Tag Archives: Textbook Trading

Textbook Trading – Notes and Review of Chapter 11 – Websites & Homework by @investorslive

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Summary:

Wrapped up the final chapter today. This was a solid chapter, and I think would be very useful for beginners to trading or new guys to pennystocks. Its kind of a “random” chapter, you can tell there were several things Nate wanted to cover and didn’t get to them in the other chapters so he wraps up with them. Its almost like a virtual Q and A. Since I can tell these are topics that he probably gets quizzed about a lot.

Intro

Middle section covered good twitter followers for the long and the short. Twitter is probably pretty well known for the non stop pumping of stocks by kool aid drinkers. But it is probably most valuable from an actionable trading perspective when it comes to “Hit piece writers” or well known bashers. In my experience there is so much noise when it comes to promoting stocks tweets seldom matter. Well unless it’s Carl Icahn, but those only come around about once a year. But on the short/bashing side there are several good twitter followers that will expose stocks in a meaningful way and provide good short entries. A lot of the handles Nate goes over are still valuable today (remember this DVD was produced a couple years ago) but beyond the names this discussion is useful from the educational aspect of detailing how to figure out who to follow and how to trade them. Since the names will always change.

twitter

Next piece is all about the SSR. I’ll admit I got a little bored since I fully understand how the SSR works and the idea of only shorting strength and avoiding grinding etc. But for new traders, or new short sellers Nate does a great job of explaining the SSR and how to avoid getting burned shorting stocks that are under the SSR.

review

The wrap up is a walkthrough of Nate scanning and developing a watch list and a plan for the next day. This is SOLID GOLD, the tickers may not matter and even the scans are not that amazing, (most guys know how to scan for stocks up big) the real value is in hearing Nate think aloud and write his plans. I particularly liked listening to him explain why he was eliminating a stock from watch. The idea of a firm plan is something that has really improved my trading over the last year. And it is infinitely valuable when it comes to becoming a consistently profitable trader. You HAVE to know how to write a plan and execute it. This last section shows you exactly how to do that.

Notes:

How to use twitter for trading
-pumpers
-hit piece writers
Homework and daily scan

Tweetdeck

Tip from me “use a separate Trading only alias” for during the trading day. Instead of your everyday “personal” twitter where you might follow all kinds of random stuff.

Watch the people that trade the stocks you do instead of random stuff like $AAPL, $GOOGL etc.

twitter follows – still current good follows today
@markflowchatter
@tradehawk
@offshorehunter

Here is a list that I follow with an alias
https://twitter.com/tcbtrades/following

Market movers – hit post writers
attached to blog post as image
-Citron
-Muddy Waters
-Street Sweeper
-Good discussion on how to use hit piece writers, even if the names change the strategy is still good
-NIA Lebed – old but still educational

Short Trap
-SSR – Short Sell Restriction
-Does not mean you can’t short, just can’t
short downticks
-Good illustration of putting on an entry under SSR
-Nice Level2 view
-Low floats under SSR can be scary to short, and will often not drop hard
-Avoid shorting weakness or grinding up or down, need to short strength under SSR
-Dont’ fight under SSR, if it works fine, but battles you will get your ass kicked
-Look for para’s not grinding under SSR

Homework
-need to scan every night, just to get a “feel” and confidence
-Best way to keep your finger on the pulse of the market
-Finviz
-Best way to set trigger/entry points
-Good screenshots of scan’s easy to copy
-Review previous day’s scan – I NEED TO DO THIS MORE
-DEVELOP A GAME PLAN AND WRITE IT DOWN

Enjoyed the layout of the trade plan, even though the tickers were old it was cool to hear Nate think out loud on building a plan.

Textbook Trading – Notes and Review of Chapter 10 – Daily Routine & Goals by @investorslive

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Summary:

For sure my favorite chapter so far! While I gained a lot from the “how to trade” and “how to find setups and entries” that were the focus of many of the earlier chapters. I really liked this “hodge podge” of trading related topics.

Intro

There is a TON of content in this chapter and all of it useful. See below for the play by play. There are so many topics that I’m not really going to hit them one by one in this recap. Just skim below and you’ll see all the main bullets.

I really think this chapter is useful for any and all traders. I don’t care if you are a newb or some salty old whore of a veteran. Nate goes over everything from a daily routine (which I’ll admit, daily routines of successful people border on a fetish for me), to defining your style and great commentary on the Ego.

psycology

Nate wraps up with describing and detailing the basic four times of the day.

  • Pre Market
  • Trading day
  • Mid Day Lull
  • After Hours

And goes into detailed discussion on how to trade or even more important NOT trade these time periods.

summary

One of the great parts about this chapter is everything in it is timeless and evergreen. This chapter would be useful for a trader today or ten years from now.

VERY GOOD STUFF, really liked this chapter!

Notes:

Daily routine

7AM – getting up early?? 🙂
-Looking for early big movers, up and down

8:00 – Look sharp – trade sharp
-Start working on borrows, pre borrow, check inventory etc
-Match up scan/plan to what is happening pre market

8:45-9:15
-check back into gappers
-again match up market plan

9:15-9:30
-Condense scan down to a trade plan 3-5 main watches
-Main screen is these 3-5 tickers on main monitor

Eat lunch, step away from monitors
If you traded well and in cash, take a walk – THIS IS HUGE!! Saves crappy trades during lull

4:00 Hit the gym, non negotiable, either early in the morning or after hours

Do a scan/watch then be done for the day.

CLOSE THE LID

Things to be a aware of
Trade tickers not companies
volume/range
check news FDA etc
Earnings calendar
buyout chatter
avoid on the short side especially, don’t fight/battle

Ego
-Market is always right
-Hope is not a strategy
-“Its easier to be patient when wrong than right.”

Psychology
-Prepare/Plan/Patience
-So much less work when you trade the plan
-Clean slate every day if possible

Adaptability
– Have a plan but be prepared to adapt to what is happening real time
-Flexibility and an open mind

Define your style
-What is your goal?
-Swinging or day trading?
-Write down your plan.

Paper trading
-If you understand what is going on, you can make money

Building your account
Be patient/grind
Do not compare to others
Don’t make changes trying to push

Multiple accounts is good, especially for swings vs. daytrades

-Trading account is in cash every day.
-Back burner swing account, add alerts for stops, but don’t stare at it trade the plan
-Don’t turn day trades into swings

Calculating Risk discussion
-Size discussion

Taking Profits
-Surprising how quickly profits add up.
-Paycheck mentality
-Size discussion, take profits scale back and let it ride

Only trade liquid stocks

Good scaling discussion

Cash is a position too – don’t overtrade

After Hours
-Basically a casino
-Can ruin a good day
-If you do trade after hours, use small size
-Be especially quick taking profits

Pre Market
-More consistent than after hours, less gambling/crapshoot
-8AM Shakeout/shuffle

Earnings
-Avoid- don’t anticipate
-Wait for the news to come out, then trade your plan
-No edge/gambling
-Same with FDA news, trade it after not before

Mid Day Lull
-Trade your plan, but not out of boredom
-If stuff isn’t working don’t wait out the lull, ditch it and move on.
-Sideways action will burn you almost every time

Importance of stopping out
-If your stop slips you HAVE TO HAVE THE OH SHIT HANDLE
-Loss is $300-500 – have your number

Focus on what you are good at

Always have a plan – set risk

Attention whores
-Good discussion
-miss good trades

Sector Sympathy Plays
– What they are.
-Kind of like former runners, need to be in it to know what they are
-Sector rotation, cycles repeat

Be Prepared
-LESS IS MORE

Textbook Trading – Notes and Review of Chapter 9 – Brokers by @investorslive

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Summary:

This was a quick but useful chapter. I don’t have a ton to relay because its all in the presentation and my notes below. I’ll go over what Nate goes over, but you really need to see the chapter to get any real good use out of it.

While this chapter had limited value for me I still think its GREAT for beginning traders or traders new to pennystocks. I knew basically everything in this chapter just because I’ve been around pennystocks and the applicable brokers for years and years. But if I had to guess what the most questions I get revolve around, it seems to always be, what broker do I use, what software do I use, etc. So many new traders think some “secret” broker and super duper quant mad scientist software is out there. While this does not exist, there is indeed a HUGE advantage to having the right broker and the right software. But it is by no means a silver bullet.

brokers

Nate goes through the three best brokers at the time. While some of the clearing firms and pricing have changed, the info is still applicable today. VERY simple but VERY useful if you are new to pennystocks and have an account at Etrade or TD or some other big broker.

The chapter wraps up with a very handy tutorial on DAS trader. While I love DAS and most hardcore traders use it. It is for sure a “pro tool” and is not very user friendly to the beginner. I remember the first time I fired it up, I was like “WTF do I do now?!?”. Nate does a great job in running through all the basic getting started setup in 10 -15 minutes. This could be worth HOURS of frustration if you try and do it on your own.

PDT

Again, no trading how to in this section, but VERY useful info that you would have a hard time finding elsewhere. Nothing top secret but you could spend days googling and bugging other traders to get the same info you get in a 30 minute chapter.

Notes:

-Options for trading under PDT
-Get what you pay for, usually cheap/free is worthless – Zecco – Robin Hood etc
-Flat fee OTC
-Nas – per share
-Deals/discounts for DVD buyers
Centerpoint
     -ETC and Wedbush
     -great borrow list
     -OTC’s/Pink
     -borrows bell to bell vs IB “running out of shares”
     -Options for borrows via locate firms
     -DAS Trader and Sterling
     -DVD has discounts in this presentation – in FAQ
 
Speedtrader
     -DAS
     -I think some of this is out to date, I think Speedtrader is even BETTER today
     -Flat rate – great for OTC’s since you might be 100’s of thousands of shares
     -Discounts on DVD
DAS Trader Demo
     -Very utilitarian, not sexy but most effective
     -HOD list
     -“Anchor” how to, link L2, Chart, T&S etc
     -How to on presetting share size and route
     -Order entry tips
     -T&S tweaks
     -Show trades and show orders on chart setup
     -How to execute an order
IU offerings
     –Scans
     -Chat
     -Webinars
     -PM
     -Video lessons

Textbook Trading – Notes and Review of Chapter 8 – OTC Trading by @investorslive

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Summary:

I’ll admit this is my least favorite chapter so far and I’m assuming it will be overall. That being said it is not bad by any stretch of the imagination it’s just OTC stuff, especially going long promo’s and washouts is just not anything I have ever done nor am I interested in.

intro

Nate does a great job of explaining the in’s and outs of the sketchy OTC markets for sure though. I think a lot of new traders like to get their feet wet trading OTC and true penny stocks. If you are that type of trader this chapter would be very useful.

The one section I feel could assist my trading is the gap plays. I have tried this from time to time but usually I’m just following other traders out of boredom or lack of plays in the late afternoon. While I’m not sure if I’m ready to try these sorts of plays out yet, I feel I do understand them more and have a better idea of what to look for.

pumpers

Some of the longer and more interesting discussions revolve around the history of pumpers. I think when this DVD came out and slightly before, these types of setups were working and it was useful to know the pumpers and their ability to move stocks. Not sure if it’s really very relevant right now. Of course it will come back, it always does. I just had trouble focusing a little during some of these since I knew it wasn’t really tradeable info right now.

review

If you are new to trading though, it is a very informative discussion of how the shady side of trading works. And of course keep in mind this DVD is two years old, so its no fault of the creator that some of the info is dated.

Notes:

OTC Textbook setups
-Look for levels on intraday but match up with daily
-Breakouts and consolidation
-ABCD
-good risk on breakdown of consolidation
Anticipating Gap Plays
-Bullish chart breaking out
-HISTORY of gapping
-watch at 3:00-3:30 then out first 5-10 minutes next day
-dont’ chase, wait for a pull back
-can get crowded so need to be quick
-need to follow trend
-can often be influence by newsletters pumpers etc
Gearing and perking – risk vs reward
-10X rule instead of $10-$12 – $1.00-$1.20
-ABCD
Pumpers
-old names, but the setups remain
-need to focus on the pumpers with hot hands
-can be hot and cold, even if the last one worked does not mean the next one will
-D rated pumpers
-good to short crappy pumpers vs trying to go long
-good explanation of how pumping works and the psychology behind it
-check history
-good explanation of “splitting lists”
-History and explanation of tickers
-tough to play big on promo’s now
Nice Price is Right video 🙂

OTC Shorts
-Get bought in a lot T+3
-know the shitty pumper
Panic Morning washout

Bounce plays
-Need to recognize blocks
-Need true panic
-big volume

Textbook Trading – Notes and Review of Chapter 7 – Morning Emotion & Faders by @investorslive

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Summary:

Looked forward to re-watching this chapter and was happy with what I found. These types of setups are my bread and butter, though I can surely get much better at them.. Today (7/27/2015) was a perfect example on $ITEK, sure I traded it for +0.50 a share but I botched it royally by not recognizing lower highers and holding into fading actions. It was a thin and jumpy stock so not a perfect example but the whole time I watched this chapter I was face palming over my trade on $ITEK.

intro

This is a great chapter for the beginning or moderate short seller. The biggest benefit to this type of setup is it gives you a solid and easily recognizable place to set risk. The scary thing about parabolic shorts is it can be very hard for the new trader with limited experience to stick to his stops, because other than whole numbers there is really no true spot to pick. The beauty of the big spikes/fades is you can take that HOD level or the previous day HOD as a stop. Then even if the trade goes against you it’s easy even with limited discipline to say “Listen it’s bumping the HOD this thing is gonna break out if I don’t cover now.”

lowerhigh

Lots of solid chart examples in this chapter, with great commentary. It is important to see these charts in order to recognize the grinding type action. No doubt one of my biggest issues is overlooking higher lows and failure to break down. So many including for sure myself add into higher lows, this is a TERRIBLE idea. These setups work most of the time, but if you add into ABCD or grinding you will ALWAYS and I mean ALWAYS get squeezed out by a spike then 9 times of 10 the stock will still fade. Where had you recognized the stock was still not ready to sell off you would have kept your size manageable and added into a winner instead.

review

This setup is often referred to as the “HOD rejection” as well. And in my opinion is the most reliable setup there is. But you need to focus only on BIG charts and stay away from stocks that are strong for a good reason. Like any short you need to be a sniper and pick only the best setups. These comes with experience but I think Nate does a solid job in this chapter explaining how to recognize these setups as well and most important how to set risk and stick to stops.

Summary

Taking advantage of morning emotion – short
     -Scalp
     -Prior day high as stop  – set risk
     -pops are met with selling
     -take quick gains, especially if ABCD sets up
Failed follow through momentum
     -big morning move, then drop and no continuation
     -Red to green good place to set risk
     -HOD set risk
     -Big charts/overextended
     -Good use of support and resistance levels
     -another good use of prior day, especially late in the day high as risk
     -lower highs – continue fade
     -higher lows – exit
     -ABCD – cutoff or take profits
Overextend fader – lower highs – late day fader
     -momentum shift
     -backside move – high R/R
     -pops become entries
Late day fade – lower high
     –Has place to set risk vs parabolic trade. – defined by support/resistance levels
     -wait for top to be set – morning emotion
     -Look for base – support levels- wait for crack for entry with lower highs
     -capitalize on profit taking into close
     -Patience to wait for fading. Ignore while it grinds
     -These can be solid swings/multidays
What does “grinding” look like – stops
     -do not add add add to a loser, only to a winner
     -good easy and “slow” what to pick exit – easy to not get trapped if you stick to it
     -Have a plan – but always have a “MONEY” stop loss – max pain
     –If you are wrong let yourself be wrong
HOD REJECT model

Textbook Trading – Notes and Review of Chapter 6 – Shorts and Over Extensions by @investorslive

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Summary:

1-Intro

For sure my favorite chapter so far. Not only because shorting is my best and most consistent trade setup, but also because I feel like Nate is really hitting his stride at creating the DVD at this point. Of course it may also be be related to the fact that at his heart he is a short seller, so I think I sensed a little more enthusiasm in this chapter.

2-Para

Nate starts out with probably the most consistently profitable though dangerous setup, the parabolic move. He does a good job explaining why this is so risky since there is no clear spot to set risk on. When a stock fits this pattern it is going bat shit crazy and it’s very hard to say “OK if it hits X I’m out”, because you can’t solve for X. This is where you have to use your rules to determine your “Oh shit level”. If you are willing to risk $100, $500 or $10,000 you need to be disciplined enough to enter and then exit at that point if it goes against you.

3-Powerclose

Next setup is the power glose and gap up parabolic. In my opinion these are the most common short squeezes and traps. Its very easy to short something mid day, then grit your teeth into the close only to be squeezed out 5 minutes after the open. Of course, if you are smart, and learn from this chapter you can capitalize on those early shorts. Avoid mid day grinding and short into the gap up the next day. This section I felt was particularly useful.

4-intradaypara

Next Nate covers intraday parabolics and kind of what I’d call HOD moves. These are a little more difficult to explain so its nice that he uses tons and tons of charts and setups to explain it. I particularly like the flipping back and forth between daily and intraday charts. One thing I can tend to get lazy on is matching up multiple time frames intraday. This section was a good reminder to always have an idea of what the daily looks like.

5-Review

In closing the most valuable lesson of this chapter was explaining to the new or growing short seller how to differentiate between a solid risk to reward short and a stock that is “up a lot”. I’ve seen it a million times and I’m sure Nate has seen it 10 million times, but the biggest roadblock to becoming a successful short seller is being able to make this differentiation. If you pay attention I think this chapter can teach and show you that.

Notes:

Parabolic Shorts
Over extended Charts
Over extended Consolidation
Power close gap up Parabolic
Intraday Parabolic
What is parabolic action?
Traps
All these setups can keep going, even if they are solid short setups, that does not mean they die long term
Parabolic Short
     -Drawback is there is no set risk, no place to set a top
     -HOD, former top etc
     -Overextended charts, going going going, no pullbacks
     -Just because it pops does not mean its a short
     -Lots of good charts to demonstrate
     –Notice grinding transition to parabolic
     -Parabolic – speed up relative to previous action – need to learn this important
     -Take advantage of emotion
Over extended Consolidation
     -Overextended, but second wave up
     -Can use lower highs and late day fade – HOD rejection type
     -Even if para if it holds higher lows, odds are you will get a squeeze – no capitulation
     -Need to recognize consolidation/higher lows
Power close gap up Parabolic
     -Closes on HOD with big daily range
     -Another huge move right at the open
     -Emotion out  of the gate, momo longs taking profits/getting spooked
     -No place to set stop, so you need  to have disciple to enforce your dollar loss rules
     -Good example on JASO, previous day took all day to move $1, para day it moved $1.50 in 15 minutes (THATS PARA)
     -Can set risk on pre market high
     -With patience you can also set risk on day high after para move for all day fade
     -Need to recognize para’s for exits or you will get squeezed
     -With no set risk you need to pick a dollar amount you are willing to lose, $100, $500, $1000 and stick to it.
     -Capitalize on chasers
Intraday Parabolic Price Action
     -Speed up relative to previous
     -whole and half dollar numbers
     -Emotion on air, quick nail and bail, not a swing short setup

Textbook Trading – Notes and Review of Chapter 5 – Red/Green & Long Trades by @investorslive

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Summary:

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Summary:

Another chapter that I picked a lot up on. I’ll admit being so short biased through the years, the first time I watched this a year or so ago, I just kind of glazed over the “buy setup” chapters. Because of that I’ve been annoyed while reading IU scans or seeing in chat about how to buy into long setups and not understanding the terminology. Of course that annoyance was self induced for sure.

intro

The most common IU long setups which have not been already covered (ABCD) are:

  • Anticipating Red to Green
  • Week Open/Stabilize and Perk
  • Morning Washout on Bullish Chart
  • Morning Washout on Bearish Close

Nate does a solid job of explaining these, and I finally “GOT” a lot of them. Not saying I’ll trade them well, but after this chapter I feel much better about my ability to recognize them as well as scan for them.

The last chapter covers a setup I may never trade, but I know lots of guys love these setups and always want to trade them. Thats “the chase” I know its possible to make money chasing MOMO stocks, but fuck, I’ve never been able to. The best part about this section though is Nate goes over a structured way to chase. And gives solid tips on how to formulate a chase plan. ESPECIALLY focusing on using chase size for entry and only adding to winners.  Probably the biggest reason chasing never works for me is a size issue. I get shook out and ultimately the trade works.

Chase

This was a solid chapter and I feel I got great value out of it. Its borderline embarrassing that I have been an IU member for 7+ years and probably read damn near every nightly scan but I still did not understand a lot of these long based setups. We’ll see if it pans out, but I feel like I am a better/more versatile trader after viewing this chapter.

review

Notes:

 

Longs
     -Gearing perking – Chapter 4
 Anticipating red to green
          Must be in play prior days, big price big volume
          needs to be on radar
          look for magnets
          sell into pops – usually partial
Make sure you have your Previous day close indicator on – R/G
Good for early trades, after the big pull ends
Tightening wedge
GOOD LESSON FOR SHORTS too- if you get a pull do not wait around if it grinds back towards R/G, COVER
Weak open/Stabilize and Perk
Solid daily chart, but weak on the day
Dips are bought on daily
Trend on daily, try and exploit that intraday
Higher lows for entry, with LOD as stop loss
     -With anticipation of Red to Green
Morning Washouts on Bullish Chart
     –Solid close prior day
     -pull into open (profit taking)
     -wait for washout to set risk, then wait for higher low trend
 
Morning washout on Bearish close
     -Bullish chart that gets hammered hard previous day
     -Buy into panic, hard but it works
     -Washout = a true emotional breakdown, not a fade
       -Want a gap down and hard pull
     -Avoid bad news/earnings, focus on profit taking
Chase, when its ok
     -biggest lesson is to use “chase size” and add to a winner, don’t go to deep on entry
     -MUST have a plan
     -Good use of “former runners”
     -gap up with volume – VOLUME important
     -Always scale in

 

Textbook Trading – Notes and Review of Chapter 4 – ABCD & Long Trades by @investorslive

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Summary:

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Summary:

This chapter focuses on the most classic IU type play, the ABCD setup. While it has been a goal of mine for quite some time to improve my going long skills, it has been made extra apparent this summer that I need to expand my repertoire.

intro

Because of that, this chapter and the next chapter on buy setups had me looking forward the most to reviewing this DVD. The ABCD setup is so simple that at times it can be a little confusing. Yeah I know that statement is confusing “so simple its confusing” what the fuck are you talking about?? But its real easy to do those air hand motions of a chart and say A is here, B is here and so on, but never really grasp it. Nate does a great job breaking it down with his own illustrations. Which I think is really valuable, you can look at lots of real examples and never really get it. Once I saw his drawing it clicked a lot more.

ABCD

Perhaps this best and most useful part of this chapter though is the introduction of THE PLAN concept.

If there was one biggest reason for failure in trading I would have to say its trading without a REAL plan. Its easy to say, “I’ll buy here and sell here if like some stuff happens”. But the most valuable lesson from the IU community is have a REAL plan with educated risk to reward. The ABCD setup gives you that. You follow that as your plan and it gives you a defined profit exit and defined loss exit. VERY useful for the beginner or growing trader.

I really enjoyed this chapter and feel like I became a better trader for watching it again. There are tons and tons of examples that really drive it home. I hope to start screening for and executing more buys. But that being said I felt my short game improve. I can’t tell you in hindsight how many times I’ve been short an ABCD setup. And instead of covering at C for a small reasonable loss. I wait for D and cover into a fucking squeeze. If I could get back the losses I’ve suffered between the C and D point on a gearing/perking setup, holy shit who know’s where I’d be today! So whether or not I buy more, I feel I will recognize these setups when I am short and exit before a big move.

summary

Notes:

Introduction of the plan idea (Core IU principal)

Gearing/Perking/ABCD setup
-Helps find risk to reward
-A – Morning spike
-B – Pullback/bounce
-C – Higher low-risk on B
-D – Breakout – new HOD
Easy to set risk on B, takes emotion and guessing out.

Lots of examples – again bummer DAS charts are very dark, but you can zoom and see them

Look for increasing volume on C, this is confirmation of interest in higher lows.

I really like the diagram that isn’t an actual chart, hand drawn, it makes it much clearer.

Magnets – combine them with ABCD, points for explosive moves.

Most useful IMHO is that you can use these setups during the lull, set targets and not have to stare at screens all day.

Good for planning gappers.

MFT – attract more interest aline this with breakouts and ABCD and magnets

Line up intraday on daily

Big lesson here, watch these ABCD setups on shorts as well. SO many times I’ve let myself get squeezed out of shorts when I should have covered into grinding/perking.

Good for pre market scanning, line up daily chart with intraday.

Great for setting risk.

Definition of gap fill

Review “tightening” action coiled spring

Best lesson, the idea of having a plan with an educated set risk/reward

Textbook Trading – Notes and Review of Chapter 3 – Charting & TA by @investorslive

Table of contents:

Summary:

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Another solid setup chapter, big goals here are to describe the idea of supply and demand and how it translates to charts. Often I think a lot of guys do technical analysis but seldom do the back out and think about why certain price levels are support and resistance. Nate does a solid job of getting you to think about the mindset of other traders. I’ll admit I often neglect this, I focus in so tightly on tick by tick and my own thinking that I seldom step back and say “What is the crowd thinking here?”

intro

Second segment is a quick but helpful reminder of the basics of candlestick charts. If you are new to candlesticks this can be very helpful. While a line chart can show the same thing as a candlestick, I think as a “real” trader you need to understand and use candlesticks. 99.99% of other traders are using them, you need to be looking at the same info as them. Thankfully unlike most trading books Nate does not spend an hour or 100’s of pages going into all the superstitious candlestick patterns. He leaves that for the loons. He simply describes how they work and the basics of how to read them.

supplydemand

Last sections focus on “Former Runners” and “Magnets”. These are often misunderstood terms and there is a solid description of each. Often in chat you will read “xxx former runner” and so many think there is some sort of central database to tap into. Really you need to know what a former runner is, but to know which tickers are one takes experience and mental work. Concept of “magnets” is more basic technical analysis. If you are trading momentum stocks, which is what the IU trading community does, you need to be looking at key inflection points. And those are often centered around whole and half dollar amounts as well as support and resistance levels.

summary

While I don’t know if I learned anything new in my second viewing of this chapter, it was enjoyable and interesting. I also feel like I was reminded of some key concepts that I may have backburnered over the last year. Particularly thinking actively about supply and demand on a chart.

Notes:

Good Supply and demand discussion – detailing the concept of bid/ask
-Buyers trying to find sellers vs. sellers trying to find buyers
Consolidation description – support and resistance
Useful illustrations of breakouts and breakdowns
“Left side of chart helps tell the story of the right side of the chart”
Basic candlesticks descriptions
-useful
Nasdaq’s vs OTC
Multiple time frames – MTF – lining up daily and intraday
-3 and 6 month – support and resistance levels
-line up on 1min
DAS charts very dark.
Former runners – description
-history of big moves in the past
-history of big range
-pennystocks vs boring stocks like MSFT GM etc
-Sector stocks often, they run when better peers run
-need to find these on your own with experience. -chat useful for this
-watching HOD list for these former runners
-big volume and big price moves, this will often run again the future once they put in these big moves
Two plans
-week opens
-big gap ups
Focus on whole and 1/2 dollar marks
Focus on entries – anticipate moves
Magnets
-Whole and 1/2 dollar
-G/R, R/G
-Daily support and resistance
-trade around points that are interesting “good analogy about people attending a concert”

Textbook Trading – Notes and Review of Chapter 2 – Setup and Terminology by @investorslive

Table of contents:

Summary:

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More preparing for the meat to come later. A lot of background and history in this chapter. But once that is over there comes a lot of useful info on how to use the chat and all of IU’s services. For sure basics, but if you are a new subscriber or considering subscribing this chapter is VERY useful. It will save you and other traders frustration because you will be able to enter the chat and already know the shorthand. IU chat is very fast paced, if you don’t know the terms you will get confused and annoy other traders by asking simple questions that can be answered in this 30 minute video.

intro

Also a lot of definition of terms, how to place orders and a very good description of short selling. I would HIGHLY recommend this chapter to any new trader. Sure investopedia is great but Nate’s real world definition of terms is superior.

Summary

Some random bits in this chapter that aren’t very useful but I’m sure Nate gets asked about all the time. Everybody always wants to know about desks and software and PC spec’s etc. Though in my opinion none of this shit makes you any money. But that being said I get asked about it all the time so I’m sure Nate does 10X more than me so he probably felt obligated to put it in here. Good thing is he goes over it quickly and moves on.

Good foundation chapter.

Notes:

History of IU service
-Battle Overtrading by providing information
Profit.ly and verifying trades
-Paper trading vs real trading
Overview of IU methodology
-Daily income
-3:1 risk to reward
-long and short
-sub penny to big dollar stocks
-CLEAN SLATE ever day – go home in cash
How to get started with IU and description of services and options
-Good for beginners/new to service
Standing Desk – description and justification.
PC specs
Terminology – beginners
-Buy – Long
-Sell – Short
-Shorting
-Buy to cover
-Good basic introduction to short selling and how to do it
Orders
-Limit
-Description
-Downsides
-Market
-Description
-Downsides
Broker/Market Terminology and definition
-Margin
-Short Squeeze – forced buy ins
Why margin is good but most use it poorly
Prop firms
ETB/HTB – descriptions and definitions
-Brokers
Exchanges
-Most trades Nasdaq
-Lot on OTC/Pinks
Chat Terminology
-PPS – price per share
-PCL – previous day close
-DD – due diligence
-HOD – High of day
-nHOD – New high of the day
-LOD – Low of day
-nLOD – New low of the day
-52’s – At or around the one year high or low
-EOD – end of day
-ER or E/R – Earnings are that day/night or soon
-PM – Pre market trading
-list of times for brokers and exchanges
-AH – After hours
-casino/reports
-R/R
-risk to reward
-O/N – Hold over
-holding overnight
-SS – S/S
-Short sale
-Range
-daily range – highs and lows of the day – detailed description
-L/F – Low Floater
-Big range/low volume
-bigger spread
-use less size
-R/G – Red to Green
-typically a buy
-G/R – Green to Red
-typically a short
Level II (Level 2) Terminology and definitions
-Bid
-Ask
-Spread
Watching Level 2 takes time
-SSR
-What it is and how it works
-How to trade it comes later in DVD