"Hi Markus, please explain yesterday at
your video was a software
Power X stock LULU in
red - SELL...
The stock is today off after strong
earnings..."
See, it is extremely important
that when you use
a tool that you use
it the right way.
It doesn't matter whether you use a tool
or a trading strategy,
right? You need to make sure that you fully
understand the trading
strategy before you use
it.
As an example, let's talk about
Lululemon.
We did have... This is actually two days
ago. As you can see,
I hope that you can see it the bottom of the screen,
March 26th.
Today's March 28.
Two days ago,
Lululemon said,
yes.
It is more likely for the stock to
go down. But then yesterday,
yesterday,
we got a black bar saying that it is
more likely for the stock to change
the direction
or to go sideways.
As soon as you see a black bar,
you're getting out of this
and you see, this is how you
can easily avoid being
trapped into earnings.
So, anyhow.
First of all, make sure that you understand
the rules. So,
we did have a red bar
two days ago,
but then yesterday,
we clearly...
The software said,
you know what?
It might reverse direction.
So, do not go short.
The second thing is when I'm looking
at stocks to trade,
I want to make sure that there are no gaps.
Now, what does a gap mean?
A gap means these
wide spaces that you see right
here,
and right here,
and you also see it right here.
What do these white space mean?
It means that Lululemon was trading at
here $107
and the next morning,
it opens up at $119.
A strong gap,
a huge gap,
and it did it again,
and it did it again.
Now, let me ask you this: when you see
that is stock is showing
a gap that is jumping
every few months.
And if you look back at the chart,
you'll see every three months...
What does that mean?
What does it mean?
What is causing this
gap?
Exactly. You're absolutely right.
Earnings. So,
it seems that Lululemon regularly
surprises its investors,
right? Regularly, they say,
oh, you know what? We did better
or we did worse.
And this is why you have the gaps.
So, one of the rules when I trade
stocks is that I
want to make sure that there's no
gap. So, therefore,
Lululemon,
if we switch back to the charts,
does not even fit my criteria
because we have a gap here,
and we have a gap here,
and we had a little gap here.
Because if a stock has been
gapping in the past,
it is more likely to do it.
So, this is why it is extremely
important that you know the rules
of this strategy.
Now there is one more rule
that I have before I'm entering
and this why I keep saying,
for example, today,
I tried to buy CRC,
but I didn't get in.
And this ties into what we're going to talk about
in just a moment: stop orders
and limit orders.
Let me show you.
What I want to see
is when I'm getting a red
bar to sell the stock.
I want to make sure that we break below
the previous low,
that we really have momentum
to the downside.
And in the same way,
I want to see that if we see
green bars before
I enter,
that we actually have momentum
so that we are taking out the previous
day's high.
Let's actually jump over to
CRC,
which is the stock that I tried
to buy today.
So, as you can see,
there is a green bar,
and now I want to see that we are going above
the previously established high.
And this is what Power X tells me.
It says, buy to open at
$26.42.
So, it is extremely important that
you let the market come to you.
This is one thing, one of the things that I've learned,
over the years trading,
I'm no longer chasing the market.
I'll make sure that the market is coming
to me. This is why I'm drawing
a line in the sand,
and say, only if we cross this
line in the sand,
then I am
willing to buy
or sell a stock.
Going back to
the excellent question that we had from
one of you,
make sure that you understand
the rules of the strategy
and this is why it
is so dangerous if
you're using a strategy without
knowing what's behind it.
This is why,
for many years,
as you know,
I've been very hesitant
to put this software in
the hand of other traders,
and I want to be honest.
I'm actually considering
of only making this software available
if you sign up
for private coaching
with me so I might actually
no longer offer the software.
So, if you if you're interested in it,
and want to get it before I change my mind,
do it now.
Let me know because we do have
a special until the end of March,
and
I might actually
really stop doing it because I don't want
you to get hurt. You see,
your money is important to me
because I feel that I have
a responsibility for your
money because you're following me here,
which I really appreciate.
And I want to make sure that you understand
the strategy. So,
in summary,
I did not...
I would never have traded Lulu
for three reasons. I
mean, this is why...
The first reason, it showed a black bar.
A black bar means stay out
of it. The second reason,
even when it showed
a red bar, it never went below
the previous day's low.
And third,
it did show a gap.
And I do not trade stocks that
are showing a gap.
Is this making sense?
And is this helpful for you?
If so,
make sure that you leave a comment
if this helps you to understand
better my thought process
before I pick stocks to trade.
If you go back to here,
for example,
CRC,
you see that CRC is a stock that
does not have
any gaps. It is really nicely
trending. This is why I tried to trade
it today.
On the other hand,
we see, for example a stock like Lululemon.
We just looked at it.
What is another one?
I think it's FLR.
See? Lots of gaps.
Right here,
right here,
right here.
So, you want to stay away
from stocks like this.
All right. If this is making sense,
leave a comment. Hit the like button
so that I know that this
is really helpful for you.
You all have a fantastic day.
Enjoy the rest of the day
and I'll talk to you very soon.
Click on like,
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