 Here is an example. As you can see, the RSI was above the
70 line. Once its above the 70 mark, the line will turn red
showcasing that the price is at extremes.

What have you noticed about this price action?

You can see that even though the RSI is already hitting the
extremes, the price still kept going up. If you had taken a trade
going the opposite direction after seeing these overbought levels,
you would instantly lose money because even though the stock
stays overbought, it never went down for a while.
And as you can see, even if you were to wait until the price goes
back down (because it goes down eventually) you would still not
be profitable because as soon as the price went back down it
regained buyers.

Here is a chart of Amazon on the MONTHLY time frame.

Every candle you see here represents 1 month of price action.

You can see where i highlighted the RSI was again at its
extremes.
Amazon never pulled back and all it did was continue to go up.

The same thing goes for the second highlighted example.

Now, does this mean that this indicator doesn’t work at all?

No. It just means that you shouldn’t make trades simply using one
indicator, because all indicators are LAGGING indicators.

Let’s look at another example of RSI, but an example where it

actually followed through with what it is meant to be used for.
Here is an example of GOOGL on the weekly chart.

As you can see, if you had used the RSI here to figure out
overbought and oversold levels, it would have worked.

Now you might be wondering,

“If i’m going to be using this indicator, is there a way for me to use
this where i can be confident in the direction the stock may go,
even if it means i would have to use other indicators along with
it?”

That’s a great question. Let’s look at the RSI combined with

another indicator i like to use.

We will be using the EXPONENTIAL moving average.

The Exponential Moving Averages we will be using is the 9 EMA

and the 21 EMA. You might have seen these EMA’s in my other
book and this EMA can be used on any time frame.
I still use these two when it comes to finding longer term plays
frmo a technical standpoint.

Why?

Because at the end of the day, i am looking at bigger time frames,

therefore when i am using a 9 EMA (where it takes the average of
the last 9 candles) i am still looking at the average of the last 9
WEEKs considering i am using a weekly time frame.
Let’s look at an example of how you can utilize these indicators
together. If you see this example i just made, i want your attention
to be on the red line.

The red line is a trendline. This trendline allows us to see the

overall trend for the stock. By overall trend, i mean the MAIN
direction that the stock is going in.
Once you identify the overall trend, you can look for mini trends,
and identify areas where you can capture these mini trends.

Check out the Orange lines i have drawn. These orange lines i
drew represents mini pull back trends. These mini pull back
trends can be traded if you correlate it with the RSI.
You can see now how much easier it can be if you utilized the
overall trendline in your trading.

Now keep in mind, these methods usually only work when you are
looking to invest into these stocks for the longer term because as
you can see we are still using the bigger time frames.
Another factor you can add in to your method, is to utilize the
volume bars on the bottom.

As you can see within the price action, whenever the stock gets
too far from the trendline, whenever there is an INCREASE in
selling volume, the stock usually follows the direction of the
volume.

In this case, we are looking at a lot of red (selling) volume every

time the stock gets too far from the overall trend line.

Let’s look at another example that you can use to help you.
Check out the purple lines. These two purple lines i drew are lines
of resistance and support. This line shows me that there are
sellers on top of the line, and somewhere along the bottom of the
line.

You can immediately draw these two lines once you find that a
stock has bounced up and down a range.
What you can do now, is position yourself for the potential
reversal.

What can help you figure out whether the stock is worth it to take
for a reversal?

Use the volume rule that we mentioned earlier. You do not have to
immediately enter this position as soon as it bounces off of the
resistance / or support but you can wait until a significant amount
of volume has presented itself indicating alot of interest in that
stock.
I won’t really be going over chart patterns in this book but its
IMPORTANT that you are able to identify patterns within the chart
because these patterns essentially tell a story.

Supply and demand will determine the direction the price will go
to.
When demand is greater than supply, the price goes up, and vice
versa.

What i’m going to do right now, is guide you on how you can
identify supply and demand when it comes to buying stocks for a
longer term hold.

Check out the examples that i will be showing you below.

Here we have a DAILY chart of SHOP (SHOPIFY)

Checkout the price action from the left. As you can see, the stock
bottomed out, meaning sellers no longer controlled the direction,
and that buyers are accumulating their positions within this stock.

If you can see the first orange line i drew, you can see that the
price then attempts to sell off again but failed.

Look at the example i have shown below.

This is the same orange line, just zoomed in.

What i want you to see is that the stock made a HIGHER LOW.

Meaning from where the stock had its lowest point ($305.3)

It went up and then created another LOW.

When it creates another LOW that is higher than the previous low,
that can tell you that buying interest is starting to come in to the
stock and that demand is starting to pour into the stock.
This blue line represents the DOWNTREND line that you may not
have noticed. When you have a stock that creates a HIGHER
LOW but is still in a downtrend, the best entry you can essentially
have is the point where the candles BREAK OUT of the
downtrending line.

Now look at the BLUE highlighted oval that i drew here. And also
look at the volume on the bottom. The Blue highlighted signifies a
9 / 21 EMA crossover. The volume on the bottom shows an
increase in demand and the good thing about this example im
showing you is that this is a STRATEGY that you can use for your
long term plays.

Let’s go back to the example. Notice how we have 2 LEVELS

where the price rejects.

There are different ways to find out whether a demand or supply

level can be utilized. The BLUE example shows you a
REJECTION after a big uptrend. The GREEN example shows you
MULTIPLE rejections (meaning the stock tried to go above
multiple times but failed every time (more than 3 times))
Now check out the price. You see that if i extend the lines, the
price is respecting this RANGE. This is an example of
ESTABLISHED levels.

Let’s throw on some indicators to see if you were able to trade

this.
As you can see, the RSI doesn’t really help much with
determining where the stock may go.

But what i will show you now is if you utilize the MOMENTUM
indicator called STOCHASTIC SLOW. If you read my previous
book, then you know all about this indicator.
Here is how it looks when you have the stochastic slow indicator
on.

Also, when you want to add this to your STUDIES on the

THINKORSWIM platform, you want to type in:

“StochasticSlow”
The stochastic indicator allows you to see MOMENTUM.

This doesn’t show overbought / oversold unlike the RSI but it

shows you MOMENTUM. The way i utilize this indicator is when i
see a stock at a resistance or support level and i want the red line
to cross over the purple line, but i want to make sure BEFORE the
red line crosses, that its coming from below or above the blue line
depending on the direction you are expecting the stock to go.

Now that you have an idea of some of the technical aspects of

this, lets jump into some SPACs.

SPACs are SPECIAL PURPOSE ACQUISITION COMPANIES.

SPACs are essentially blank check companies. These are

companies you can buy into, and what they essentially do is, they
raise money in order to be able to acquire OTHER companies.
When you buy into SPAC’s, they put the capital they raised into a
trust that earns interest, and they can use this money to acquire
companies OR company.

Its like its own fundraising vehicle.

There are 3 ways a company can go public.

1. Through an IPO (they raise capital from investors)

2. They can do a direct listing (where they put the stock straight
on the exchange without raising capital through an IPO)
3. Through being acquired by a SPAC

It’s cheaper for companies to go public through SPACs, and

anyone can buy in.

SPACs are also known to invest into a lot of hot areas.

On the other hand, SPACs can be seen as a BLIND investment,

and it can take them a while to figure out what company they want
to invest in, on top of having a mixed track record.

Two noteworthy examples of successful SPACs that you may

know about are SPCE (Virgin Galactic) and DKNG (DraftKings).
I am currently invested into CCIV (which is another SPAC) that is
said to have a merge with the electric vehicle company LUCID.

According to research, in 2020 there have been 50 SPACs that

announced merger deals worth tens of billions of dollars.

In todays investing age, i feel like its best to look for companies
who specialize in disruptive innovation.

These are companies who can make products and or solutions (it
can be a pre existing product) and be able to distribute or attract a
wide range of people and have the product so simple, that it
almost doesn’t make sense NOT to have that product.

Also another way you can tell if a company is disruptive is by their

business model. The way they run their business, and what their
goals are.

Why is Amazon so disruptive?

In my opinion, Amazon is disruptive because they simply focus on
customer service. Amazon has put its customers as a priority.

Netflix is also a disruptive company because they revolutionized

video streaming. And you may think that the reason why they are
considered disruptive may be because they have taken out their
competitors, but they were the ones who started to make their
own content and movies.

You know it’s a Netflix movie when it says “Netflix Originial”.

These are just two companies who have shown that they can
disrupt the industry and this is one of the main reasons why they
are so successful.

For me, for example, what I’m focusing on now, in terms of long
term stocks that I want to look to invest in, is to figure out a
market and/ or industry that is emerging.

I want to invest into companies who are going to either

revolutionize the way we do things, and companies who are
essentially in a growing industry that has a big potential for growth
within the next 10 years.
For example, the main industries I am looking to invest in are:

Artificial Intelligence

Automation / Robotics

Drones / UAVS

Cybersecurity

Renewable Energy

Electric Vehicles

What I am doing now is looking at different stocks from these

industries and try to figure out which companies I think have the
brightest outlook.

At the end of the day, when you want to invest into companies,
you want to invest into companies you can believe in. You have to
be willing to do your own extensive research in order to be
comfortable with what you are buying.
Luckily, in today’s age, it’s never been easier to find companies
because there’s so much information out there and you can even
utilize a trading community as a source for information on stocks
and then you can do your own extensive research based on
which stocks were discussed.

Like I said earlier in this book, I like to diversify my long term

stocks into a portfolio that can potentially grow faster than the
average rate of the S&P 500.

I’ve noticed that in order for me to be able to produce these higher

than average returns I would have to actively manage some of the
stocks in my portfolio, especially the ones that are very
speculative.

A good method to use is to compound.

You can re invest your DAYTRADING profits or extra money from

work, etc to add to your long term account on a monthly basis.

A lot of my daytrading profits I use to buy dividend stocks. This

way I can use my money to buy more income.
.

Here are some examples of stocks i have found that have shown
tremendous growth in 2020.

FSLR / JKS / DQ / ENPH / SEDG (Solar)

WKHS / FUV / NIO / TSLA / FSR (EV)

HZNP / MRNA / PODD (Health)

GRWG / CGC / SNDL (Cannabis)

QCOM / SONO / CRWD / PDD (IT)

SHOP / AMZN / BABA (E-Comm)

These are just SOME companies that have had major growth, out
of many others.

Commodities are also very common, but not very many people
trade commodities.

Commodities refer to things like natural gas, corn, wheat, oil, etc.
Yes you can trade these. You can trade these by trading
FUTURES contracts.

These are the contracts of commodities and is similar to Options,

except with futures you have to buy the shares.

They are both similar because you can utilize these two ways of
trading in order to hedge your positions on your long term
portfolio.

When it comes to hedging your portfolio, options can serve as a

key player.
Options can be used to hedge your long term shares by letting
you buy short term puts.

I buy puts for SPY and QQQ if i feel like the market is going to
make a small correction in which i have no idea how much my
long term account may pull back by.

Buying puts during a pullback allows me to have a peace of mind

for my long term portfolio, and if the profits of these puts can
exceed the temporary pullback loss, i can use these profits to buy
the dip on some of the long term shares i am holding.

Another key thing i do, in terms of protecting my long term

portfolio to the downside is, IF and only IF i am in a speculative
stock, and it has grown tremendously, or IF i feel like there are too
many eyes on it (in terms of hype stocks) i will take my profits and
sell these speculative names to buy DEFENSE stocks for the time
being.
FOR EXAMPLE, if i invest into a company and it runs from $7 to
$30 in one month, and all of a sudden, the whole world is talking
about it, what i will most likely do is average down my position, or
sell it all to buy DEFENSE stocks for the time being.

I don’t really like taking my chances when it comes to giving back

profits because my goal is to outperform the market.

Sometimes if i hold the stock for too long, after its made a
significant amount of growth, i have a tendency to switch them
out, and move on to the next speculative play.

This is what i also mean when i say my long term account is

actively managed.
Another way to diversify your holdings other than using the % by
Growth/ Speculative/ Dividend stocks is diversifying your holdings
by MARKET CAP.

Diversifying holdings by market cap can give you a better idea of

how risky your investments are.

If you invest 80% of your holdings into small cap stocks and 20%
of your holdings into mega cap stocks, then it only makes sense
that your portfolio is almost always going to be volatile.

Here is another list of potential topics / industries you can look

into when it comes to researching for stocks.

Blockchain Technology
Space Exploration

Cloud Computing

P2P

Machine Learning

DNA

Stem Cells

Gene Therapy

Molecular Diagnostics

Alternative Energy (Like Renewable Energy)

3D Printing
E-Commerce

This is an example of a portfolio that is highly diversified in terms

of which topics / industries that it covers.

After figuring out what you want in your portfolio, you can then
adjust accordingly in terms of the weight each of these industries /
topics have.

You can have a portfolio that is 20% E-Commerce oriented, 40%

DNA oriented, 20% Space oriented, and 20% Blockchain
oriented, the combinations are endless.
The factors that will determine how volatile your portfolio will be is
simply the companies / stocks you choose, how big they are as a
company, and how that certain industry is performing now.

If you are using a scanner like Barchart, remember to filter

through everything you can find.

Scanners like barchart allow you to filter stocks by VOLUME,

Earnings, Highs & Lows, Liquidity, Momentum, Top 100 stocks,
and they also have pre set ideas like 5G, Blockchain, Cannabis in
which you can just click and see the companies that fall under
these industries.

The tools you have at your disposal presents endless

opportunities…

First and foremost this is not financial advice.

These are merely created for entertainment purposes, and I am
just showing you what works for me.

This book will have new approaches, strategies, indicators that

you can take advantage of for scalping, daytrading, and swing
trading.

This book is strictly price action analysis.

By the end of this book, you should be able to construct your own
trading strategy and have a better understanding of price action.

Now, whether you’re scalping, or daytrading, the first thing you

want to always do is to go on higher time frames.

Whether you are trying to scalp or daytrade, going on to higher

time frames will allow you to see the bigger picture.

In the next few examples we will take a look at Boeing. All of the
examples I show you of techniques/ strategies are taken from my
own charts.
In the example below we will be looking at a 20 day 1 hour time
frame of Boeing.

You can see that in a span of 10 Days, it created a symmetrical

triangle.

Symmetrical triangles have two converging trend lines that are

essentially symmetrical.

With the symmetrical triangle you are paying close attention to the
price action within the triangle, and you are waiting for the
breakout opportunity to present itself.

Symmetrical triangles can break out to the upside or downside.

The top of the triangle consists of lower highs and the bottom of
the triangle consists of higher lows until they come to a point
where either buyers / or sellers will overcome one another
causing a breakout

Imagine a game of tug of war. That is the psychology behind a

symmetrical triangle.
1 Hour Time Frame

The general area in which a symmetrical triangle will most likely

breakout will be towards the end point where they almost
converge.

There are occasions where the price can breakout halfway into
the triangle but that will more than likely be labeled as a “range”.

Look at the example below.

The orange line is called an impulse move. An impulse move

could also be identified as a pole.
Whenever you have an impulse move, it usually transitions itself
into a pattern, whether it be a flag or a triangle.

1 Hour Time Frame

If you look at the vertical distance of the impulse move and

compare it to the move of the breakout after the transition, you
can see that more often than not, it will be the same, or almost the
same.

In this case, the impulse move was $25, then it transitioned into a
huge triangle, and the breakout of the triangle was a $25 move.
In the past month, Boeing has soared almost $100.

All of this is due to sentiment and news. There have been a lot of
recent good news on Boeing and it was one of the laggier stocks
to move back up during the pandemic in comparison to the
overall market. And it made sense. They had issues with their
planes that caused fatalities and also the pandemic crushed the
travel industry.

Going back to the more recent news on Boeing, you can

sometimes correlate news with patterns on the chart.

When I look on a 4 Hour, 1 Hour time frame and I see a perfect

bull flag, or a perfect triangle, I will look up news on that particular
stock to see if there might be a catalyst I don’t know about that is
causing this type of price action within the time frame.

Before entering breakouts it’s important to make sure the impulse

move is strong in order to have a better conviction that the price
may hit your next target. Without a nice strong move, you might
be setting yourself up for a fakeout, etc.

5 Minute Time Frame

When you are trading a breakout that has occurred on 4hour,
1hour chart it is very crucial that the price holds above its
breakout level if you plan on entering after it breaks out.

You can look to see whether it holds on a 5 minute / 15 minute

time frame if you plan on swinging this into the next day.
You can see on the example above, this is Boeing on the 5
minute chart. The yellow lines on the bottom is part of the 4hour
triangle that we mentioned earlier.

Look at how the price action is treating the top of the triangle as
the price breaks out.

You can see that for the first half of the day, the price consolidated
yet stays above the breakout and starts creating a sloping line to
the upside.

This means that the buyers are accumulating on this specific

period of time.

In this case, the buyers have been accumulating for about 4

hours.
7:00 to 11:00

Notice how the volume stays fairly low during this time.

You have to understand that there are specific hours in the market
in which the majority of buyers / sellers come in to participate.
This blue line essentially means that at the breakout level, the
buyers are gaining interest and the demand is increasing.

You can essentially also make a horizontal line on the top thus
creating an ascending triangle.
An ascending triangle shows aggressive buying while sellers stay
stagnant. You see how the lows are getting higher and higher in a
slope while the highs on top stays flat.

The fact that this pattern alone formed itself after a big breakout
can help you have a bullish conviction on this trade.
Let’s look at the next day.

The first thing you always want to do is to label the pre market
highs and label the premarket lows.

The premarket high will serve as an entry level for calls.

The premarket low can serve as an entry level for puts.

What determines pre market levels?

After hours resistance / support

Pre market resistance / support

The reason why pre market / after hours support / resistance
levels are strong is because many professional institutions, funds,
banks trade after hours.

After hours and pre market movements can usually gauge how
the market may open.

Economic data is usually the driver for after hours/ pre market
moves.

Pre market / After hours levels are usually good levels to trade off
of, only if you have another level nearby you can use as your
profit target, etc.

More often than not, pre market / after hour levels will usually
respect the previous day’s high / low.

In the example below, you can see that the close from the
previous day acts as a new support after hours / pre market.
This support level can be used as an entry for puts for the next
day because you can have an understanding that, previous to
yesterdays close, we could not break above this price due to the
sellers preventing it from pushing up.

Buyers finally took control of this after hours / pre market.

Here is the same chart with the 4 hour levels incorporated in the
chart.

You want to make sure your next resistance levels become your
profit target.
And to ensure you have a good profit target that have a good
chance of hitting, you have to make sure the profit target is still
within your stocks ATR (Average True Range)

Calculating the Average True Range

can be done manually by simply taking an average of how much

the stock has moved in a certain period of time (preferably the last
30-69 days), or you can use websites on Google.

There is a partial site you can use called [Link] where you
can look up any stock you want and find out all of the information
you need in regards to its fundamentals, including its ATR.

Once you know and understand what an ATR is, you can use that
number to gauge whether the position you’re trying to get into is
worth it to take or not.

If you have a risk to reward ratio of 1:4 this means that the 4
should be within its ATR.

Example: If you are going to get in XXX at $3 and set a stop loss
at $2, this means you’re risking (1).
If you have a profit target of $7, this means your reward is (4).

This is generally what a 1:4 reward looks like.

Make sure the reward is still within the ATR!

1 Minute Time Frame

Let’s move on to a 1 minute chart of the same stock. Above you

have the pre market high which serves as an entry for calls.
The reason you want to switch to a 1 minute chart is because
waiting for a 5 minute candle to break out and close above a level
can take too long and cause you to miss out on profits.

Check out the massive volume that came in when the price
breaks and holds the breakout level.

Using the 1 minute can still give you the same conviction. All I’m
looking for on the 1 minute time frame is for the price to settle
above my entry level.

You are essentially going to be looking for candles with long lower
wicks that are setting just above the level when attempting to
enter calls at breakouts using the 1 minute chart.

You want the lower wick to be longer than the upper wick (if it has
an upper wick).

The longer lower wick tells you that there are more buying
pressure coming in at that specific level.

1 Minute Time Frame

Look at the way I highlighted the bottom wick and the upper wick.

This is like a gauge meter and it allows you to see how much
stronger the buyers are compared to the sellers.

This candle + the volume should be enough conviction for you to

make the decision to trade this to the upside.

You can always use the stochastic, ema, but understand that
when you are looking at 1 minute charts you must be able to
execute fast.
Another reason why it’s important to execute fast is the current
time in which you’re entering the trade.

If you are trading the first 5-25 minutes of the market, you must be
able to execute fast because volatility tends to be crazy during
this time.

The longer you wait, the more likely you are to miss a move, and
the more expensive the option contract will be.

5 Minute Time Frame

Here is the 2 profit targets that we have for Boeing.

What I’m going to do here is pull up the ATR on Boeing to give
you a better idea.

Boeing ATR

source: [Link]

$10.35 is the ATR of Boeing. Meaning Boeing can move an

average of $10 daily, either to the upside or to the downside.

Where do you start counting the ATR?

You start the ATR from the opening price of the stock.
As you can see here BA slowed down after making a $10 move to
the upside from the open.

We have 2 perfect entries here that we utilized (this is an actual

trade that we took).

The perfect entries were the pre market high and the first
resistance.

You can also trade the price action in between using a strategy
called “Top Seed”.
5 Minute Time Frame

Look at his example.

We have 3 different parameters within this daily chart.

We only care about the top 2 parameters because the opening

price opened above the 2nd parameter.

If you missed the entry on the first pre market breakout, it’s okay
because you can always trade during the transition after the
impulse.
We talked about this before, remember?

The move from the pre market high breakout is considered the
impulse and this bull flag is the transition.
The reason for the name impulse, is because of how fast this
move can be.

With the top seed strategy you do not enter at the breakout.

With the top seed strategy you are going to enter at the bounce or
mid point of the bull flag.

In the top example, the Top Seed entry is the purple line.

Comparing the Top Seed entry vs the “Normal” Entry where

people wait for it to break out, makes really no difference.

Why?

Because you essentially have the same stop loss as you normally
would if you were to enter at the breakout of the flag.
Capturing the move using the Top Seed strategy allows you to
capture bigger moves than everyone else who enters this trade at
the breakout.
You see the stop loss that’s been laid out here. This is the same
stop loss that you would have had if you entered at the top of the
flag.

But by entering here (purple line) you are able to capture more of
a move.

Like i mentioned, you still have the same stop loss. Entering at
this level ensures you don’t get caught in a pull back that may
happen as soon as the price breaks out.

It also depends on what time of the day you are attempting to take
this trade.

Everything depends on sentiment. This is why its always

important to look at the overall market and how its performing in
correlation to the stock you are looking at.

This is why, in my opinion, volume is a key factor.

There is a reason why breakouts that have a high run percentage,
usually starts off with a spike in volume.

Going back to the strategy, by entering here at the purple line you
might be able to capture the option contract while it’s cheaper
because as the volume increases during the breakout, the IV can
jump up high this causing the contract to be more expensive due
to the Vega of the Option.

5 Minute Time Frame

Understand that within each parameter, you will more than likely
have impulses & transitions as long as the stock is still within its
ATR and as long as the market sentiment is somewhat one
directional.

But when it comes to the market being one directional there is no

way for us to know if we’re going to get a one directional move.

But what we can do is look at the longer time frames to see if we

are breaking out of specific patterns that can give us the
conviction that the market may be one directional for the day.

In this case for Boeing, we had the huge 4hour pattern that broke
out causing a nice move to the upside recently.

1 Minute Time Frame

Now, if you were going to trade the actual breakout, there’s
nothing wrong with that too.

When you have to execute at the breakout you need to be able to

catch things fast.

By catch things I meant to be able to catch the indicators that you

use and catch when they align with each other.

Look at the increase in volume and correlate this with the candles
that I highlighted.
The volume bar of the breakout candle must be higher than the
previous 4-8 bars.

1 Minute Time Frame

There is a good rule of thumb when you are trading impulses.

They will usually make the same move in terms of the breakout.

Look at the first impulse move.

You have a $4 move to a bull flag transition.

The bull flag breakout is another $4 impulsive move.

You then have another transition, this time into an ascending

triangle and breaks out another $4 to the upside.

The first impulse move gives you an idea of the move you can
potentially catch.

This allows you to hold things longer, etc.

It’s best if you buy more than 1 contract because you can trim.

This strategy is called the “Runner” strategy. You essentially want

to take profits at the first profit target but you hold the other
contract (s) during the transition and what you can do is either
keep the contracts or add to your position at the next breakout.

The goal of the “Runner” strategy is to be able to capture more %

when you are in a position.

A lot of traders’ biggest problems are letting things run and the
“Runner” strategy is a very efficient way of capturing bigger
moves.
Here we have TSLA on the Daily Chart. We see some nice
impulse moves into transitions into more breakouts.

Now let’s identify how much the stock moved during the impulse
moves.

This example is to give you an idea of how much breakouts can

be identical to its previous impulse move.

If you look at historical data, and see the same things happening
over and over again, then the probability of it happening again
increases.

This is what technical analysis is all about.

There is supply / demand & sentiment within these moves, but the
patterns repeat themselves more often than not.

The way we do our analysis, we use both a top down, and bottom
up approach to our analysis.
We look at the overall economy, down to the sectors, and the
individual stock, and we break down the stock and try to figure out
where it stands based on its current price action in comparison to
how it was the previous hour, day, week ,year, etc & we try to see
where it can go next.
After every breakout, TSLA has moved $140.

This is pretty insane right?

In order to anticipate these types of moves, you usually need to
have more than 2-4 highs on a daily time frame and it needs to be
in a consolidation / transitional period that started with an impulse
move.

When you have a historical pattern like this, even if you missed
TSLA, you have to understand that by utilizing the pole of the
move, you can get an idea of how much you can capture.

These types of setups, that you see so often, are usually the
starting point for huge volatility increases, major price trends and
huge price swings.
This is how accurate trading can be. In the previous example I
showed you the impulse $4 identical breakout on a 5 minute time
frame.
This one here is on a Daily chart.

You can utilize this strategy on any

time frame.

You just need a good transition from the impulse.

What makes a good transition?

The transition needs to be a consolidation that has enough buying

and selling pressure going against each other.

Studies:

TTM_ScalperAlert

StochasticSlow
In the next examples I will go over how you can utilize both of
these studies to have a better edge.

With any indicator, you should not use it to have a complete

conviction of where a trade may go, but use it to help you make a
decision.

Just because the indicator says buy, it doesn’t mean you should
buy.

5 day 5 minute
Here is the TTM SCALP ALERT

The TTM Scalper alert indicated when to buy or sell against

different pivot levels on the chart.

This indicator can be used as entry or exit. But in my opinion, I

use this as a “partial confirmation”.

As you can see the sell signal arrow at the market open could’ve
been used as an entry for puts.
In my opinion, it’s better when you combine a few things together
in order to have a conviction.

First off you want to identify the first red candle.

The first red candle is an indecisive candle.

Whatever candle follows after this indecisive candle should give

you a sense of where the price may go next.

5 day 5 minute
An indecisive candle has 2 wicks of the same size.

In this case we have a sell signal during pre market but we also
have an indecision candle.

What makes this a shorting opportunity?

If you pay close attention to the Moving Average you can see that
the 9/21 EMA crosses on the 2nd candle confirming a further
downward trend.

This second candle also confirms the breakout of the pre market
support (if you were to draw an invisible horizontal line across).

5 day 5 minute
You notice how we have a triangle that has formed after the 8th
candle.

This is also a breakout you can trade and you can use the first
impulse move to figure out your profit target.

5 day 5 minute
Let’s further look into how these buy / sell signals can help you.

Compare the two examples above.

Notice WHEN the buy signal appeared.

The thing about this indicator is you will not immediately see the
signal at the bottom.
It takes time for it to confirm and develop.

But notice how it appeared on the second candle at 568.99.

This but signal is essentially telling you that a bounce may

happen because this pivot level is being treated as hard support.

5 day 5 minute
Also, here’s the best way you can trade this buy indicator. You
want to make sure the momentum confirms so when you look at
the momentum indicator (stochastic) on the bottom there you can
see that it is crossing the threshold as the arrow appears.

This is a good trade to take because the momentum is shifting

from bearish to bullish.

The next sell signal appeared at 582.47, more than a $10 move
from where the first buy signal appeared.

5 day 5 minute
Now that the first impulse move has been made, you get a sell
signal.

Now there is something about this sell signal that you should
know about.

Notice the momentum indicator as the sell signal appears.

The momentum is still strong!!

This is how you can prevent yourself from potentially getting faked
out of this trade.

This sell signal can be used as a scalp trade but that depends on
your account size.

If you are day trading the stock, then you don’t need to focus on
this sell signal.

One way to differentiate between which buy / sell signal can be

used for what type of trading, is by looking at the momentum
indicator.

In this case, this sell signal was a takeout for daytrades because
the momentum on the 5 minute was still strong.

You will more than likely get sell signals when you’re entering
transitional phases of the stock.

You should know that transitional phases usually begins with a

candle that has a longer upper wick.
5 day 5 minute

When entering trades, it’s always best to go in more than 1

contract.

Why?

To take advantage of the transitional phases.

During transitional phase this is when you need to trim your
contract.

You leave the others to run through the consolidation period, and
what you can do then is take advantage of the “Top Seed”
strategy.

The “Top Seed” strategy, like we mentioned before, requires you

to enter the trade before the breakout happens.

But the one thing you need to make sure is you want the price
action to be near the end of the pattern before entering it.

The reason being, is because you want to enter at the most

probable time the price is going to break out.

1 day 1 minute
Here is an example of the “Top Seed” entry.

This is an example of how you can enter this trade using multiple
confirmations.

The last buy signal that you see is on an indecisive candle and
you want to enter on the next green candle where you get a
volume spike, a stochastic cross and an EMA cross.

Why couldn’t I enter on the first buy signal?

Because that buy signal is on a bearish candle and the
momentum was still very bearish on the down side.

1 day 1 minute

Your stop loss in this example would be slightly below the buy
signal arrow.

Let’s take a look at another scalping setup.

1Day 1 Minute
Here we have the 1 day 1 minute time frame. Notice how the
price has action has established a support level on the 1 minute
frame. Once you see a support level established like this after a
down arrow, we are essentially waiting for the buy signal to come.

Now take a look at the 3 up arrows that you see on the left.

Notice how they are essentially giving a buy signal in the same
zone.

If you were to make a horizontal line across these 3 arrows you

would have a level.
1 day 1 minute

Here is the level drawn horizontally across the buy arrows.

Now we see a buy signal forming as the candle spikes to 211.18

This level can be used as an entry for calls to the upside.

You can see in the stochastic, that the momentum has shifted to
the upside.
Your next profit target can be the next white arrows or the current
high of the day.

1 day 1 minute

Notice how we had a transitional phase when it hit the first area
where the previous level was.

We then had a crossover mid phase + the momentum indicator

staying above the blue line with no sell signals.

This can be used as an indication that the price will continue.

Also I want you to notice how the volume spiked as the EMA’s
cross.

This is another indication of a potential continuation to the upside.

Now let’s say you used the runner strategy where you buy
multiple contracts, and you’ve taken profits and you’ve rode this
move up with your last contracts.

You might be waiting for a sell signal to happen but understand

that the buy/ sell signals don’t usually appear at tops or bottoms.
The candles after the reversal have to form first before the signal
appears.

1 day 1 minute
In this case the sell signal did not appear until 3 candles have
revealed itself.

This is why it’s important to only use this TTM SCALP alert as a
tool.
Incorporating this indicator into your swings can be a major game
changer.

This indicator can allow you to capture big moves.

Look at this buy signal, followed by a momentum shift.

180 day 4 hour

This was a $26 breakout from Boeing.

When you see a stock breaking out of a pattern on the 4 hour / 1

hour chart, you need to understand that once you jump into the
1min/5min chart, the bigger picture is still the direction of the
breakout.

Sometimes we get caught up in a trade or we end up cutting

things to short due to emotions without understanding the bigger
picture.

5 day 15 minute
Here’s a 15 minute example of how the indicator can help you.

The 2 bottom arrow shows you that there are buyers there.

The top white arrow that appeared pre market tells you that there
are buyers there and that, that is a support line.

In this example we will be looking to trade the pre market high

breakout of 584.60

5 day 15 minute
This yellow line will serve as a breakout entry for puts.

Now let’s look at this from a 5 minute point of view

5 day 5 minute
Notice how the first $15 move was the initial move that
transitioned into a channel. Notice how the breakout move is
identical to the first initial move.

In this example we will go into the slow stochastic indicator and

change one of its settings.
Where it says “show breakout signals” you can adjust it to
“On SlowK”.

5 day 5 minute

Check out the stochastic cross over Red arrow that presents
itself.

This setting allows you to easily see when the momentum shifts at
a breakout level.
This arrow will most likely appear at certain breakouts that have a
good chance of shifting in momentum.

As you can see this arrow gave us a sell signal at 118.75

5 day 5 minute

Now notice how it hit support.

You would assume the price may reverse back up right?

Maybe, and maybe not.

But what we can do is take a look at the momentum and the

volume.

Notice how much the selling volume just spiked at this support
level.

This lets you know that sellers are in control of this area and you
should not attempt to trade a reversal anytime soon.

Also,

Notice how the momentum is below the blue (20) line.

When the red line is below the blue line, it means that the selling
momentum is at its strongest.

Unless it curves up, you do not want to go against the

momentum.
When your momentum line is above or below the blue line, it’s a
good indication that you will see a continuational move headed in
the same direction.

5 day 5 minute

Check out how it kept flushing for another 10 minutes back down
to near its pre market support & low of the day.

180 day 4 hour

Here’s an example of how you can easily take advantage of this
in a higher time frame.

Notice got the green buy signal appears right as the stochastic
lines are about to cross.

If you waited or the line to cross the price might have already
broken out.

But if you simply read the price action + apply this arrow to your
conviction, you can potentially make more profi than if you
generally would by waiting for a full breakout.
Just buy looking at the price action you can see that the buying
pressure is currently strong, why?

Look at the move that BA made as the stochastic signaled the

buy arrow.

Pay attention to the time in which BA was bought.

This huge move it made happened pre market which means you
essentially have institutions, banks, etc who entered before the
market opens.

When you think about this in mind,

You have to understand that retail traders will most likely want to
get in on a piece of the action. Especially since the stock has
already made a decent move to the breakout point.
Let’s quickly take a step back to before the buy arrow was
signaled.

Look at where and when the signal was actually given.

Notice how it was given once the price broke over the 9 ema.
Here is how effective this strategy can be when you utilize
multiple factors and execute.

When trading breakouts using this “slowK” strategy you want to

implement the impulse strategy to be able to have an idea of how
much you can capture in terms of moves.

5 day 5 minute
Let’s take a look at how the Scalper alert can help you with this
particular DAYTRADE.

Now pay attention to this price action that you see.

Can you take a guess at what kind of trade we’ll be taking?

If you thought “calls” then you’re right.

We can see that a potential ascending triangle / symmetrical

triangle may be forming close to where the 9/21 EMA may
converge.
Now look what appears as the price gets higher and higher and
reaches a potential breakout.

This arrow is confirming a breakout of a pivot point.

5 day 5 minute
Notice the stochastics crossing as well on the bottom indicating a
shift in momentum as the price is about to breakout.

5 day 5 minute
Pay attention also to the volume spike as the price is breaking out
of this triangle.

Now you might ask:

Where is my profit target?

Your profit target will be the pre market high that is labeled by the
white arrow on your left.

5 day 5 minute
Notice how the price attempts to break the high of the pre market.
5 day 5 min

And then gets rejected.

Once your profit target has been reached you have to trim your
contracts or take profits and wait for the transitional phase to
happen.
During this time, its best to shift your eyes to other names, and
not be glued to the same name, because transitional phase
usually last longer than the first impulse moves.

It is not good to stay glued to one name, because it can cause

you to miss other opportunities and potentially miss out on other
moves that could have happened around the same time.

Understand that, there are usually tons of moves daily ranging

from a lot of stocks, and they all happen at different times
UNLESS the overall market just has a very low volume for the
day.

5 day 5 minute
Here is another one you can use called the “DMI REVERSAL
ALERT”

This indicator is used to be warned of a potential directional

change.
You can pair this together with the

“DMI STOCHASTIC EXTREME” indicator which in itself lets you

know when the momentum may reverse.

In the last example I do not have the DMI reversal on, but if I did
have it on you would see the arrow under the green candle.

These 2 DMI’s can be used together as a combo.

There are many types of combinations you can use, and its up to
you which ones may work to your liking.

It is best to stick to less than 3 indicators when trading, so you do

not confuse yourself.

What you can do is, try different combinations of different

indicators, for a few days, weeks, and compare them and see
which combination best works for you.

5 day 5 minute
There are plenty of ways to use different indicators together and
have an edge while trading.

Now let’s go over the steps in creating accurate levels for your
chart.

​ You must start with the weekly chart.

​ You do not need 2-3 touches on a weekly candle
because the weekly candle is already strong enough to
be a level in its own.
​ When you reach the 4 hour chart, that’s when you need
to use the 2-3 touch rule.
​ Once you get to the 4 hour chart, you want to color
code these levels.
​ I suggest color coding the Weekly, daily, and the 4hour
only.
​ The reason why you want to color code these levels is
so that when you are daytrading, and the price is about
to reach your profit target or entry level, you know what
time frame that level is based off of.
​ If you are approaching a higher time frame level, you
need to expect some time of resistance at that level
simply due to the fact that the level is derived from a
4h/daily/weekly.
​ If you want to have a strict rule, use 1h / 4h levels as
your profit targets only. This ensures a better chance of
maximum profit.
​ If you have a 5 minute profit target that is $1 away and
a 4h profit target that is $3 away, i would opt out for the
4h profit target as long as that $3 move is still within the
stocks ATR. The ATR of the stock is the most important.
​ You can end up entering trades at the wrong time and
having the wrong expectations without understanding
the capacity in which that stock can even move for the
day.
Here you see GOOGL / AAPL / AMZN

If you like looking at multiple stocks at once, this is a way for you
to do so.

Here are 3 big weighted stocks in the SP500.

Whenever you see SPY make a move, it is more than likely

because these weighted stocks are moving in alignment.
Here we have FB / NFLX / and MSFT.

Also another 3 heavily weighted stocks in the SP500.

What similarities / differences do you see between these names?

The similarities are that they

all made a move up.

But the thing is, more often than not, they will not make a move at
the same time, synchronically.

This you must understand.

You do not know which one of these stocks will move first.

But what you should know is that, laggers will usually follow.

What you need to do is identify which one of these heavily

weighted stocks have the initial run, and if you miss that, you will
have an opportunity at the lagging stocks.

For example, you can see that FB & GOOGL were the first ones
to have the initial run.

AMZN did not start running until after GOOGL was almost halfway
into its move.

MSFT did not start running until AAPL was done with its move.
This is why it’s important to just focus on one name at a time
instead of trying to look at multiple stocks at once.

If you try to catch them all at once, you will not succeed because
like mentioned, these things will not move all the time at the same
exact time.

SNOW PROFITS 129%

Let’s take a look at how I was able to capture this move on

SNOW.
Can you guess the strategy I used?

Sometimes you will not have enough time to be able to make the
drawings that are necessary for you to see the clear picture.

This is why its important to practice, practice, practice so you can

read charts without having to draw trendlines, ovals, etc.

The more you practice on reading charts daily, the better you will
get.

If you are good at reading charts, you will be able to immediately

see that i traded a Bull flag^

Now what was the strategy i used?

If you guessed “Top Seed” than you are correct.

I also used the indicator called, “Impulse”.

Which i will discuss later on.

Now you might ask me,

SNOW has already ran $30 by the time you entered… what
makes you think that this was a good entry?

Aren’t you afraid that the stock will dip?

Here’s the answer to that question.

1 hour chart
Here is SNOW on the hourly chart.

Do you see something similar to what we’ve discussed before?

If you had looked at the hourly chart / 4 hour chart you should
already know that there was an initial impulse move of $50.

It then transitioned into an ascending triangle.

Understanding that SNOW had a potential $50 move allowed me

to not be afraid of entering this trade even after it’s made a $30
run.
This is why it’s IMPORTANT to look at the bigger picture every
single time you trade.

30 minute

Notice the color coded levels.

The blue level is a DAILY level.

The orange line is a 4 hour level.

Color coded levels will play a significant role in your entries / exits
and overall performance.

Notice how much stronger the 4 hour / Daily levels are compared
to the 5 minute level.

5 minute level: white

4 hour / Daily levels are the most optimal for developing profit
targets for daytrades.
Sometimes Daytrades require time for you to be in the trade so
having a designated Daily/ 4hour profit target that is still within the
stocks ATR will definitely help you.

1 Minute chart

Let’s dive deep into a Scalpers mindset.

Scalping requires you to have a different mindset than daytrading.

You need to be able to be fast, and to be able to react to certain
price changes faster than you would a normal DAYTRADE.

Check out this price action.

The blue line shows you a 1 minute resistance. You see that 4
candles have tested this line alone.

You need to be able to identify this with speed so you can catch
it’s breakout.

The hammer candle shows you that a potential reversal may

come so this is when you need to be in your toes and wait for that
blue line to potentially break to the upside for your entry.

Until the VOLUME shows you that buying pressure is increasing

at the breakout, you sit on your hands.

Once the volume rises above the previous 3-4 bars, that’s when
you want to execute the buy position.

Why the volume?

Because you want to ensure there are orders coming in as you
buy.

There’s no point of trading a breakout if there is no volume to

show for the potential move.

Another example of when you need to be fast.

This is a previous NFLX signal that I caught.

The initial hammer gives me the heads up that the price may
reverse.
Watch how the momentum shifts after the reversal candle
happens.

The 9/21 EMA is also converging and looking to cross.

As soon as the volume spikes is where you have your entry.

In this scalp your profit target will be the pre market high.

Here is the type of breakdown that you need to be able to

analyze.
Once you begin to have a level of proficiency in reading price
action, you can read this chart without having to point out every
single resistance / support and labeling them.

Pay close attention to the price action written above.

You may have learned this from the previous book so this
example may be a refresher.

This is an example of how you can use the 1 minute time frame to
your advantage and how you can use this time frame to scalp.

Step 1:

-Identify highs / lows of the previous days

-There can be multiple highs/lows so you need to label the ones

that have had the most retracements
-Identify price action near the close

-Look for levels that have retracements with long wicks

-Multiple long wicks means that the level may hold due to the

amount of buying / selling pressure that is coming in those wicks

-Try to find stocks that had a steady run that day

Step 2:

-On the day you’re looking to trade this name, identify the pre
market high / low

-Use the same levels that you had made from the previous day
-More than likely, you will use the pre-market highs/ lows as entry
for calls and puts.

-Follow these levels when you are going to scalp

1 Minute Chart
You need to be able to spot these resistance levels on the 1
minute.

The first highlighted candle with the breakout allows you to have a
“Top Seed” entry.

The highlighted volume is where you would have a more

“Traditional Entry”.

1 minute Chart
Your timing needs to be precise.

What we have above us here is a perfect setup.

Volume spike at the breakout + momentum shift

Even with this perfect setup, are you still able to execute?
These are the types of 1 minute patterns you need to be able to
identify.

Take time to go to your charts daily, and spend 30 minutes to a

few hours just practicing and watching price action for yourself so
it can be second nature the next time you chart.

1 Minute Chart
Let’s look at this price action.

When you’re reading this price action you will not have enough
time to make this analysis during the day.

You need to be able to have this whole layout without having it

drawn.

Meaning you should be able to understand the concept of every

pattern / zone that I described above.
The reason why the red zone is a selling zone is because right at
the market open, the price fell below after testing the pre market
high.

The price then went on to consolidate in between, right below the

same pre market high level that you would have otherwise used
as an entry.

Let’s now jump into an indicator you may not know about.

This indicator is free on TOS,

And this indicator I like to use for swing trading.

This indicator is called

“Impulse”

This indicator replaces the color of your candles to red blue and
green.

This indicator is composed of EMA’s & MACDs.

Green is bullish, Red is bearish, and Blue is neutral.

When the MACD & EMA values are higher than the previous
candle, it’ll turn green, “bullish”.

And vice versa.

And when none of these applies, the candle will be blue.

There is also another Impulse indicator called the “Elder” impulse,

made by Dr. Elder.

But this requires you to get the script itself from google (which i
will not link here).
Make sure the settings is set to what it looks like here.
Change the length to: 9

4 hour time frame

Notice how the breakouts are nicely colored and how you could
essentially follow this indicator for breakouts on the 4 hour time
frame.

That sounds good, but make sure you pay attention to the volume
and the momentum indicator before entering trades.

With this indicator, you can get a better picture of when you can
enter trades.

Daily
In this example you can see how if you entered an overnight
swing position on the breakout candle, you would immediately be
in profit the next day.

In addition to this indicator, I can use my stochastics to give me a

better conviction on an overnight swing.

You can see here, in the span of 2 months, every time we get a
nice breakout opportunity, this indicator has shown to be accurate
in terms of going in the direction we are looking to trade.
This is the type of accuracy you want in an indicator, especially
when you have multiple indicators going to work for you at the
same time.

Daily Chart

Here is a daily chart analysis using stochastics as conviction.

This is how you can combine both indicators to have a better

conviction on your entries.

Look at the first symmetrical triangle breakout.

You have:

-Breakout Candle

-Increased Volume

-Stochastic Cross

Happening at the same time.

These 3 factors is enough for me to execute a swing trade on this

stock.

The same goes for the next 2 highlighted bars.

4 hour chart
Here is an example of MSFT on the 4 hour time frame.

You can see the patterns and the breakouts.

Remember that in this indicator, a green candle is essentially a

bullish signal, a red candle is a bearish signal, and blue is a
neutral signal.

The best way to trade this indicator is to simply combine it with

stochastics to help you.
Just by looking at this chart alone, there was a nice $20 move
down swing trade.

The stock followed its own wave where it kept making lower highs
while you had 3 different bear flags forming.

Of course we’re just looking at this in hindsight but this should

give you an idea of how powerful this combination can be.

1 minute chart
Here’s how you can take advantage of this combination of
indicators while using a 1 minute chart.

Look at the blue candle within the triangle with a long upper wick.

Instead of it being red, it’s blue and considered neutral.

This means that the buyers are still present within that candle.

This indicator can help me stay focused on my entry because if

this blue candle was red, I would’ve been thrown off.

And 4 things appeared at the breakout:

-Breakout

-9/21 Cross

-Volume Spike

-Stochastic Cross
This is enough conviction to enter this trade.

Even 2 of these factors should be enough conviction because in

this time frame we are looking for scalps.

Remember that trading is mostly mental.

No matter how good your strategy is you must understand and

comprehend basic risk management and understand that the
moves you see are out of your control.

You are only in control of how much you are risking on your
trades.

You should not rely on any single indicator to help you with your
trading.

TOP SEED + IMPULSE INDICATOR

Notice the green signal candle after the bounce of the bottom of
the flag.

Using Top Seed + Impulse together can give you an edge but like
any other strategies, you must use it with caution.
In this case we will have the same stop loss as if we would if we
entered at the traditional breakout.

Top Seed + Impulse is best if you are looking to scalp a few 1

minute candles.
Another example of how you can utilize this indicator together
with an early entry right before a potential breakout.

This example is an example of how you can use a bear flag.

In this example, the first 3 candles alone showcases a very

bearish sentiment, and the fact that the candle did not turn green
at all within this pattern shows you that sellers were in control
(using impulse indicator).
Another example of the TOP SEED + IMPULSE INDICATOR
combo that you can utilize when seeing this setup.

So here we’re looking at a triangle breakout.

We are also using the premarket high as a level for breakout.

You may not see this because of the triangle, but in reality, the
level we are attempting to trade is the pre market high.

Tip: When trading a pattern breakout close to its pre market high
level, you want to make sure you have a steady uptrend coming
into the level.
Creating a Watchlist:

​ Start off with Weekly chart

You start off with a weekly chart because you want to see the
bigger picture. You want to have an idea of where the stock has
been the past few months and you want to have an idea of where
the stock may go and whether it is in a weekly pattern or not.

You then want to create support / resistance on the weekly chart.

1 touch is okay on the weekly. I try to get at least 2 unless its the
top / bottom, but 1 is passable.
You don’t need to pay attention to the bottom part of the chart
because in all reality, the stock probably will not fall back to its
lows in the next week, so this saves you a lot of time.

You then want to color code the levels (up to you).

Color coding levels is up to you, but in my opinion, it helps me

differentiate between a weekly, daily, and a 4 hour level.

Weekly, daily, 4h levels i will color code, while the 1h, 30 min, 5
min levels i leave white.

A lot of the times, the bigger time frame levels will be the most
defined levels in terms of the chances of it retesting.
In this color set, i have the Pink as the weekly levels, the Blue as
the daily levels, and the Orange as the 4 hour levels.

Once you move down the time frames, if you have levels that are
tight enough to be considered as entry and exit, and these
parameters fall into the ATR, you don’t necessarily need to create
more levels on the lower time frames.
Unless the gap between the bigger time frame levels are
significantly higher, then you could leave it as is.

These levels are tight enough for me to use as a daytrading entry,

therefore i do not need to make any more on the 5,15 minute
charts. Although i can.

You preferably need to if you’re going to be scalping this stock.

It’s not a scalpable parameter when it has a $4 gap between each

other and the stock only has a $6 ATR.
You can have the best trading strategy, and still be unprofitable
because you fail to realize that at the end of the day, the market
will do what it wants to do.

The market will move how it wants to move.

Have a clear plan before entering any trades. Have a set profit
target, and have a clear entry.

Do not be afraid to cut your loss when the price hits your stop
loss.

Do not be afraid to take your profits when it hits your target, even
when it seems like the price can move even higher.

The only exception to this rule is if you use the “runner” strategy
when you are essentially trimming your contracts and letting some
run because you’ve already taken your small bit of profits.

Trading is not a get rich quick scheme, it is a journey.

And you have to come to terms and peace with that simple fact.
Every single day, you get behind your phone, or your computer,
you have to come to terms with the fact that you’re there for
growth.

Money is just a byproduct of that growth.

When you have consecutive down days, take a step back and
reset and identify the mistakes that you made.

When you have consecutive green days, remember to stay

humble and to always follow your plan.

It’s easy to be over confident and completely throw off your

momentum.

Remember that this is a journey!

sources used for research: nerdwallet, optionsbook, google images,

thinkorswim, stockcharts
Trading Guide by Kevin Trades

A Quick Trading Guide by Kevin Trades

​ There are a few ways to trade breakouts, and the easiest way is to use a smaller
time frame to try to get in at the earliest possible time. The trick is to go down 2
frames from where you’ve made the trendlines. In this case, we are looking at the
daily time frame. In order for me find a potential entry on a BREAKOUT, then i
must go down to the 1 hour chart to find an entry. Anything lower, can potentially
lure me into a fakeout. And anything higher, does not give me enough data for a
conviction.
​ For reversals to the downside, there is a different approach you can take. You
can use the Moving Averages you implemented on your chart to help you. In
order to use the MA’s to help you, you have to think of the MA’s as its own
resistance and or support.
If the moving average is forming within a demand / supply zone, then you have to
assume that the candlesticks will move in the direction of the zone, regardless of
whether you get a potential crossover on the EMA. This is one reason why
trusting the EMA’s themselves can’t be its own strategy,. There are times where,
if you were to trust the EMA’s and assume its going to go in the direction you
want it to, you get caught in a reversal. If the moving averages crossover to the
upside in a supply zone, expect a bearish move in the near future. Price Action
will always overcome indicators.
If you get an EMA crossover to the upside, in a demand zone, then its a good
time to trade calls. Also, sometimes the moving average will form right where the
resistance trendline is, and if they are both at the same level, this doubles the
 chances of the candlesticks to reverse back down, IF the candlesticks test either
of these two as resistance. If the candlesticks continue to pierce through both of
these lines, then expect a bullish move. Usually when they do pierce through, a
crossover on the EMA must have happened shortly before. Charting is like doing
LEGO. You have different pieces right in front of you, and you have to find the
ones that fit.
​ Trading bounces is probably one of the easier trades to take because there’s not
really much to it. Believe it or not, i believe bounces are easier to read than
reversals.
You can apply the GP strategy when trading bounces, or you can just look at the
weekly chart, and see where there are big demand levels. Also, by going to the
weekly chart, you can find demand zones that happened in the past, and use that
zone as an area of value, where you will buy.

I know that charting might look hard to you, but the more time you spend on the chart,
the more things will make sense. I believe that there are so many ways to trade and be
profitable, because i think that the charts speak differently to everyone. By this i mean,
each person can interpret the charts differently. What i see, someone else might not see,
and what they see, i probably don’t see. This is why, sometimes, when we do a lesson
on charting, i might point out things that you could have never have seen unless i
pointed them out to you. This is also why sometimes, you can find a bull flag, a
symmetrical triangle, and a wedge all in one chart within the same candles.

Here are some methods to give your trading an Edge:

Have a basket of stocks/ETFs on a list.

Maybe about 12-20.

Familiarize yourselves with these stocks or ETFs

ETF: SPY (EXAMPLE)

Nobody wants to look at hundreds of stocks everyday or every week. It gets

confusing and time consuming.

Keep it small. Focus on these names, and watch them.

Figure out how they’ve moved over the past week, month, 6 month, even
year.

Recent News, etc.

Create your resistance and support levels based on a 6 month, 1 month, 1

week time, 1 Day time frame. For resistance and support levels to be more
effective, make sure to use the “3 touch rule”.

Meaning, based on your chart, has these stocks “touched” these

supply/demand levels at least 3 times over the last 6 months,1 month, or
week, days.

Support and Resistance levels allows you gauge where buyers or sellers
are sitting. If a stock has reached a high of $150 4 times this week and

fails to break that level again, this means that $150 is the level where sellers
are heavy, and buyers aren’t.

If a stock has reached a series low of $100 4 times this week and is always
bouncing off of that level, this gives you the idea that, at $100, the buyers
are heavy.

Knowing these types of levels allows you to make better trades because you
start to understand the trading range. Trading ranges form when the stock
is trading between a

series of highs and lows.

Accept the RISK of your trades.

Use proper risk-management when entering trades.

Trading Plan
Account Size: $1,000

Risk per trade: $100

10% risk

10 / day

10 x 2: 200

Month 1

(20) trades per month out of 200

20% profits each trade

End of month profits:

$400

Ending Balance on Month 1: $1,400

Best Stocks: SQ/ SNAP/VZ/HD/EA/FB

Account Size: $1,400

Risk per trade: $140

Month 2

20 trades per month

20% profits each trade

End of month profits: $560

Ending Balance on Month 2: $1960

Best Stocks: SQ/ SNAP/VZ/HD/EA/FB

Account Size: $1,960

Risk per trade: $196

Month 3

20 trades per month

20% profits on each trade

End of month profits: $784

Ending Balance on Month 3: $2,744

Best Stocks: SQ/ SNAP/VZ/HD/EA/FB

Account Size: $2,744

Risk per trade: $274

Month 4

20 trades per month

20% profits on each trade

End of month profits: $1097

Ending Balance on Month 4: $3,841

Best Stocks: FB/AAPL/VZ/HD/EA/FB

Account Size: $3,841

Risk per trade: $384

Month 5

20 trades per month

20% profits on each trade

End of month profits: $1,536

Ending Balance on Month 5: $5,377

Best Stocks: FB/AAPL/VZ/HD/EA/FB

Account Size: $5,377

Risk per trade: $500

Month 6

20 trades per month

20% profits on each trade

End of month profits: $2,151

Ending Balance on Month 6: $7,528

Best Stocks: FB/AAPL/VZ/ROKU/FB/NVDA

Account Size: $7,528

Risk per trade: $752

Month 7
20 trades per month

20% profits on each trade

End of month profits: $3,008

Ending Balance on Month 7: $10,008

Best Stocks: FB/AAPL/ROKU/FB/NVDA

Account Size: $10,008

Risk per trade: $1,000

Month 8

20 trades per month

20% profits on each trade

End of month profits: $4,008

Ending balance on Month 8: $14,000

Best Stocks: FB/AAPL/ROKU/FB/NVDA/AMD/DIS

Account Size: $14,000

Risk per trade: $1,400

Month 9

20 trades per month

20% profits on each trade

End of month profits: $5,600

Ending balance on Month 8: $19,600

Best Stocks: FB/AAPL/ROKU/FB/NVDA/AMD/DIS

Account Size: $19,600

Risk per trade: $1,960

Month 10

20 trades per month

20% profits on each trade

End of month profits: $7,840

Ending balance on Month 9: $27,440

Best Stocks: FB/AAPL/ROKU/FB/NVDA/AMD/DIS

Account Size: $26,440

Risk per trade: $2,744

Month 11

20 trades per month

20% profits on each trade

End of month profits: $10,976

Ending balance on Month 10: $37,416

Best Stocks: FB/AAPL/ROKU/FB/NVDA/AMD/DIS

Account Size: $36,416

Risk per trade: $3,741

Month 12

20 trades per month

20% profits on each trade

End of month profits: $15,000

Ending balance on Month 11: $51,416

Best Stocks: FB/AAPL/ROKU/FB/NVDA/AMD/DIS/AMZN/ TSLA

Account Size: $51,416

Risk per trade: $5,141

Month 13

20 trades per month

20% profits on each trade

End of month profits: $20,556

Ending balance on Month 12: $71,982

FB/AAPL/ROKU/FB/NVDA/AMD/DIS/AMZN/ TSLA

Account Size: $71,982

Risk per trade: $7,198

Month 14

20 trades per month

20% profits on each trade

End of month profits: $28,792

Ending balance on Month 13: $100,774

FB/AAPL/ROKU/FB/NVDA/AMD/DIS/AMZN/ TSLA

$1000 to $100,000

GROWTH IS KEY/ PATIENCE IS KEY

You can use 20% risk instead to do this in HALF the time, but you’re adding
on more risk.

This can always change and you can always end up getting more than 20%
profit per trade because the example above is being CONVSERVATIVE.
Using the power of compounding you are able to make the most on Month
11 & 12.
$5,000 Account | AGGRESSIVE

Month 1: $5,000

20 trades per month

20% risk per trade

20% Profits in each trade

End of month profits: $4,000

Ending balance on Month 1: $9,000

Month 2: $9,000

20 trades per month

20% risk per trade

20% profits in each trade

End of month profits: $7,200

Ending balance on Month 2: $16,200

Month 3: $16,200

20 trades per month

20% risk per trade

20% profits in each trade

End of month profits: $12,960

Ending balance on Month 3: $29,160

Month 4: $29,160

20 trades per month

20% risk per trade

20% profits in each trade

End of month profits: $23,328

Ending balance on Month 4: $52,488

Month 5: $52,488

20 trades per month

20% risk per trade

20% profits in each trade

End of month profits: $41,990

Ending balance on Month 5: $94,478

Month 6: $94,788
20 trades per month

20% risk per trade

20% profits in each trade

End of month profits: $75,582

Ending balance on Month 6: $170,370

$5,000 Account | CONSERVATIVE

Do the first example, except with this account.

Risk 10%, and just aim for 20% profits per trade, 20 times per month.

If you use 10% risk on a $5,000 account, you have essentially 200 trades
you can do in one month.

All you need is 20, at 20% profits each.

You can include the losses in this, because you can lose 10-20 times while
using 10-20% stop loss and you can have multiple trades at 30% profit and
it will make up for those losses.

The point here is to utilize the power of compounding in your Options

Trading.

Don’t focus on the profits, but focus on trading well every day. Focus on
finding high probability setups and always execute on these setups.

The main reason why people fail to how their accounts is they try to grow it
too fast thus using terrible risk management.

Here are some methods to give your trading an Edge:

Have a basket of stocks/ETFs on a list.

Maybe about 12-20.

Familiarize yourselves with these stocks or ETFs

ETF: SPY (EXAMPLE)

Nobody wants to look at hundreds of stocks everyday or every week. It

gets confusing and time consuming.

Keep it small. Focus on these names, and watch them.

Figure out how they’ve moved over the past week, month, 6 month,
even year.

Recent News, etc.

Create your resistance and support levels based on a 6 month, 1

month, 1 week time, 1 Day time frame. For resistance and support
levels to be more effective, make sure to use the “3 touch rule”.

Meaning, based on your chart, has these stocks “touched” these

supply/demand levels at least 3 times over the last 6 months,1 month,
or week, days.

Support and Resistance levels allows you gauge where buyers or

sellers
are sitting. If a stock has reached a high of $150 4 times this week and

fails to break that level again, this means that $150 is the level where
sellers are heavy, and buyers aren’t.

If a stock has reached a series low of $100 4 times this week and is
always bouncing off of that level, this gives you the idea that, at $100,
the buyers are heavy.

Knowing these types of levels allows you to make better trades because
you start to understand the trading range. Trading ranges form when
the stock is trading between a

series of highs and lows.

Accept the RISK of your trades.

Use proper risk-management when entering trades.

The different approaches you can take
when attacking the market

There are 3 ways you can approach the market…

​ Conservative
​ Moderate
​ Aggressive

Now, the most important piece of information for you to understand isa the
simple fact that trading is 90% PSYCHOLOGICAL.

What I mean by that is, you can have 100 people using the same
strategies, but only 20% of them succeed. Why is that a fact?

Because everyone has different emotional capabilities. Some people are

able to handle their emotions well early on in their trading career, while the
rest of us (including myself) finally learn after years of losing.
The technical aspect of trading is very important to learn even though the
importance of charting knowledge is nothing compared to being able to fully
conquer your emotions.

Now, lets talk about approaches.

Conservative….

When you take a conservative approach to trading, it essentially means

that you are afraid to lose money. As f*** up as that sounds, it just sounds
like you want to minimize as much risk as possible.

It is possible to be profitable being conservative, but again, coming back to

the psychological aspect of things, people usually do not have the patience
required to grow an account conservatively.

An example of a conservative approach…

Let’s say you have a $1,000 account.

You buy each contract for $25-50. And use a 20$ stop loss, meaning you’re
risking $5-$10 per trade. Which isn’t bad, but wouldn’t it be nice to grow
your account at a faster rate?

Try to move your way up from conservative to at least moderate.

In order for you to gain confidence, use the THINKORSWIM app, and trade
ON DEMAND.

ON DEMAND trading allows you to choose any trading days from the past
and trade them as if it was real time. The platform gives you fake money for
you to use so you can buy the same exact contracts that were sold that
particular day.

Also, UNLESS you have been consistently profitable, understand charts,

and have mastered your emotions, rushing to grow your account will only
lead to failure. Sure you can get lucky here and there, but it won’t work out
in the end because without extensive knowledge, your ego kicks in and
somehow deep inside you develop a god-like concept as a trader. Then the
market will humble you.

I’ve been humbled by the market plenty of times.

The reason why i have been so profitable (and brett as well) is because i’ve
used all of my lessons i’ve learned from losing, and i get rid of the
emotional attachment i’ve ever had with money, at least during those few
trading hours where i have to be able to perform at an optimal level.

Moderate approach…

A moderate approach to me, means that you are willing to risk money, but
you’re smart enough to know how much money to allocate into each trade.

A moderate trader has a lot of great risk management skills, and moderate
traders tend to be the most consistently profitable ones.
Being moderate will allow you to produce more high percentage trades.

Example of a moderate trader:

$1,000 account and he uses $100 per trade with a 25% stop loss. This
allows the moderate trader to make more money percentage wise because.

A Moderate trader does not set a timeline in how long they expect to flip
their accounts, instead, they focus on what’s in front of them.

Aggressive traders:

Aggressive trades allocate 20-25% to their positions because we like to

trade high probability setups such as:
This oval that you see represents a breakout of a huge pattern.

Now my trick is, looking for breakouts on the 4 hour level, and using the 5
minute candle that breaks out of the 4 hour line, you have more of a
chance the stock will go your way because the momentum of buyers are
coming in on the bigger time frames.

Regardless of what kind of a trader you are, and no matter how much
knowledge you know about the stock market, or the charts, etc, you can’t
always be right because sometimes the market will just do what it wants to
do, and at that point, it’s out of your control.
The GAME PLAN is to

​ Use money you aren’t afraid to lose (to help your conscious)
​ Follow a strict risk management plan. Meaning, If you are going
to use 5% of your account for a single trade, have a 20-30%
stop loss.
If you are going to use 10% of your account for a single trade,
have a 15-25% stop loss.
If you are going to use 20% of your account for a single trade,
have a 10-15% stop loss.
If you are going to use 30% of your account for a single trade,
have a 5% stop loss.
​ Focus on HIGHLY probable trades. Meaning you have to find
points in the chart that have been tested multiple times, and
when and if it reaches that certain level again, you can trade the
breakout of the level.
​ Finding Breakout patterns aren't the only way to execute some
of the best trades. Extensive knowledge of candlesticks will
allow you to dissect each candle to and allow you to see and
pinpoint areas of the chart with the most demand just by using
candlesticks.
​ Most of all, Brett and I are trying to help you. We are here for
you and we only want to see you win. We want to change your
life and change your outlook on your future and remind you that
there is so much out there for you, and you need to step up and
take control of your life and destiny.
​