Step by step trading on WWE - part 1 by Redart

Hi, welcome to this new video. Today I want to do something a little different from the other videos. In one of my first videos I made a point, actually, if I remember well, and it was something about the difficulty for new people to start, not because there is no information, but because there is too much information. You find online a lot of material, videos, blogs, you can find books. So you have so many things in your mind that it may not be easy to understand exactly what is the process that you should follow to trade. So with this video that is split in two parts, I will bring you from the beginning of the analysis to placing a trade. So you can see how you can use the information that I shared in the past months, how you can put everything together and really have a systematic process to look for stocks and if you find a good setup to place a trade. So let's start here. You see finviz, you should be familiar with that if you follow my channel, because I already spoke about finviz in the past and I think it's a very good tool to screen for stocks, especially for the fundamentals. And on top of that is free. So good combination. So what do I usually do every week, weekend I have my screener. So here you can screen, you can put your criteria if you remember. For example, you may look for stocks where the earning per share growth this year is positive. And notice here how this number will reduce when I apply the filter. Now we have more than 7,000 stocks, and when I put these, we already narrow down to less than 3,000. And. And then you may put additional filters here. For example, the earning per share grow next year and then you reduce. So when you apply all your filters, what do you do? Well, what I do, I use the Tinker Swim platform for the technical part, because I think it's a great platform, allowing you a lot of power in terms of screening and you don't have inactivity fees. So it's great. So the process is this. Every week I screen for the fundamentals here. I take the tickers and I import the list of tickers in tinkorswim that is here. And the great thing about Tinkorswim is that when you import a list of stocks, you can apply the technical screener on that. So what happens is, let's say I import my list of stocks. I have already done it. And then here you go to scan. You can write your own screening conditions. And when you click scan, you will get the results. So the stock I want to show you today the strategy I'm Using today is a trend following strategy. And this is the stock I want to show it to show to you. But before that what I do when I look for possible entries is this. I look at the S, P spy. Why? Because I want to understand if the market is overall in an uptrend. So I look for long positions. If he's. If the market is on a downtrend I will look for short positions. And if the market is really not clear, I will sometimes just avoid to look for positions. So let's have a look at the S and P. Now you see there was this resistance level that was hit many times and recently what happened? Well, the price kind of broke out, then it went down and then it seems it's breaking out again. So in this kind of context, breakout plus looking at the moving averages and I remember to you that if you, if you don't watch, if you didn't watch the video on moving averages we have here six of them. The red dotted line and the blue dotted line are the 20 and 40 exponential moving averages. And then we have the blue one, the 50, yellow is the 100, the green is the 150 and the red is the 200 daily moving averages. So when the dotted red is above the blue dotted is a short term indication of uptrend. So it's good for going long. On top of that the price is above the red line, the red line is looping up. So I created in Tinkorswim this kind of tool that is showing you if the slope is also up or down. And this is another indication of bullish situation. We also have the 50 above the 150 but the 150 is still sloping down. But overall I think we already have the price above the 200. So the situation is quite bullish. However, because the price is still near this resistance, I will look for long position but I will not do pure trend following trading. I would rather put some take profit. And I made a video about that where you should take your profit when you do trading. Anyway, the reasoning here is that the situation is overall bullish. So it makes sense to look for long positions. And this screener that you see here is actually looking for long positions. And the results are displayed here. So the stock again that I want to show you is this wwe wwe if you're not familiar, is this wrestling that you see on tv, Right? And if you look at the past, the stock was amazing. I mean was trading at around $20 and then it went up to almost 100. So definitely if you look at the big picture, the trend is clearly up in the long term. And if we zoom in, what do we see? Well, we see that the price was going up after this drop. It went up and then it's doing this kind of deep pattern. What do I mean by that? You see here the price, it was going down. It bounced on this 200 moving average. That is a strong support. Then he went up. Then here he was testing the 50 was during earnings. So that's why you have this big volatility. Then here again is testing the 50 and the 150 and here what happened? The price went around the 50 and now is bouncing up. So this to me is a good signal to enter because the price was reaching a support. The 50 moving average that was already tested here and somehow here and now is going up. How do I know it's going up? Well, you can see that there is this last candle. First is a bullish candle that is good because it's green and is also making higher high and higher low compared to the previous one. Okay, so this stock is good. Why? Because the trend is up. The S, P is up. We are near the moving average. So we don't have the risk of being overextended. There is this nice situation of deep and the last candle is making higher high and higher low. Does it mean that the price will definitely go up? No, we don't know. But we can place an order because we have a lot of indications that the price may go up. But that's not all. I also look at some other things. Number one, you see this relative strength indicator that I presented in a previous video. So this, when it's above the red line, it means the stock is stronger than the S and P. And this is the case by far. So that's even another supporting argument for going long on this stock. So from the technical point of view is really good. Let's go back to Finviz and check this stock. So we can write here the ticker name wwe and let's have a look at what we see. Well, you see here the results are very good. So we have the earning per share. Usually I check for trading the present and the future. I don't look at the past. So I see here that the earning per shares this year are very good. 100% next year also very good. Next five years also good. So the projection is also good. And also in terms of sales, quarter by quarter is good. And the earning per shares quarter by quarter is good. Return on equity. ROE is very good. Way above 10, 15%. So in terms of fundamentals, I think is pretty solid, pretty good. The only thing I may be concerned is this insider transaction that is minus 60%. And we can have a look here. You see there was this on 27th of March, this big sale by the CEO. Let's see if they say something in the news. Okay. Is there anything, there should be something after. Oh yeah, this one. Let's, let's check. So the other nice thing about FinViz is that it gives you a lot of information even on insider transactions. Okay, so what do they say? Okay, so basically needed money for some other venture. Yeah. The thing is this about the, about the insider trading. I think there is a big difference between positive and negative insider trading. Positive insider trading probably only happen if the people working there are really confident about the company. Otherwise why should they buy? But selling doesn't mean that the company is doing bad. They may sell because they need cash for other reasons like in this case. So I'm not really concerned about this number. And on top of that, this is a trading strategy, it's not a long term investing. So we just need to make sure that in the short term, for a few days, weeks, maybe one month, the price will go up. We are not really assessing the long term stability of the company. Otherwise we should look at something else like the debt and things like that. So to recap, fundamentals very good and technicals also good. I repeat again, the trend is up. We have this kind of pattern with a dip here. Price making higher high, higher lows. This point is a pivot point is a situation where the price was making a low and then it's bouncing up. And it means that is a good place to put our stop loss around here. Why? Because if the price is going below this pivot point, it may be an indication that the trend is changing. And the last thing I will check is about earnings. Where are the next earnings? So you see here in Tinko Swing they will tell you that they are on the 2nd of May. So usually if the earnings are coming in less than 10 days, I will not take the trade because as you have seen here, earnings may be associated with high volatility. Not all the time. Sometimes nothing happens like here. Sometimes you may have gaps, sometimes you may have things like that. So what is the risk? The risk is that in case you have a big gap, it may be good for you if it's going up. But it may also be bad because if you have a gap down, your stop loss will be triggered at a much worse price and you may lose more than what you wanted. So it may be a good idea to close the position before earnings, but I also want to have enough time for the for the stock to move and reach my target. So in the next video, what I will do, we will place the trade, so we will do the position sizing and to understand how many shares to buy, where to place, stop loss and all the other things like the entry, the target. And also we will place it for real using the interactive broker platform. So you will have a complete strategy. You will see from the beginning to the end how to place trades. So stay tuned and see you next time.