Class 6: Trading the Lanes (In-depth Line Drawing and Charting) Review of Class So Far

Transcription

1 Today s Class Class 6: Trading the Lanes (In-depth Line Drawing and Charting) Review of class so far Where we are going from here More in-depth technical analysis Trading with brackets (neutral trading) Review of Class So Far Review Stock buying, selling short Setting up trades (using support & resistance) Virtual trading & tools Basic technical analysis About options (buying calls & puts) Getting a pulse on a markets Four basic strategies (buying, selling stock, buying calls, buying puts) Two bonus Strategies Renting stock (Covered Calls) Insuring stock (Protective Puts) PAGE 1

2 Review (continued) Basic chart Reading & Patterns Channeling stock & trends Basic line drawing Market Psychology (why the market moves) Intro to Dow Theory Where We Are Going The Road Ahead Micro Picture In-depth Technical Charting & Line Drawing Support & Resistance Trend Lines Trading Lanes Trading Neutral (with brackets) Price Targeting Moving Averages & Basic Indicators Moving Average Crosses Moving Averages as Support & Resistance Timing Trades with Moving Averages 3 Basic Indicators Trading Neutral & Trading with a plan Setting up your trades Contingency orders Entries/Exits PAGE 2

3 Setting Stops Remove the Emotion with a Plan Level 2 picks up... Chart Patterns (2 classes) Reversal patterns Continuation patterns Consolidation patterns 15 most common & accurate How to trade them Candlesticks (2 Classes) Individual Candles (what they mean) Single - Line Candles Two - Line Candles Three - Line Candles Combining candles with lines, moving averages, and chart patterns Start Putting it all together Training your skills Trade Simulation Trading Journal Make your trading skills automatic Final Confirmation Technical Indicators Different types of indicators 9 Indicators I trade with How they work and how to use them PAGE 3

4 Putting lines, averages, patterns, candles, and indicators together into a trading system Finishing touches Strategies Trading multiple situations Combining strategies Trading any type of market Applying to intra-day trading Money management In-Depth Line Drawing/Charting Support - The price point where a stock finds more Buying pressure than Selling pressure and pushes the price higher (Bullish) Resistance - The price point where a stock finds more Selling pressure than Buying pressure and pushes the price lower (Bearish) PAGE 4

5 Support and Resistance - Rules Always start with a line chart Use Candles to confirm the points 2 points make a line 3 points make a trend (or pattern) The more times a stock hits a line, the stronger that point of support or resistance. What you need to remember: Support & Resistance alone are not enough to trade from. Use S&R to give us a frame work. Combine S&R with other technicals to help us trade. S&R are the foundation of all other line analysis Support and Resistance - Channels Channel - A stock moving sideways between support and resistance in a predictable repeating pattern. PAGE 5

6 Upward Channel (Up-trend) - A stock moving sideways between support and resistance in a predictable repeating pattern While Making Higher Highs & Higher Lows Downward Channel (Down-trend) - A stock moving sideways between support and resistance in a predictable repeating pattern While Making Lower Highs & Lower Lows What is a Trendline? A trendline is simply a support or a resistance that moves at an angle instead of horizontal. PAGE 6

7 How To Draw Trendlines Rules: Always start with a line chart Always start with a change of direction Takes 2 points to begin, 3 points to define Check candlesticks for confirmation Defining Trendlines In a trend, one line is of primary importance. In an uptrend = Support In a downtrend = Resistance We will refer to this line as the control line PAGE 7

8 Foundations of Stocks and Options Range Line helps define the range of the trend Parallel Close (not exact) Start off of the first retracement Trading Lane OLD Resistance, becomes NEW support PAGE 8

9 Support & Resistance - Fanlines The result of varying angles of acceleration and deceleration of a trend Old support becomes new resistance (and vice versa) Occur much more frequently in Bull markets than Bear markets Accelerating Line Occurs when a trend is becoming steeper Usually seen in extreme market conditions (a bubble or a panic) When the line is eventually broken, the next support or resistance is the previous angle of attack PAGE 9

10 Decelerating Line Occurs when a trend is weakening Evidenced by breaking trend lines without revealing a clear reversal Generally after 3 lines are drawn the reversal is confirmed Support & Resistance Purpose: Support & Resistance, Trendlines, & Fanlines combine to help us see: Trading behavior Price targets Pivot points Logical analysis Trading opportunity PAGE 10

11 Price Targeting Previous price points become future targets (pivot point) The more times a price hits that point, the stronger the target Setting Up The Trade Draw a neutral bracket around the pivot point. If the stock bounces, trade bullish If it breaks through, trade bearish PAGE 11

12 Action Steps Put your line drawing knowledge to work Notice how different stocks behave Determine some pivot points Try setting up some bracket trades Place some trades and see how they go (virtual of course) Go to Next Class - Moving Averages/Indicators Remember we are here to help you all throughout your journey in the Stock Market. Reach out anytime through at success@tradesmartu.com or Schedule a Call and one of our Student Coaches will contact you. PAGE 12