Teaching a prop trader secrets on technical analysis (that you will not find anywhere else)

in this video watch me teach a prop trader secrets on technical analysis that you will not find anywhere else hi i'm mike bella fury co-founder of smb capital and we're a proprietary trading firm located in midtown manhattan and i'm also the author of the trading classic one good trade and the playbook in this video i work one-on-one with the trader teaching him technical analysis secrets to make a winning technical trade let's get to work on sharing these important trading lessons so you can grow your trading account [Music] okay so this is a flag break across multiple time frames that's setting up on the 1 5 15 minute there's a daily flag that's taking place it's in a hot sector and the goal is to be swinging half of this it's on nio in the ev sector and this is taking place on 8 24 2020 to 8 26 2020 so game planning there are two positions to take on this and the first is taking the day one flag that we will go over that is a 1 5 15 minute multiple time frame flag that's holding up holding above key daily resistance that has now become support at 1460 and the goal for this is as soon as it begins to work because we have that bigger idea in mind is to send half of it to the swing account and use the other half on the day to create some cash flow behind it so this multiple time frame flag is actually an a plus set up for me but the swing portion of it is something that i'm working into my playbook it's common on our desk for traders to have a day trading account and also a swing account and what's helpful to a lot of the traders is them for them to day trade in their day trading account and then take their swing trades and put them in another account so they're not watching tick by tick like they are for their day trading account and they're trading that swing trade differently uniquely with its own set of entries and exits and variables and also easier for them to keep stats in this separate account for their swing trades and it could be entirely possible that you're really good at day trading but not so good at swing trading it can be entirely probable that maybe you're not a good day trader but you're really good in your swing trading maybe it's the case that for a lot of guys you're you're good at both and your day trades are really setting up awesome opportunities for swing trades that you want to capitalize on the second position comes on day two and it is also that same one five 15-minute multiple time frame flag that is an a-plus setup for me and again the only difference between this day two setup is that it's taking place right at the open and again this is something i'm developing into my playbook i'm one who in the past has sit out typically the first 15 to 30 minutes but if there's these bigger ideas in mind where you might never get those prices again and you're playing for that you know bigger idea sometimes if that setup comes around you have no other option but to take it right at the open so that's kind of what i'm working on right now it might only happen for me you know a few times per month but still something really good to have in your arsenal and again we still have half in our swing account and we do the same thing with this position we send half of this into our swing account and use the other half on the day to create some cash flow so basically they're the same setup with the same idea in mind and you know sticking half of it into your swing account and we have some really good prices vix you know the volatility index the opening print was 22 and if this wasn't more of a sector play evie it is um with a big daily breakout volatility being being relatively low compared to prior months is something to really take note of um this month i have been quicker to take off some risk at the first turn i see because of volatility being a little bit lower and you know moves not showing continuation all the time but again this is a very hot sector it's a big daily breakout there's a lot of volume behind it so it's a little bit different yeah but kyle 22 vix is still higher than it's been for most of the last six years you know we were between 12 and 15 for most of the last five years so while volatility is 22 which is a little bit lower than it has been of late overall it's still pretty high yeah correct relative to the last couple months we're not getting those big time moves all the time maybe there's less opportunity or less you know positions that we're getting those moves but still volatility over the last few years we really can't complain about it yeah and i love you putting in what volatility was in your playbook that's an excellent addition and i like how you're pointing out that this is in a really really hot sector which may override what volatility is overall for our reading so vixx could be 17 it could be 15 but because this is in a really hot sector the ev space we could still have lots of movement more movement volatile movements could still follow through better than a large cap stock and the reason why we're putting volatility in at the beginning of this particular trade is to see how we're doing when volatility is at certain levels when volatility is between 12 and 15 trading is going to be different than when volatility is 25 and above correct and because of that um i think it's important to know where the leader is in the ev sector and of course that is tesla um so it's important to have it on your radar make sure you have it pulled up um when some of these other ev names are you know in place so it can be whatever sector whatever the head of the snake is you want to be keeping an eye on it because in this case i would say keeping an eye on tesla is almost more important than you know maybe what the overall market is doing it's good to have you know a good reading of both though completely agree in a hot sector what's the leading stock how's the leading stock doing that's going to be more important than how the overall market is doing excellent point you're making and then on day two it pushed at the open this is tesla and that may have helped nio break out right at the open as well kind of fuel that fire and all that is is simply more confirmation if you want to learn three real world setups that our traders use including the simple setup that we teach all of our new traders and the setup that turned one of our traders into a seven figure big money earner check out the free webinar that we're currently running just go ahead and click the link that should be appearing right now at the top right hand corner of your screen that's going to open up this free registration page in the new window so don't worry you're not going to lose this video you're going to learn more in a couple of hours from this trading workshop than from years of online education so the fundamentals nio limited um they design and develop high performance electric vehicles has been leading the pack in eevee breaking out to new all-time highs and has a split coming up at the end of the month very soon the next couple days um eevee names are certainly in play there's a technical setup um it's a daily flag it's you know a setup that i'm very comfortable with and there's eager people who miss tesla looking for alternatives you know people who really didn't capture the meat of the move on tesla they're looking at some of these alternatives and we're going to go over at the end how to kind of scan for those or screen for those at night so it's in a hot sector there's a technical breakout across multiple multiple time frames high institutional ownership relatively high short flow and you know that can equal fuel to the fire it doesn't always need to be you know a simple independent news catalyst and we really didn't from what i came across we really didn't have that on nioh what you mean by that is that there can be a technical breakout that is the catalyst or or there can be a news catalyst in of itself that can be the catalyst it doesn't always have to be the news catalyst for something to be super in play it can just be that there's a lot of buying that's come in our bowl is high volume is is high stock is is acting well intraday it's holding above you up nicely it's holding its time frames really really solidly and that can get you to be interested in a particular stock um so some statistics on nio the daily volume is typically around 123 million areval this is current volume at the time compared to its past at the time of the reading it was 3.14 at the time of the positions these flag breaks it was a lot higher than that i wasn't able to capture it but it was five plus for sure um atr 0.98 this is kind of how far we can maybe expect a stock to go but if of course if the arvol is elevated you know over one we might get multiple atrs short float 12 relatively high it's been growing so you know we have some shorts who are underwater um the float is 838 million it's not a low float stock this is something that you know you might be able to feel pretty comfortable if you get some good prices holding this overnight institutional ownership this is important to note it's relatively high at 45 percent and what this tells me is a lot of these institutions from my understanding they play on bigger time frames bigger time horizons so if you see something maybe like a one minute flag taking place but if you zoom out to you know the five minute the 15 minute the hourly and the daily maybe and it doesn't look so hot it's very overextended you want to be really careful at least from my experience to not really run after those you know one minute breakouts and it's that's all it really provides me with you know there's big money involved in this and they might be looking at some bigger time frames than the typical person okay so we get into the daily and this is something i've been stocking for the last couple weeks it's a very nice setup of course in a very hot sector and we have about a month of consolidation we are building some higher lows but on relatively lower volume and we're getting ready for something special it's built up we have longs and shorts duking it out and that's kind of what consolidation is all about we have you know we have bulls and we have bears fighting it out and one side is going to win it's either going to be a breakout or a breakdown and that's kind of the timing point that's where you know things get pretty exciting and we could kind of see that we have this high volume day on this breakdown down below i show it with shorts thinking hey maybe this is the top they're getting involved and they're risking off this high you know there's a good possibility some bigger time frame players maybe took this breakdown and they're risking off this high so you know if we consolidate build some higher lows and then break over that level well a lot of them are going to be cutting you know they're going to be forced to pay up we're going to have a lot of longs looking at this getting involved as well we see an increase in volume starting to come in when we do build some higher lows and when we break out and when we get above 1469 the day prior this level right here and hold up the 9 ema that green line is creeping underneath showing this is not as extended as you know maybe some people think and again there's a high institutional ownership behind it and i use a 90ma as a reference point across multiple time frames to determine whether or not something needs to first reset itself and i also like that the previous day low at 1362 right here and right here is only about a dollar away so many bigger time frame players will risk off this you know the previous day low and because it is so close the risk to reward makes sense for them to participate so there's going to be more market participants when this does break out that'll bring in more volume more people are looking at it that's all it is but it is important good wedge pattern on the daily chart it does a nice job holding over the nine ema which you're looking at you know it gives you a gives you a really tight area that you can see who the winners or who the losers are for this particular the trade and the other thing i like is that what's the ema doing it's heading higher yeah it's sloping up yeah that's a bull sign okay so this is the five minute and the 15 minute on day one of this breakout we're gonna see that there's kind of that opening push again for the most part i'm sitting out that especially when it's not very clear it breaks out you know you could get some type of momentum play in there that's not really me it's pretty hard to fight for price there we pull back in and i know quite quite a few people who are buying these dips one thing that strikes me as should be next or should have come before and maybe you're going to talk about a little bit later is a chart of how tesla has done recently you know so we're saying the tesla's been really strong it's been it's been super strong we've said we've said hey there's been this this kind of weird catalyst of the stock is going to split tesla's going to split it's going to split august 31st and it's run up a bunch since they announced that it hasn't just been strong and hasn't just run up i mean it's it's vertical it's it's i don't want to say it's parabolic but it's near parabolic i mean it's it's been unusually strong unusually steep to the upside and to get a picture of that next to neo strikes me as i love your logic which is the people that miss tesla may seek second and third tier stocks to add exposure to the ev sector perfect sense spot on 100 correct great thinking and so to have that picture of how much tesla has run up and for you to include that on your playbook places in your mind when that does break out when it's holding up on the 1-5 the 15 the 30-minute charts whatever it is that you use for multiple time frames and here you're using the one the 5 the 15. other people may expand that to the 30 maybe to the 60 minute there's no right answer to that it's that's a personal preference that's going to make me way more way more optimistic that if i see something holding up the one the five the 15 then i ought to buy it and it's going to work because of what because of how how well tesla traded because of how steep it is and to be specific about what that picture looks like does that make sense yeah i'll definitely add that down the road and the next idea that's similar okay so i'm taking the flag break at 1471 with risk off 1464. and this is an a plus setup for me again it's that 1 5 15 minute it's a little bit extended on the hourly and that is something i'm looking at as well but this is a pretty good setup for me this is an a quality setup and it's also above key daily resistance at 1460. it was kind of that line in the sand we could kind of see we broke down from there earlier we got back above you know quite a few people are underwater and that you know that daily resistance has now become new support and it's holding quite nicely so nice tight risk that we're able to take on this and you know i'm fine with hitting out of this if it doesn't want to work out right there maybe it works out later but you can see that the goal is to sell one-third of half of my position on the first turn um that's something again i've been doing a lot this month i've been pretty aggressive with taking profits and you know it's helped out this month to say the least and the other half of this position is going into that swing account with that bigger idea in mind again it's in a hot sector tesla is squeezing the living daylight out of everyone short the splits coming up it's breaking out on the daily you know this is a really nice setup and it's holding up into the close so throw half into that swing account um and we could bring down that risk to 1460 because it is that key level um that's taking place on the daily so then sell the last two thirds prior to 350 when this breakout stops um again holding the other half in my swing account with risk off 1459. so kind of right before that or right before that market imbalance i think it was a selling balance on the day maybe you know just get out of the position it has this breakout it's not really showing continuation and again we're still holding half in that swing account um so you know get out of the remainder position that we're holding so then day two comes around and this is the setup that i'm kind of working into my playbook because of the time of day it happens at so take the flag break at 15 17. it was something i was taking a look at but i kind of sat it out with risk off 1502 throw half into the swing account once it opens up again we have really good prices so we have half from yesterday and now half from today in that swing account from some really good prices and there's a good possibility that we'll never you know in the next few days or at least on this day we won't see those prices again um so the half that i'm using on the day i want to be piecing out on every reason to sell um usually i'm selling a third or a quarter and now i have half from yesterday and a half from today in that swing account with around a 1493 cost basis um some really good prices this is where you know some some may argue that this is not the right move and you know everybody has a different time horizon and this is something i'm working on um but i think when we break down from this five minute low we put in a lower high and we're starting to get heavy um and some volume comes in to sell half of the swing position on this consolidation break and the rest of this ring position is with risk off 1640 um this kind of low right here and this is a big two-point move it's two atrs i think the atr like i said was 98 cents so this is basically a two atr move or so and again we had some nice size on it because you know we got some really good prices we fought for price and you know we weren't risking a whole lot so this is a relatively big move and there's nothing wrong with locking in some maybe i don't have to lock in a half but you know that's something i'm gonna work the kinks out of down the road and then this is day three and we could kind of see we're forming higher lows here from i think from day two and then in pre-market hours we kind of retest that level we retest it at the open and then we kind of get above 20 and you know that is a big important level it's a whole dollar and we kind of have this big slam down and then you could kind of think okay we get this big slam down but we kind of hold up so you know maybe this gets a lot of shorts involved and maybe we could reclaim an after hours and break out but instead we break down and so and the the goal is to sell all of this when we break these higher lows it's basically a five-point move i captured on relatively nice size due to you know pretty tight stops the first position had a seven cent risk um when getting involved and risking seven cents initially to capture five points on a good portion of the position is you know nothing to complain about so these are the variables of this setup it's in a hot sector you really couldn't ask for a better one right now the ev sector tesla not only at all-time highs not only does it have that split coming up at the end of the month but it it's squeezing out everyone and a lot of people miss the move on the long side um so we're in you know one of the best sectors with one of the best you know leaders in the space right now are of all greater than three it had that daily flag breakout it also had flags throughout the day um and that's something i'm very comfortable with um there's a playbook set up on day one and i'm working on day two with this playbook plenty of liquidity tight one one cent spread um i think this is kind of a quote from one of your books bella where somebody talks about there are those spots where you know if you want to buy unlimited um this is you know one of those names where you could almost buy unlimited you know insane volume you know good story behind it setting up on the daily setting up on the day you know you can get in and out exactly where you want on this name volume moves in at both timing points confirming thesis there's a clear level where i'm wrong and that's really important for my style i need to know exactly where i'm wrong and if i want to put a hard stop there i can put a hard stop and i can move out of the way and then reset and on both of these positions it had exactly that there's a clear level this is also important to the thesis and the context behind it of where early longs have stopped out you know where maybe some people from the retail point of view or you know even other people as well maybe ran after the name and then you know bought it a little bit too high and then it pulled back in they had to stop out so there's less overhead from those longs and then also knowing where shorts are stuck across multiple time frames and where they are risking it and where they are risking is that timing point where i want to be getting involved because you should see immediate resolution and you should see it you know push away from that price rather quickly and that'll keep you know your mae pretty low so you know if you go in risking on one of these flag breaks and it works right away you really shouldn't go down on the name a whole lot if any and that is important to my style yeah and i'll just share that one of the traders you talked about liquidity that there being plenty of liquidity one of the traders at the firm was long more than 300 000 shares just to sort of use a number uh and just to give you something to think about yeah now i want to go back if we can go back to your intraday charts a couple of things you want to have so you're saying basically this is holding up on the one the five the 15 minute that's my trade yeah i need to see charts where the one minute is holding up where the five minute is holding up where the 15 minute is holding up and for you to be showing me where you're going to be entering because the one the five and the 15 minute charts are holding up yeah that makes sense and it makes sense for your learning because there's a large difference between you going through this exercise and having done that work the one minute held up this is what it looks like the five minute held up this is what it looks like the 15 minute held up this is what it looks like and you put that together you go over it you go over it again you're visualizing in your head what you want to see for a one to five a 15 minute flag hold next time you see that particular setup it's going to be so much easier for you because you have that picture in your head yeah of the one the five the 15 minute all aligning uh as opposed to here which is you you don't have that so that's number one the second thing is for this particular trade particularly two-day three-day trades you need to have a chart that overlays how neo is trading in conjunction with tesla is there something that you can learn based on how neo should trade based on the way tesla was trading when tesla pulls in what does neo do when tesla makes a new high what does neo do is there a lag between a new high and tesla and what neil will do are there clues to how tesla's trading okay the head of the snake as you said the leader that can help you trade neo so you need to overlay a chart of that in here because you're going to see that kyle you're going to see certain commonalities between when there is something that's real hot when there is that head of the snake that's real hot and then the second tier and third tier starks stocks start to go and you'll you'll be able to [Music] add some some risk pretty easily just based on what you've observed as to how tesla trades first and then how neil reacts there'll be some real easy money i mean you're talking it'll be some real easy money along the way some scalp some ads that will will make this trade a good 20 more profitable just by doing that yeah and i actually saw quite a few people at the firm um they were talking about how they were buying these dips on nio and you know maybe part of that is because they were keeping maybe a little bit of a closer eye on tesla and you know seeing that it was holding up and breaking out so that is definitely something i need to add to this playbook okay so we're on reading the tape and i don't have the tape on this i was in a few other positions at the time um but it's kind of like any other flag break um maybe a little bit more powerful on both setups that are working shorts are being forced to cover at the timing point on that lower high break of every flag and long's paying up and that brings in volume from both sides and these flag breaks i've taken for the last few years and you know i it's pretty clear what you want to see you want to see that breakout on big volume and you want to see it get away from that price really quickly and that is kind of confirming that idea um and on every single pull in you kind of want them to be higher you know building those higher lows and you know they could be slow they could be fast but they should be on lower volume um after breaking out followed by buyers coming back in you know every single breakout so on every pull-in if there's a lot of you ever thought about building something visual for yourself to determine how strong the tape is so all right i'm watching four or five things at the same time i can't watch neo tick for tick can i use my technology skills to give myself a visual map of when this the tape is a lot stronger you know for example we've talked about this in the past you can build a filter and it can tell you the percentage of volume that's done on the offer percentage of iron that's done in the bid and you know if the percentage of volume that is done much more on the offer does that give you an edge uh and and that's just that's a that's an idea for you but you should you should think about using your technology skills to grade how strong the tape is overall and i would say on these you do want to see that offer a lot heavier than the bid on the breakout so that is something that i should you know add to a filter or my tape so that's something i could certainly add this week and work on so how could i've done a little bit better on this or i guess a lot better continue to playbook this setup until i have a big enough sample size to start taking it with a sense of comfort personally i don't like executing positions until i have a playbook backing the setup now the day one is a setup that i should have taken it is a playbook setup for me um and kind of a reference to this is i used to play baseball and it's almost like hopping on the mound and in a big game you all of a sudden you know decide to throw a knuckleball when it's not in your arsenal i don't really like executing positions that i don't have in my playbook as of yet so that's kind of what this exercise is about and that is why i'm adding this and you know getting more sample size until i'm more comfortable with it and then i can take it you know pretty small until i feel more comfortable what position did you play in baseball that was a picture yeah you know it's so interesting so my son who's seven is taking personal pitching lessons and personal hitting lessons and you know as you know i pitched in college and so i i you know that's that was a big part of what i did when i was a when i was a kid and i love your point about hey we're just trying to get better i i am just struck by some of the things that i did not do when i was a pitcher that luke is being taught to do right now at seven and i mean the other day i was i was watching the lesson is these 30-minute lessons one-on-one and they start by going over the mechanics of throwing and you and i will talk about this in person because this is so insider baseball but there's there's literally something that i did not do when i was a kid that when i watch lutz luke's instructor teach him how to get in a starting position for pitching that i just literally can't believe that i never did yeah i just can't believe it and it would have added three miles an hour to my fastball if i had done what luke is being taught to do and so yeah i mean these things are getting this stuff down is is super important will make you a lot better uh made me want to i literally i was like i can't believe i did not think of that like how could i possibly have left that out um so things like this really do matter yeah i i totally agree with that the last couple of years that i played baseball in college i you know started picking up things you know i kind of started following bauer on the reds or i guess he was on the indians at the time and he's big into tech and you know weighted balls and recording and you know getting video and that is stuff i wish i did a lot earlier and now that you know i'm in the market you know i'm kind of learning from those mistakes kind of similar to you um with baseball you know wish we could have done some of these things in the past and you know now i'm able to kind of bring that into the market and work on that now 100 and i'd say that too with my training if i had my trainer when i was a kid when i was playing that i have now i i gotta i gotta say i probably would have added another three four miles an hour maybe more uh maybe three or four miles an hour and and when i train with my trainer i'm just like i can't believe that i didn't know this at the time so anyway we're always learning definitely um so to wrap this up i guess i have one more slide after this but continue to look at dailies every night on finviz and see what sectors are consolidating and setting up for the bigger idea moves these are names to be focusing on for this type of you know swing i kind of had a position similar to this yesterday on amc i didn't swing it but it came from a bigger idea a lot of shorts are underwater consolidating on the daily so this is really important to me and this is something i actually really you know like doing right before bed i look forward to having this a part of my arsenal down the road as it's really a subset of an already a plus setup for me the only difference is time of day and swinging part of it i can still be selective at the open and i spoke with someone at the firm about this but when there's a playbook set up proper level to risk off of great context of where early longs have stopped out where shorts are stuck and where they are risking with a bigger idea in mind and it's breaking out on the daily i need to take it and it is something i will take down the road you know that day two right at the open because now that i've seen it so many times and i see it a lot on tech names you know big tech names you need to either take that setup or you're probably not going to get those really good prices later in the day so it is really important and maybe again it might only happen a few times per month for me but you know that's still going to add to the bottom line and the final thing to know is you know holding up a portion overnight has never really been a part of my playbook in a position i take maybe more than once or twice per year due to where i live it means waking up at around three in the morning here in california even a little bit earlier as opposed to five to six when i move um to a different time zone you've had to pass on this in your playbook due to you know it ruining your sleep and how you perform the next day and bell and i have talked about this a little bit um it's going to be a lot different once i move but it is important to note you know i there was a part earlier in my career where i thought you know i wanted to swing a lot more names and you know my time zone wasn't really conducive to that and i noticed myself performing very poorly the next day where it wasn't even worth it and then just this final slide is um a pre-market scan i had or that i use and basically what it's telling me is that the 90ma on the hourly is tucked up underneath it's up more than five percent in the last five minutes and the second photo is a finviz scanning for ev names meeting the criteria listed from the night prior and that's about it hey go ahead and click our subscribe button so you don't miss any of the videos they were producing for you and the trading community and please take the time to add your feedback in the comment section for what videos you'd like for us to produce next and what you found helpful from this video from all of us at smb train and trade well

Channel: SMB Capital

Views: 28,729

Rating: 4.9022007 out of 5

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, technical analysis, tech analysis, breakout trade, NIO stock, NIO, $NIO, $TESLA, tesla, trading electric car stocks, prop trading

Id: CPkIg1QXXGA

Length: 36min 28sec (2188 seconds)

Published: Tue Sep 01 2020