Stock Trading Basics Analysis Essay

Course Curriculum

Session 01 – Beginner Stock Market Course Overview

Section 1: Analyze! (for Opportunities)

Session 02 – Two Parts of Stock Market Analysis
Session 03 – Fundamental Analysis: What Stocks to Buy?
Session 04 – Getting Started with Broker Simulator Practice Software
Session 05 – Technical Analysis: Understanding How Stock Prices Move

Section 2: Plan! (how to Buy & Sell)

Session 06 – When to Buy and Sell Stocks? Use Trendlines
Session 07 – How to Buy Stocks
Session 08 – How to Sell Stocks

Section 3: Execute! (your plan)

Session 09 – How to Buy & Sell Stocks with Online Brokers
Session 10 – How to Manage & Monitor Stocks You Own
Session 11 – How to Make Money Consistently with Betting Strategy, Odds.

 

“How do we make the stock market so simple everyone can learn?”

Anyone can learn the stock market, how to invest, and how to trade.  It is not hard.  We’ve seen people from all walks of life and of all ages make money consistently in the stock market.  The problem is the news and complicated terminology that confuses everyone.

We wanted to teach the stock market as straightforward as it really is, without all the noise.

Finally, we came up with this Stock Market Basics Course for Beginners.

If you never learn anything else about the stock market ever again, this first course is enough. You can apply these skills not just for stocks but bonds, mutual funds, commodities like gold and oil, and even real estate! Any market really.

How can you learn all of this?

By keeping it simple, we’ve thrown out everything except the steps you absolutely have to do. We reveal the daily routines of professional investors and traders that they can’t do without.  Everything else from the news to stock tips from friends is a waste of time.

We help you focus so you can spend as little time as possible and make as much money as possible with these 3 steps.

3 Steps

  • ANALYZE the market for opportunities and dangers – connect the dots. So easy you can teach kids
  • PLAN a strategy. What do you do if things go your way? What if things go wrong?
  • EXECUTE your plan.

Every course we teach from here on out is based on this course. This course is so important we want everyone to take it. Literally everyone.

Help your friends and family and invite them to enroll in this course with you. Enrolling gets you anytime access and extra materials such as practice exercises, cheat sheets, reading lists, and certificates of completion.

Share your progress with the hashtag #sharethewealth

 

COURSE MATERIAL

APPS

free thinkorswim Practice Software

**Requires Free TD Ameritrade Account.  No deposits or minimums required. Get it here.

 

BOOKS


More on Social Media

Youtube: http://youtube.com/stocksessions
Facebook: http://facebook.com/stocksessions
Twitter: http://twitter.com/stocksessions
Google+: http://plus.google.com/stocksessions

“The Complete Trading Course: Price Patterns, Strategies, Setups, and Execution Tactics” by Corey Rosenbloom


“Fire Your Stock Analyst!: Analyzing Stocks On Your Own (2nd Edition)” by Harry Domash


“Technical Analysis Using Multiple Timeframes” by Brian Shannon


Hindsight may be 20/20, but with some studying, your stockpicking foresight can get pretty good, too.

X

Foreseeing the move by a stock with terrific fundamentals, a No. 1 ranking in its industry, and loads of fund sponsorship, before it happens is crucial. If such a stock breaks out with force, then you're more likely to grab shares at the proper buy point.

Think of the "buy point" as the ground floor of a potential elevator-like advance to new highs. It's not enough to just buy the right stock. You have to buy the right stock in the right way at the right time.

Those who read Investor's Corner regularly have a strong command of one of the most important patterns in growth investing: the cup with handle. The pattern allows you to be consistent in your buying. You're essentially entering a stock only when it's reached the point in which it can rise fast in a relatively short time frame.

Human nature hasn't changed. Greed and fear still drive the market. So the cup with handle and other useful patterns of investor behavior will continue to pop up among IBD's wide span of features and screens designed to help you find and buy great stocks at the right time.

Make a habit of going through the stocks presented in IBD 50, Big Cap 20, Stock Spotlight, Sector Leaders, IPO Leaders and Stocks Near A Buy Zone. Most of these can be accessed via Stock Lists on the home page at Investors.com. (See the Income Investor columns by clicking on "Research" on the main navigation bar on the home page.)

Are you completely new to chart analysis, or want to bring your skills up a notch? Check out the real-time annotations done in Leaderboard, which debuted in July 2011.

Defining The Buy Point

A buy point is a price level at which a stock is most likely to begin a significant advance. It also points to an area of the chart that offers the least amount of resistance to price progress.

Where that point is depends on the type of base the stock has formed, whether a cup with handle, a cup without handle, a flat base or double bottom.

This is the critical moment. Identifying the correct buy point can make all the difference between a successful investment and a losing trade. And before you buy, always check that the Market Pulse table, updated every day in The Big Picture column, shows the current outlook as "Market in confirmed uptrend."

Let's look first at one of the easiest buy points to spot: one from a cup without handle.

In this type of base, the stock declines as much as 30% to 33% from a recent 52-week or all-time high, then starts to recover in a process that takes at least six weeks to complete. Once the ascent begins, there are no significant pullbacks, or anything that might be considered a handle.

The buy point on this pattern is easy: 10 cents above the peak in the left side of the pattern.

The flat base isn't much different. When the stock recovers and is 10 cents above the base's prior highest point, that's when you jump in.

The Buy Point In A Handle

As the stock approaches new highs — building the right side of the cup pattern — the stock suddenly pulls back moderately in price. This pullback is up to 15% in depth but can be much less. According to IBD research, most handles in the most successful stocks show a drop of no more than 8% to 12% from the handle's highest price.

Also, a good handle will form within the upper half of the base. How can you tell? Sometimes you can see it visually. Maybe the handle began forming when the stock was just a few points below the cup's left-side high.

When it's difficult to tell, what should you do?

Use the midpoint test. Add the highest price and lowest price within the cup, then divide by 2. Do the same with the handle.

If the handle's midpoint is higher than the base's midpoint, a breakout has a better chance of succeeding. The stock has already shown strong demand by climbing off its lows, plowing past prior price levels in which some shareholders had bought and immediately harbored paper losses. As a stock rebounds, these folks eagerly sell and get rid of the stock.

Use the highest level in the handle area and add 10 cents to derive the buy point.

Take Seacoast Banking (SBCF) as an example from 2016. After the Donald Trump presidential election win on Nov. 8, bank stocks took off. Florida-based Seacoast joined the bandwagon with a gusher of a move from Nov. 9 to 14, rising as much as 9% during that time frame and clearing an 18.05 handle buy point on a nine-week cup pattern.

The midpoint of the cup was 16.83 (15.85 + 17.80 divided by 2). The handle's midpoint of 17.38 (16.82 + 17.95 divided by 2) was higher, so it passed. As seen in Seacoast's case, sometimes, the handle may begin forming slightly above the cup's left-side high.

The double-bottom base is a bit different. The stock forms a cup pattern, but makes another correction before it reaches new highs. The second bottom usually is lower than the first.

The pattern has a W-shape. The buy point is the middle intraday peak of the W-shape plus 10 cents. Keep in mind that a handle may also form, presenting an alternative entry.

No matter what type of base it is, the stock should pass its buy point in heavy volume. That gives you the confidence big investors are buying as well.

How much volume should you expect? Trading should swell at least 40% above the stock's 50-day average volume.

If you're watching a stock during the trading session and aren't sure if volume is so strong, check the stock quotes at Investors.com. The volume percentage change is continually calculated.

Nursing care facility operator VistaCare went public in December 2002 and by April 2003, it had formed a cup base with a high handle (1). The highest price in the handle was 19.

Within the handle, the stock fell 11.6%, in range with the typical handle on a cup base during a bull market. Meanwhile, stocks were taking off and leading growth names were bursting out of bases after the market followed through on March 17, 2003, Day 4 of a new rally attempt. On that day, the Nasdaq soared 3.9% in higher turnover; the S&P 500 gushed 3.5% higher.

VistaCare broke out on April 28, 2003, in heavy volume, then held above the 19.10 buy point two weeks later during a pullback that became a bullish reversal (2).

On the breakout day, VistaCare showed decent ratings  on IBD Stock Checkup despite being such a young new public company: a 72 Composite, 80 EPS, 78 RS and A- for Accumulation/Distribution.

Investors who bought at the correct buy point stood to more than double their money by year's end.

(A version of this column was originally published in the April 16, 2010, edition of IBD. VistaCare was acquired by Odyssey HealthCare in March 2008. Also, please follow Saito-Chung on Twitter at @IBD_DChung for additional commentary on breakouts, top growth companies, and financial markets.)

RELATED:

Inside IBD 50: What To Do When Your Stock Has A Frightening Accumulation/Distribution Grade

How To Trade Smart: Invest Time In The Cup-With-Handle Pattern

How To Read Charts Like A Pro, Part I: Focus On Daily Chart? Weekly? No, Both

How To Read Charts Like A Pro, Part II: Check The Time A Stock Spends Below The 10-Week Moving Average

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *