Important Tips for Swing Traders

Important Tips for Swing Traders — with David Moadel hi everybody and welcome to looking at
the markets with David Modell I want to give you some important tips for swing
traders and by the way if you want more help with trading investing swing
trading any of that stuff you can email me anytime at David Modell at
so here’s tip number one today for you before you buy or sell anything it’s not
a bad idea to in addition to all the other research you’re doing to check the
insider buying and selling and there are different places you can do that right
now I’m just using thin viz fi n viz fin viscom and on the home page if you click
on the insider that’ll tell you now there are no guarantees I cannot
guarantee the accuracy of fin viscom they are not paying me to make this
video or anything like that so you know no guarantees that this is
accurate or not but you know for example looking right now I mean if I thought
about buying Facebook for a swing trade to hold on to it for a few days few
weeks a few months something like that I might think twice about it because check
it out Mark Zuckerberg the CEO of Facebook September 30 sell selling
shares October 1st selling shares October 2nd selling shares 3 trading
days in a row or not trading days but just three days in a row selling shares
thousands and thousands millions of dollars worth of shares he’s selling
them you know does that necessarily mean that Facebook’s in trouble not
necessarily I mean you know people sell for different reasons but if he really
believed that the stock was going to go up you know you got to wonder why is he
selling so much in so many days in a row I mean that’s not a great sign or here’s
another one Twitter if I was thinking about buying Twitter I might think twice
because you have two different insider people selling you know one day and then
the next you have a director at Twitter selling many shares and then the next
day the very next day the chief accounting officer at Twitter selling a
bunch of share and so you have two different people
right in a row you know insiders in the company selling
shares that’s probably not a good sign you know Google you gots you know again
a sale all right so it’s not all necessarily bad I mean you might have in
owners and insiders buying as well and that could be a good sign
all right so these are things to think about y’all I want you to add this to
your list of things to consider and it really doesn’t take that long to check
it I mean you could just on this site you could just go to the page and just
browse through it and see you know who’s buying and who’s selling what all right
so that’s a tip for you right there in addition to all the other research
you’re doing one quick point I wanted to tell you about before you buy or sell
anything whether it’s stocks or options whatever it is if it’s on a company you
want to check to see when their earnings date their next earnings report is going
to be that’s super important and I’ll show you an example of why that is so
here is khc Kraft Heinz Company and I’m thinking about let’s say selling a put
option because I want to buy a hundred shares of Kraft stock at a lower price
right now it’s 2659 let’s say I want to buy a hundred shares at $25 a share okay
so I could sell a put option and I’m looking at the expiration dates for the
25 strike puts that I want to sell and I noticed that with the expiration date
one month away 30 days away that’s November first
I can sell for let’s say $42 per contract all right so I could collect
$42 right now in my account for selling a put option on Kraft Heinz that expires
November first and then I noticed that a week later I could sell I could sell for
almost twice that amount not quite twice but pretty close for a lot more $72 and
I thought wow that’s unusual you know $42 for 30 days out
or just a week later $72 that that’s quite a jump in price and I thought man
I’ll just sell this one get $72 you know and I would just have to be in the trade
for another 7 days let’s say another week but then I thought wait a minute
why is this so much more expensive it’s because there’s a lot more risk because
look at when the earnings date is November 7
that’s the earnings announcement for Kraft Heinz stock okay and so there it
is November 8 yeah of course the November 8 expiration date is going to
be more expensive I’ll fetch a bigger premium you know because there’s
earnings in there on the seventh and this expires the 8th so if I sell the
you know the one from November first then I won’t have to deal with the
possibility of a big earnings drop all right and so this is the safer way to go
and so I think I’d rather sell this the one expiring before earnings and only
get $42 per contract then sell the the one that’s after earnings so yeah I’ll
get more money up front but I’ll have to deal with a big risk because of the
possibility of a sizable earnings drop that happens sometimes on earnings
announcements a stock can go up a lot it can stay the same or it can go down a
lot and that’s usually a risk I would rather not take if I can help it so
whether you’re gonna buy a stock let’s say you’re thinking about just buying
the stock and not you know dealing with options okay
I mean if earnings is coming up soon you might not want to buy the stock because
it could go up a lot yeah it could also go down a lot and that sounds a little
bit more like gambling and less like investing if you’re just speculating you
know right before an earnings announcement if you’re thinking it’s
going to go up a lot it might not and no one knows whether stocks going to go up
or down no one knows whether it’s going to be a
beat or miss with the earnings and so that’s just a quick point that I
wanted to make right now here’s another point I wanted to make you don’t want to
buy at a high price even though everybody’s going to tell you to not
everybody but a lot of people if you go on social media if you go in some chat
rooms message boards newsletters sometimes that people send out I’ll give
you an example all right oil ok WTI west texas intermediate crude oil has been
trading in a range from $50 a barrel to $60 a barrel for a long time and so
you’ve been able to buy in the low 50s or at 50 and then sell when it gets up
near 60 you could just rinse and repeat that do it over and over but what did so
many people in chat rooms and message boards and on social media do when oil
got up to 60 when it broke through 60 people got so excited as you can see on
this chart went up to around 63 or so 62 or 63 everybody got excited they said it
was a breakout it’s breaking out of the range that’s not how it works folks it
went right back down this was based on a drone strike on Saudi oil facilities but
if you’re going to play the range play the range if you’re gonna buy it around
50 and then sell it around 60 and just rinse and repeat that over and over
that’s what you got to do if you listen to the people who say oh when above the
range one above sixty it’s 60 to 63 now it’s going to go higher
well now you’re buying at the top of the range you’re buying high and you’re
going to end up selling low if you listen to those people now they’re
telling people to sell some of those same people all right so you’re gonna
end up buying high and selling low I’ve got a better idea if you missed the run
up to 60 or 60 to 63 it’s okay you know no one could have predicted that there
was going to be a drone strike on Saudi oil facilities I mean come on who could
have who could what trader could have known that that was going to happen and
it says so you say okay look it’s at the top of the range I’ll wait until it gets
back to the bottom or until it establishes a new range I mean if it
went way above 60 and then it started to bounce between
I don’t know seventy and eighty over and over that would be the new range but
right now it’s at the top of the range and then it went back to the bottom now
it’s getting closer if it gets around fifty it’s right now it’s it’s in the
low 52 s could easily get closer to 50 and then I might start buying you know
it could be either us Oh which is an ETF that represents oil or you could buy XLE
which is an energy ETF that’s another way to play it way to play that or you
can buy companies like ExxonMobil or Chevron something like that the purest
play would probably either be get into the end of the futures markets and buy
oil futures contracts or us oh okay this is just a chart of WTI crude oil per
barrel price all right and as you can see it is down and you know that’s what
you get for buying at the top okay I mean sometimes it keeps going higher but
that’s not how this works not how the game works if you’re gonna buy low and
sell high so that’s just a point I wanted to make don’t be listening to
people who tell you to buy when something is at the top of the range or
breaking through the top or top of the range necessarily unless there’s a good
reason to do so and obviously there was not in this case there are exceptions to
this of course all right so just wanted to make that point I just wanted to make
a really quick point here about the three trading day weighting rule which I
talked about so much here’s an example a textbook example this is Schwab SCH W
and yesterday Schwab announced that they’re going to do they’re going to
have free commission free trading which is pretty cool I use Schwab so I’m happy
about that but as you can see the investing community was not happy about
that at all look at the size of that red candle okay and as I like to say
whenever you have a big red candle there’s a pretty good probability not
always but a pretty good probability that the next trading day is going to
have a medium sized red candle and then the next trading day is going to have a
small red candle and that this is textbook right here it is
happening because not everybody reacts to the news the same day some people
wake up the next day and check their portfolio and see that the stock is down
and then they panic sell or they might do it two days later and I mean two
trading days I’m talking about trading days here so weekends and holidays don’t
count all right so did I jump in and buy Schwab on this day no and I’m glad that
I did not okay I’m going to if I’m going to get in then I’m gonna wait until at
least three trading days have passed and since the big drop and that so like
today is day one after the big drop and does that mean that I’m necessarily
going to buy you know three trading days after the big drop no that just means
I’m gonna look at it and I might consider buying it then but maybe not if
it’s still falling probably not okay so that just means that I don’t even
consider buying anything that has had such a huge drop in one day such a big
red candle until I don’t even look at it until at least three trading days later
then I look at it and reevaluate and maybe consider buying it possibly or
scaling into it all right so that’s just a point that I wanted to make all right
so I hope you enjoyed these swing trading tips I hope they were helpful to
you once again if you would like help if you want some coaching with trading
investing charts fundamentals all that good stuff you can email me for the
coaching at David Modell at and hey if you like this video why don’t
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to you again soon

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