How to Start Investing for Beginners (Full Course) transcript

in today's class I'm going to teach the ultimate beginner's guide to how to get started with investing now as an investor our goal generally is to buy a stock low and to sell it at a higher price at a later date so the focus of this episode is going to be to teach you how to find the best stocks to buy I'm actually going to walk you through the two systems that I use I use one system for active trading also known as day trading in my case and I use a separate system for finding stocks that I want to Buy and Hold for a much longer period of time the standards are different as an active Trader I'm looking for stocks that have the potential to go up 100 200 300% in a single day but as an investor as someone who maybe is taking a position on your phone and hoping to hold it for weeks or months you actually don't want that level of volatility sure it' be nice if the stock goes up 2 3 400% but stocks that are that volatile that quickly can go down just as quickly as they went up and if you're not there to monitor the position you could end up taking an unnecessary loss most people who eventually become day Traders start as simply investors and becoming an investor is incredibly easy the market has never been more accessible than it is today on your phone from an app you can access the market you can start buying and selling shares and just like that you are an investor now becoming a profitable investor is a different story in my opinion profitability comes down to choosing the best stocks to buy after all if you buy a stock and it goes up you'll be profitable if you buy a stock and it goes down you will lose if you are someone who wants to make a serious profit in the market you're going to have to work for it but I'm going to share with you the system that I have personally followed over the past 10 plus years of active trading and passive investing so I want to begin high level by talking about how to start investing so if we look at a stock like Nvidia or we look at a stock like Tesla both of these stocks have had periods where they were incredible Investments the price kept going higher and higher and higher where we're talking about 50% even 100% returns in a relatively short period of time during a period of time when the overall Market might have only been returning 10 or maybe 12% at most when it comes to being an active Trader or an investor really the strategy falls into two camps you have the people who look for a trend and want to jump on that Trend and continue to ride it as long as they can and then you have people who are counter Trend Traders so a trend Trader is going to look at something like this and again this could be a daily chart where this is you know three months of time or this could be a five minute chart where this is a few hours of time but a trend-based Trader is going to look for these first pullbacks right down here as an opportunity to buy a stock that is strong that is showing some serious strength and that has the potential to keep going so they may buy here more people may buy here more people may buy here and there'll even be some people that get in up here and up here people will continue to buy these pullbacks in an effort and an attempt to profit from the underlying Trend that is continuing counter Trend trading is the opposite a counter Trend Trader is someone who is going to look to profit from a stock that is reversing and going down or a stock that has been selling off for a long time and has the potential to bounce so if you have a stock that's been dropping for a long time a counter Trend Trader might be looking to buy it right down here for the reversal back up what I will tell you is that both as an active investor and as an active Trader counter Trend trading is very difficult you're trying to predict a reversal and if you're a beginner I wouldn't even try it to be honest it didn't work for me and it won't work for most beginners it's a lot easier to find something that's trending up and to profit from jumping on that trend than it is to try to predict when this incredible stock like a Tesla or Nvidia is going to reverse and turn around so rather than trying to predict a reversal I think it's much easier to look for the trends and jump on so that means the two things we really have to talk about today is number one how to find the system for finding the best stocks and then number two where to buy if I could teach you these two things you're going to walk away with some actionable skills that you can Implement in your own trading and investing today I think a mistake that a lot of aspiring investors make is they're always looking for the next Nvidia or the next Tesla and so what that means is they're really they've got their ear to the ground when people say oh this stock is going to be the next one they start buying these stocks that are very speculative because a lot of stocks are going to be called the next Nvidia but they're not actually going to become that they're not going to do anything even close to what Nvidia has done and so if you lock up your money in these stocks that are so speculative you probably won't have much of a return and in the meantime Nvidia might have continued moving higher so the traders that do the best seem to be the ones that focus in on the stocks that are actually trending right now so you might say well gosh Nvidia is so ex extended and expensive up at this price right here I missed it by not being in you know down here but most people missed it most people were not in down here when nobody wanted it right when it was selling off and nobody cared about it people weren't buying it it's as it started to come up that people said oh gosh this is something I should participate in and people start buying these pullbacks and these pullbacks and usually what happens is as the price goes higher the volume gets higher because there's a phenomenon in the market where when something gets expensive and it's moving up people only want it more it doesn't make sense but the market can be irrational and we can profit from an irrational market so I'm going to discourage you from trying to find the next Nvidia or the next Tesla and instead show you the tools that I use to find the stocks that are moving right now because these are the ones that I want to be looking at on pullbacks to see if I can accumulate a position so I'm going to begin by showing you the system that I follow to find stocks for an investment now this is very different from the system I follow when I'm looking for a stock for day trading we're going to go over that in a minute but to help you understand why there's a difference between these two criteria when I'm day trading I'm hunting for extreme volatility and that's because I'm looking for a stock that could go up 200 300 4 % in one day when I'm trading especially with a relatively small account like I was when I was getting started if I want to make $1,000 in a day and I only have $1,000 in my account I need to find a stock that can go up 100% now as an investment for a longer term hold something that volatile would actually be not really a smart thing to buy Because by the time it's squeezing up in the middle of the day you might be buying it already up 70 80% but usually when they make those really big moves they don't sustain them they go big big and then they come back down so there's opportunity to profit in there but you've got to be able to be in front of the computer and watching the trade so for a longer term investment I want to kind of bring down the volatility a little bit and I do that by increasing a couple of the filters that I use when searching and breaking down the criteria of whether or not this is something I'd consider so the tool that I use to create my watch list for investing is called finis and you can see it right here F NV Iz . finviz.com and this is a free tool that you can use it's they have a lot of ads on it um and it's not a tool that you can use for day trading because the data is not as like streaming real time it's more of creating lists so what I do is I go into the screener right here I click on the screener and now I can begin putting in my criteria for what I want to look for okay so right now we've got a total of 9 ,500 stocks we need to whittle that down and I'm going to do that by setting some criteria just minimum criteria to help me sort of filter out the type of stocks that I want to buy so number one um I'm going to choose um capitalization of the stock and well I'm actually going to start by um selecting float and I want to do a float of greater than 500 million shares now this might be a term that some of you are not familiar with the flow uh or the number of shares outstanding but what this refers to is that when the company did its um its IPO they issued a certain number of shares to the market stocks have a float of like under a million shares for instance there's only 23 of them here these are going to be stocks that can be ridiculously volatile now there's nothing wrong with that for day trading but these are going to be really too volatile for a long-term investment so this isn't something that I would trade and these are all I mean look they only have a million shares they've sold so the market cap is calculated by taking the number of shares so the number of shares times the price so if they have 1 million shares outstanding and the price is $2 a share this company is only worth two million bucks that's not very impressive I mean it you know I for just not to be rude about it but you just can't expect that that company is probably going to do a lot anytime soon um their balance sheet probably has a lot of debt they probably need to raise money so that's not something that I would consider uh very seriously okay so for number of shares I'm going to say uh it's got to be over 500 million now by doing that we've narrowed down our list pretty substantially here to 387 stocks so that's that honestly is terrific um there you could even go a little lighter if you felt like well maybe I've cut out uh some good ones you could say well I'm going to do over 200 but for right now we're going to start with over uh 500 so I tighten the filter and then I can loosen it if I need more ideas okay so this is just simply giving me the number of shares available to trade oops um put it at 500 there we go all right so now I'm going to go into um the technical Tab and I'm going to start entering some technical criteria because as we know I want a stock that is moving and so if we if we think about what does it look like when a stock is moving up there are some technical ways that we can describe this stock okay so how would we describe it performance uh well we certainly wouldn't if it was down 10% on the week I guess that wouldn't be the end of the world but you know weekly performance well maybe that's not we certainly wouldn't want something that's down 50% on the month but what what if we step all the way back down to like the last year what if we said I want to see something that's up 50% in the last year because that's going to be the Nvidia type of stocks the stocks that have been trending higher they've been moving by setting that criteria right there of up 50% in the last year we've now narrowed down our list to 60 stocks to look at so a watch list of 60 stocks is a lot of stocks to watch that's a little bit too big of a watch list now you could do that you could just say well 60 stocks and then going to go through the list each day and going to look at the charts and I'm going to see if any of them look like they're setting up for an entry we're going to talk about entries and exits in a moment now the nice thing between investing and day trading is that the entry and exit patterns those signals are very similar so there's good news there uh there's not a lot of re repeat um learning okay so um so o over 50% in a year this is going to show us the stocks are certainly moving but I think we can do a little bit better than that so the 20-day simple moving average what this is is this is an indicator that is the average price of the stock over the last 20 days so it's it's constantly updating so as the stock is moving up this indicator is moving up but it's always going to lag a little bit behind because if the stock goes up here well let's say this is $200 a share it's average over the last 20 days if it came from 175 is certainly not 200 the average is going to be a little bit lower so generally these averages uh you know Trail slightly behind as the price is going up however if the stock started to decline then the average would flip and it would be above the stock for a little while as it's coming down so I would say at a minimum we want to see that the price is greater than the 200 uh sorry greater than the 20-day simple moving average so let's just say just very simply that we want to see that this stock is priced above the 20 SMA that just dropped us down to 38 that's fantastic so there were some stocks on there that although they were up 50% in the last year it's possible that if we had looked closely at some of those charts the stock had gone up 100% And now is down here you know where it was it was still up 50% but it was underneath its moving average and it was clearly coming back so we don't care about it in here we want to trade it while it's still in the uptrend in this area this is the area that I'm interested okay so we're going to disregard those stocks that were below the 20-day simple moving average now the criteria that we we've entered so far number one float over 500 million shares performance up 50% over the last year and price above the SMA has given us a list of 38 stocks which actually isn't bad but I would say maybe if anything is a little small out of 9,500 stocks we've only got 38 so I think what I'm comfortable doing in this case is going back to shares outstanding and bring it down one notch to 200 million if I do that we come up to about 113 Poss possible stocks this would be to your preference if you want to keep your filters a little tighter or a little bit more open uh but I'm going to start with a little bit more open and now that I have this list I'm going to sort it by price now the reason I'm going to sort it by price is because I well I could also do some filtering here and that would be just fine I am not going to be very interested in trading these low price stocks uh for a longer term hold they're just they're too cheap uh while on the one hand a low price stock it's easier to get a larger percentage move on the other hand most of these stocks are cheap for a reason the companies aren't doing super super well and I just don't want to be holding a stock like that and then have news come out that they've you know sold assets to raise money or sold more shares to raise money those are all negative events it wouldn't be good so there's sort of two ways to do this number one would be to set a price filter of s simply honestly above above $10 is an easy hard cut off minimum you could even go a little higher like above $40 or $50 a share and that would be better while it's true that these are going to be a little bit more expensive these are going to be companies that are better established so I'm going to be uh preference have a strong preference towards slightly higher price in any case I'm sorting the list by highest price uh to begin with so now we've got a list by adding um making a slight adjustment on two filters we added um number four uh price above um above 50 and we changed this from 500 million and we brought it down to 200 million just to give us U some more alerts some more potential stocks to watch and to build a watch list from okay now most of them are still going to be above 500 million but uh there'll be a few that are a little bit lower okay so now that we've got our um our list we have to start going through each of these stocks and deciding whether or not these are even worth trading we haven't even looked at the charts yet I mean you could see the little chart if you Mouse over it but we've got to start looking at these in a bit more detail so now what I do is I put this um sort of on the side here and you can use whatever platform you like if you use thinker swim or you you know you use the platform that I've built day trade Dash that's fine too um either way I'm going to use day trade Dash I'm going to pop out this chart here and we're going to start going through some of these stocks and looking at specifically the daily charts that's what we're focusing on right now we're not looking at intraday time frames we're just looking at at Big Picture daily chart so the first on the list which is the highest price is NVIDIA now Nvidia is a stock obviously that has been moving up very well it has had pullbacks and those pullbacks get bought up and it continues higher so this is a stock that I would definitely add to my short list so I like to keep my watch list on a Google sheet but you can use whatever you prefer so I'm just going to copy um the last row there and type in Nidia and this is go start calculating automatically so um watch list for longer term holds okay so so that was um so Nvidia is the first one now we're going to come back to it we're not talking yet about specific entries we just want to say does this chart pattern look good is the stock moving higher and is it um plausible that we could be buying in any of these areas and it could continue higher and I'd say the answer right now is yes okay so that's Nidia number two is Netflix so Netflix um I'm I obviously familiar with the company I always think it's better to be familiar with a company because you understand what their business model is um it just makes you feel more comfortable owning the shares this is a stock however that um if you look at the chart you can see that it has been pretty volatile and something that happens with this which is a little bit more technical but you see these windows on the chart we call these gaps these are occurring uh when the company has earnings so every 3 months the company puts out quarterly earnings and man the market reacts in a big way so the last two have been positive which is good uh but previously there was um a period of some negative earnings and this was an area of concern big drop down big drop down so for that reason uh unfortunately for a longer term hold that would mean holding through these types of events I think that that is going to carry too much risk on this particular stock so looking at the daily chart I'm able to see that identify that and for that reason rule out Nvidia Microsoft sorry uh Netflix Microsoft uh this is a stock that does not have those similar gaps uh it is definitely steadier on the daily chart it's definitely been moving higher it's trending up uh AI Tech has been a boost for sort of all of these uh companies so it appears that it's been holding a bit of what I would call a ascending support line this is getting into a bit more of my technical analysis uh portion of doing due diligence but as I look at this I I always want to ask if I can get in as close as support as possible so an entry anywhere along this blue line could be valid and I could hold the stock as long as it stays above it and if it breaks below it then that could be an exit so I would say um Microsoft msf so we'll copy this row copy paste and type this in msft boom so we'll bring that one up and we'll have that one on our list as well okay next one down and I just keep going down the list this is my process I just keep going down the list and I look at each one of these stocks so caterpillar I'm a big fan of the stock have liked it for a long time it's moving higher so this is another one where I would be interested in buying pullbacks I would do the technical analysis looking at the chart trying to understand where it's shown historically support and try to get in as close to those levels as possible so caterpillar yep would definitely add that one to the list all right so cat oh we got to copy paste so copy paste cat so on so forth so I continue going down the list until I've created uh what I would say is a solid list of stocks to consider now there are some industries that I'm going to generally stay away from usually uh I'm going to stay away from energy uh energy stocks these ones are not usually going to be as volatile um something that I'll also be looking at as I pull up um more information here is I'm going to be looking at uh the dividends that these stocks issue whether or not they do even issue a dividend and this is help F because usually stocks that have a higher dividend have a lower return rate the problem with being a dividend investor and I I'll there's separate classes that I have specifically on dividend investing there's a very well uh strong hit track record and history behind that strategy however if you are a beginner investor you have a smaller account well let's look at the percentage on some of these dividends if I scroll up on the stock um up here Bristol Meyers uh Qualcomm locked Martin their dividend yield is like 1.8% 2% you know some of them are a little bit higher but a lot of these dividend returns are are quite low so um and I'm not sure that these have dividends uh let's see I no actually um these ones sorry these ones too but the the problem here is that if you put in ,000 you put in you have a$1 thousand Robinhood account and you put it all into a dividend stock how much are you going to get at 1.8% you know you're going to get $18 you're going to get an $18 return over a full year of holding the stock that's nothing it doesn't move the needle so for me when I was getting into the market I had a relatively small account and I had the goal of making $50,000 a year that was what I wanted to make this was more than 10 years ago $50,000 went a lot a lot further in those days and I wanted that as my goal I was living in Vermont and I thought this is enough for me to be doing well but I knew that if I put the money I had into a dividend stock I wouldn't even make making a th a couple thousand a month I wouldn't even make $1,000 a month the return would just be too low so I knew I had to look for areas of the market where I could get more return and I wasn't going to get it in dividends I would need to get it from the underlying stock actually going up in value uh and again the reason I like there's two reasons I like these higher price stocks more um one reason is because these stocks tend to be stocks that have a lot of attention they're well established they have a lot of momentum and they can continue higher and they can do really nicely so that's number one number two most of these stocks will also have options trading which is a way where you can leverage a smaller account to grow it faster and you can still do that as an investor you could buy an options contract you can hold it for if it's a weekly or a monthly for a quarter out you could hold it for a good stretch of time and as long as the underlying asset goes up then you will get that nice return Now options are risky because they are a derivative and they can go up many multiples of your underlying asset so if you buy the like 360 calls let's say just as an example if you bought the option contract on caterpillar at 360 we could just go in here and and check it real quick um not to take a big tangent but just for those that are curious so all products caterpillar so we're going to go we're going to just look well we don't want to do weeklys we'll go um you know like a a couple weeks out month out so the 360 calls here let's see um let just I'm just going to go out one more one more stretch here okay so what we want to see um we've got $175 by $11 at 345 350 3 355 360 so our 360 call right now is trading at $5 $5.80 but let's just call it $5 if the underlying asset if the price goes up to 360 then this is going to go from $5 to approximately $11 uh a contract which means this is going to go up 100% the underlying asset only went up $10 a share it's not even a 10% return but this went up 100% That's The Power of option contracts but if this drops down to you know 330 or something like that this is going to go this is basically going to go to zero it'll be worth worthless so trading options uh I is is definitely going to require more active management and it's taking on more risk and the question for you as a Trader is what is the return that you're trying to get how much risk are you willing to take and how much time do you want to dedicate to studying the market so the if basically if you want to spend almost no time then that that's where you find something you can buy you park your money in it and you walk away and you don't look at it for a while even these stocks like your Nvidia uh your caterpillars your Netflix these are going to be stocks that you're going to want to NE definitely set a stop on you want to make sure you're managing your risk you don't want to just hold something that's up 50% over the last year and just let it ride because it could it could turn around it could start to roll over if you really want to go with super super low risk then you're just looking at the putting your money into an ETF but you're going to sacrifice the return so this is that Spectrum I would say where um as a Trader it's risk and return right so as you increase your it doesn't matter which side's on but as you increase your risk your return um your return potential can go up if you're day trading this is where you can see 400% in one day that's huge if you're trading options you know that are a little bit risky this is where you could see again anywhere from you know 100 to 1,000% or more this is big but the risk is high and then you have down here which would be like putting your money in the checking account now you don't want to do this most likely because you already understand that if you put your money here it's not even keeping up with inflation so you have to take some degree of risk now you could put your money into a treasury bond at you know 4% or 5% something like that there's some that are 7% shorter term so you could do that that gets you a little bit higher again on the $1,000 account 7% That's only $70 for a whole year right $70 for a whole year it's not going to move the needle so when you've got these smaller accounts this is when you're going to be more speculative now if you're someone that's got a bigger account you've got 25 $30,000 you've got more money to work with so you can afford to hopefully take a little bit more risk and you should be rewarded for that risk that you're taking but obviously you have to study and you've got to take your time this is the thing that I'll remind you there is a huge amount of potential in the market but you have to work for it it's not going to come easily you've got to work for it but if you're willing to work hard for it then you know this profit is out here it's it's it's yours for the taking but you've got to work for it okay so back to our um list here so I'm not going to go through um every single stock that's on the list but my process this is how I create the watch list so what I'm essentially looking for on this list are the stocks that present to me as being um the strongest and they're going to present that way by showing that they've got the biggest range so I another way that I can sort this is by looking at the highest volume when I look at the highest volume stocks these are going to show me the ones that are the most liquid most liquid means it's very easy to get in and out and that's also going to mean they have a lot of um volume most likely in the options contracts so Amazon very liquid stock but another stock where you can see these gaps on the daily chart formed uh most likely by earnings events so some gaps but household name strong stock AMD um this is a stock that has been quite strong as well um you can see in this instance we might be able to look at this and say hm okay we could have support down in this area so I would say AMD is one that we could add to our uh list as well here so we're going to add AMD um Amazon I would add it um I think we'd be able to find again it's on the watch list which means means we generally like it and we start once we get into the section where we're going to talk about entries we start saying this is the area where I think I can afford buying it based on my risk reward ratio so this class is multiart right now we're talking first just about um finding the stocks and creating the watch list so what else do we have we had um mu this one um let's see what's the price of it now $93 a share so that one's coming up a little bit TSM lot tech stocks on here Oracle see now Oracle has this big gap I don't really like that um the big gaps that's going to be too much risk um for me mu though that was okay so uh that one would be fine to add so we'll put a couple more stocks on this list and then we'll get into the process of um where I show you sort of the technical component of finding your entry okay so let's see so we had mu this is an energy company here NRG so going to disregard that ovv disregard that PSX disregard that these are energy stocks um the fact is I'm clicking on there I think it's going to go here PSX the fact is there have been times where energy has been a strong sector but it it is definitely subject to politics and to International um you know foreign relations and stuff like that so there's a bit more volatility there GE General Electric this is not a stock you would typically think of as being a big uh a big mover but it actually has been doing really well it's got some nice momentum so this is one that I would definitely consider this is a nice return so GE we'll put that on the list again we're we're looking at stocks here that I think I can uh manage my risk on for longer term holds these are not short trades these are stocks I'm comfortable holding for days weeks months uh maybe years Dell unfortunately with that Gap up and and selling off that's going to be tough um MPC Marathon petroleum that's out IBM this one um Tech of course uh bigger Gap here probably going to leave that one alone for right now BST utilities I'm going to leave that utilities alone so I think we've done a pretty good job here um creating a list now two four five six 7 that's fine but what we can see is that these are pretty predominantly on the tech side uh caterpillar is an outlier but that's fine uh from the dividend position let's see um the are either don't return a dividend or they return a fairly low dividend no surprise there I usually like to look at the dividend growth over the last three years 5 years and 10 years uh this is not autop populating so I'll take that out um some of these are not populating free cash flow I do like to look at that negative free cash flow on mu the best free cash flow is on um Microsoft so free cash flow something worth looking at these are some of the more technical components again the these are well these are fundamental but they're technical in they're sort of detailed in nature is what I really mean Microsoft also however has a lot of debt and so does Amazon uh nonetheless and you can look at the debt to shareholder um equity ratio but uh nonetheless I think this is a good starting point and we're going to now focus on looking at the chart okay so when we pull up the chart on these and we'll start at the top of our list now with Nvidia all right so we've got Nvidia at the top right here so when it comes to looking for an entry I said that I had really two goals here to show you my system of how to find the strongest stocks and then number two where to buy okay so when it comes to where to buy I'm going to start drawing some trend lines this is technical analysis I typically will draw a line uh where I connect the a recent pullback like right in here and I connect right in here so now this is showing a ascending support trend line truthfully it's not easy to draw many of them because it's been so strong um this could be a resistance line in this area but it's not as well defined as some of the others that you may see me draw on some of the new some of the other charts that we'll look at this is a little bit unusual here um it's such a steep trend line but it seems like it was support on the stock right in this area and then became a little bit of resistance in here not able to really hold above it super well so this is a stock where we have um this sort of uh support area here that's a little ways away and a resistance area here so on this I would probably say since this candle bounced down here off of the blue 20 moving average that the 20 moving average would be a spot that I would start to be interested and I would consider this to be approximately my Max loss on the position so that means entries would be around 828 and stop would be down in this area at that time the stop would be moving up it would start at about 760 and that it would be at that moment if we came down to that level today but this support level is moving up so the longer I can wait to get in the better the closer I could get to being in right off support here at around 8:30 potentially with a stop as close as 8:30 if that was if we wait and pull back all the way till here then I could be getting in here off the 20 moving average approximately and off of ascending support so what I would say is I'm going to start to be interested in this stock right now at about 828 now there's a couple things I could do I could actually go into my live trading account and I could say all right right Nvidia Nvidia right here I'm interested in buying this at um 828 and I could start with not 5,000 shares but just uh 10 shares something like that something small just to break the ice and that would be a fine way to break the ice and get in now if I was willing to buy up to 100 shares if I wanted to buy 100 shares of this I could do something a little bit a little fancy and I could go out here let's see look at the strike price I'm going to go further out we're going to look this is an this would be an options trade um yeah see we could go a little ways out at $8 uh sorry at $830 right here what I could do and this this would be this would be risky because it would require me to be able to buy 100 shares so realistically for most small account Traders this might be a little too expensive ensive but what you could do um is you could sell you could sell one contract here at um the price of approximately 34 and when you do that right here what it's going to do is it's going to earn you $3,400 of profit you will earn $3,400 of profit immediately when you press the sell button but you will be obligated to buy 100 shares of the stock at8 uh $830 a share this is called called a cash secured put I teach this more in my options trading class it's a little complicated um anyways it's a strategy that you can use when you want to set a buy order when when essentially you're saying exactly as I am right now that I would love to buy this at 828 and if it comes down to that level I will buy it at that price but you are committing yourself you are obligating yourself to do that and it is going to tie up buying power to do it quite a bit of buying power as you can see right so you know a th000 shares of this would be $830,000 10000 shares is 83,000 so it is tying up quite a little quite a lot of buying power because the minimum you could do is 100 uh one contract with which is 100 shares okay so for most of you trading with small share size on something like this um you would just put your buy order at 828 you would set it you would forget it and you would say well not forget it you keep an eye on it but you would know that that's a spot where you want to buy okay next one down uh Microsoft so on Microsoft again we want to get in as close to support as possible the reason we want to do that is because we want to get in and we want to our Max loss basically as close to our entry as we can that way if we get in down here near support of this blue line and it breaks and it starts selling off we're not going to hold it on this whole pullback we're just going to get in and we're going to set a Max loss on the position right underneath support sometimes a stock will test support but as long as it closes and holds above it then we're fine so in this case on Microsoft the support level is uh down here at about 408 okay so the current price is 416 so similarly I could say all right I'm interested in this at about 408 I could go and uh put out the order to buy you know however many shares I want so this one wouldn't be the options TR uh tra options chain um I could go over here let's see make this bigger um go to active Trader and I could just say uh msft and then I scroll up here scroll down till I find my order or I could just click here let's see oh this is on instant buy I got to turn that off auto send so let it pull up the order and then I would type it in 406 406 something like that again not going to do that many shares could do 10 shares something like that okay all right so 10 shares set the order Let It Go and then you'll have your order in there that you can manage so you can always go into your orders working orders filled orders and you can see the orders they're currently pending now this is an account that I'm not really trading in right now this is I have it set up but I'm waiting for the move over to uh Charles Schwab okay so this is uh Microsoft again looking to buy as close to support levels as possible the levels that I'm looking at will be based on the position of the moving average the 20 and the position of any ascending support level that I'm able to draw caterpillar we'll do the same thing here we're going to pull up caterpillar and on this one uh right so we've got entry entry uh support support so here again right around this level is support that would be the safest place to be a buyer now some people are going to say well you know this thing is going to go all this way without me and if it does that it's fine I wouldn't have been able to manage my Risk by getting in at the very top because my my stop is too far away I ultimately want to keep my losses as small as possible I will have losses but I want to keep them small so my entry on this that feels safe is going to be around 334 so that's the price I'm going to watch and I'm going to have to wait for it to come to my level this is probably one of the most important things is being patient for your entries now there is a saying that it's more important to be in the market than just be sitting in cash so it's it's difficult to time the market precisely you could have The Misfortune that the day you get in the overall Market has a big selloff and your position goes down or that the market is very strong for weeks and weeks and weeks and you're not able to get in so there are really two ways that you can address this number one is you just simply accept it and and you say well regardless of that I need to manage my risk on my entries and I want to be really very much a sniper on getting it at the exact right spot setting my stop loss and then waiting until it comes up now the nice thing with a stop loss is that it's an order you set with your broker where it'll sell the position for you at your predetermined level of risk so you say I want to take this position but I only want to risk 100 bucks you get in you set it and boom now if you bought this stock right up here you have a much higher likelihood of getting your stop loss triggered because it's so extended it could easily pull back but then a week later it continues to go higher so it's not a good idea to just buy at the high and set the stop anyways it's a better idea to buy closer to support and to set your stop just below that so that's the smart way to do it that way you can afford to be in while it's jumping around a little bit and then you're able to participate in that next move to the upside now the the second way to deal with this issue of not being in the market is to do what's called cost averaging which instead of buying all 10 shares at once you would buy one share this week buy one more share next week one more share the week after and then regardless of you know maybe the stock goes up a little bit or down a little bit in the next couple weeks you've moved yourself in slowly and then your average price will be the average over you know 10 weeks of accumulating that is a fine way to do it as long as you really want to hold this stock for a long time if you want to hold a stock until it you know for like a year or two years then that's fine or longer but if you're wanting to take a position where you get in and you know as soon as it goes up here you're going to take a little profit out then you need to be a bit more calculated with your entry so at the end of the day it depends on how much you love the stock okay all right so we I would continue to do this for all of the stocks are on my watch list AMD against support around here I drew this line by connecting uh the lows down here right usually when you connect a couple of them the others start to kind of line up so I connect these up uh if you want to learn more about my Ultimate Guide to technical analysis I have another episode specifically dedicated to that where I get into a lot more detail so if this some of this is over your head don't worry there's more to learn um so AMD entry would be down here around 178 179 Amazon entry on this this one right so this one was a little tricky though because of the gaps now there might be some where well let's see that's an awfully steep line a steeper line like that it's easier for it to break so we are kind of right at it right now uh this might be the only one that it could be worth considering an entry around 174 but with a tight stop acknowledging that because the support line is relatively steep it does have a higher likelihood of breaking um this is also a stock where your you've got 9 billion share float the the number of shares that have been sold is really really high so your expectation of well what is a profit Target well jeez it's only 180 right to break through the high maybe 185 so it's only $9 a share so on a n on a you know a 10 share position it's only $90 to $100 it's not a lot um on 100 shares you know it's close to 90000 to a th000 so it just depends on how much money you can put into that trade uh Amazon's going to be a little bit of a slower one mu this one again a little tricky and something I don't usually like doing is trying to draw a line like this where it breaks below and is back above so I don't see a really obvious line on this right now so again this would be a super steep one don't love it probably wouldn't be my top for right now but you know it is holding around the 20 at the moment which is this blue line so as long as it can hold that level the low was $90 so I could take an entry with a stop at 90 I'd be risking about $3 a share so with 100 shares that'd be $300 of risk I always want the potential to make uh at least twice whatever I'm risking so I need to be able to make 600 which means my target would be uh back up towards 100 that's not uh out of this world as an expectation I think it could be done so that that might work so now you should have a good understanding of how to build a watch list and where to look for your entries we're typically going to be looking for areas of support where we can have the least amount of risk possible acknowledging of course that trading and investing carry risk but we want to minimize that risk we want to be in a strong stock that has the potential to keep going higher and we want to be able to participate in that upside now I think the best way to start investing is just to break the ice and to take your first position even if it's just one share because what it's going to do is it's going to force you to learn a lot of the mechanics about how to actually press the buy button how to press the sell button how to enter your stop order and a lot of it is is very clear but you've got to go through sort of the motion of doing it and the best way to do it is with really small share size so the amount of money at risk isn't significant this is the process of converting sort of the knowledge that you're gaining in a class like this into the actual skill of being able to do it yourself and share it with other people that you know now I want to differentiate um the criteria that I use for finding the best stocks to trade between investing on the left and active trading on the right so as I said at the beginning of this episode I want to share with you my system for finding the very best stocks to trade both as an investor but also as an active Trader so as an active Trader remember what I'm looking for is vol ility I want to see something that's going crazy that's moving like in a really big way and I'll show you a couple examples of what that looks like so you better understand um how this is going to appear on a chart okay so here's some case studies this is an example of a stock that um you look at the chart and you'll see that this made a a very significant move the stock went from a low of about $7 a share right here up to $11 a share this is a really solid move I mean look it's not 100% in one day but it's a big move for me it was enough to lock up $9,888 of total profit okay so that's great this one APM the stock went up over 100% in one day this was a little bit of a bigger move the previous day was trading at like $150 and it squeezed up all the way to $18 a share okay that's huge volatility that's what we like so this is the type of chart where you know you could be looking at this and be like oh that looks like you know Nvidia but this is a chart that took place over the course of just two hours that's a huge move for two hours so for this one locked up $44,000 of profit aisp this was another one a stock that had news the daily chart all of a sudden out of nowhere it's like blasted off it had you can see really dramatic pulled back popped back up not the type of chart I would look at for a long-term investment but for a trade I'm happy to consider it and boom $177,000 of profit that is terrific okay so now you see a couple examples of what that looks like so what I'm looking for from a sort of technical perspective with an act for for a stock to consider for active trading float with investing we're looking for 200 million share float or higher 500 million usually higher as well less than 20 million is what I look for for active trading so the reason that float goes way way way down is because we want to see the stocks have the potential to make those huge moves and just as an example of um some of these stocks we could pull up let's see our finis here and we could just um let's see maybe we I'll just um open a new window here I'll just copy paste this here and we'll just do a new screener um so all we're going to do here is look at the shares outstanding of under a million I mean we could do under 20 million but I could do under 5 million and then if we look at some of these um we're going to see some pretty crazy moves so uh under 5 million oh that's interesting um so some of these are very very expensive let's see maybe what's the best way to view this maybe this is okay well some of these are kind of cheap so 46 cents $32 I'm going to bring this down to under a million just to get some of the really juicy ones just to show you for example so apvo this is a day had some really big volatility this is a day went from this stock went up a lot this one's been moving Gan that one's been moving so you're going to see a lot of these sort of big candles just volatile stuff now again as an active Trader we would love a day where a stock went from a low of two $2.50 up to 12 even if it doesn't hold up that whole day and I think this is also a good example where you're seeing these are red candles on these little charts so a lot of these stocks they made a really big move like aisp or qrx but they may not have all held up super well now this one's doing okay but qrx this one came back down on the daily it doesn't change the fact that on this day the stock had 25 million shares of volume and at one point had gone from a low of $2.69 all the way up to a high of well over $6 you that's over 100% in one day so what that means is we've got volatility and it goes both ways they can go up and they can come back down so number one criteria I want to look at floats that are less than 20 million shares and I'm going to prioritize the lowest ones higher because I know those are the ones where we're going to see some of the biggest moves price it's got to be under 20 I don't want to trade high price stocks I want to trade the low price stocks because what I know is for a stock to go up 100% it happens a lot more frequently with like A2 $3 stock than it does with a 30 $40 stock I mean it's just sort of the simple math that if a stock goes from $2 to $10 it's up several hundred% but it only went up $8 a share in contrast for a $30 stock to go up 500% it's got to go up over $100 a share it's a huge move that just doesn't happen as often so and then performance for investing I'm looking at and this is Trend based both of these are trend-based this is a this is for trend-based trading where we're looking for something that's moving quickly and we're looking to jump on that Trend so for investing we're looking for up 50% over the last year and above the 20 SMA for active trading I'm looking for over 50% in one day and some of you might think geez well by the time it's up 50% in one day haven't you missed the bulk of the move and I would argue that uh no not necessarily because if we look at some of these trades here um on let's see which one was this aisp $177,000 of profit I got in this right here at $3 uh sorry what was it $7 a share $7 gosh that's so small uh yeah $7 a share and so at that point it was already up you know probably 40% from the previous day it already made a huge move but I bought here and it went higher and where did I set my stop well look at this blue ascending support line so I bought as it was breaking over that line and I set my stop right below it I said as long as it holds this line I'm happy to keep holding so while I'm using finis for building watch list for long-term investing for active trading and for day trading I need scanners that are giving me realtime data so I have a development team that I hired that built out this platform for me and what we're doing is we're searching the market in real time for stocks that meet these criteria but not only are they meeting these criteria the stocks are also making a new high at that very second so when a stock pops up and is making five new highs in a row it's that means the stock is moving higher and if it has that low float below 20 million shares if it's priced under 20 if the performance is already up 40 or 50% on the day then what I'm doing is I'm checking to figure out why the stock is moving up odds are it has breaking news so as an active Trader the Catalyst that creat creates the volatility that I thrive on are breaking news headlines so a stock could have FDA approvals clinical trial results for pharmaceutical companies or could have quarterly or annual earnings any of these types of headlines can give the volatility That We crave on these low price stocks so these scanners are searching the whole Market in real time for stocks that meet that criteria and this is a scanner that is actually producing audio alerts as well so I could click on this stock you know for instance BNA aai and I could pull it up and I could say all right well you know what's the story with this stock it's clearly moving higher and maybe in this case I wouldn't take a trade because I don't see an obvious chart pattern but in the case of uh another stock I might pull it up and I look at the pattern and I say all right here's something where I feel like I can manage my risk now this one's a little bit on the cheaper side but you've got some ascending support in these areas so are there some traders that bought this pullback right here I'm sure there are because you could draw this support line just like this so here's something really cool once you get good at technical analysis at reading stock charts if you're doing it for investing you're doing it for daily analysis that's fine you can apply that to the intraday time frames because the patterns are Universal the language is universal the patterns you'll see on the daily you'll see them on the intraday chart and so likewise a Trader who's really good at intraday trading it's very easy for us to analyze the daily chart of a stock the big biggest challenge for Traders like myself who are trained to be active traders to get in to get out the hardest thing for us is to take long positions and just hold it there's two issues one we're used to trading lower price stocks but these are not the safest stocks to buy and hold because a lot of these stocks their balance sheet isn't that great the company's carrying a lot of debt they need to raise money and when the price comes up they use that as an opportunity to sell more shares on the market and then the price goes back down so small cap look price stocks are not usually great for long-term investing so for us we then have to focus on these higher price stocks that are a little outside of our wheelhouse a little outside of what we're typically comfortable with the Nvidia the Teslas you know the Netflix and things like that the challenge with this sort of transition between day trading and active investing is that uh we tend to overtrade we don't like to just sort of sit and hold it because we're already sitting here all day watching our active day trades so then we keep an eye on sort of the trades we're holding longterm and then we think oh this looks like it's a good drop I should just sell it here so our biggest problem is overtrading so where regardless of where you're at if you're someone who's wanting to come in as an investor and just get started and break the ice everything that you learn you can eventually apply to active trading now if you're someone who's really more interested in active trading but you're wanting to venture a little bit into the longer term you've already built up a skill set that's going to make it easier for you to make that transition so if you guys enjoyed this episode today in this class if you learned something I hope you hit that thumbs up and I hope you subscribe to the channel to see more classes on investing and trading strategy just like this I'll see you for the next upload real soon