Security Price and Your Bottom Line Presented by Scott McCormick, - - PowerPoint PPT Presentation

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Security Price and Your Bottom Line Presented by Scott McCormick, - - PowerPoint PPT Presentation

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Security Price and Your Bottom Line Presented by Scott McCormick, CMT DYAD Capital Management Group, LLC Disclosure Acknowledgement: This course of instruction will prepare you to actively invest/trade securities and/or other financial

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Security Price and Your Bottom Line

Presented by Scott McCormick, CMT DYAD Capital Management Group, LLC

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Disclosure Acknowledgement: This course of instruction will prepare you to actively invest/trade securities and/or other financial instruments only for your

  • wn account at an appropriate financial firm which utilizes the electronic transmissions of securities and other financial

instruments to execute trades for its customers. This course is not preparation to be a Licensed Broker in the financial industry. Representations: Student acknowledges the DYAD Capital Management Group, LLC (DCMG, LLC) has made no representations or warranties. Moreover, Student recognizes and acknowledges that individual performance depends upon the individual skills, time availability and dedication of each Student in the training program. This Agreement represents the entire understandings, if any, either oral or written. Moreover, DCMG, LLC training program should not be construed as a recommendation or an

  • ffer to buy or sell any security or the suitability of any investment strategy for the Student. The purchase, sale, or advice

regarding any security, other financial instrument or system can only be performed by a licensed Industry representative such as, but not limited to a Broker/Dealer, Introducing Broker, FCM and/or Registered Investment Advisor. DCMG, LLC currently offers both educational and Investment Advisory services, but keeps said services separate, and requires a signed Investment Management Agreements before offering personal investment advice. All purchasers of DCMG, LLC educational training programs are encouraged to speak with a licensed representative of their choice regarding the appropriateness of investing/trading or of any particular investment/trading strategy. Risk Disclosure: No offer on our part with respect to the sale or purchase of any securities is intended or implied, and nothing contained herein is to be construed as a recommendation to take a position in any market. It is possible that at this date or some subsequent date the officers of DCMG, LLC own securities, or buy or sell securities mentioned in this presentation or those not so mentioned. The intent of the information is for instructional purposes only. The material presented herein has been

  • btained or derived from sources believed to be accurate, but we do not guarantee its accuracy. All trading involves high

risk; past performance is not necessarily indicative of future results. There have been no promises, guarantees or warranties suggesting that any trading will result in a profit or will not result in a loss.

Property of DYAD Capital Management Group, LLC 2

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Objectives

  • Why use technical analysis at all?
  • Staying on the Right Side of the market is

really staying to the left!

  • Tools of the trade
  • Don‟t forget your stop!
  • Now what do I do?

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Why use technical analysis at all?

“From my point of view, the investors are the big gamblers. They make a bet, stay with it, and if all goes wrong, they lose it all.”

Jesse Livermore

Technical analysis helps the investor:

  • Recognize long term trends
  • Identify when stocks have gone on sale
  • Recognize when long term trends are over
  • Identify where to place a proper stop

Technical analysis is not about telling the future. It‟s about recognizing the present and telling you when your future is at RISK!

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Why use technical analysis at all?

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AIG Rolling 5 Yr Total Return vs. Technicals Rolling 5 YR Total Returns Technical Analysis

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Why use technical analysis at all?

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WMT Rolling 5 Yr Total Return vs. Technicals Rolling 5 YR Total Returns Technical Analysis

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Why use technical analysis at all?

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AAPL Rolling 5 Yr Total Return vs. Technicals Rolling 5 YR Total Returns Technical Analysis

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Staying on the Right Side of the market is really staying to the left!

  • Three types of trends
  • Up trend
  • Series of higher lows and

higher highs

  • Up trend reversal is a

lower high followed by a lower low

  • Down trend
  • Series of lower highs and

lower lows

  • Down trend reversal is a

higher low followed by a higher high

  • Sideways trend
  • Series of roughly equal

highs and lows

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Staying on the Right Side of the market is really staying to the left!

  • Drawing trend lines (need

at least 2 points)

  • Up Trend
  • Connect the rising lows
  • Down Trend
  • Connect the declining

highs

  • Sideways Trend
  • Connect the horizontal

highs and lows

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Staying on the Right Side of the market is really staying to the left!

  • Basic Trend Line Strategy
  • Up Trend
  • If price is on the left hand

side of the trend line expect trend to continue

  • If price moves to right

hand side look for sideways market or up trend reversal

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Staying on the Right Side of the market is really staying to the left!

  • Basic Trend Line Strategy
  • Downtrend
  • If price is on the left hand

side of trend line expect trend to continue

  • If price moves to right

hand side expect sideways trend or down trend reversal

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Staying on the Right Side of the market is really staying to the left!

  • Basic Trend Line Strategy
  • Sideways Trend
  • In a sideways trend look

for price to close above

  • r below horizontal

trend lines

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Staying on the Right Side of the market is really staying to the left!

  • Basic Trend Line Strategy
  • Sideways Trend
  • In a sideways trend look

for price to close above

  • r below horizontal

trend lines

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Staying on the Right Side of the market is really staying to the left!

  • Basic Trend Line Strategy
  • Sideways Trend
  • Buy the lows and sell the

highs

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Tools of the trade

  • Moving Averages
  • Identify Trends
  • Stochastics
  • Find stocks on sale
  • Fibonacci
  • Additional confirmation of price highs and lows
  • Multiple Time Frame Analysis
  • Get the right perspective

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Tools of the trade

  • Moving Averages
  • Identify Trends
  • Two Basic Types
  • Consider Length of

Moving Average based on anticipated holding period

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Tools of the trade

  • Moving Averages
  • Identify Trends
  • Used as dynamic trend

lines

  • Basic trend line

strategy applies

  • Price is above (let

hand side) upward sloping moving average the trend is up

  • Price is below (left

hand side) downward sloping moving average the trend is down

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Tools of the trade

  • Moving Averages
  • Two Basic Types
  • Simple Moving Average
  • Calculated by adding

the closing value of a security for a specific period of time, and then dividing by the specifies time period

  • Exponential Moving

Average

  • Similar to the Simple

Moving Average, but is weighted towards most recent data making it more sensitive to price

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Tools of the trade

  • Moving Averages
  • Consider Length of

Moving Average based

  • n anticipated holding

period

  • Short Term
  • 10,20 Day
  • Mid Term
  • 50 Day
  • 10, 12,26 Week
  • Long Term
  • 200 Day
  • 52 Week
  • 12 Month

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Tools of the trade

  • Stochastics
  • Find stocks on sale
  • Identifies where the

current price is relative to it‟s price range for the last 14 periods

  • How it works
  • Calculates a specific

percentage value versus range of 0-100

  • Below 25 indicates security

trading within the bottom quartile

  • Above 75 indicates security

trading within top quartile

  • Basic strategy
  • Up trend, look for

stochastic to be below 25 for buying opportunities

  • Down trend, look for

stochastic to be above 75 for selling opportunities

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Tools of the trade

  • Fibonacci
  • Additional confirmation
  • f price highs and lows
  • Measures previous price

swings and identifies mathematic ratios which price has a tendency to gravitate towards

  • Most common ratios
  • 38.2%,50%61.8%
  • 23.6%, 78.6%,88.6%

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Tools of the Trade

  • Fibonacci
  • Additional confirmation
  • f price highs and lows
  • Measures previous price

swings and identifies mathematic ratios which price has a tendency to gravitate towards

  • Most common ratios
  • 38.2%,50%61.8%
  • 23.6%, 78.6%,88.6%

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Tools of the trade

  • Multiple Time Frame

Analysis

  • Get the right perspective
  • Utilize Moving Averages

and Stochastics in the appropriate time frames identifying the dominant trend while finding stocks

  • n sale
  • Long Term
  • Weekly, and Daily

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Don‟t forget your stop!

  • Risk Management:
  • Proper stop placement
  • In up trend below the

previous low

  • In down trend above the

previous high

Remember that risk is the difference between where you enter, and where you exit at a loss; the smaller the better!!!

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Don‟t forget your stop!

  • Risk Management:
  • Position Sizing
  • The maximum size stock

position based on maximum risk in an account and the trade risk (defined as the difference between entry and stop price)

Example: $100,000 Account

  • Max Risk 1%

($100,000*.01=$1000.00)

  • Entry Price 27.18
  • Stop Price 24.75
  • Risk=27.18-24.75= $2.43

(8.9% Risk)

  • $1000/$2.43= 41

1 Shares (round to 400) Property of DYAD Capital Management Group, LLC 25

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Now what do I do?

  • Analyze, Strategize, Execute!
  • Finding Stocks
  • Resources

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Now what do I do?

  • Analyze, Strategize, Execute!
  • Analyze
  • Price:
  • Identify prior peaks and troughs (highs and lows) for support

and resistance

  • Is the security in an up trend, down trend, or sideways trend?
  • Is the price above an upward sloping moving average, or below

a downward sloping moving average?

  • Are the stochastics above 75 or below 25?

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Now what do I do?

  • Analyze, Strategize, Execute!
  • Strategize
  • Up Trend
  • If the trend is up, and price is on the left hand side of the trend

line/moving average look for buying opportunities (oversold stochastics)

  • Down Trend
  • If the trend is down, and price is on the left hand side of the

trend line/moving average look for selling opportunities (overbought stochastics)

  • Sideways Trend
  • If the trend is sideways, and price is between the horizontal

trend lines consider going long after a close above the horizontal trend line, or buy at the lower horizontal trend line, and sell at the upper horizontal trend line (look for

  • verbought, and oversold stochastics)

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Now what do I do?

  • Analyze, Strategize, Execute!
  • Execute
  • Identify Entry Price
  • Identify Stop Loss Exit (stop market)
  • Calculate trade risk
  • Calculate position size
  • Let „er rip!!!

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Now what do I do?

  • Finding Stocks
  • Select preferred

fundamental criteria

  • Look for stocks with price

above key moving averages (200 day, 26 week, 52 week)

  • Look for oversold

Stochastics

  • Also consider market cap,

beta, price, volume (liquidity)

Example:

Mkt Cap>$500 Million Beta < = > 1 Price >$10.00 Average Daily Volume > 500,000

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Now what do I do?

  • Resources
  • Stockcharts.com (Free and Subscription Charting and

Stock Scanner) www.stockcharts.com

  • FINVIZ.com (Free and Subscription Stock Scanner)

www.finviz.com

  • Trade Station (Professional/Retail Charting

Platform) www.tradestation.com

  • eSignal (Professional/Retail Charting Platform)

www.esignal.com

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Thank you for Attending

Q&A

Future Questions? Email Scott McCormick,cmt at dyadcmg@yahoo.com Reference AAII Meeting

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