Class 2: Buying Stock & Intro to Charting. Buying Stock

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Barry Barker
8 years ago
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1 Class 2: Buying Stock & Intro to Charting Today s Class Buying Stock Intro to Charting Real World Analysis Buying Stock What Is a Stock? Share of ownership in a company Publicly traded Holds monetary value Security Present value = what someone is willing to pay for it INVESTOR TRADER Buy & Hold Want Market to Go Up Focus on Fundamentals Long-term Focus Focus on Securing Money Average 15-25% per year Not making much money today Buy & Sell Constantly Want Market to MOVE Focus on Technicals Short-term Focus Focus on the cash Average 20-30%+ per MONTH Making LOTS of money today PAGE 1

2 How Many Directions Can a Stock s Price Move? Up Down Sideways Notes PAGE 2

3 Bulls = Think up Bears = Thinks down Bulls vs. Bears Sideways = Bulls & Bears are in balance Long vs. Short Two types of trades with stock Long = Buy a stock (think for the long term) Think it s going up (bullish) Short = Sell a stock (think for the short term) Your Goal Think it s going down (bearish) Pick a direction Up (Bullish) Down (Bearish) Apply the proper strategy Long (Bullish) Short (Bearish) How do you know? Learn to read the chart PAGE 3

4 Introduction to Charting Chart Review Three types of charts Line Bar Candlestick Line Chart Simplest form of charting Constructed from the closing price only Beneficial for simplicity, but lacks complete information Bar Chart More specific information Constructed from all of the open, high, low, and close prices Allows us to see the extremes of the day Easier to see overall market sentiment Candlestick Comes to us from Japan Similar to the bar chart Uses all of the OHLC prices Gives us colors to signal up and down days When combined with other candles creates candle patterns Very good at revealing market sentiment PAGE 4

5 Q: What is a price chart? Charts: How They Work A: The plotting of the past performance of a stock using the open, high, low, and closing price for each time period. Q: Why does it matter? A: Based on its historical behavior we can better forecast future behavior of a stock. Q: Do stocks really behave and can we really forecast them? A: Because... People are predictable People determine the price (buyers and sellers) People tend to herd (follow the crowd) People are ruled by two emotions Support: The price point where a stock finds more buying pressure than selling pressure, and the buyers drive the price higher (bullish). Resistance: The price point where a stock finds more selling pressure than buying pressure, and the sellers drive the price lower (bearish). PAGE 5

6 Channel: A stock moving sideways between support and resistance in a predictable repeating pattern. $52/share over 6 months PAGE 6

7 Downward Channel (Downtrend): A stock moving sideways between support and resistance in a predictable, repeating pattern while making lower highs and lower lows Upward Channel (Uptrend): A stock moving sideways between support and resistance in a predictable, repeating pattern while making higher highs and higher lows How to Trade a Channel PAGE 7

8 Pulling It Together Select your stock (any stock) Look for a trading channel Draw your support & resistance lines As stock bounces up off of support, BUY the stock As stock pulls away from resistance, SELL the stock Action Steps Look at some current stocks and see if you can see any channels shaping up See if you can place a trade in your virtual account to buy, based on a channel Remember we are here to help you all throughout your journey of education and trading 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 8

Ignite 2015 Opening Session

Ignite 2015 Opening Session Overview Conference Overview Current Trading Environment Trading vs. Investing Tools you need Intro to charting Action Steps Currently Trading Environment The only thing certain