How to read stock charts as a trader and investor with Ruben Leija

There's so much to learn just about the basics of stocks, but while that is happening I'm also seeing passionate people making daily bets based on stats.

There's a long way to go before I get comfortable with this, but today I'm going to go over a recorded webinar one of my colleagues took, and he's the one passionately talking about bets every day.

I'm at least going to try and make sense of something to start with.

Rough notes (some time first person, sometimes 3rd person, need to put images in )

How to read stocks as a trader and investor with Ruben Leija

Short term < 1 year

Long term > 1 year

The stock market will tell you, not your boss / not the guru on twitter / or your neighbor

5 indicators:

5 day exponential moving average - EMA(5) - Related to more recent pricing

20 day moving average: MA(20) - average number of days and price of stock

200 day moving average MA(200)

Relative strength index : RSI set to 14 days - Measure the speed and change of price movements

RSI over 70 = stock is overbought and you should SELL

RSI under 30 = stock is oversold and you should BUY

Moving average convergence divergence: MAC-D - Used to show changes in strength, momentum and direction (early warning signs)

Swing trade

Long term investment

Some indicators that parallel with RSI - pandemic, CPI, inflation - good to buy - Netflix. Zillow

Other things that can affect predictability - job report, government talking, feds

Sites to use to read charts

He’s used fidelity(allows fractional) and webull (no fractions - but great live charting )

Webull customer service is really good - phone - real person 

Webull 4 - really good app

Lots of stuff going on in webull - but once u get hang of it, easy.

Crypto - coinbase

He advises against robin hood

 

Stockcharts.com (free )

Look at daily not weekly

Searched for Zillow

When looking to do swing trade - 

What’s the current price 

Set up the configurations for EMA, MA, RSI, 

Simple moving average - 20

200

EMA = 5

RSI - 14

MAC-D - 12.69

At the time Zillow was at 109.28 and he wants to first see what experts say

Tipranks.com - lot of people analyzing data

Search for Zillow

Profit margin - 20-30% , ideally 30% - don’t waste time below 30 

Analysts are saying 185 could be Zillow price, and the profit margin could be 69% 

It feels like a good move - but I’m going back to stock charts to check the stats I told earlier

Analyst’s ranking is listed on tipranks - so you’re looking at both fundamentals and charts - news and trends -

Analyst use EPS / research 

First the RSI:

RSI on top 

42.57 - it has been oversold

Right after RSI is hot , you will see a parallel drop

If you are doing long term, if you see a dip you buy, if you see another dip, you buy a little more.

But if you are a sing trader - you want something predictable 

Tip ranks, profit, RSI (so it can grow to a price I am aiming for)

You can see it moves up , moves down or moves sideways

Nightmare in Zillow but today looks better.

Sideways means good. It can either go up or down. It can catch momentum to go up.

MA - is the candlestick today close above 20 day MA - it’s a good indicator that it’s gonna catch some steam upward

Red candlestick - wait a bit  till it gets green above 20 MA 

If you want to take a risk put a stop loss

Swing trade can be anything under a year - quick buck

3 circles - above 20 day MA

Some red circles when < 20 day MA

Has it touched 185(tip ranks) before ? They touched 200 - this is a good company unless the CEO did something stupid

Two price targets

Right now toying around with 20 day moving average - will add in some 

When it gets above 20 MA, I’ll add more to my position

Wish

Tip ranks - 20.50 - 81% upside

Now the RSI - 55 - 

With this kind of RSI, I won’t wait till 20 - it won’t reach that high. 

Lock profit earlier than 20. Before RSI gets to 70.

11.27/16

2 price targets , one at 20, one at 16

Stop loss limits - depends on your loss tolerance

If u r betting $100 - 10% loss - just 10 bucks

But then when you put $1000 - then make sure your stop loss becomes more important

Where is the candlestick moving?

How long will the candlestick take for it to reach all time high - weeks? Months? ask this question

Greed will kill you

Options - different ball game. These fundamentals I take to options 

Etsy

221.77 , 33.50 upside return - 30% is good

RSI - 44 - under 50 - little bit oversold , may hit the price target

The current candlestick is not > 20MA. No

Toying around - small position

Add more later if needed

Draw lines - 221 and then 210

160 to 210 is a big run - it will hit 70 RSI before price target 2

Webull - you can do charting here too instead of stock charts, write notes

If candlestick red but > MA 20 - intuition - is the trend going down - won’t put too much here 

Don’t wanna mess with that

You can use twitter - John Lipton? - he posted a tiger

Google ETFs - SPY

How different is this from options ?

• Date for expiration 
• Can go to 0 in options
• Depends on options style
• Day trading
• 3 months / month contracts
• Swing options 
• When it hits > 20 Ma, how many days does it take to hit peak
• Contracts - definitely analyze more
• Up to date 
• Look at catalysts
• Read news
• Look at the chart in the end of day
• Don’t get into too many options , may be 2-4
• Sideways - alert
• Tradingview.com
• 20MA crossing over 200 MA
• Plenty of success with just simple metrics

• Play accounts : paper trading in e trade 
• Next topic - how to find stocks