Landshark Education Blog | Learn to Trade Stocks & Options
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I hope everyone had a great holiday season and are ready for the new year. I wanted to take some time to write a new blog on some market outlook items and general thought's on some trading & investing ideas for Q1.
Before I get to that I want to address some items with Landshark and the changes coming for students and non-students alike.
(You can scroll down for Q1 market thoughts)
The company began in 2013 as me teaching a group of futures traders who reached out to me from a referral. At that time I was simply trading my own PA (personal account) and working on an FX desk in Scottsdale. It was a time where I had just got back from 'corporate' finance life and I was trying to decide what to do next. When teaching that group of traders I was able to see that they had little to no proper education. In fact, at that point, I really was clueless to the space of retail financial education. So from there Landshark Education was born.
The first set of courses were not that great looking back. But again, I was new to all of this and had to learn how to structure learning material. It took feedback over the last few years to really figure out how people learned, what they needed to learn and then how to properly deliver it. We tried live weekly classes in 2016, it worked, but admittedly it was a time issue that caused my personal trading to suffer.
Last year we tested the on-demand, learn as you go model and a weekly live class. This worked. The past 3-months myself and the instructors as well as some back end developers have worked to bring an entirely new Landshark Education. We're really excited for the new educational courses, the updated content and the way you'll be able to learn.
We call it the Landshark Learning Method. What that means is you'll be able to take classes online at your own pace, on your own time then attend live lectures during the week (evening-hours) and then utilize a 24/7 chat room. We had feedback of people wanting to learn in person, but let me be the first to tell you this from 5-years of working with traders; You taking a 'live in person' class once and only once without studying material on your own, going through quizzes, interacting in a community will not make you understand the material let alone have any chance of success at this. The new model is based on the premise that it will take you, at a minimum, 3 months to begin to grasp concepts. But the great thing is that you can pop into live classes online as your schedule allows.
So starting next week, we'll be transitioning to a new website and a new learning platform. If you're a student you've been updated in the chat rooms and have the appropriate forms to complete to be transitioned over. If you're not a student, we'll be hosting webinars shortly to give you an 'open-house' tour of everything.
The new model and curriculum is something that I can be proud of and even more confident in for everyone learning to do this. I do want to say, to be clear, that we are not a day-trading company and do not teach day-trading. There were too many potential students the past few years not understanding this and I think it's important to discuss here again. I think it's prudent to understand that what you see online of 'taking $500 to $100,000' might be viable but it doesn't come from 12 months of learning to do this, even 24 months. This is a serious commitment and we've put in our commitment with the new Landshark to bring the very best curriculum and technology to you as students and potential students.
Going forward in 2019 I will personally only be a coach in the Bullshark Mentorship Program while assisting as needed in the other classes. For me I am excited to get back to working with students that are passionate about making a real change in their financial future and learning a better way of investing in the markets. That being said, we're looking forward to this re-brand and launch next week and hope you will enjoy it as well.
Q1 2019 Market Outlook & Investment Ideas
December was brutal. The very best hedge fund managers whom I look to and who have help build my market philosophy were down as well. Now, I don't think anyone was shocked at the sell-off since we've had such a tremendous run in the markets but it did get a bit carried away. The Christmas lows were met with strong buying across the board which made for some great entries to select names across the board.
From 2009-2018 what we saw were markets that were essentially vertical, aside from a few volatility events, you could really just buy and hold. It was so bad in 2016 I recall being in Barcelona for about a month and remember the S&P E-Minis maybe move an entire 10-point range the time there. Returning state-side I assumed that we would maybe pick up in volatility but we didn't and as a trader it was depressing. Now, fast-forward to the end of 2018 and current times and we've seen an amazing run in the VIX and major names take major hits from their all-time highs. So when I look at a few market indicators, see the price-action and read investment letters from managers far better than myself I have come to my thesis for 2019; It will be better to be an active trader/investor than to buy and hold.
Now normally, this is a stance that I have had hammered into me since I began as a futures trader in 2010 and subsequently took with me to a Portfolio Manager role years later causing me to miss out on some large long-side buy and hold trades. Do I believe the market will make all-time highs again? I have never been and hope that I will never be in the business of predicting what a market can do past 3-months ahead of me. However, I will say looking at the S&P500 that I do believe we will begin to trade in a large price range for Q1. This is likely to bring the large price swings we saw in December (+800 Dow/-$500 Dow) back and make this concept of what most retail investors do of buy, hold, hope and pray diminish.
However, what it will present is an opportunity to be active again in the markets. Buying index ETF's for short term 1-3 week holds, selling then re-buying. Or, for the savvy market investors using futures to really get into it, something I prefer. I bring this up because the past few weeks I've had some emails asking what market buys are available and really, I don't believe in this buy and hold all of 2019 theme that most of you want to buy into. I don't think there will be 'one trade' that will be the winner for the year nor will I ever speculate in the markets in that manner.
Let's move on to the start of January and discuss some themes and potential ideas in-depth.
The market will be volatile, great for traders not buy and hold
Yen is a key currency to watch in Q1
Tesla has the potential for a large mover to new all-time highs
Futures are the preferred asset class for Q1
So far the month of January has been giving with some great moves in: NFLX, TLRY, VXX and Yen futures to name a few. Apple signaled what many we're thinking and even in this rally on the S&P as of the past week it still has yet to follow, which, is concerning. Again, I think Apple tends to have an investor 'cult following' and people want to see it higher but I'm a trader who uses price action as his primary tool to make market decisions and the lack of movement off the lows bothers me. Now that doesn't mean it's a short either, it just means its something to note for this overall market.
Then Yen is a currency to watch for me in Q1 mainly because it will dictate a lot of what the equities market will or will not do. It's been seeing some strong resistance lately and the moves off key technical levels have been reacting without much hesitation (as opposed to trading sideways) which is a good sign for volatility.
Tesla is a stock that everyone loves to bash on but usually they're just talking their own personal books. I've never had a position size big enough to where I've felt the need to do that and additionally, I just really look at price not fundamentals - which again, don't and have not seemed to matter in the last few years anyway. However, I do like this stock for the potential to break-out to all-time highs. The short interest on this has and should continue to be extremely high. It really only takes a little disruption, headline news or large buyers to come in and cause a squeeze. Again, does this mean the stock is 'worth' more, no, absolutely not but you have to understand the markets are more than what you think something is worth just because you have an opinion. So if I had to say I had 'one trade' for Q1, it would be Tesla. I have a small position through call options (not shares - I don't believe in it to hold equity) that I would like to see outperform.
Aside from that, the equity plays still don't really excite me that much. There are a few MLP's I came across that are paying a strong dividend but I'll likely forgo that to focus the capital in the futures markets as I am expecting the volatility to remain and the capital is better put to use there.
So the goal for me is likely the same as it is each year; sticking to index futures, WTI Crude and Yen futures while looking for larger out-sized trades in the equity options markets, which, if I am correct on the potential index range for Q1, could play out.
The housing industry has been a drag on the overall economy in five of the last six quarters. That doesn't seem likely to change much. Builder sentiment fell sharply this month amid worries about affordability. Prices have been climbing faster than incomes for years, in part because there aren't enough homes on the market to meet demand. Now with a new tax law that that reduces incentives for homeownership and the Federal Reserve raising interest rates, ownership is even more of a stretch.
Housing starts rose this morning but only slightly. While I don't think this is 2007/2008 again housing has certainly been a drag on the economy this year.
"I bought shares of Apple because they're a good company."
This is what you call the lazy investors, investing process. No looking at price charts, no analyzing targets just buying and hoping it goes up. In fact, I'd be willing to be most of you reading this probably do the same thing.
Below an excerpt from the WSJ this morning.
Lower-than-expected demand for Apple Inc.’s new iPhones and the company’s decision to offer more models have created turmoil along its supply chain and made it harder for Apple to predict the number of components and phones it needs. Apple slashed production orders for all three of the iPhone models it unveiled in September in recent weeks.Forecasts have been especially problematic for the iPhone XR, Apple’s new lower-price model. Around late October, Apple slashed its production plan by up to a third of the approximately 70 million units it had asked some suppliers to assemble between September and February, Yoko Kubota, Takashi Mochizuki and Tripp Mickle report.
The stock has traded really well the past few years but with all things, it needs to sell off to 're set'. Someone sent me an email yesterday and asked me if I thought it was on sale and ready to buy. I hate these emails so I ignored it. (FYI, it wasn't a student, or I'd had answered).
I had to share the image to the left as I thought it was funny considering this sell off.
Final thoughts on the market: While I think we see a snap back rally this week I don't think this is a situation where 'stocks are on sale' and you go in and buy for the hold. This is a situation where you go in and buy then get rid of them a few days later.
If pressing a few buttons to do that seems like a lot of work then you can be sure one of the advisors at the big firms will be glad to take your money and under-perform the market and get their fees, so there's always that.
Blind risk is what we do when we don't realize the risk at hand.
Sort of like your 401K or retirement accounts. The ones that you hand over, check maybe once a year and then hope that there's enough there when you retire. That's blind risk.
It feels safe because you don't have to see it or think about it on a daily basis. It's the reason most people never take their own money management into their own hands. Seeing a loss here and there bothers them. Two years ago I had a student angrily email me because they lost $1,000 trading futures.
$1,000 gone. Sad. But let's be real here. Your 401K and retirement fluctuates a hell of a lot more than that and if you saw it you would be on the phone with your advisor looking for them to tell you a story to calm you down and make you feel all warm and cuddly inside. The truth is investing has fluctuations and no I'm not talking about the ones where you buy a stock, it drops 50% then you tell yourself; "It's a good company, I'll hold it for a while because it will come back".
What I'm talking about is the face is that you need to define how much you want to earn each year. If you have $900,000 and you want 10% a year you sure as hell don't need to have all $900,000 diversified in stocks, mutual funds and bonds to just make $90,000. And if the thought of making $90,000 from the markets is unthinkable to you there are two issues:
1) You don't have enough capital to invest 2) You prefer blind risk and don't like to see a loss
This is, in my opinion, why most people wait too late to plan for retirement or even take control of their finances because not thinking of the risk at hand is easy. It's the ones that stare risk head on and find a solution to it that make the returns in the markets and in life. I hope this helped. Daniel Bustamante Coach
SUMMARY: VXX in a range, depending on the broader market direction we could go up to 36 or down to 29. Understand the flow of the market, and find the range where price reacts, and you can make money.
First off Happy Veterans Day, and thank you for your service to any service men & women out there!
I can remember when I started to get interested in trading and tried to go all in one a few trades and failed, having the market go against my trade time and time again was very frustrating. I tried some different methods watch videos on YouTube in the effort of trying to figure out what the secret sauce was to timing the market and being consistently profitable. I want to tell you that I have found it and that I am timing the market perfectly every time, but that would be a lie. What I can tell you is that understanding how the market flows has made my trades better, but that does not mean I win every trade.
Take for example this monthly chart; if we look at the past year, we can see clearly where the price has reacted(grey boxes). The stock market is always creating patterns that we can use to our benefit for getting in or out of trades. In the image below you can see how price increased when it arrived in the lower range(confetti) and how it decreased(comet) when it entered the higher range.
Right now we are at the start of a bullish trend on the VXX, which could potentially mean we are staring at a broader bear market, this is still not confirmed. Even if we do not end up selling off the VXX can be an excellent tool to create profitable trades in these market conditions of large swings. Below is my daily chart for VXX with a note on what I plan on doing this week. Feel free to comment or ask me questions on why I have these price targets.
Based on Landshark's trade plan, I have found consistency and developed a general understanding of flow and how price reacts in certain areas. So after seeing my chart, you may be asking yourself, how exactly do we know the top and the bottom? My answer would be, use history, see where price reacts and you will find your range. If you are having trouble finding ranges reach out to one of our instructors here at Landshark we will be glad to help you. We also have our Core Foundations of Trading (CFOT) course that can help you with understanding price charts and market patterns.
Good luck trading this week and be sure to thank those around you who have served this great country for the sacrifices they have made for all of us. Bryan Agosto Coach
I think too many times we get caught up in discussing the best stocks to buy, what indicators to use and other items that we forget possibly the most important one; routine.
Routine is arguable the most important part for any investor or success entrepreneur. Take for example today. It's Sunday which usually means for me that I'll review the markets from last week and try to look for 2-3 ideas to use this week to trade and make money from.
I like doing it this way because I don't day trade and I don't believe in being at the computer all day long in order to make money from the markets. I use this alert tool on Think or Swim that reminds me when its 11:30am EST - so each day I get a text and bell notification that 11:30 am is here (this is the European markets close). Usually the market tends to be done for the rest of the day at this time but I set the reminder to help me to get to other important tasks at hand.
I find it easier to work in scheduled windows like this. This goes on for most of the week except Friday's because I rarely put on new trades on Friday and it's mostly consistent of taking off old positions, good or bad.
I wanted to write on this topic today for some of the newer investors who may read this blog. When you're starting it's all about getting into a routine. At first the learning curve takes some time but you'll notice within a years time a routine start to develop and it's from here where it tends to be smoother sailing. I hope this helped. Daniel Bustamante
So here we are two weeks after we had not one, but two CNBC Markets in Turmoil Specials. You have to love the financial media - they love to put on a show.
The question you should be asking yourself is what did you end up buying during the sell off? If you're like most investors the answer is probably nothing. You'll wait for a few more days of stocks rallying then think "hey this is green maybe it's a good time to buy it" - Wrong.
Sure your 401K and retirement accounts look better today than they did 10 days ago but did you really learn anything from these recent events?
Square was one of the better buys and you missed it.
Odds are the volatility will die back down a little here but we will set up another few red days likely in the next 2-4 days, maybe we'll get another markets in turmoil? Fingers crossed.
In other news TLRY woke up from it's slumber yesterday and I realized the stock had options you could trade on it. With implied volatility on them at +200% it makes for some great premium selling opportunity.
Again some of you are going to want to know 'why' the stock is up. You're going to read news articles written by a journalist who is just getting out their daily required quota and then you'll do whatever you can to make what they say fit your investing thesis. Why is it up? Who cares. The price chart tells you now that you can probably short it or if you understand what I said above start selling insurance on the stock.
We're close to releasing a new website and an all new online academy here and I'm excited for that. The software we're going to be using for students to learn in 2019 is the same that Universities like University of Michigan and a few others use.
Plus, the new mentoring program for those of you with investable assets of $200,000 + will begin enrollments starting in less than 6-weeks so stay tuned.
I figured after this morning most people looking at their 401K's and accounts feel like Patrick Bateman. Though yesterday, last week and pretty much the entire month of October probably felt like his other side.
So we got a nice rally today across the board and the long positions I took I've all but sold. The way the markets are trading right now it makes it difficult to get into longer term trades and to be honest, why would you want to? Netflix alone was up +6% this morning and NVDA was up something like 8% or 9% the past two days.
The same CNBC talking heads that hated stocks last week suddenly love them today, but really, who cares, it's news and if you're blaming them because you couldn't extract any returns from this market the you've got a bigger problem.
Remember, get optimistic before the news, not the day it comes out. Good investors are ahead of the curve.
I posted a few stocks on my shopping list in a Sunday post along with some price charts and notes. Then I had someone send me a chart that looked like the one to the right. It gave me anxiety at first glance and I deleted it. Looking at this one right now is giving me anxiety again.
It took a few days, two to be exact, to consolidate on the lows and rally (I know, waiting more than 2 minutes for a trade to work is stressful!). But we did rally. The key was how you executed on the long trade ideas which is usually where most get it wrong. I talk about options a lot but I like futures and shares.
This week was one of those weeks where it made sense to buy Nasdaq futures with a wide stop, small exposure, and look for the rally.
For those of you buying equities dealing with the swings until we rally is something you'll just have to endure. That, or you can get in and take shorter-term trades, which I personally prefer.
We're not out of the woods. People get excited on rally days and get nervous on sell-offs, for me, up/down It's all the same. But, for those of you who still want to try the buy and hold you need to clear some key areas on the major US indices.
Nasdaq: $7070-$7075 is a key resistance. S&P500: $2720-$2760 is resistance.
I like reducing long exposure here. This is not the dip where you buy and hold for 3 months, it's a market where you buy and short sell in 1-5 day trading windows.
If after this month you feel like this from these markets, then you're not wrong. We all do.
I'll leave you all with this. Stop paying attention to the news and stop reading the news articles to generate your investment ideas. Look at a price chart, learn to read a price chart and then from there you can start generating better ideas. There's a right way to read them and there's a wrong way, period. From there comes overall portfolio risk management and idea structuring. I know many of you that don't do this full-time or even consider it try to reaffirm your investment ideas by reading news articles that support your thesis. Stop. The news is after the fact, not before it. So hopefully this wild month woke everyone up again as we did in January. Stay nimble.
Last week as I was consulting for a large healthcare company, I was asked about what I did with my spare time. I explained to the crowd how I loved to trade and read price charts with the purpose of profiting from that knowledge. We discussed how trading parallels many aspects of life; one aspect specifically was food. Over the past three week's I have had so many people ask me when do I get out or when do I get back into the market. Throughout all of these question, I get one question consistently how much do I need to start trading?
My response is how much are you willing to lose, but that always makes people feel like I am standoffish. So I have adopted the approach to liken trading to eating. With eating habits, you generally have three types of personalities: the convenient eater, the haphazard eater, and the planned eater. These translate well to trading, and we should always strive to be one of these as we trade.
First, you have the convenient personality. A person with a convenient personality will offload the task of getting to consume food to others. People who do this in trading generally have a financial advisor(FA) take control of their accounts and offload the risk to them. This rarely leads to a healthy portfolio(see our previous blog about Financial Advisors), just like stopping at a fast food restaurant will rarely result in a six pack, FA's have a vested interest in increasing commission not your rate of returns.
Secondly, there is the haphazard personality. A person with a haphazard personality will eat whatever they have at home without planning things out. This is a fair way to get by, but will it result in the best foods each time? Most likely not. This is the same as someone who throws money into a 2030 retirement fund in their 401K hoping and praying that there will be enough money there when they need it either in retirement or before.
Finally, there is the planned personality. These are the individuals that have a meal plan that they follow. They plan out their week and identify what is needed to put into each meal to ensure they can enjoy their food when they are ready to cook. This is how we trade at Landshark Education; we plan every week by identifying what we want to trade how we will trade and what the trade will profit or lose(no one wins every time) before the week starts.
If you want to understand how to have a better plan in a market as crazy as we see these past few days, you have come to the right place. This week are hitting some key levels where we could see potential reversals in the market. If there is no reversal what will we do? Follow the plan, just like we should all do as we eat. My storage is full of potential trades in either direction based on what happens tomorrow I plan to eat! What about you? Bryan Agosto Coach
I realized this morning that it's almost November. The year is over and it went like that.
Looking back my favorite ideas for the year were Square and Twitter. I actually owned shares of both. Snap, another idea, not so great but allegedly, you can't win them all so I'll stick with that as my reasoning as to why Snap just couldn't get right.
November is usually the last month of the year where there is movement and for me that's when I stop trading. December I take time to prepare for the next year, relax, get things in order and just sit back.
I'll be headed to Austin end of the week for meetings and we have some great things coming for 2019 which I am pretty excited about.
One of them is a great Learning Management System; a few US colleges use the same one we're going to be using for their online classes so learning the materials will be that much easier. It's filled with quizzes, live videos and much more content to the new programs we're releasing.
One of them is a Funded Futures Trader program which I am partial too. (FYI, it won't be free, or close to Free like Top Step -details to come in January).
The first month of the corporate account has, so far, turned out decent. I wanted to be at +30% but looks more like +10%-15%.
Today should be exciting. The markets are at inflection points which means a lot of trades in play and money to be made.
I'm sitting here this morning making sense of the markets last week and procrastinating my road-ride. The one thing you don't want to procrastinate on is your retirement and the plan for these markets. They're nasty right now and the question I'm trying to determine myself is whether or not we're close to some buying opportunities.
So let's look at the Nasdaq, which for me, is my leading indicator (sorry to offend those of you with those fancy 'back tested' indicators you have on your charts).
By the way, click the chart to expand it.
There's still a lot of pressure on this (selling) so $7000, $7040, $7100 areas are levels that need to trade above. Now I know some of you sticklers want an exact level to the penny but the markets don't work like that so think of it like this: The markets need to trade above those areas.
I really like this company. It's easy for small business owners to use and I've been a fan of it all year. I had a $1,700 swing trade earlier in the year on it in my IRA. Ideally, I'd like it to trade to $58-$67 and I'll be a buyer.
In 2017 this stock was just vertical. Good news, bad news or even fake news on it didn't matter; it went up. We're $80 off the highs this year on it. That being said I'll be interested in it this week. I have a feeling it trades to $115-$125 but we'll see. I made a nice $2,000 trade earlier this year on it, its a good lesson to watch.
Netflix and buy? We'll see. $290-$295 is an area I like, but not for shares, for calls. $330-$335 is a hard task for this stock to clear but in this market anything can happen. Below $290 then it's open air to $270. Won't be buying shares on this, probably ever.
So those are a few items on my shopping list for this week and the next few weeks. There are more but I've procrastinated this morning ride long enough and I need to prepare for this upcoming Thanksgiving feast in a few weeks.
One more thing. I'll be hosting a 3-Day open house again this week from 9:30-11:00am EST.
If you want to attend I'll need you to fill this form out to get the link - Please fill that out before (today) not at 9:15 am. Enjoy your Sunday. Daniel Bustamante Coach