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Stockhaven’s Classroom 5/1/12

Topics include: How to interpret level 2′s on big board stocks, when to use a stop loss order, how to grow a small account, comparing uptrends vs. downtrends and how they can help us make better trading decisions

Tickers reviewed: AMZN, HLF, LQMT, KMAG, AAPL, ICPA, EGT, EVDR, RSRS, SHLD, DEST

(please excuse the technical interruption about mid way thru the video)

Here is a text version of the submitted questions (italics represent Stockhaven’s comments):

how to search stockhaven:

http://www.stockhaven.com/stockhavens-classroom-42512/ (around the 6 minute mark of the video) — please search our site before submitting questions because many of you are submitting questions that have already been answered 

1.) I have watched your video’s about how to read the L2 but am having a hard time using it for big board stocks when they move so quickly.  Can you give any sort of advise?

prior days close

prior days open

prior days high

prior days low

pre market high… pre market low 

more than anything else in trading this simply just takes and experience, literally just staring at the screen and watching and you will begin to build a sense of intuition when it comes to watching level 2 for big boards

also you say it is moving so quickly, is it moving up or down very quickly? if it’s up, then demand is outweighing demand (so you have a “demand spike” going on and you could likely confirm that by looking at the chart) if it’s down then supply is outweighing demand (and you have vise versa going on)

when the action is slow, then you know there isn’t as much supply/demand in one direction or the other

same principles also as far as identifying large orders on bid or ask

2.) When planning a trade for entries and exits, is it best to create your SELL order right away (which is what I do 99% of the time) or put a STOP in instead?

I did watch your video on uses Stops and Stop Limits and entries, exits and noticed that you put your SELL in as soon as you buy the stock

When is the best time to use a STOP?

when you can’t be behind the computer watching.. where am i gonna sell at a loss?

3.) For those of us with smaller accounts that are hindered by the three day settlement period and pattern day trader rule, is there a clear cut way to grow the account?  Would doing day trades pay off more for this size of an account? Or would picking up stocks at support, adjusting your Stop Loss and riding out longer trends be the way to go?  I understand that this may be specific to the stock being played, but if there is any incite you have on the path of least resistance I would love to hear it

not forcing trades 

go where the liquidity is.. i.e. trade the stocks that are trading the most volume… why? because if you do have to sell for a loss, it will be very easy to get out at a minimal loss because the spreads  are alot tighter

gap plays 5-10% gains 3-7% 

know why you’re buying*** 

know why you’re selling 

http://www.stockhaven.com/a-must-know-trading-strategy/

MY ARTICLES: 

good for beginners .. http://www.stockhaven.com/my-rules-for-traders-with-500-2500-trading-capital/ 

  trouble with your trades?

 http://www.stockhaven.com/some-tips-for-the-rookie-trader/ 

big resouces website 

http://www.stockhaven.com/basic-stocktrading-101-links-to-investopedia/ 

3 day rules etc.  http://www.stockhaven.com/must-know-technicalaties-for-new-traders/ my favorite of all i’ve written  http://www.stockhaven.com/dont-be-scared-be-prepared/  short words for great trading technique .. http://www.stockhaven.com/a-trading-poem-to-remember/

4.) I would like to know if you can possibly give any advice or suggestions on traders who do not have Level 2. Maybe there is a video or class you have already done. I have QuoteStream II with Zecco and its good, but I dont have the bids and the ask which I feel are extrmely important.

yes, get it at whatever cost necessary

http://www.stockhaven.com/dont-trade-blind-why-you-need-level-2-and-real-time-charts/

5.) When you compare charts such as XCLL and ADMP , XCLL is more of a bottom bounce play and ADMP has ” clear skies ” not having any trading history at these new highs its currently making.  Which chart do you personally prefer the chart that has a history of trading at higher prices or a chart that has no history trading at lower prices.  My gut tells me with no history at higher prices there will be less resistance but I wanted your opinion.  Please explain which chart has more strength the chart with trading history at higher prices or the chart with no trading history at higher prices.

I would rather be in uptrending stocks personally because they show a history of demand outweighing supply and I like being on the side of the historical trend.. if it ain’t broke, don’t fix it. i’ll adjust to the trend when it says I should so

downtrending stocks show a history of supply outweighing demand, a much tougher battle to fight 

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