[arkyuan]

Hi Guys,
  I want to ask about VRAY. As it shows up on the watchlist few weeks ago. I looked at the technical and it looks like a good stock. It breakout all resistance on July 25 with outstanding volume and the volume contracted. I was thinking enter it on July 31 when the price was 12$ or 11.50$ when it start to rise again but then, it went downhill. I was wondering what is the mistake I made here? should I wait a bit longer?
thanks,
ark,

Simply at $12 it had already moved 81% in just four weeks. The entry point needs to be significantly closer to at least the most recent support, so that your risk reward based on where the stop loss should go has the potential to be at least 1:3 Risk:Reward. So don't try to chase, as even an normal pullback from a swing high is anything up to half of the previous move, so in this stocks case that was a pullback to around $10. And even though the volume has been lower than a few weeks back at the very top on the pullback, it is still significantly higher than the weekly average volume in general, as it has been over 2x the average weekly volume for the last two weeks. So again you'd only want to see it with around average volume or less on a pullback, not 2x.

With breakouts try to look for volatility contraction patterns (VCP) imo, or a cup and handle type pattern, as they are much safer for entries. As remember what you could lose should always be your first consideration in any trade, not what you might win. Lose small always.

I hope that helps.

Hi Isa,
   Thanks for the reply it definitely help me understand how to read the chart. I do have few questions regarding to what you said:
   1. when you said most recent support, you meant support level at 6.63$ on the daily chart?
   
   2. How was the Risk:Reward ratio being calculated? 

   3. I remember you said you won't trade any breakout that is 2x 52 weeks ATR? so this case, which resistance level do you use for the breakout at July 25th? The initial breakout of 7.76$ that was at July 3rd or long term resistance level breakout at 10.64$ ? 
thanks,
ark,

[badcharts]

Hi there everyone, im new to this forum and brand new to the stock market too, i have been reading stans book over the last few weeks. Im 18 years old and hoping to financially secure my self in the stock market in the future, of course i am expecting the losses that every trader encounters and i have proven this on a demo account that i have been using for a few months now (which i have had considerably more losses than gains). Im very intrigued to learn everything there is to know, however to start off i just want to ask quite a bulk of questions if someone is willing to answer them and help me out.

Questions i would like to know:

1) How can i actually see a market trend ?

2) How do i work out profit/ earnings ?

3) When a stock breaks what moving average is the best ? (Eg is it when a stock breaks a 30 day ?)

4) Is an advance-decline line needed & how can i construct one with uk.tradingview.com ?

5) How can i calculate momentum index

6) Do i need high-low differentials

7) How can i construct Mansfield charts with uk.tradingview.com ?

8) How can i construct resistance and support lines ?

9) How do i actually know if the stock that i am trading is in a positive group or negative ?

10) What broker is the best for me to start out with ?

I would really appreciate it if someone took there time to answer these questions, im looking to thrive in the stock market and would love it if i could get some help on the way.

Many thanks
Reece Webb

Hi Reece,

Welcome! All excellent questions and a great place to get feedback on them is here!

One thing for sure, even if some label Stan's framework as "simple", I see it as multi layered, easy to learn, but hard to master. Human emotions always getting in the way of applying it correctly (and that is when you don't forget crucial parts of it)!

Have fun discovering, learning and getting some experience using it. The best part is when you'll come back to it years later and notice new things you hadn't before, that is when you'll truly appreciate this trend following framework!

Regards,

Patrick

[isatrader]

   Thanks for the reply it definitely help me understand how to read the chart. I do have few questions regarding to what you said:
   1. when you said most recent support, you meant support level at 6.63$ on the daily chart?
   
   2. How was the Risk:Reward ratio being calculated? 

   3. I remember you said you won't trade any breakout that is 2x 52 weeks ATR? so this case, which resistance level do you use for the breakout at July 25th? The initial breakout of 7.76$ that was at July 3rd or long term resistance level breakout at 10.64$ ? 
thanks,
ark,

1. Yes the most recent weekly swing low at $6.63

2. You determine where the investor or trader method stop loss should go based on the methods requirements from the book. That's your 1x risk amount from the entry, and then the target should be at least 3x that distance from the entry the other way. i.e. so there shouldn't be any resistance from the last few years within that target range. I personally like to use 1:5 RR on my trades though. 1:3 would be a minimum.

3. I use the ATR for calculating position size and also as a guide for stop loss distance. So for me the 2x the 52 week ATR amount of the stock is the maxiumum that I will risk in a trade. So in this case the 52 week was around $0.95, so 2x was $1.9 from the entry point.
The lower breakout point was the close above the $8.49 May high, in July at $8.93. So 8.93 minus 1.9 = $7.03 maximum stop loss distance, which is above the $6.63 swing low, but is above the 30 week MA, and the 50 day MA. So a possible in terms of risk there, if you were willing to get in before the move past near term resistance, as you wouldn't hold if it fell back below the 30 week MA anyway.
The higher breakout point above $10.64, if you'd decided to get in close to that it, then the 30 week MA was at $8 then, so that's almost 3x the 52 week ATR past where I'd be considering a minimum for a stop loss, so there's no entry with my rules personally when it's that far away from it's stop position until it makes it's next decent pullback/consolidation after that, which it's doing now, as you need to establish where the nearest support exists first after such a big move in a short time, so that you can determine whether it's ok to move to new higher stop loss position.

[isatrader]

Hi there everyone, im new to this forum and brand new to the stock market too, i have been reading stans book over the last few weeks. Im 18 years old and hoping to financially secure my self in the stock market in the future, of course i am expecting the losses that every trader encounters and i have proven this on a demo account that i have been using for a few months now (which i have had considerably more losses than gains). Im very intrigued to learn everything there is to know, however to start off i just want to ask quite a bulk of questions if someone is willing to answer them and help me out.

Questions i would like to know:

1) How can i actually see a market trend ?
A) Learn to understand the various market breadth indicators that make up the 'Weight of Evidence' approach - like the Advance Decline line, New Highs New Lows, Bullish Percent Index etc. Read Chapter 8 of the book to start

2) How do i work out profit/ earnings ?
A) You don't have to. Weinstein's method is 100% technical. Learn to read the charts and the volume data. Don't get bogged down in the fundamentals that the news shows talk about. The stock market is predictive, so by the time the fundamental data is realised to the public, it's normally already in the stock price to some degree.

3) When a stock breaks what moving average is the best ? (Eg is it when a stock breaks a 30 day ?)
A) We use the 30 week Moving Average as the main MA in the method, and also the 10 week MA. We don't trade on breaks of moving averages, but instead on breakouts above levels of resistance.

4) Is an advance-decline line needed & how can i construct one with uk.tradingview.com ?
A) It's part of the market breadth tools that you need to learn in order to be able to determine the market Stage. Is very important in the method.

5) How can i calculate momentum index
A) It's the 200-day moving average of the daily advance-decline figures. It's a very long term indicator though, so should just make up part of your breadth indicators for your weight of evidence.

6) Do i need high-low differentials
A) Yep, again part of the weight of evidence

7) How can i construct Mansfield charts with uk.tradingview.com ?
A) badcharts on here is using them on that platform, so maybe private message him to find out what the indicator is called on there

8) How can i construct resistance and support lines ?
A) These are just lines, and normally your software will have these

9) How do i actually know if the stock that i am trading is in a positive group or negative ?
A) You can look at the sector chart and workout it's stage, or you can look at direct competitors of the stock and work their stages.

10) What broker is the best for me to start out with ?
A) Hard to say. I've been doing this for over 10 years now, and still switching around. Basically the general answer is the one that has the lowest fees and for the market that you want to trade. This takes trial and error, as the majority of the UK ones overcharge. So personally I've moved to an overseas account this year with Degiro, as they are no frills and seem reasonable so far

I would really appreciate it if someone took there time to answer these questions, im looking to thrive in the stock market and would love it if i could get some help on the way.

Many thanks
Reece Webb

Generally the best advice I can give is to setup you charts in a consistent way, and practive daily learning to identify the Stages. As once you can identify the Stage of stock on the weekly chart at just a glance, you'll be miles ahead of most. As it will keep you out of the bad ones.

I hope that helps

[Reece Webb]

Thanks a lot for the help, i have been busy analysing charts for a while now and seen that i have made a few mistakes and im unsure where i am going wrong.

Also i am unable to send any messages, im unsure why, i cant even view my inbox or my outbox.

Thanks

[isatrader]

Thanks a lot for the help, i have been busy analysing charts for a while now and seen that i have made a few mistakes and im unsure where i am going wrong.

Also i am unable to send any messages, im unsure why, i cant even view my inbox or my outbox.

Thanks

Hi Reece, I don't allow new users to send private messages until they are trusted members of the site as this is my personal website not a general forum. it's just set up as a forum to make it easier for people to talk about the method. So please ask any questions in this Beginners Questions like you did previously.

[Reece Webb]

Oh strange, before i was allowed to send messages and build quite a good bond with @badcharts and we were messaging daily, he was helping me a lot with my charts etc, would be nice if i could still message him.

I entered TIG on the breakout at 0.57, im struggling to see where i went wrong with it and how i can avoid this mistake again next time.

[isatrader]

Oh strange, before i was allowed to send messages and build quite a good bond with @badcharts and we were messaging daily, he was helping me a lot with my charts etc, would be nice if i could still message him.

I entered TIG on the breakout at 0.57, im struggling to see where i went wrong with it and how i can avoid this mistake again next time.

Yeah, I changed it for new users, as I wanted to encourage people to talk on the site, so it benefits others that read it. And discourage spammers etc.

I've updated your membership level, so you should be able to message now.