OFFICIAL STOCK MARKET AND ECONOMY THREAD VOL. A NEW CHAPTER

[johnnyredstorm]

I just learned this but TOS has this on demand feature where you click the on demand button (top right) and it'll play out charts from the past. Great tool for brushing up your execution at night. Gonna be using that when I'm bored.

 

[johnnyredstorm]

Volume profile and value areas are really interesting. If you're looking to learn them and add a new tool to your arsenal, check out the volume profile and value area videos in OP. Follow Twitter and @marketwebs I'm gonna check out Jim Dalton's book soon, Markets in Profile. This is a great tool to gauge market sentiment.

I'm gonna do some backtesting here with TOS' on demand feature to improve my understanding and execution with it.

little tidbit on the 80% rule of value areas.
http://www.ino.com/blog/2011/12/how-to-pick-intraday-market-direction-–-the-80-rule/#.VJXgJ5ANk

 

[johnnyredstorm]

did a risk reversal in GILD on this weakness this morning

sold the Feb 100 put, bought the 95 put (risk is the difference of the width minus the credit received) and bought the 100 call for a 1.50 debit. so my risk overall is the credit spread going to full value (under 100 at expiration) plus the price paid for the call. i think this one recovers in the next few weeks. wanted to try something different and expand my repertoire.

when everyone's panicking, sometimes it's good to be calm and taking advantage of their fear/noise. know which stocks are strong enough for you to do so.

edit: not looking too great right now. facing some headwinds but its drug is superior to ABBV's so let's see what happens. have till feb 20th. that 100 level has been a magnet past few weeks/months on pullbacks so hopefully it gets back there soon.

this thing is giving me Hep C. lesson here, try and avoid picking bottoms or pick a dollar amount you're comfortable losing. tough trade more often than not. I'm sticking with it since I'm comfortable with the capital risked although it is more than I'm normally willing to risk. i still think this could work in the next 50 days or so till expiration.

 

[awwsome]

 

[johnnyredstorm]

Saw this list posted on the Twitter. He's also worth a follow.
@canuck2usa: Trading Books I like The Bible of Options Strategies-Cohen / Five Waves to Financial Freedom: Learn Elliott Wave Analysis cont/
@canuck2usa: Trading Chaos: Maximize Profits with Proven Technical Techniques/Trading for a Living: Psychology, Trading Tactics, Money Management cont/
@canuck2usa: Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk/Technical Analysis of the Financial Markets-Murphy
@canuck2usa: Market Wizards, Updated: Interviews With Top Traders
@canuck2usa: Option Volatility & Pricing: Advanced Trading Strategies and Techniques
@canuck2usa: Technical Analysis of the Futures Markets by John J. Murphy.
@canuck2usa: Following the Trend: Diversified Managed Futures Trading


stopped out of GILD, took the loss. Shouldn't have tried to swing it yesterday, should've played the bounce and stepped back and let it set up before attempting a swing.

sold 3/4 of my INVN calls at 2.15 from 1.70 average. Nice little gain. gonna hold the last 5 calls for longer.
took 3 of those calls off at 2, holding just 2. will look to readd those 3 on another dip.

 

[johnnyredstorm]

some Options tests and material to learn from
https://www.cboe.com/learncenter/default.aspx

Markets in Profile by James Dalton is a solid read so far. Could be a little dry but the concept of volume profile trading/value areas is phenomenal.

Heard good things about this book. Gonna take a look eventually. There might be a PDF out there
The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist Hardcover – March 23, 2009
by Brett N. Steenbarger

Nice little read for people new to options
http://newtraderu.com/2014/12/25/10-options-trading-pitfalls-to-avoid/

 

[johnnyredstorm]

View media item 1322615

http://hedgemind.com/research/50-stocks-that-matter-most-to-hedge-fund-investors

 

[johnnyredstorm]

One thing i'll say about credit spreads, if you're collecting 65 cents in premium and risking $4.35, that's a horrible trade. I don't care what someone says about the probability of the trade working out makes it worthwhile. It's horrible risk-reward. Try and get even money bets or better.

 

[johnnyredstorm]

Using Market Profile, the 80% Rule
http://www.shadowtrader.net/videos/sunday100725st/sunday100725st.html

Education Stuff
http://shadowtrader.net/archives-main/education/

Example of volume profile

 

[johnnyredstorm]

man I implore anyone with little experience that wants to get their feet wet with this stuff get on TOS OnDemand during your free time and pretend this is live (even those with experience this is great to brush up on and try new strategies). Enter orders, trade, take targets, etc. Treat this as real life. Prepare yourself for when the market is open. I've been using this every night to get better, work on my executions, etc. We live in a tremendous age where you could gain experience early in your career without much worry. Treat this like your real money, use only what you would have in your account and refine those skills. Makes no sense having to learn on the fly when you could execute on a simulator and build up that experience.

 

[dannyb270]

hey guys I am a teenager who is interested in finance and the stock market. I am currently taking an investment course at my highschool so i know most of the basics about trading. I am now looking into opening an online account with a few hundred dollars to gain some experience. I have already done some trade simulators for a few months now and have done decent. Do you guys have any tips for me on what i should look for when picking
things to invest in such as which stocks, ETFs, mutal funds, ect. I am mostly looking for some low risk stuff where i can reinvest dividends if possible and lets say 5 years from now i will have made nice profit. I dont need the instant homerun and I know to be patient and that not all people make tons of money. please let me know any tips and what I should look for when choosing some stocks to invest in. thanks in advance.

 

[dannyb270]

I also created a paper money thinkorswim account and i would like to learn options. is there a website where i can more about options and also do you have any helpful tips that you can share? lmk

 

[johnnyredstorm]

some Options tests and material to learn from
https://www.cboe.com/learncenter/default.aspx

just use TOS OnDemand at night and fool around with options on there during your free time so you get a feel. i suggest you just fool around on there in general for the next year during your free time. stick to the dollar amount you'd be using in real life and slowly increase size.

learn your greeks, most importantly theta. most people blow out because they aren't privy to time decay. front month options are cheaper than back month because of theta. back month, you have more time value, front month is less and if there isn't intrinsic value, they're designed to go to 0.

front month is one month or two out from your current day (Jan 17 exp)
back month is two months or more out from your current day (March, April, June exp)

learn about implied volatility. it's probably the most important thing to learn next to theta. vol crush is very real after catalysts/earnings reports/volatile days in the market.

stay away from swinging weeklies. weeklies are high in gamma so they offer your best return, but your greatest risk. i day trade weeklies but i wouldn't swing them unless it's in a spread or if i have freebies (sold half at a double or more) and i'm looking for a continuation move the next day (or i would do a small dollar amount i don't mind losing). i wouldnt touch weeklies if i was you with real money, but have fun using Tos OnDemand or paper trading with them so you can learn from your mistakes without losing capital. i love weeklies in all honesty but they're not for beginners, they're designed to go to 0 every friday if they're out of the money.

on a 10 lot, every 10 cents is 100 bucks so your dollar amount is vastly different from common stock. a 10 lot is equivalent to 1000 shares.

avoid sell options naked. you have blow out risk that way. always spread them if you wanna capitalize on theta and look to do credit spreads that offer even money bets or better. also make sure you manage your spreads/options on expiration (if you're in the money) or else you'll be assigned stock.



Friday's a new year so i'll be doing new spread sheets after the close for FB, AAPL, TWTR, BABA and maybe TSLA to try and stay on top of them and their habits. With the spreadsheet from this year, I knew TWTR's tendency to go green/red and I could use that data to either look for late day fades, or close out long positions that look heavy. There's a basic template for TSLA in the OP with the formula. I'll try and remember to post them in here after I do it.

 

[dannyb270]

Thanks so much for the response! i think that i will avoid options for now. i will need to do some more research on them since they sound a little confusing. I'm currently researching some stocks right now that are relatively cheap for both long term and some short term. i am looking at trends and 20 day averages to help determine how some stocks will move in the future. are there any other ways or methods i could use to predict how a stock will move? thanks

 

[johnnyredstorm]

Don't avoid them just study up and paper trade them. Have nothing to lose messing around on the simulator.

Ichimoku cloud is the only indicator I use. Plus volume profile to figure out value areas.

Cheap stocks are usually cheap for a reason so just keep doing research and what not.

 

[johnnyredstorm]

Normally don't care about The Street but Feurstein is decent. I wanna get better at fundamentally trading biotechs this year. Will be a long journey. Coulda shoulda woulda been in BLUE back in October. But even then, that would've been me gambling not necessarily reading and interpreting fundies.

This is a list of stuff/mindset to avoid in this sector.
http://www.thestreet.com/story/12725934/1/the-seven-deadly-sins-of-biotech-investing.html

 

[johnnyredstorm]

Candlestick patterns
View media item 1336458

did an iron butterfly in GILD for this week, small just a 3 lot, wanna try and work on taking in some credit plus volatility is high so I don't wanna buy calls outright in this 1, 99-101-103 for 1.60 credit, risking .40 per 1 lot.

 

[based mod]

Candlestick patterns
View media item 1336458

did an iron butterfly in GILD for this week, small just a 3 lot, wanna try and work on taking in some credit plus volatility is high so I don't wanna buy calls outright in this 1, 99-101-103 for 1.60 credit, risking .40 per 1 lot.

Appreciate that chart of candlestick patterns. I had to keep googling them or looking them up on stockcharts.com. No longer. Thanks!

 

[based mod]

HLF taking a dump

Wonder how many people got trapped into this one

> JAN 6

after

MU - Micron Tech


> JAN 7

before

MON - Monsanto


> JAN 8

before

GPN - Global Payments
STZ - Constellation Brands

after

BBBY - Bed Bath & Beyond
CUDA - Barracuda Networks
EOPN - E2open
HELE - Helen of Troy Limited
TCS - The Container Store Group


----------------------------

> JAN 12

after

AA - Alcoa


> JAN 13

before

KBH - KB Homes

after

CSX - CSX corp


> JAN 14

before

JPM - JPMorgan Chase
WFC - Wells Fargo & Company


> JAN 15

before

BAC - Bank of America
C - Citigroup
LEN - Lennar
TSM - Taiwan Semiconductor Manufacturing Company

after

INTC - Intel
SLB - Schlumberger Limited


> JAN 16

before

GS - Goldman Sachs Group
STI - SunTrust Banks

 

[andycrazn]

Candlestick patterns
View media item 1336458

did an iron butterfly in GILD for this week, small just a 3 lot, wanna try and work on taking in some credit plus volatility is high so I don't wanna buy calls outright in this 1, 99-101-103 for 1.60 credit, risking .40 per 1 lot.

awesome charts. candlesticks is the way to go

 

[johnnyredstorm]

buddy of mine wants to start investing a little was using a line chart, told him to stop wasting his time and learn candlesticks you get more information with the sticks.

grabbed some CTRL july 20 calls at a 1.26 average. have 10. paper bought some yesterday, could be a decent swing, plenty of time in these. let's see what happens. not crazy about buying otm but who knows this always had m&a chatter.

grabbed some UPS April 115 calls for 1.185 average. playing a lil order flow today.

grabbed a 3 lot of EBAY 56 calls for next week at .42. risking 130 bucks, not crazy about it but wanted to be involved just in case some chatter comes out in the next few days about paypal or something.

 

[based mod]

Pretty insane what's going on with oil

 

[johnnyredstorm]

maybe we'll see a bounce soon in oil. crazy how much it's been dumped.

http://newtraderu.com/2014/12/22/35-top-destroyers-of-trading-capital/

 

[fontaine]

Do you think it's smart to get some calls on oil?

Or even just some oil etfs...

 

[johnnyredstorm]

idk maybe just pick a dollar amount you're comfortable risking like a 100-300 bucks on some Feb calls a dollar or two out of the money and see if we can get a bounce. it's a countertrend play so i would like to see crude test and hold 45. i might do something like that myself with USO. not gonna risk any serious capital since these bounce plays could be a crapshoot. maybe even do a call spread, i gotta price stuff out and see what has the best risk-reward.