Getting Started with Technical Analysis

Hello and welcome today to Getting Started with Technical Analysis, another great webcast from Schwab Coaching. My name is Ben Watson. I'm an education coach and senior manager here at Charles Schwab, and I'm joined out there in the chat by my good friend James Boyd. He's there to help answer your questions. He's a 20-plus year veteran of the financial markets. He's a great technician, and he is a great resource to be able to help answer your questions along the way. And welcome to all of you, whether you're here with us in the live version or not, it doesn't matter. We're glad to have you with us. Now, the title of this webcast is Getting Started with Technical Analysis. We are starting on lesson one, which is the understanding of the basics and the foundation of technical analysis.

So if you are brand new to understanding and learning about technical analysis, this is the place to start. If you've been doing it for a while, stick with us. I guarantee you there are going to be some insights in directly to our next step in technical analysis, which will be next week talking about trend and timeframe. So we're going to get started with the basics of technical analysis today. A couple of quick housekeeping items, though, as we do that, a couple of quick reminders that everything we talk about simply for illustrative and educational purposes only, it is not any kind of a recommendation, shouldn't be considered any kind of advice or personalized investment recommendations. We talk about options a lot.

We're not going to in this discussion, but I just wanted to quickly remind you that options do carry a high level of risk. They're not suitable for all investors. Make sure that you're aware of the characteristics of risk to standardize options before considering any option strategy. Now, we're going to use some specific symbols today. Those are simply for illustrative and educational purposes, only they are not to be considered any kind of a recommendation. Name of this particular webcast is Getting Started with Technical Analysis. And that's only one way to look at the market. There are others. Technical analysis is one, fundamental analysis, probability analysis, and other means of evaluating the market. Here's the thing. All of those are theoretical in nature. None of those are guarantees.

And to rely solely on one particular type of analysis might be leaving out some other information. So our focus today is going to be technical analysis, but that does not discount nor invalidate. Uh, fundamental analysis or any other way of looking at the market now we're going to be using the Thinkorswim desktop software platform today, specifically the paper money version. Paper money version of the software platform is a great learning environment; it is not however a guarantee of future success out there in the real world and as you'll find as we move along, there are some things that the paper money version does not do relative to what a live trading platform does so be aware of that.

Remember that investing involves risk including the loss of principle performance no guarantee of future results so as we kind of jump into uh this discussion I wanted to really quickly talk about this: you know normally Barb Armstrong teaches this particular webcast series. Barb is out having her knee replaced, and so I'm helping out for a little while while she's recovering from that. But I wanted to kind of give you a sense of where we are in this discussion. So our focus today is on Lesson 1, Introduction to Technical Analysis. Next week, it's going to be Trends and Moving Averages. That'll also incorporate Time Frame, then Support and Resistance, then Candlestick, Price Patterns, and other types of Price Patterns, and other types of Price Patterns, and then Technical Indicators, and then things like Divergences.

Now, one of the things that I wanted to mention as we're getting into this discussion, flow. If you happen to be coming into this webcast after watching Lesson 7 or Lesson 8 or whatever, it doesn't matter. That's fine. You can pick up wherever you want to. We record all of these webcasts. They're available in the archives. They're available in the Getting Started with Technical Analysis playlist as well. So you can binge watch them in order. You can pick and choose whatever you want to do. The third thing I want to say is this.

And Options Strategies live workshop in person. We were in Santa Clara, California. We had a little over 500 people who came and attended, and they learned the basics of technical analysis on day one. For those of you who are in that workshop or planning on attending a future workshop, and I'll show you where you can find that information, all of these things that we've talked about in this list of discussions in this Getting Started with Technical Analysis series, we also talk about in that live workshop. So if you've been to the workshop or you're planning on going to the workshop, this webcast series is a great companion piece. And you missed part of that technical analysis discussion, well, this series of webcasts is a great way to catch up on all of that information.

And John says, I was there. Awesome. Okay. So that's where we are. We're starting on lesson one and we're going to get into the discussion. And I promise, you know, again, I recognize that there are different skill levels here. This is a beginner level, but there are going to be some nuances for those of you who've been doing this for a while. So stick with us. discussion today is going to be really this. What and why of technical analysis? Why do we look at technical analysis? Some of the principles of technical analysis. We'll talk about charting basics and we'll talk about some key points of using the charts, specifically on the Thinkorswim desktop software platform. There are some similarities in the way that that platform works along with Thinkorswim web-based version, Thinkorswim mobile.

There are some differences as well, so be aware of that. But we're going to jump into kind of this basic understanding technical analysis to begin with. Now, there are two kinds of different approaches. And I'm glad that I've got James Boyd here in the chat as well, because James is not only a great technician, to be sure, he's also a great fundamental analyst. In fact, he's been studying for a long, long time to acquire some designations along those lines. And so he knows probably more about fundamental analysis than I've ever dreamed of learning about fundamental analysis and understanding the company's financial statements and balance sheets and those types of things, right? And so as we look at that, that's a great way to find.

Individual stocks or finding market movement and finding sectors and industry groups is a great way to understand what it is that we're going to trade; what individual stocks that we might trade. Fundamental analysis is really good at identifying those elements. Technical analysis, on the other hand, is focused on price action, volume, technical indicators: areas of price direction change, areas of momentum that can help to make a decision about when we trade. Now, neither one of these two methods of analysis-neither technical analysis nor fundamental analysis-will tell us what is going to happen in the future. In fact, really no form of technical analysis or of market analysis can do that. Nothing can tell the future because news always happens.

But if fundamental analysis gives us a framework for making a decision about what we're going to trade, and technical analysis gives us a framework around making a decision about when we're going to trade, then we can use them in their proper context, and we might start formulating our thought process this way. If something happens, then I'm going to make a decision about how I'm going to react to that. I'm going to shorten that. If this, then that. If price breaks out of the area where it's been recently, then I'm going to enter the trade. Or if price breaks down from the area where it's been lately, then I'm going to exit the trade. So if this, then that helps us to structure our thought process.

And by structuring our thought process, that helps us to get over some of those, not only psychological, physiological, but also emotional challenges that might keep us from making rational trading decisions. And so that's, again, one of the benefits. And not only that, one of the goals of technical analysis is to help us to make those more informed decisions. Let's talk a little bit about some of the fundamental I know that's kind of counterintuitive, the fundamental makeup of technical analysis, but the basics, the building blocks of technical analysis, if you will. One of those is that price tends to move in trends either an uptrend, a downtrend, or a sideways trend; and how that looks and how long that trend exists. Really, it's a function of a couple of things.

One, the market's understanding of what that price of the stock might be. And two, the time frame in which we're looking at that particular trend. So, we can have multiple trends within a longer-term time frame. We'll talk a little bit more about time frames in just a little bit. But, price moves in trends; bullish, bearish, and sideways, up, down, and sideways. The second tenet of technical analysis is that we have to kind of have a baseline assumption. And that assumption is this: The market knows everything. The market discounts everything. When I say discounts, the market incorporates and digests every bit of information that is out there. And that information reflected in the current price of the stock. So if we don't subscribe to that premise, we're going to have a hard time with technical analysis.

So that for some may require a suspension of the disbelief of fundamental analysis. It simply says that the market understands and knows everything. And the idea behind that is very, very simply this: News can change the market at a moment's notice. But once that news is out, the market very, very quickly digests that information, processes it, and it is reflected in the current price of the stock. Now, the third thing is that history tends, not always, but tends to repeat itself or it looks fairly similar. Humans tend to react similarly in similar situations from time to time to time to time and over a different variety of contexts. Of what we do. So those are some of the things that we need to understand about technical analysis as we start this process.

There's some potential benefits from using technical analysis. Looking at trends on the chart can help us to make decision points. When do we get in? When do we get out? If this, then that. Technical analysis is flexible. It can be applied to any market condition. It can be applied to a bullish market, a bearish market, sideways market, a very volatile market, a market with a lack of volatility. And it is universal and flexible across a different range of timeframes. Additionally, it is universal and flexible across a different variety of instruments. I taught a webcast this morning on trading futures, and I used technical analysis. We can use technical analysis on indexes. I teach a webcast on Wednesdays on trading index options. We can use technical analysis for foreign currency and forex trading.

We can use technical analysis for trading options. We can use technical analysis for trading stocks, for trading ETFs. There is an underlying element of fungibility of not only instrument but time frame in terms of technical analysis and things that we do. And that's a potential benefit. Some of the risks, however. We have preconceived notions. We have a cognitive bias. Sometimes those get in the way. The risk of slippage in an illiquid market, if there's not a lot of trading going on, sometimes the price that we buy or the price that we sell might be a little bit different than we expect. It's easy to see trends and conditions in hindsight. It's very difficult to see them as they are occurring. So that becomes a challenge.

We oftentimes will see what's going on only after it has happened, and then we can react to it. Technical analysis is somewhat subjective. Now, there are some elements of technical analysis which are plain, clear-cut, objective in nature, but a fair amount of it is discretionary, and subjective, right? Okay. So John asks a great question, and I think this is a good question to answer along the way. Does Schwab have any lessons on how to interpret and digest the important information in fundamental analysis? And in fact, we do. In fact, James Boyd, I'm glad that he's in this particular chat, he happens to teach a couple of different webcasts on some of those subjects. Additionally, we have an entire research arm of Charles Schwab that does nothing but fundamental analysis, our Schwab Center for Economic Research.

And that information is available on the Schwab. com website. It's available in some forms on the Thinkorswim platform. So, yes, there is lots of information about how to interpret information and how to make decisions about what to trade, as well as there's lots of information about technical analysis. So let's do this. I'm going to jump over to the Thinkorswim desktop software platform here really quickly, and we'll just kind of drop into what's going on at the moment. We'll just kind of pick up our discussion about technical analysis right here. So I'm looking at kind of a basic chart that some traders might use as a starting point. So I'm on the Thinkorswim desktop software platform. I'm on the charts tab at the top of the page, displaying at the moment what's referred to as a line chart.

It's just simply showing a line drawn between the closing price of, in this case, the S&P 500 index, the broad view of the market, that closing price on a daily basis. So every single day there's a new closing price. This draws that line in between those closing prices and tracks that line. And we can see that trends then begin to emerge. Higher highs and higher lows, substantiated uptrend. Lower highs and lower lows, substantiated downtrend. And so those are some of the elements. Now, the line chart is only one way to look at the market. Line chart is a very simple way to approach looking at the market. But I'm going to shift our gear again just a little bit here. This is a line chart.

The time frame on this particular chart is one year daily chart. So each endpoint on this line, each little increment on this line, is one day. But there's a lot more information we can get. So I'm going to change the style of this chart. And I'm going to change that chart type from a line chart to what we refer to as a candle chart. And a candle chart gives us a little bit more information about what's going on, about the market, about about the daily battle between buyers and sellers. So, what I want to look at in this particular case, still on the S&P 500, now I want to break down some of these candles so that we have an understanding of what those candles tell us.

So I'm going to zoom in here on one little time frame. Back in November, I happen to like this particular time frame, not just because it was nice. I like November; November's a nice month. Displays a variety of different candles that kind of cover the gamut of what candles tell us about price movement. So I'm going to zoom in on this time frame right here. In early November 2024. And you can kind of see what those candles are showing us here at this point. So, I'm gonna grab my magic marker tool and we're gonna just kind of line out these candles. In fact, I'm gonna zoom in just one little shorter timeframe right here. And so we're gonna grab these candles right here. Let me kind of zoom those up here.

So I've got four different candles in this range right here. I've got this candle right here and I've got another candle next to it and I've got another candle next to it and I've got another candle next to it. You notice that one of those candles is red, one of those candles is green. That's significant. You know it doesn't have to be red and green, it could be blue and silver, it could be uh or orange and blue if you're a Denver Broncos fan. It doesn't matter what the colors are just as long as you've got two opposite colors. They could be black and white. They could be blue. They could be brown. Whatever you wanted them to be, right? Okay, so here's the information that we get out of these candlesticks.

We know that we're going to have an opening price for the day or for that time frame. We know that we're going to have a closing price for that timeframe. That timeframe, we know that we're going to have a low price during that timeframe. So here's what we've got. We've got an opening price here. And we've got a closing price here. I'm sorry. Let me do that one more time real quick. I already messed us up there. There we go. Let's close that out. Clear all our annotations. Let me grab my magic marker one more time. Our opening price in this case was right there. Our closing price was right there. Our high was right up here and our low was right down there.

I had it right back, in fact, backwards, right? Okay. How do I know that the opening price was on the left and the closing price was on the right? We know that these candlesticks are red from left to right. So our opening for the day is always going to be on the left-hand side, and the closing price is always going to be on the right-hand side in Western charting. How do I know that it was above or below? Well, I know that this is a red candle. I can see that this is a red candle.

particular case. So now I know the relationship there between open and close. And I know that the high is always going to be at the top and the low is always going to be at the bottom. That makes sense logically. So I can draw those lines or those points of data in as well. So here's my open, high, low, and close on that particular day. Now I want to take you over to this fourth candle in this series. And what this is telling me is that my opening price, was down here. And my closing price was up here. The reason I know that is that there's a green candle, which means it's upward movement; the open is lower than the close, which means my high is still up here and my low is still down here.

So, green candle, bullish candle, open high, low, close, but different relationship than what we were seeing between the open and the close on that red candle. Now that we've got that kind of basic definition in mind, now that we understand that basic relationship, let's take a look at a couple of these candles here in the middle. This first candle is kind of, or this second in this series, is kind of an interesting one. So I know my open is always going to be over here on the left-hand side, and my close is always going to be on the right-hand side. This candle didn't really go very far at the end of the day. The difference between the open and the close was very, very small.

In fact, if I, when we come back and hover my cursor over that, I'll see that that difference for that day was very, very small. here. And I have a low that was down here. I know that my open was a little bit lower than my close simply because of the color of the candle. If this were exactly the same, and an open and close did exactly the same price, that would be a white line across there. And we would call that, sometimes referred to as a doji candle. No movement within the day between the open and the close. Now, price may have gone higher and lower, which this wouldn't did. It went higher, it didn't go much lower.

But that's the type of candle that suggests that maybe there's a little bit of equilibrium, not price movement one direction or the other. Now let's take the next candle, the last one in our quartet of candles here. And this is a red candle. That tells me then that my open was up here at this top corner. My close was down here. My high was right here and my low was right there. What that tells me about this particular candle is there was a little bit of downward movement. Fairly close to one another, the high and the low went roughly equal distances up and down. And this candle is an indicator of forces being somewhat in balance. Buyers and sellers kind of balanced up and down. Nobody is really, neither side really pushing one direction or the other with any amount of force.

Like those forces that help to keep the top spinning upright. So that is a spinning top or equilibrium candle. Now, you happen to notice where this particular candle occurred. This particular candle or set of candles occurred near a turning point, or what we can identify after the fact as a turning point. Now, I'm going to use the charting tools here on the Thinkorswim platform. I'm going to grab my trendline tool, and I'm going to draw a line of what we're going to refer to as support. Now, we have a whole webcast in this series that talks about support and resistance. But this helps us to identify a turning point where price comes down to, buyers step in and push that price higher.

So I want to just kind of do this to illustrate what's going on at this particular point. And that is that the sellers were pushing price down. And then there was a bounce where buyers were starting to step in. And then those buyers began to push the price higher. Those levels of support and resistance, if we were looking at, say, for instance, this area up here, that might be a level of resistance where sellers start to push down. Those levels of support and resistance can be decision-making points for us as traders using technical analysis. We could say something like this from an if-this-then-that standpoint. If price, let's say we were in the trade to begin with, if price breaks that support level, then exit the trade, else wait.

Wait. So levels of support and resistance coupled with what the information is that we're getting in the candlestick patterns. That can all go into helping us to understand not only that daily battle, the trend that's going on, but also those entry and exit points that make sense from a technical analysis standpoint. Because what we've found after looking at lots and lots and lots of charts, not just me, not just James, but every technician out there comes to this understanding that price action really is what dictates what a price does. When we see a level of support, that's a likely point for a bounce. If there's news that changes that, maybe it breaks through. But trend often prevails. Not always, but trend often prevails. And when we can catch those trends, either when they're moving or when they're changing, we can make a decision about entering or exiting a position.

Analysis in hand here. Here's what I want to do. I want to show you a couple of examples now that we have this solid understanding of these essential elements of technical analysis. And then we'll add a couple more here before we go. So now that we have this idea, we're looking at the S&P 500. I'm going to zoom back out on the chart. And we'll take a look at what's going on right now on this particular chart. So I'm going to zoom back out. And I'm going to zoom, whoops, I kind of squished everything down here a little bit. So let me go back to my auto view. I'm going to zoom over to this particular candle.

Now, this is an interesting scenario because what we have going on today in today's trading is the price of the SPX went up, in fact, gapped up overnight and is now starting to sell off a little bit, but it's above where it closed yesterday. From where it opened to where it closed. But we're kind of in an area where maybe there's a little bit of resistance, that area where price might turn around and come back down. So that does seem to be what's happening here. Not a guarantee by any means. But what we might do in this particular case is say simply, if price breaks out of that resistance level, then enter the trade, else wait. And then once we're in the trade, we might specify a point.

We might say, hey, right down here, if price were to break this level, this is the point at which I no longer want to be bullish on this index or on this stock or this futures contract or whatever it might be. That's the point at which I want to exit the trade. So, we can kind of frame. And everybody might be a little bit different in how they look at that. And in our next discussion, we'll talk a little bit about timeframes and different ways that we can look at levels of support and resistance in terms of making decisions. But what I see right now in this particular chart is a price trying to break out of a resistance level and failing a little bit today.

Not that if you were already in the trade that you would be exiting the trade, that might be something better suited to wait for a break a little bit lower. But if you're a shorter term trader, that failed move to the upside could be a reason to switch direction and go short. So, all of these things kind of factor into the discussion. But I do have a couple of examples that I want to look at. Of positions where that breakout, that if this then that statement, is in fact coming to fruition. So I'm going to change my chart here really quickly to this one right here. I'm going to change this to city group. So I'm going to zoom in over here on the right-hand side, and I happen to notice that previously, and I'll draw my line right here with the line tool on the chart.

That previously there was a little bit of a resistance level. And I'll zoom in a little more closely. So price went up, up, up, up, up. You see those big green candles driving momentum higher, runs into a resistance level. It comes back down. It pulls back a little bit. It doesn't really ever break the trend, meaning breaking that series of higher highs and higher lows. It roughly makes a higher low and then makes a new higher high. Identification. But then it bounces, and in fact, on this earnings announcement, new fundamental information coming into the system. The price of the stock breaks out of that resistance and says, boom, here we go. No guarantees that it's going to go beyond where it is right now. Could turn around tomorrow and come right back down.

But the prevailing trend is up. So the probability is that this price continues to move higher, according to technical analysis. Doesn't mean that it can't change. It doesn't mean that news can't change it. It doesn't mean that buyers could go away, that there could be geopolitical events that would drive this price lower. It simply means that at the moment, this is in a situation where it has broken above a resistance level. That is a potential entry signal given technical analysis and suggesting that trends do tend to continue. So if that's the case, and this is what we're seeing right now, and we were coming to this, we say, cool. If this, then that statement was, If this price breaks resistance, then enter the trade, else wait.

Well, the wait is over. We've met our particular characteristics and criteria, and then a trader could enter this trade if that were their statement. So what we're going to do is I'm just going to simply, I can grab either up here at the top, I can grab the bid or the ask price. I could right-click on the chart. In fact, that's what I'm going to do is I'm going to right-click on the chart. And I'm going to say, all right, buy it. Now, not a recommendation by any means, simply an illustrative and educational example. And I'm going to say, buy this stock. If price breaks above that resistance level, it has done that. And that's what we're going to do. I'm going to put this in my stocks group that I've got built already.

And by default, the order is 100 shares. You don't have to trade 100 shares. You can trade less than that. In fact, that might not be such a bad consideration to think about. Is determining how many shares you're going to buy based on the characteristics of your trading, your risk tolerance, the circumstances of the market. Don't necessarily just have a default amount that you buy every single time. So make a determination based on your risk and your risk tolerance and a set of other factors that may help you to make those decisions. So in this particular case, we're going to go ahead. I'm going to leave this at 100 shares. I'm going to click on send, and I'm going to fire that order off.

And we ended up buying, in our paper money account, 100 shares of Citigroup at $91. 54. And that's what the price is currently. And this is moving to the upside. No guarantees that it'll stay there or that it'll keep moving. But take a look. Let's zoom back out to what we were looking at that got us to this particular point. Since April, this stock has been rallying up, pulled back a little bit, rallying up, pulled back a little bit, rallying up, pulled back a little bit, and rallying up again, never breaking that uptrend, just continuing to move higher. No guarantees that it will continue to move higher beyond this. However, it could turn around tomorrow. That's absolutely something that could happen. I'm going to take one more example here, and that is MSFT.

You're noticing a theme here. There are a lot of technology stocks today that are moving higher. This is a stock, Microsoft, that I obviously have drawn some lines on before in the past. Once again, same type of scenario. We have this reversal pattern down here in April. It rallies, rallies, rallies, rallies. Notice all those big green candles keeping this moving. There's a couple of those little equilibrium or indecision-type candles as this continues to move. Then we run into the resistance, in this case, right about where I'm just going to draw this line imprecisely because it is discretionarily drawn. And remember, I said that that is one of the things we do with technical analysis is we draw lines somewhat imprecisely. And so that line comes in at about 503.

That was a previous resistance over the course of the last four days. Price couldn't get above that level until today. Something changed, and something new drove that price a little bit higher here, and is helping this to move higher. For whatever reason, buyers now decided, I'm okay buying the stock above that 503 level. I'm okay stepping in and pushing that. Now, that might be news. It might be expectations. It might be that there's nobody else up there selling that stock at that particular price or looking to push that price down. And so now we get that little bit of a breakout and that continuation of the move to the upside. So let's go ahead and let's trade this one again.

Again, our if this then that statement might have been 'if price breaks above this resistance level at 503, then enter the trade, else wait.' And if that was the case, we got that expectation. We got that criteria met today right now. I'm going to come up here to the top of that candle. I'm going to right click and I'm going to click on 'buy'. And we're going to send that trade off again, 100 shares. and I'm going to put this in my stocks group. Let's put this in my stocks group. Where did that go? There it is. Okay. Right down here. Stocks group. And we're going to click on 'send' and we're going to fire that order off. And that order filled as well. And so we see that price moving higher.

All right. Now, as that's working and working away, one more circumstance that I wanted to bring into this mix and one more tool. So one of the things that also goes along with price as our data point is another data point that becomes important as well, although not as important as price, but it is a confirming factor. So I'm going to go to this little gear icon up here at the top of the page. I'm going to go to where it says equities, and I'm going to click on show volume sub graph. Before I click apply and okay, I'm going to do something else. I'm going to come over here to where it says appearance, and I'm going to change my volume bars to the same color as their corresponding ticks or bars on the chart.

So if I have an update, it's green. If I have a down day, it's red. And if I have a neutral day, it's white. And I'm going to click on Apply and OK. And volume can tell us some interesting things, although volume gets a little bit obscured sometimes. Here's what's happening and what this tells me about this particular move. This breakout today is happening on a fairly low amount of volume. There's not a lot of oomph behind this move. I might be a little bit suspect of that move. No, not enough to keep me from entering the trade, but enough for me to perhaps want to make a decision to get out. If it turns around and goes against me. So I might say, fine, if price breaks 500, then exit the trade, else wait.

Now I want to look at one more trade example that gets us that same idea here, and that is A M A T and applied materials. So this is another circumstance where price had been coming down, starting to rally strongly. Volume, however, is falling off in the last few days. Let's zoom in over here on the right-hand side. And I see that price is kind of running into this same level of, whoops, let's zoom in. Price is kind of running into this same level of resistance right here. We get maybe this little bit of a breakout and then it comes back down. So I'm going to say this, if price breaks this resistance or closes above this resistance, then enter the trade, else wait. But you notice what's going on with volume.

Volume is really starting to tail off a little bit here. So I might be suspicious and I may not want to jump in until I get some clear evidence that price is moving higher. So you know what I'm going to do? I'm going to come in here and I'm going to say, look, I want to get above the high of that candle right there, that high point. Not a guarantee, but that maybe there's some movement in the upward direction. So here's what I'm going to do. I'm going to take that $201-level. I'm going to right-click on the chart. And I'm going to buy this, but I'm going to do it in a special way. I'm going to click on edit.

And I'm going to put in 100 shares, but I'm going to say: Buy it, but stop and wait for something to happen first. Wait for the price to move above that 201 level. And so I'm going to change this order type to a buy stop, which says: Buy it, but stop and wait. Check first to make sure that it's above this level, $201. 10, before entering the trade. And I'm going to turn around and I'm going to make that good till canceled so that I don't lose that opportunity tomorrow. Now, it could, and that might be okay. I would just need to come back in and replicate it. And I'm going to click on confirm and send. Now, here's the thing. This is going to generate a market order.

So once that trigger happens, if the price of the stock gaps up higher, there's a possibility that we could get filled significantly higher in this trade. But I'm going to go ahead and click on confirm and send, read through the order, make sure that that's what I want. I'm going to put this in my stocks group, and I'm going to click on send, and we're going to wait for that circumstance to occur to get into the trade. You can see where that order is. It's just above that high of that day. We've set up a couple of different scenarios. We bought when the stock was breaking out. We bought when the stock was breaking out with low volume. And now we're setting up a buy stop order.

We're now deep into the heart of technical analysis, guys. So let's show you where you can find more information. If you come right over here to the Trader Talks webcast page. And by the way, we'd love to have you click on the subscribe button right here. That helps you to stay connected to this content and helps you to be able to set alerts. It also helps other traders to have access to this content as well. And it is at no cost to you. So just click on that subscribe. You can do it right down there at the bottom right corner of the screen too. We've got a link embedded there as well. Here's the getting started playlist. If you come over here to playlists. and you type in the word getting started.

I'm just actually typing the word getting and type in playlists. Then you're going to find those playlists and we're going to come down here and we're going to find the getting started with options. We've got getting started with technical analysis. Here's the playlist and I'll show you the full playlist. And you could see that Barb started and did Lesson One back in April of this year and then rotated through all those. So this is our equivalent here. You'll see that the next one is Trends and Moving Averages, Lesson Two, and so on and so on. So we've started that process. Now, if you want to learn about some of the specific elements of technical analysis here in this context, this is something that can help you to maybe pick up a particular topic.

The discussion, or for those of you who are familiar with technical analysis already, come here to the Trader Talks webcast page and type in something like 'support'. And now you've got a lot of different technical a lot of different webcasts that talk about. Um, that talk about different types of technical analysis. Now, P. Anderson asked the question, what are the advantages of doing a buy stop rather than just setting a limit price? So setting that limit price, if we had put that order in as a limit price, the limit says, buy this, but don't buy it unless it is below a certain level. So that certain level or better, or better when you're buying is less. So that would have entered the trade right away instead of waiting for the circumstance and the proof that that price is moving higher.

So, that's kind of the idea behind setting a buy stop versus a limit order. And you can even search for that buy stop. And you can search for a bunch of webcasts that talk about that. Utilizing a buy-stop order. Can I buy a stock with a buy-stop? What's the risk of using a buy-stop? Lots of different ways you can go about doing that. Have you used a buy-stop order to enter a trade? Ask yourself that question and ask yourself if that's something that might help you make that if-this-then-that decision. So, my thanks to all of you for being here with us. Make sure that you follow me. Make sure that you follow James Boyd on X. already. My ex-handle is at BenWatsonCS. James is at JamesBoydCS. We would love to have you there with us.

And coming up next in this webcast series, we're going to start to dig into this discussion of building an investing plan. So now that we have the basics, now we're going to start to look at some of those watchlist criteria, what to trade, and entry signals, will help us to make that decision. So these are some of the things that we've talked about today in this discussion. My thanks again to James Boyd for helping out. My thanks to our great production staff and to all of you for being here and learning about technical analysis and starting down the road to learning more about being a technical analyst. We'll see you again very soon. Take care, everybody. Bye-bye.