Rebel Traders 074 : A Bird in the Hand is Worth 2 In The Portfolio

Awareness and Opportunity are two core words that can help grow your portfolio and pack it with prime positions… If you know how.

Did you know that you may well have a strategic advantage over many other traders?

It’s true. Many traders do have hidden Super-Powers.

The cool thing is that you don’t need to wear your underpants on the outside of your clothes (unless you want to, that’s your deal…, not mine!)

So, how do you have an advantage?

Well, think about this for a minute. You have a unique set of experiences, knowledge, skills, and insights that no one else has. Now the breadth and depth of that knowledge and experience are going to vary from person to person.


However, the one thing that this can help you with is developing your true character as a trader. It will allow you to have special Spidey-Senses in the market triggered by events, actions, news and other factors that align with your previous experiences.

So, raising your awareness, keeping your eyes on the prize and tapping into that unique perspective you have can help you grow your portfolio and pack it with prime positions.

In this week’s show, we show you how to utilize those skills in a whole new way.

Time Stamped Show Notes

Read Full Transcript

Automated: Awareness and opportunity are two cool words that can grow your portfolio and position. You ready? Let's do it.
Rebel Traders takes you inside the world of two underground master traders who take an entertaining and contrary look at the market to cut through the noise of wall street and help you navigate the trading minefield. Together Sean Donahoe and Phil Newton are on a mission to give you the unfair advantage of a Rebel Trader. Now, here are your hosts, Sean Donahoe and Mr. Phil Newton.
Sean Donahoe: Hey, hey, hey, this is Sean Donahoe, and welcome to the Rebel Traders podcast. This week we are going to be basically help you keep your eyes on the prize and basically to line up the sights on your rifle to pick the target for long-term success. What we're going to do in this week's episode is we're going to be looking at how you can sync your knowledge, your interest, your expertise to raise your awareness and find those hidden gems. As always, I'm joined by the pirate king himself, Mr. Phil Newton. Hiding in the background there.
Phil Newton: The czar.
Sean Donahoe: A czar, okay, Sinbad the bloody sailor here. We're just kind of ...
Phil Newton: Just to not sing a segment of I am the Pirate King, Pirates of Penzance.
Sean Donahoe: Yeah, the Pirates of Penzance, the Pirates of Portfolios, there we go, that's what we .
Phil Newton: Even better, yes.
Sean Donahoe: There you go. So yeah, this week me and Phil are going to dive and look for the hidden gems that are buried in the charts.
Phil Newton: Springboard off the plank maybe.
Sean Donahoe: Absolutely -
Phil Newton: Keeping with the pirate theme.
Sean Donahoe: Absolutely, keel haul the bastards, there you go. We're going to look at how basically what your knowledge, interests and expertise actually are, and how they can raise awareness to find those things.
Phil Newton: Transfer of skills as well might be another thing, because just jumping ... You just sparked a thing, when we're coaching people we often try and draw on the experience that they have, so that we can compare it to how that might apply in trading. So you just kind of triggered something that we quite regularly do. You probably know a lot of things already from outside of trading that are wholly applicable with a few different adjustments to the trading world. You know, you can make best use of your knowledge in multiple different ways.
Sean Donahoe: Absolutely, a few simple tweaks that's all it takes, and a few little techniques.
Phil Newton: We like a little simple tweak, don't we?
Sean Donahoe: Darling, yes. Basically these can lead to prime opportunities in the market if you know what to look for, that's what we're here for.
Phil Newton: Awesome, we've also got coming up later on in the show our Trade, Fade, or Evade. I do like that section Sean, can you get the feel of it. Because we get to demonstrate that production line method that we keep going through every day of the week, every month. So that you don't have to be flicking through charts all day, every day. But at the same time, if you've got a little bit of extra time, then you can do that, but it's not necessary if time is a premium for you.
Sean Donahoe: Absolutely. So let's dive right in. Now, as Phil alluded to, this is something that we do on a regular basis with the students. It's something we do ourselves, we have our own backgrounds, our own areas of specialty. It's very interesting, although we have a lot of the same analysis and we're looking at the same things, both Phil and I, again, Phil is our senior strategist, analyst, and lead coach. We both look at the charts in the same way, have the same kind of viewpoints, we share each other notes and everything else that we're looking at. But as was highlighted in our Facebook community, we have very different approaches with the same analysis because of our different experiences, different interests, different focuses. All of that helps create really a unique trading voice, a trading persona.
Phil Newton: You put me in mind Sean of that ... Have you seen that cartoon that's doing the rounds at the moment? It's two people facing each other and on the floor is a giant six in front of both those people. But for one person it's a six, and for the other person it's a nine.
Sean Donahoe: No, I haven't seen that, but I can see that.
Phil Newton: I know it's a silly little kind of meme type illustration, but this is what we mean. Everyone can look at the same information and depending on your perspective, which is something that we've been talking about quite a lot recently, you can see different things. I suppose from the most obvious one that we always kind of clash over, well not clash over, but we kind of lock horns about, and kind of, "Oh yeah, I can see where you're coming from." Type of viewpoints, is with this time horizon.
My automatic default is look at the last 15 months. Your kind of natural default is look at three to six months, because you're a little bit more aggressive. So you're happy to be a little bit more flexible with that objective or viewpoint, or time horizon. I do, I always find that quite interesting when you've got a different perspective, how everyone can look at the same information and find something to trade, or some way to trade, or an opportunity. You know what I'm saying there Sean, don't you?
Sean Donahoe: Absolutely.
Phil Newton: It's an interesting thing with perspective.
Sean Donahoe: Well also the thing is, yeah, I do look at the last 12 months, minimum, and I do tend to look at the last two years. But a lot of my charts are focused on the last six months that I look at on a regular basis because again, I know I've already looked at 12 months, and I'll pull them up and I'll blow them up and scale back, if I'm doing a lot of the initial analysis. I do a lot of ... Again, I did a video about this-
Phil Newton: You do a bit of extra ... You kind of have a separate monitor, which I used to, in fairness, you have a separate monitor because you're a little bit more desk orientated with your other projects, and other business commitments. So it's easier for you to just have a quick scan, and take a 10-minute break from that, and have a 10-minute binge on charts. You know, it's easy to do it. Whereas, I don't want to do that anymore. I've done that, I spent a long time doing it. I spent 12 years as a day trader. So I don't want to do that anymore, therefore that's why I don't have that viewpoint. But I suppose because I've traded that way with a shorter term time horizon it's easier for me to switch gears back and forth. Which is why we're always saying, "Oh yeah, I can see where you're coming from."
I'm open-minded to see that viewpoint. Which I suppose is another thing with traders. That's something we spoke about at length last week, which is that open-mindedness to new information, or in this case, to different perspectives. Because a different trader will see different things. To be fair, I remember talking to, back when I was day-trading all those years ago on currencies, regularly used to chat to a guy called Darren. We'd be on the phone and my time horizon was one to three days, and his time horizon was one to three hours. Regularly we'd be looking at exactly the same entry points, because it's a bloody good entry point. But our time horizon, his might be bearish, and mine might be bullish. We'd be doing two completely opposite trades.
We'd both be making money on it. It was just such a bizarre thing. That was kind of like my first real huh, type of moment where two people can look at the same things, have two completely opposite viewpoints, two different, opposite trades, and both of you make money. That was an eye-opening revelation. Yeah . I always find it fascinating, and it happens to us all the time.
Sean Donahoe: Yeah, I mean there was one I remember-
Phil Newton: . It's quick to the draw isn't it, who can say that first?
Sean Donahoe: Yeah, absolutely. Yeah, a few years ago I remember one that was Herbalife. We had complete-
Phil Newton: I remember, yeah.
Sean Donahoe: We had the exact same viewpoint, but again, and we proved this time and time again in the show, especially with Trade, Fade, or Evade, that we see different things ... Or we see the same information, we see the same entry points, but we have different times horizons, thus we want to execute the trade in a different way. You again, sometimes-
Phil Newton: But that production line method is pretty much the same process that gets us to the conclusion or end result that we want, it's just with that time horizons the adjustable variable in our production line, we get a different output. It's always interesting.
Sean Donahoe: But it really comes down to that trading personality. What is important to you, what time horizons. The very key that you've mentioned, I'm a wee bit more aggressive than you in our trading styles.
Phil Newton: It's just because you're around to look for the opportunities. Don't get me wrong, I can be as aggressive with all of them, I just choose not to do it. For example, I am looking a little bit more at day trading strategies at the moment, but I'm trying to take that knowledge and apply the principle of how can I do the day trading thing without spending-
Sean Donahoe: Without day trading.
Phil Newton: Without day trading. It can be done. It can be done. But it's just how do I apply a way that I want to trade with that objective of getting the day trade in, but without the time commitment that's usually associated with it. It's still going to require about one to two hours, but when you've got that objective you can backward engineer the process that gets you the result that you want. I want a little bit of activity on the day trading side again, because I've got a hankering for doing it, but I don't want to spend all day day trading. I know I can do it that way, so I've just got to make a few tweaks and adjustments to get the outcome, or the output that I want with the objective. I want to do this, but here are the restrictions, here are the requirements, and put all those pieces of the puzzle together and we can get the result that we want.
This comes back to something that we continue to discuss, these are all illustrations of what's your end objective? I don't mean to make money from the trade or profit, I mean how do you envisage yourself trading? What does that look like to you? For me it involves logging in, doing 20, 30 minutes and go and do something else. That is the end objective for me is to spend as little time under the act of pushing the buttons and trading. That's what I want from trading. Whereas, other people they like the idea of perhaps spending from an hour before the markets, all the way through to an hour after the markets, the full nine to five routine, if you like of trading. They want that experience. If they've got the time and the luxury and the means to be able to do that, then great. I'm not saying that's not a bad thing, but that's what they want.
So I think having that objective of how do you envisage yourself trading, and do you have the ability to do it. So for example, we're just talking about day trading, if you want to day trade, do you have the ability to day trade? Because it's often not a case of login for 20 minutes and day trade, in the way that most people talk about, which is do a bit of scalping off one-minute charts, and we'll make loads of money. It's not actually that simple. You can spend all day day trading for that 20-minute trade and most of that time's spent waiting. So if you've not got the ability to day trade, then why are you trying to day trade? That's where I was trying to get to with it.
Sean Donahoe: No, that's absolutely true, and-
Phil Newton: that's the objective.
Sean Donahoe: It is, because like my daily routine, again, talking about traders' voices and what we're looking at here, my day is usually 30 minutes before the market opens, in fact I'm just rattling off a couple of trades as we talk here. Then during lunchtime, then I walk away, because I've got all my other interests I'm taking care of. Then usually around lunchtime I'll flick on, again, because I'm usually at my desk at my office, I've got a multi-monitor setup because I'm again, working for multiple different businesses, and I've got all my different teams and everything else going off. I'll flick over the charts while I'm having a bite to eat, just to see what's happening through the day, just to kind of see, okay, yeah, like I say 10 to 20 minutes-
Phil Newton: That crazy old weird going on, yeah.
Sean Donahoe: Yeah, and I usually flick over the news, because I like to have a global and kind of a news awareness, not that I'm addicted to every pundit, but I like to see what's going on in the world, in general, just because of my personal interest in current and world events. Then I have a look at the charts as well, see if there's anything rattling because of that. Yeah, okay, cool. It's not really that I actually do anything, I just like to know what's going on, I'm kind of like ... Like awareness.
Phil Newton: That's what we spoke about with a finger on the pulse.
Sean Donahoe: Yeah, then come end of day, and like when Phil was putting his feet up for the day, so I did a little bit of analysis end of day and put a video up, just because okay, end of day, what's happened through the day? Anything cool popped up? This is interesting. Boom, here's a quick opportunity, I'll line that up tomorrow.
Phil Newton: Anything new and noteworthy, yeah I like it.
Sean Donahoe: Yeah, so again, it's more of I'm a little more, let's just say I keep an eye on the broader markets and -
Phil Newton: If there's a short-term opportunity, you're ready for it.
Sean Donahoe: Yeah, and it's also just because I generally like to see what the hell's going on in the world, because it doesn't just affect the trading, it affects many of my other business interests as well. So I keep my eye on it.
Phil Newton: That makes sense.
Sean Donahoe: It's great for awareness. Phil's I would say a lot more passive, but here's the cool thing with Phil, and I don't know if you'd agree with me on this, your passive in that you have your 30 minutes in the morning and you're done. But this gives you the capacity when you have the time, the inclination, et cetera, that you can then go in and play around with different ideas, play around that, but it's not your mainstay. You have the capacity when you have the itch that needs scratching, you can go do that but it doesn't become your main thrust.
Phil Newton: Exactly, I've got a little bit of a thing to do, a little bit of data I need at the moment. Again, I did a little bit as you know, I spent a bit of time earlier in the year actually day trading and scalping on the open, which I quite like doing. But it just reminds me of how time intensive it can be, which then drove-
Sean Donahoe: And why you don't want to.
Phil Newton: And why I don't want to do it, yeah. I mean it was nice reminder. I know I've also got that skillset that if I need to do it, and I want to do it, I can certainly go and do it because I've got that skillset. So how can I take that itch that I want to scratch, as it were, and apply the same philosophy that I've got these days to a shorter term time horizon? Open and closing on the same day, that sort of time horizon. Can I use that low time intensity objective and apply that to the day trading? Which it can be done, it's just trying to figure out how to actually put all those elements together so we've got that same low time commitment and you get all the benefits of day trading. Yeah, it's an interesting thought exercise, if anything.
I suppose the other thing as well that I was kind of skirting around as I was trying to articulate the thoughts, is it's pretty fucking boring, what we do. It really is. When you've got your strategy, because while you're learning it's all new and it's all shiny, and you've got all the buzz words, and all the tools and the tricks, and all the whizz bangs and everything, yeah it's all exciting. But you know, 20 years down the line you've got a process that works. This is why probably I keep referring to it as a production line. There's nothing new on the production line, it's just this plugs into that, when that's done you do this. When this is done you do that. It is by rote. When you get to that point, it's pretty dull and boring when you've got a system that's making money.
So you're always looking to try and sharpen the edge. So most of my time is ... It's more to do with research and maybe just affirming, or reaffirming that yes, this is the best strategy for me right now, based on my objectives and my goals for how I envisage myself doing the act of trading, which is what we mentioned earlier. That just reaffirms what we're doing. I mean for me, I was always kind of researching and developing and tweaking and maybe I'll apply the strategy and make it a primary strategy. Or maybe I'll just keep it on the shelf. But you're always kind of looking to keep those little gray cells active. I think that's part of what the trader journey is. I think partly the mistake that people can make is that that research and development and self-education and keeping yourself sharp for the skills of trading, they should be completely separate from the strategy that you know is working already. Does that make sense Sean?
Sean Donahoe: No, absolutely perfectly.
Phil Newton: Doing a here, because mistakes that people make is going both those things. They've got a strategy that they're maybe not too confident with because maybe you're brand new to this, or low experience. Then you're trying to learn more and refine and polish and get better. They start making ... Stop trying to change the car wheel while it's in motion. That ends up in a very painful end result. So I think if you can separate those two things, yeah, I think that makes sense.
Sean Donahoe: Absolutely, and the cool thing is that when you have that kind of process down, you've got the strategy down, and you're doing it almost robotically, you don't even think about it. You're just boom, boom, done.
Phil Newton: That's where I'm at for the moment.
Sean Donahoe: Yeah, I mean the way-
Phil Newton: It's all boring. That's how it should be, that's a good thing for what we do. We don't want it to be exciting.
Sean Donahoe: Yes, we don't want this to be Las Vegas, this is not the roulette wheel.
Phil Newton: Yeeha!
Sean Donahoe: A lot of people unfortunately do treat it like that. For me, if it makes it dull and boring, I actually find it-
Phil Newton: I want to completely detach, yeah.
Sean Donahoe: I find that I can do that, I can detach all my emotion from that, that's great, because that leads to consistency. When you start getting excited, that's when you start making mistakes.
Phil Newton: Making mistakes, yeah.
Sean Donahoe: everything else. But the cool thing is that because I have a direct passion and interest in what I do, while that part is boring it allows me to refine my processes and do experiments and funnel down interests. I mean one of the things we talk about is where your interests and trading actually intersect, because for me, I'm a tech nerd. I've got my fingers in a lot of different things in the tech industry. Everything from startups, IPOs, incubators, so I'm always looking at the tech sector and what's happening in moves in technology. So a lot of my direct interests come from the tech side. I'm very focused on that, because that's where my interests and skills and experience lie. So a lot of the times when I'm trading I tend to have a particular focus on tech, because outside of what the charts are telling me also there's a lot underlying from a fundamental aspect.
That more tips into my investor side, which again, is outside of the trading which trading is purely, or for the most part, technical. Unless I see a little fundamental opportunity, but it's rare, it's more chart focused. But for the investing side-
Phil Newton: There's a longer lead in with the fundamental side, isn't there?
Sean Donahoe: Exactly, and you can see shifts and see tweaks and everything else, because you've got that little bit of deeper insight based on where you are, what you've done.
Phil Newton: I think you've got more thinking time when you've got a bit of a fundamental twist to it. Thinking time is how I refer to it. What do I mean by thinking time? You could probably spend a couple of weeks thinking about is this the opportunity, and then waiting for the timing, which is where the charting element might come in. So you've got a lot of thinking time about it, which is where keeping the finger on the pulse, and keeping an eye on the headlines and looking for those fundamental shifts, that's where that's beneficial in my mind.
Sean Donahoe: Absolutely, and you know, when you see something happen, you just tipped on something there that was very important, is you might be thinking okay, what would the criteria for a perfect entry in this area be? What would I look for in terms of an investment? I mean perfect example, I'm looking at oil, that was my focus yesterday, oil futures actually. I'll pull up a chart here. I was looking at the oil sector, like crude oil, which has taken a severe hammering the last few weeks. It's something we talked about in the show, say two, three weeks ago, or something like that. That there was a point that I'm waiting for to see if it breaches, if they breach that, then I'm going to be a bit bearish on oil. But it was a point of interest and everything else, and sure enough, it did breach through that, and that was what I was looking at, that would be my turning point. Sure enough, I've been short oil for a while, but now I'm thinking okay, I'm not looking for the turnaround.
Phil Newton: It's run out of steam, pardon the pun.
Sean Donahoe: Yeah, exactly. Again, it's that when you see a rapid drop, because you have a knowledge and you've already got that idea in mind, that your analysis and your thinking cap has been on and you're like, okay, when it does -
Phil Newton: Think about .
Sean Donahoe: Yeah. This is where really having a trade in the hand is worth another couple of trades in the bush. Only over here, because you start thinking from this sector, okay, if this happens, what else would happen co-related to that? What in the other sectors? Maybe if you're looking at the futures you don't want to trade futures contracts because of the risk and everything else. Okay, well what ETFs would I be looking at? What infrastructure companies related to this sector would I be looking at to maybe take a pop on? If this goes down, what's the equal and opposite reaction here? What goes up if oil goes down? What this does is starts you thinking.
Phil Newton: Yeah, or is there start having that Socratic approach. That's certainly what we were talking about in the Facebook group as well this week, sorry, end of last week, with that ask yourself questions, keep that ... We spoke about it at length in last week's show as well. Have that open mind. This is what we mean by have that open mind. It's just asking questions all the time. That's a really interesting thought and approach to again, just thinking about the scenarios. Maybe again, start looking left, when something's happen you start looking for the evidence, you start looking for the footprints of what happened last time something similar happened? Either fundamentally or from a chart point of view. You can literally look back at footprints and there's so much data these days available, we can go and figure out this happened in the '70s three or four times, you can go back that far if you wanted with something like oil.
You've got so much opportunity to go and look for evidence. Especially if you've got more of a fundamental twist to this. Last time something similar happened, because there's a good chance that something similar happened, and you can go and analyze it and say what were the outcomes, what were the scenarios, and what happened next? So you can start to figure out a possible what happens next for right now. That always makes it interesting. I suppose the follow on to the point that you were kind of moving towards is when it happens, it's not a surprise. You've planned out the possible scenarios, if it goes up, down, or sideways, what are the possible scenarios? How can you potentially profit from that? Is it a direct trade on oil? Is it an ancillary? Is it something else? Is it an inverted trade, if something goes up, maybe something goes down. Where is the opportunity? I think having that open mind just keeps you prepared for possible scenarios.
Sean Donahoe: Yeah, I mean a perfect example of that you actually mentioned in a video a few days ago, after the recent rallies you were saying, "Okay, I expect it to retreat a little bit down to about halfway from the recent rallies. You were saying this very .
Phil Newton: Yeah, pick your own bets, they're all doing something very similar, what a surprise, it's almost like I had a crystal ball, isn't it?
Sean Donahoe: Well yeah, I mean it's a pretty good analysis -
Phil Newton: It's nothing clever, but this is the thing, I always play it down. There's nothing clever of fancy about it, it was just if it goes down, this is the possible scenario. If it goes down, where could it go to? Well this is the level, why? Look left, because that's where it got to last time. There's nothing clever or fancy about this analysis. You know, I've been doing this since we were doing trade runs back in 2006. There literally is nothing clever or fancy, it's just that was the scenario for if it went down. Then I went through a scenario for if it went up, and if it went sideways. So of course I'm going to be right, because I've covered the three possible bases. That was just the, "Oh Phil, you were right again." No, it was just one of the scenarios that was the most likely one, in fairness. But it always makes me laugh that people forget about the other two scenarios that I talk through.
Sean Donahoe: Exactly.
Phil Newton: So it always makes you look right when you come up with scenarios, but there is literally nothing magical or mystical about what we do. Now that first primary scenario that we spoke about earlier in the week has unfolded. It's like it's looking like the second leg of the scenario is unfolding, so that's the primary. If it continues to go down we've got another scenario. We're talking about the stock indexes there, just for reference. But it's just interesting the way that you're always going to be right, and it gives you that sense of accomplishment when one of the scenarios unfolds, because one of them's going to be right.
Sean Donahoe: It goes up, down, or sideways. That's the three things, we've covered all three.
Phil Newton: It's probably a little bit of all of them, in fairness. Yeah, but I think when you start to do that, and think about I know what's happening now, but what could happen next? When you start to ask yourself those types of questions, and start looking for history to find some supporting evidence for what happened last time, that's where your experience as a trader will really take off. Again, just a quick tip actually, there's something we've not spoken about too frequently, but how can you speed up experience? Because experience takes time, but if you can ... Especially if you're like us where we trade primarily off the daily charts, how can you get a day's worth of experience in 10 minutes?
So go and put a 30-second chart on, or a 20-second chart on, and go and just look. If you've only got an hour in the day to look at things, and practice and sharpen the sword, as it were, then you want to use that time efficiently. So you want as much information, as much chart time. So if you go and look at 10-second charts on intra-day data, again, pick a chart. You've got no intention of trading it, just for reference-
Sean Donahoe: You need something with volume, you need something with a lot of volume.
Phil Newton: Yeah, I mean go and look at the SMP, the Dow, Apple, something that's really active, but just go and put a fast time chart. If 10 seconds is too fast, use 30. If 30 seconds is too fast for you, put a minute on. Just have a look at the data that unfolds, and start to do predictions. Start to do analysis on acid. I think what I'll do, I'll put a little video for this in the Facebook group, it'll be two or three minutes, but all you want to do is just do that analysis on fast forward. If you're a trend line dude, use trend lines. If you're a moving average ... Just literally verbalize, say out loud what's happening now, make statements of facts, because that's not going to change in relation to the analysis or the tools that you're using. Then think about what happens next, what might happen next, if it goes up, down, or sideways?
When you start doing that on fast time frames you get the experience, because it's making those decisions, making those assumptions of this is what's happening, this is what's going to happen next. Then it takes just two, three minutes to figure out. Or to find out what actually happened next, if it goes up, down, or sideways. Then that's going to give you experience and you can kind of course correct those assumptions. Now you've got actual experience to draw from. You might have been right or wrong, and it's either going to confirm or not confirm that that viewpoint happened. You get to really build up your experience on pretty much fast forward. Assume that you've got say 30 minutes in the day to do it, just pick that 30 minutes. Go and look at a fast timeframe, and you're going to get 30 years worth of experience in 30 minutes, because you're not waiting a day for a new piece of information for you to do the same type of analysis.
Sean Donahoe: I was going to say, a lot of the way I test some of my indicators I develop and my algorithms, is by testing it on a one-minute chart. Just so I can say okay-
Phil Newton: You've got no bias as well. Because if you try and do that as you scroll through the charts, you've always got a bias because you ... Whether you consciously acknowledge it or not, you know what's happened next. As you scroll back through the charts, you know what happens next. So you've always got that bias. You can always skip ahead a few bars to see well were you right or weren't you? This is real-time analysis that you're doing on say 10-second charts, or 30-second charts, whatever the time frame is. Whatever's the right pace for you, but you're going to have this analysis, and you literally don't know what's going to happen next. It's real-time analysis and that is invaluable. You can really concentrate. This is what we've spoken of before in the past smart analysis, smart use of ... The best use of the 30 minutes that you've got to look at the charts.
If that's the only window of opportunity you've got to practice the skillsets, then make the most use of it as you can. Again, you can get six months worth of experience in that 30 minutes because you're on such a fast timeframe. You don't know what's going to happen next, that's the advantage of doing it. You get to genuinely test out your knowledge, your theories, your skillset, and see it unfold in real-time. You'll find out whether you're on the right track or not on the right track, as the case may be. You don't have the benefit of hindsight, that's the real key to all of this.
Sean Donahoe: You don't want to curve fit stuff, based on your analysis, like oh I know it didn't work there, so I'm going to skip over that piece and .
Phil Newton: I'll skip that, yeah. If I've heard that once, I've heard it a thousand times. I didn't include this segment of the chart because of whatever bullshit reason that they made up. The true test of a trader is on the hard right edge of the chart. I think that's a nice little tip that, I quite ... Obviously I've used that many times, but it's the only way to get a true, genuine, real-time experience in the shortest possible timeframe. Again, you've got no intention of trading at a 20 or 30-second chart, but it just gives you that real-time experience, that's how you get it. I'll do a short video after this, after we've done the podcast, I'll pop it in the Facebook group.
Sean Donahoe: Absolutely. Guys if you want to be part of the Facebook group go to Facebook.com/groups/rebeltraders, and you'll find us, just put it in the search if you want to, we pop right up, just like Viagra. It's all good. So without being-
Phil Newton: Viagra.
Sean Donahoe: You know, I couldn't resist.
Phil Newton: You only said it because I was going to say it.
Sean Donahoe: I know.
Phil Newton: You got there before me.
Sean Donahoe: Anyway, with that being said, let's go over to Trade, Fade, or Evade and let's have a look at a few stocks. This week we're going to get our hands dirty and all covered in oil. So that actually doesn't really help the mental imagery there. We're going to start with-
Phil Newton: Dirty.
Sean Donahoe: I know. Ooh, my. So we're going to start off with FANG, and I don't mean the Fang stocks that we've been talking about, the actual stock symbol is F-A-N-G, Diamond Back Energy. Now again, this is all based on oil, like I said, oil has been taking a hammering the last few days, so I'm kind of curious to see whether there's some opportunities. Again, haven't looked at these, I just grabbed a whole load of random oil stocks, or oil related stuff, to see if there's an ancillary or co-related move that we can lump onto.
Phil Newton: Is there an opportunity? Yeah. Yeah, because our preferred trading vehicle is options. So ETF stocks, that makes the most sense for us, if you don't want to trade oil, or if you don't want to trade options, or on the futures of oil. Not everyone does, in fairness. As you said, plenty of opportunity. FANG.
Sean Donahoe: Okay. Now this one, I would trade this. This is in range, if you look at it going back to end of 2018, this has been ... The current level has been pretty much a consistent bottom of this range. But if you'll also go back two years, again, longer timeframe, it was the high of the previous range. So I actually like this one. I think this is great.
Phil Newton: I agree, it's in a range, the low in the range, it's bullish in sentiment in my view, nothing new is developing, so it's got to be traded, which is what we're saying would be, we're expecting it to move high. Nothing new is happening, it's probably going to continue to be range bound.
Sean Donahoe: Okay, so that's a simple one, we both agree on that one, funnily enough.
Phil Newton: Nice and easy, knocked one out the park.
Sean Donahoe: Yes, thank you for that micro-correction.
Phil Newton: Qualification.
Sean Donahoe: Next one, XOM, Exxon Mobil, what would you say here?
Phil Newton: I think it's the same, it's in a range, but this time it's not quite at the lower or the upper end of the range, which is where I would like it to be able to put a trade on. It's a wait, it's a nearly trade, but it's not quite at the right location. But same thing, it's in a range. The current price is kind of in the middle of the range. The range I'm evaluating from about April this year is the dominant, slightly angled range.
Sean Donahoe: .
Phil Newton: In fairness, looking back at it, it's kind of been dithering around the same thing since about 2017, the last two years.
Sean Donahoe: I would evade this right now, I just don't like the look of this one personally, but-
Phil Newton: Yeah, it's hard to define the upper and lower boundaries. It's not as defined as FANG was.
Sean Donahoe: Okay, next one, Kinder Morgan, which I believe, if my memory is right, they are a pipeline company. What would you say about this one? It's at the lower end, it's a $17 stock, but what would you reckon on this one?
Phil Newton: It's not quite in the price range, which is the first thing.
Sean Donahoe: No, .
Phil Newton: Yeah, I mean it's only recently gone below $20, so again, it's in a range. I think what I don't like about this, while it's the same shape, it's in a range, it's been quite messy. Most of this from July, it's a very tight, very narrow range, as a percentage it was really, really narrow, it was almost flat-lining. I don't really like that in a stock. I've seen that in a few stocks recently, and that's usually indicative of something, a big giant question mark going on in the background. There's no trading activity, nothing's going on, price movements in a very tight, narrow range. If anything, you'd be thinking that that's usually the behavior when there's some type of takeover talks going on in the background. You see that on a few stocks when they're talking about things in the background.
I suppose it'd be interesting to go and find out what's going on in the news with this, because usually there's something going on in the background, when you see that type of really narrow price contraction, which is abnormal compared to if you just look at the behavior of the last two years. So it's evade, but I'm just trying to give the background of this, of why. It'd be interesting to kind of go and look at the news and just see what's actually going on here, now that I'm looking at it.
Sean Donahoe: Now you want to see something interesting. This is just something that occurred to me. I'm just looking at some of the levels, and I just drew a couple of trend lines here. If you look back, and again, I think you might actually be onto something here, secondary analysis. If you look back from say May of 2017, if you look at that top there, the July of 2017 and then if you look at it pushed through it a little bit in January of 2018, but if you connect those points to the current low, as of the 25th of October, you can see where it's kicked back from right now. It's kind of like it's and it's extended.
Phil Newton: I see.
Sean Donahoe: It's kind of bounced around that point of interest, and bounced off there. But if you look at it, it's kind of ... There's been a little bit of a channel there, descending channel that has gone sideways after that. It kind of broke out of that channel, but went sideways, but it's dipping back towards it. That is looking interesting to me. I think you're right, I think this is the kind of indecisiveness that-
Phil Newton: There's something going on.
Sean Donahoe: Something going on.
Phil Newton: Something going on, but price behavior of the last six months is very different from the previous 12 to 15 months. Again, in my experience there's usually something fundamentally going on, secret boardroom meetings type of thing that's going on in the background. Because of that then you've got a massive drop in volume, massive drop in the daily range of movements. That's usually suggesting something going on there.
Sean Donahoe: Yeah, me personally, I mean I would evade this one just because it's not in my dollar range, per se. This was completely chosen at random. The fact that you can see something about this and think well the oil sector's been taking a damn hammering recently, is there something going on? Is this a company in trouble? It might also raise your awareness to look at the fundamentals to say okay, when something like this is trade it might be further investigation, is there something going on? What's on the rumor mill? What's on the grapevine.
Phil Newton: I was just going to suggest this is a good example, KMI, kilo, Mike, India, Kinder Morgan, it's worth going to take a look at, just to see what we're talking about here. Because that really narrow price activity is an anomaly compared to the previous 12 to 15 months. Again, before I've even looked at the news I know something's going on. So that's why we're saying, it would be interesting ... The point I really want to get onto, this is my argument, but I don't need to look at the news. Because when you've looked at enough charts and you say, okay, well price is doing something that's different and not normal for this particular stock. Or normal at all for any stock, to be fair. It's completely flat lined.
You know, it's just an interesting chart, just to keep your mind's eye open for this sort of thing, because it's not the sort of behavior that you might see. That then leads onto I wonder what's going on in the news? So this is a good example of when I would then, based on what I've seen on the chart, then go and look at what's in the headlines and the news and hit the Google machine and see what's going on. Because it might be that something's going on, and it might be that there's trade opportunity there from a different perspective. You know, one of those once every six months, eight months, 12 months type trades.
Maybe this is the footprint that's being left in the chart to suggest that something's changing potentially or about to change with the fundamentals. People are waiting. So this is interesting for lots of different reasons. What are we going to do with it today? It's evade, but certainly it's been hoisted up my flagpole, maybe I'm going to go and take a look at it.
Sean Donahoe: Absolutely. No, very cool. Okay, next one, let's see, EQT. EQT Corporation. Ooh, let me have a look, I haven't even had a look at this one myself.
Phil Newton: The trade was two days ago, the benefit of hindsight, having watched it go from $35, it's now just below $20 because it's gapped down yesterday. It would be trade, but again, the trade would have been a few days ago. With the benefit of hindsight, I don't think I would have been in this, but I can see where the trade was, if that makes sense?
Sean Donahoe: Yeah, I'd be evading this one right now. The movement's already happened.
Phil Newton: Yeah, most this year, most of last year, and 2017 you've got a range, you've got a very classic break down at the beginning of October, very classic pullback. It wasn't a deep pullback, so it wouldn't have highlighted on my regular scans. Again, it is a breakout pullback, I can see the trade, it just wouldn't have highlighted, and then you've got the big, what looks like a big news drop yesterday. I would imagine bad earnings, and you've got this monstrous drop. I can see the trade, it's just it wouldn't have highlighted on my usual scans. If I was going to do something bearish, but post-news it's usually an evade situation, because usually after a big gap in any direction on the back of some news announcement, price usually meanders for anywhere up to 30 to 45 days. That's usually my experience anyway.
Sean Donahoe: Okay, next one then, SLB. I can't even pronounce this.
Phil Newton: SLB, I've got a love/hate relationship with Schlumberger.
Sean Donahoe: Yeah, I would be looking for exhaustion, but not seeing it yet. Little bit of a kickback today, but it's been, if you look back at two years, that's been a declining one. It's been range bound most of this year, but last few weeks. Again, with the hammering that oil has taken, again, very close relationship with the oil futures, there's a lot of correlation that you can see it's dropped down a lot. Even though oil has been peaking, Schlumberger has been going sideways for most of this year. If you go back two years, you can start seeing a clearer decline over time, even though that little bit of range bound may be a little breathing life into it, compared to the oil market. But as soon as the oil dipped down, boom, dropped like a bloody stone.
Phil Newton: I think if you compare this with EQT, EQT have missed the boat because big gap, trades already happened. You've got the same kind of consolidation as you had just said, but you've got that breakdown, you've got the pullback, it's not a deep pullback, but I think that this rally ... It's currently about $48 and a half approximately. If it rallied to $55 I think that would be where the trade was. If you can get the deep back to $60, that would be great. Previous support just to ... I'm gagging on using those phrases, but previous support might turn into resistance at $60, big psychological round number. I think if it can get to there, that would be the kind of ... Not quite sell or rally, but break out pull back, but you've got a deep pull back, back to the previous break point. That $60 was quite pivotal for most of last year, and for the latter half of 2017. So that would be the trade for me. It's not a today trade, it's certainly a maybe trade, but I'd be looking for that pull back.
Again, compare that to EQT where the same type of setups unfolded, you've just not got the deep retracement. So this is what it looks like before the big potential move. Maybe there's something similar to ... Maybe the trade's on SLB because you missed it on EQT.
Sean Donahoe: Possibly. Now one thing, ladies and gentlemen, and I want to be very, very clear on this. When you put stuff down as a maybe trade, also write down exactly what you are looking for, and why. If that does not occur in a timeframe that you speculate, take it off that maybe trade list. Because one thing-
Phil Newton: It's funny-
Sean Donahoe: ... you can really-
Phil Newton: I was just going to say it's funny, we were writing about this in today's email, weren't we, to our loving and adoring subscribers. Wait for the trade, if it doesn't get to the level that you want, don't chase it.
Sean Donahoe: Yeah, exactly. Again, you can end up with a whole load of stuff on a maybe not today list, but the problem is that over time you forget what your exact criteria were. It ends up just becoming a big junk list that starts creating noise. So be very, very clearly defined about what you are waiting for to get into. If it doesn't meet that, boom, kill it, that's it.
Phil Newton: Don't chase it, don't put your radar on it just for the sake of doing it.
Sean Donahoe: That way you focus on the ideas.
Phil Newton: I've got to admit, you raise an interesting point, I've got a lot of stocks on a maybe list, just to-
Sean Donahoe: Yeah, that way you do .
Phil Newton: I'll check that in a few days time and see if there ... Or I'll check back. You just keep checking back every couple of days, and then once every couple of weeks I'll go through everything that's on that maybe list. There may be a dozen or so stocks on there. You know, if I can't remember what I was doing, the trade's not there. It was just something that sparked my interest, delete, delete, delete. The majority of it is delete, because I can't quite remember what I saw the first time. I think that's a good measure of you've got something on a maybe list, you want to be able to know why you were going to trade it. So if it's not obvious what you were going to do last week on it, then this week's not ... Something's changed. You saw something that probably wasn't there, is what I'm trying to get to.
Sean Donahoe: Absolutely. Okay, last one then for this group, Halliburton, HAL.
Phil Newton: Again, something similar, $40 is the pivotal level. They're all looking very similar, they've all been range bound, they're all highly co-related. I think $40 is the pivotal level if we were looking between Schlumberger and Halliburton. But you've got that waiting for a pull back. You've got a break down through $40 where price has mostly been range bound. You've got a small pull back, not a deep pull back that I normally like to see. I think if it did rise to $40 that'd be where the trade was. Again, not surprisingly, it's a maybe trade, keep an eye on it, wait for the deep retracement. If we get it, it's going to be great, if not I'm not going to worry about it.
Sean Donahoe: Absolutely. So there you go ladies and gentlemen, that is Trade, Fade or Evade. Again, interesting observation. The one for me I think is FANG, F-A-N-G.
Phil Newton: That looks the most interesting.
Sean Donahoe: Yeah, out of that little bundle.
Phil Newton: head time, if you had to choose one thing to trade, it'd probably be the first thing that we looked at.
Sean Donahoe: So ladies and gentlemen, that's it for this week's show. Do thank you for stopping by, and your time and your attention, and that is it for this week. But please remember, this show is not free, it will cost you a five star review. Just go to TradeCanyon.com/RebelTraders and you can subscribe and review us on your favorite way to hear the show, which helps us reach more traders and investors just like you.
Phil Newton: You can also connect to us on Facebook and the Twitter machines, you can find the links at TradeCanyon.com/RebelTraders. We've got a lovely active Facebook group, as we've already mentioned. You can go to the Facebook search box and just type in Rebel Traders and we should come up first, we have checked that a few times. We're still number one. If you'd like to contact-
Sean Donahoe: We'd better be, because I trademarked the bloody term.
Phil Newton: Yeah, if you want to contact us via the old fashioned method, a lot of people like to ... I don't know when it became old fashioned, but nevertheless is it's [email protected] is my email. If you'd like to get in touch by all means.
Sean Donahoe: If you want to reach me, mines a little easier, it's just [email protected] We're rocking and rolling from there.
Phil Newton: What have we got coming up in next week's show Sean?
Sean Donahoe: Well next week's show is Cool Hand Phil. Okay, so we're going to have a little bit of fun, or Cool Hand Sean, Cool Hand Luke, whatever you like it, it's going to be someone's name. We're going to talk about the emotion of trading. How to just become cool, calm and collected no matter what life throws at you.
Phil Newton: How to lobotomize your trading.
Sean Donahoe: That's actually a good title as well. Okay, so with that being said, rambling over, as smooth as a hedgehog, I won't use where we're inserting that hedgehog, but we'll do it again next week. Take care for now.
Phil Newton: Bye for now.
Automated: For more cutting edge trading advice and a free trader workshop to help you build a personalized trading plan, and make smarter trading decisions, go to TradeCanyon.com now.
Futures, options on futures, stock and stock options trading involves a substantial degree of risk. It may not be suitable for all investors. Past performance is not necessarily indicative of future results. Trade Canyon Incorporated provides only training and educational information. If you actually understood and listened to this, then that means you are awesome. Congratulations and well done. Notice, this product may contain nuts.

(Click the time stamp to jump directly to that point in the episode.)

3 Key Takeaways From This Show

  • Awareness of the environment can lead to interesting opportunities others miss
  • Allow your expertise, experience, insights, and skills become your trading super-power
  • Wearing your underpants on the outside of your clothes is optional

Connect With The Rebel Traders

Download our Private "Universe of Stocks"

Download the 350 "Core" stocks we look at every day that present the best opportunities. Just enter your name and email below to download now...
DOWNLOAD THE LIST NOW
We value your privacy and will never spam you

Comments are closed.

×
HEADLINE HERE
SUB HEADLINE