Learning the Language

2018-05-25 | Allison Ostrander

Simpler Summary

Whenever you first start trading, you may become overwhelmed with the jargon that so many traders like to use. As you sit in the trading room or listen in on a webinar, you may feel as if everyone is speaking a different language – except evenGoogle Translator can’t help. Don’t be discouraged if you feel like you’re in this boat. When you first start trading, just like learning a language, you start with your foundation and then build from there. So here are some things that can help you get a head start:

 

  1. Understand the basics. When you start learning something that you may have some prior  knowledge of, you may feel that you’re above learning the basics. If you’re thinking like this, step on the brakes and hit reverse. Just like mastering the conjugations in a language like Spanish leads you to understanding the full language, understanding the basic terminology in trading is the key to getting the more complex strategies.
  2. Repetition, Repetition, Repetition. Just like when you were in school, sometimes it takes a few times of re watching a video, or rereading a book for it to fully sink. This is no different when it comes to trading. Once it starts to sink in you’ll find that you’re easily able to follow along with any trader alert.
  3. Practice makes Perfect. A deep immersion is sometimes the best way to really retain the information. Much like being dumped in Barcelona and learning Catalan, jumping into a paper account and trading is a great way to get a concept on the terms and strategies. Paper trading also allows you to understand Risk Tolerance without actually putting any money at Risk.

 

Once you master riding a bike, it’s a skill that never really leaves you, which is the same thing with trading. Once you learn trading as a skill set, it’ll benefit you throughout your life journey.   
   

Simpler Sentiment

John It was definitely a choppy week in the indexes, with volume dropping off towards the end of the week as trader’s fled from their desks to get a jump start on the rare 3 day weekend.  As we wrap the week, all of the technical patterns are bullish, but the internals point to this market being “a little too long.” This just means that if everyone is positioned long, there is no one else left to buy.  That doesn’t mean we roll over and die. It just means that in a situation like that the upside is limited as it “works itself out.” Hence, looking for chop.



Carolyn — I remain a cautious bull in SPX.  The charts are bullish, though closer to price resistance with timing at the last high.  This is a time to ratchet up stops on longs.

Here is what the daily chart looks like with that timing and price resistance.

Henry — Some of the best themes from my trading this week come from “hidden timeframe” Squeezes. I wouldn’t say a 4 hour chart is hidden, but not everyone is looking at a 130 minute chart. You could say the same about the 78 minute. When these signals line up together, and especially when they line up near lifetime highs, these can make for very powerful setups. NFLX was a perfect example, BABA is a close second and still looking for it’s new high. Catching a few of these trades can go a long way in making your month.

Into next week I plan on being a little bit lighter than I have been here lately as it’s a short week and I’ll be out Friday, then the week beginning June 4th I’ll be looking to add to positions like PYPL and BA where we’ve got very clean Squeezes and a good chance of higher prices.

RagheeI am generally bullish equities still with long positions in PSCE, NVDA, AAPL, FB. I am also focusing on shorter term time frames right now for nearly all my trading. Currencies, energies, and indices continue to be short-term to even daytrades. Which emphasizes the importance of knowing the time frame to trade and the price movement associated with each. That said. I will be a longer term buyer if tech and small cap, Nasdaq and Russell make the most sense for me for trends that can deflect geopolitical tension.

Sam — This week we saw Bitcoin trade from $8500 down to $7300, after reaching $9990 just two weeks prior. We have a support level at $7260 and prices are attempting to hold that level and offer a relief rally in to the weekend.

The important takeaway of the week in Crypto is that we are still in the very early stages of burgeoning market. The volatility to both the up and down side indicates to us that the market is in the process of establishing how it will value itself in to the future.

We see many parallels between the Crypto market in this current state and time to the Nasdaq boom of the middle and late 90s. There were many opportunities for traders, however the ecosystem had not yet been fully established and many of the stocks then and the 1500+ coins now will not survive.

That is okay, that is how markets form. We offer an interesting chart that shows both Amazon and Apple “crashing” in the 90s, however, when viewed from the prices those stocks reached the “crash” seems like a small blip on the chart. Given the current volatility in Crypto along with its disruptive nature to existing technology we believe this is the long term view of the Crypto space.

John Carter says:

See the original setup HERE

Expert: John Carter

Setup: Setup on SPY

Update from John: For our trade of the week, I focused on an iron fly on the SPY, which does well in an environment that is choppy and directionless.  So far, so good. My plan is to continue to hold that trade into the long weekend and take advantage of the additional premium decay.  

 

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