Medium Term Trading At Key Levels


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Video Transcription:

Hello, traders. Welcome to the stock trading and the fourth module short to medium stock trading. In this lesson I’m going to teach you the third strategy of this module, which is a medium-term training strategy at key levels. This means that we are going to be very patient for this strategy to work and we’re only going to trade key levels and hold our positions for days, or until the market tells us to get out. This strategy is going to bring more gains or more profits from your trades, but you are going to have less set-ups than on day-training strategies.

Okay. So, here’s the Twitter four-hour chart. We are going to be using the four-hour chart to find our levels. Now, here’s one way to zoom in. Well, we’re zoomed in on the Twitter chart, and we’re looking at the price of this level, so the 24. , we are going to start by putting on some levels on the horizontal line. We have a very strong level here at the 30, our very strong support and then we have another one here at the 34 level. Okay.

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Now, I don’t want you guys to be filling your charts with levels, because that’s not what’s important here. What’s important here is to look at the overall zones of support and resistance. By looking at the overall zones of support and resistance, we are going to know where buyers and sellers are going to be coming into the market. Now, I don’t want you to start drawing lines on every single support and resistance. I want you to draw lines or horizontal lines on the historic support and resistance levels.

Now, we have the 34 or well around the 3397 level which is the gap opened that hasn’t closed yet, and we have another one here at around the 3628 level. So, let me just draw this one around the 3620 level, that’s fine. Okay. Now, we are going to be using the four-hour charts to draw our levels. And as you can see, we have very clear zone of support than resistance when we were ranging here, and then, well, the gap didn’t open here at the 34 level. I’m sorry if it were to zoomed in. The gap opened here at the 36 level when this four-hour candle closed.

Okay. And then price opened way back down at the 3231 level because Twitter missed its earnings. Now, we are going to also use fundamentals to trade this strategy, well because we are holding our positions for days. We are absolutely immersing the risk of training through earnings and I’m going to tell you something we are never going to trade through earnings. So if you have medium-term position and tomorrow is Twitter earnings, you have to close your position because we don’t front-run earnings unless you have been holding your position for weeks, and you already have scaled out of it.

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Now, because Twitter missed its earnings around here, we are going to look for short positions. I’m going to show two entries on Twitter and I’m going to just pull on the last level, which is this one right here. Okay. At around the 2433. Okay. Now, the forward chart only works…or we are going only using the four-hour chart to spot the levels. Then we are going to jump in the one hour chart. Okay. So, here we are in the one hour chart and as you can see we have the gap here. That hasn’t closed yet, but what we’re looking for is retracement back to these levels. Okay.

We retrace back to these level and for a short opportunity, or a short position. Okay. We retrace here and we see a very clear rejection of this level. So, we are going to open a short position. Okay. A short position, well, we enter the short position around the 2968 level, and we’re going to put our stop-loss above the 30 level. Okay. Remember that when we are…I’m sorry when we are medium-term trading, our stocks are going to be a little bit larger which is fine. Okay.

Now, what we want to do here is, let me just enlarge this so we can look at the entire price action. Now, we are going to be putting our stops around the 3040 level, I’m sorry, because we don’t want to be taken out on spike or on a stop run. Now, that we have the entry right here, we are going to be looking for levels where to get out. So, with a $10,000 account we can short sell 300 shares of Twitter, and because we are risking 61 cents, we are risking $183 on this trade, so it’s basically 2% of our account which is absolutely fine.

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Now, price starts to drop and we take out the previous low which is excellent for us. Then when we take out the previous low, we need look closely at the 28 level, why? Because it’s the next round number, and in stock trading we are going…well in trading overall we are always going to be finding buyers and sellers a round number. So, when we hit the 28 level, you can see that the hourly candle completely breaks through the 28 level and closes below which is excellent for us, and we are holding our trade and looking for the 27 level.

And when we get to the 27 level, we take out our position and we make $2.76 per share, and because we short sold 300 shares we made out of this trade $828 which is almost a 10% increase on our account – so that’s excellent. And this is the first short position or the first position on Twitter that I wanted to show you. Now, you can see with that then we got top and we start to trade in a range around this level, and then we dropped. Well, this is not a very strong setup around this level of resistance because we did find some sellers here but we also find buyers.

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We could have short sold when we broke to the down side, but volume was very thin as you can see so this actually not a very good setup. So we are going to continue and we are going to see what happens next. And remember, we are only using levels for this okay? Why? Because we want to maximize our risk to reward ratios by trading well by sniping our entries thus making out stop-loss a lot tighter.

Okay. So, let’s continue and the level we’re looking at this one, the 24 to 2433 level. Now, we are going to try to take a buy trade here and I’m going to explain you why. Okay. Even though we’re in a down mode, you have to take a look at what happened here. Let me show you this candle very, well on thicker basis. You can see that when we broke with this level very abruptly, but when got to the 21 level, let me just zoom it like that so you can see the actual week of the candle, when we got to the 21 levels we did find institutional buyers here.

Big money stepped in and bought this stock at a 21 level. This was a level that well was very eyed, and this surge in green volume explains the big money here. And you can look at the candle well that came all the way down. Just look at this it broke with the 24 level and dropped $3 okay in one hour, that’s insane. Twitter moves $3 in a much longer period of time. This candle broke through a very important level. And then, well, flushed $3 dollars just to find buyers and closed all the way above this level at above the 25 level.

So this is one or two things, one we could have had a short covering from short positions that were holding from the high 40 levels, I’m sorry the low 40 levels, or this is just a covering from medium short position from these levels right here. In case, buyers stepped in here and the reaction in price is the same. We started to trade up. We made a low then we made a lower low, and broke with the previous high. So, the down movement or the down structure broke, and that’s what’s important here.

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Now that this down structure broke, and this level has been confirmed as support, we are going to look for a long position around this level. And we we’re going to do is we are going to put on a buy at right here. You don’t want to be taking a buy position right at the level, because you want to get filled. So you want buy a…put a buy position or a long position right here around well the 2460 or the 2470 level. Okay. Now, this is your buy the 2470 level and you’re going to put your stop-loss just below this low. So, you are going to be risking around 93 cents per share.

Now, remember that your buy position is here and you haven’t been filled just yet. So, you got filled here and then price came down and tested the level again. Now this is incredible. Just take a look at this. Price was trading in the range and of course you can make money out of this range, but what we’re looking for here is just to take exponential, well to try to take exponential positions at key levels.

So, we get filled and price reaches the same level, and we start to continue to trade up. Now, our first target should be the previous high at the 27 level. Okay. But we broke with this level very abruptly, so what we’re looking at right now is the top of the previous range. Right here. We are looking at these levels for a…to sell the first half of our position. Well, we are around $3.36 in the money and because we made almost $1,000 on the previous short position, we can buy even more shares of Twitter.

And in this case, we bought 400 shares. , 400 shares times 3.36, it’s $1,344 that we have made from this long position, but we’re taking half of it, okay? Why? Because we want to see if price is going to break with this range. Now, this is important. You are going to scale out, so we are going to take half of our positions. We are going to move our stops just below the 26 level. Okay. And why the 26 level? Because it’s the previous consolidation or the previous what seems to be the previous low. Now, we are going to move our stocks right here, so we are going to be locking in around a buck.

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And we are going to take out half of our positions for a $672 win. And we’re going to hold. Okay. Well, price as expected retraces and rejects the previous low here, and the 26…I’m sorry the 27 level which is amazing for us, because now we can ride this puppy up to the next target which will be the 30 level which is the next well support, I’m sorry resistance level that we marked on the four-hour chart, and the 200 shares that we were still riding up made for us about or exactly $1,066 plus the $700 that we made before.

So that’s $1,700 win on this trade which is more than 10% of our account. And of course, if you’re trading CFD’s you can buy even more shares of Twitter. This is how you’re going to be trading the medium-term, okay? You are going to find key levels. You are going to wait for a pullback. You are going to analyze price action, and you are going to be patient.

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