| What are the 2 different type of investing mindset? | Long-term mindset & Short term mindset |
| Long Term Mindset is about....? | Certainty |
| Market change from a rational price to a irrational every how many years? | 6 - 7 in general (as of 2020 it is 10) |
| What is the main difference between long term investing and short term trading? | In short term trading we are not interested to own the shares |
| Technical analysis really help us to do what? | To see the emotion and psychology of the market as the underline security moves up or down |
| What are Technical Indicators? | They are tools to help us predict which way the market may go in the near future |
| Why is charting helping us? | It helps to see on a graph the price movement so that certain tendencies of human actions can be seen visually and use to our advantage |
| Why the Name Credit Spread (2)? | It is a Credit because you end up with a net credit
It is a Spread because it uses 2 different Options |
| What is a Support Line? | Where the Bearish trend changed (reversed) to Bullish |
| What is a Resistance Line? | Where the Bullish trend changed (reversed) to Bearish |
| How many categories of trend is there and what are they? | 3 trends
Uptrend - series of higher high
Downtrend - series of lower low
Channeling - trading horizontally BETWEEN floors and ceiling |
| How many point of contacts do we need when drawing trend lines? | Three or more points PROMINENT of contacts |
| Trend lines 3 points of contact is for Support line or Resistance line? | It is 3 points of contact for both |
| What is a Macro trend (line)? | A trend line over 1 - 2 years minimum with 3 points of contact (inside can be other smaller trend) |
| How do we call a long term trend? | A Macro trend |
| How long is a Intermediate trend | Few months to a year |
| How long is a short term trend? | A few weeks |
| When should we start to be careful with Trend Line? | When the price bisect (cut) the trend line it can signal major change |
| What are the 4 points that can break a trend? | 1) broad market news that change the entire trend of the market
2) Individual news about the company
3) Unexpected news surrounding earnings
4) News surrounding industry or sector |
| What happens at FIB Ceilings? | Significant Selling occurs
Area where the price struggle to go higher
Area where the price temporarily stop rising |
| What happens at FIB Floors? | Significant buying occurs
Area where the price struggle to FALL below
Area where the price temporarily stop FALLING |
| What is the time from to draw the Fibonacci on a chart? | It is drawn on a 9 months |
| Which type of Chart to we normally use to draw the Fibonacci lines? | 1Y : 1D chart |
| Should we pick the lowest and highest points of the 9 months to draw the FIB? | No you should take a strong floor and and strong ceiling |
| How many points of contact do you need to draw floor and ceiling for FIB? | 2 minimum |
| What makes for a strong floor or ceiling? | The more contact there is (the floor or ceiling is TESTED several times) |
| What "creates: floors and ceilings? | Human Psychology, when human fells not good about their stock position |
| Who is the main influencer of what is happening with the price movement of the security? | Humana are creating it |
| Which Index do we use to have a broad view of the market and which period on the chart? | The Dow Jones
10Y : M |
| What is the Shiller PE? | Total stock price over (divided by) entire total stock earning |
| When is the Shiller starting to be considered over priced or good value? | Over priced starts at a PE of 23
Ok starts at a PE of15 |
| What does the The Wilshire GDP indicates? | It compares the total value of 5,000 listed company versus the US GDP
It indicates an issue of the 5,000 are worth higher than the US GDP, then the economy is considered not good / healthy |
| What is the MACD? | It is a momentum indicators showing how fast or slow people are going in or going out of the market |
| What is Stochastic? | Stochastic indicates if a security it over bought or under bought. |
| How are Rulers setting up the Stochastic? | We set up at 80 / 20.
So over 80 it is overbought and a selloff could be coming soon
Under 20, it is underbought and could be an opportunity |
| What is the moving average line? | It is the average of the lat 9 period + the current period to date |
| What is the time frame (in month) that you draw the Fibonacci lines on | 9 months |
| Which Type / length of chart do we use to work with the 3 arrows? | 10 years monthly chart |
| What is volatility? | It is a representation of fear in the market |
| What does CBOE stands for | Chicago Board Options Exchange |
| What is the Mid? | It is the Mid point between the Bid and the Ask |
| What is the difference between an Option Spread and a Credit Spread? | An options spread is a strategy that involves the simultaneous buying and selling of options on the same underlying asset. A credit spread involves selling a high-premium option while purchasing a low-premium option in the same class or of the same security, resulting in a credit to the trader's account. |
| When would you do a BPS (Bull Put Spread) | A bull put spread is an options strategy that is used when the investor expects a moderate rise in the price of the underlying asset. |
