MASTERING STOCK TRADING WITH

THREE SIMPLE TECHNIQUES





My name is Noshee. I am the Financial Markets Wiz-
ard offering my wealth of stock options analysis,
knowledge and resources geared for traders who are
looking to finally grasp financial freedom by making
smarter investments in the stock market.

My Personal Background in the Trading Industry Achieving Financial Freedom and a Balanced
Lifestyle
You're probably wondering what makes me the perfect
individual in helping you to increase your personal There is a reason why there is a difference between
wealth. Currently, I am a full time trader who rigor- having a career and having a JOB, which some people
ously follows the stock market and have developed believe stands for "Just over Broke." By seeking a ca-
strategies that help to target ideal stock ideas. My pri- reer in trading, I have come to look forward to each
mary industry focus is in equity options. Yet the re- day with a newfound excitement and anticipation.
sources and skills that traders learn through my re- I've found how rewarding it can be to help others --
sources can be easily applied to develop strategies that my family and friends as well as my community of
can be used toward buying and selling any other finan- traders -- find a greater lifestyle through stocks and
cial instruments. options trading that can significantly increase their
wealth.
I started my formal education by gaining an MBA de-
gree in finance. I also obtained a degree in computers Yet it's not all about my trading career. I also believe
and banking, as I have found these skills extremely in having a balanced work/lifestyle and that physical
useful in further understanding the basics of the stock fitness is closely related to financial fitness. With my
market as well as researching for the best technology office located in San Diego, I enjoy exercising by jog-
tools to use to help analyze stock behavior. ging on the beach and in the mountains, as well as
riding my bike, after the stock markets close and my
Before becoming involved as a full-time trader, I market analysis is completed for the day. Through
worked in various technology roles as I was a systems this physical stimulation, I maintain a high energy
analyst and designer, an IT consultant, an IT trainer level and keep my mind sharp to tackle the stock
and a project manager. I moved up in the business markets for the following day.
ranks, applying my skills to help companies build and
maintain their IT infrastructures. As I reached every Now that you know more about me, I hope you enjoy
new promotion and position that offered greater re- reading my Top Three Trading Strategies in stock
sponsibility, I felt something lacking. These positions market to help you build your career as a profitable
simply did not satisfy me by providing a rewarding stock trader. I am more than happy to be sharing this
lifestyle or by offering me a true sense of accomplish- information with you. So let’s begin!
ment.

I not only wanted to help others achieve their goals, I

also wanted a greater level of self-fulfillment. I came to
realize that I could achieve this by taking complete
control of my financial future.

Several years ago, I left my $125,000 per year job in

the IT industry and created a career in trading that
better reflected what I wanted to achieve in my life.
Over the intervening years, I've accumulated an exten-
sive personal library that focuses on all aspects of trad-
ing. I'm constantly reading about the topic as I love
spending time advancing my professional skills.



1. How I Trade Gaps 1.1 What Are Gaps

There are essentially three ways that the price of a

Gaps trading is one of my favorite trading strate- stock can open for trading relative to its prior
gies.It is also one of the difficult strategies to trade closing price.It can open higher, lower, or at the
as trader can get caught in the wrong direction and same price. When there is a significant difference
start losing right away.This could be very demoral- between a stock’s prior day closing price and its
izing.Therefore, understanding gaps, what causes opening price, it is called a gap.If the opening
gaps and what to look for in trading gap is very im- price is higher than the prior closing price, it is
portant.Dozens of stocks gap up or down every day called a gap up.If the opening price is lower than
but not all stocks are trade-able.There are only the prior closing price then it’s a gap down.When
handful of stocks which are good trade candidates a stock opens at essentially the same price as the
on any given day.Therefore, knowing which one to prior close, or the difference is very small, then it
trade and which one to avoid is crucial to improv- is considered to be a flat open.
ing the portfolio balance.So let’s begin in under-
standing the gaps and in the next article we will go
in detail on how to trade gaps and fade gaps by us- 1.2 What Causes Gaps
ing Calls and Puts.
A variety of factors can cause the market or indi-
vidual stocks to gap.Examples include late break-
ing news on specific stocks, earnings reports, ana-
lyst upgrades or downgrades, overnight futures
trading, economic news, major world events, or
simply an imbalance between supply and de-
mand. Regardless of the specific catalyst, gaps
occur due to excess demand on the buy or sell
side, which is further exaggerated by low volume
trading that takes place outside of regular market
hours.Since the total number of buyers and sellers
is lower during post — and premarket hours, any
significant buying pressure pushes stock prices
higher than would normally occur during regular
market hours.The opposite is true when there is
more selling pressure.

1.3 When Gaps Occur

Gaps occur every day of the trading week but

mostly on Mondays and Fridays.The larger the
gap, the better the potential in the trade.If stock is
gapping up on news such as major analyst up-
grade or an upside earnings announcement, then
the chances are that stock will continue moving
upward.But the stocks which gap up for no reason
will likely pullback.
 1.4 Types of Gaps 1.4.4 Exhaustion Gaps
There are mainly four types of gaps.
Exhaustion gaps are those that happen near the
end of a good up - or downtrend.They are many
times the first signal of the end of that move.They
are identified by high volume and large price dif-
ference between the previous day’s close and the
1.4.1 Common Gaps new opening price.They can easily be mistaken
for runaway gaps if one does not notice the excep-
Sometimes referred to as a trading gap or an area tionally high volume.
gap, the common gap is usually uneventful. In
fact, they can be caused by a stock going ex-divi- It is almost a state of panic if the gap appears dur-
dend when the trading volume is low.These gaps ing a long down move and pessimism has set in-
are common and usually get filled fairly quickly. .Selling all positions to liquidate holdings in the
“Getting filled” means that the price action at a market is not uncommon.Exhaustion gaps are
later time (few days to a few weeks) usually re- quickly filled as prices reverse their trend.Like-
traces at the least to the last day before the gap. wise, if they happen during a bull move, some
This is also known as closing the gap or closing bullish euphoria overcomes trades, and buyers
the window (in Japanese). cannot get enough of that stock.The prices gap up
with huge volume; then, there is great profit tak-
ing and the demand for the stock totally dries up-
1.4.2 Breakaway Gaps .Prices drop, and a significant change in trend
occurs.Exhaustion gaps are probably the easiest
Breakaway gaps are the exciting ones.They occur to trade and profit from.
when the price action is breaking out of their

 trading range or congestion area.To understand
gaps, one has to understand the nature of conges-
tion areas in the market.A congestion area is just
a price range in which the market has traded for
some period of time, usually a few weeks or
so.The area near the top of the congestion area is
usually resistance when approached from below.-
Likewise, the area near the bottom of the conges-
tion area is support when approached from
above.To break out of these areas requires market
enthusiasm and, either, many more buyers than
sellers for upside breakouts or more sellers than
buyers for downside breakouts.

1.4.3 Runaway Gaps

Runaway gaps are also called measuring gaps,

and are best described as gaps that are caused by
increased interest in the stock.For runaway gaps
to the upside, it usually represents traders who
did not get in during the initial move of the up-
trend and while waiting for a retracement in
price, decided it was not going to happen.In-
creased buying interest happens all of a sudden,
and the price gaps above the previous day’s
close.This type of runaway gap represents an al-
most panic state in traders.Also, a good uptrend
can have runaway gaps caused by significant news
events that cause new interest in the stock.
 1.5 How I Trade Gaps

Ideally when a stock gaps up, we should not buy “Calls” unless it makes a new high
after 10:00 AM EST. Similarly, if a stock gaps down, we should not buy “Puts” unless
it makes a new low after 10:00 AM EST. When stock gaps up it makes a high and then
reverses to the downside but stays above the open price. It trades aggressively be-
tween open price and high price. Professionals try to short at high made during the
first thirty minutes of the market open. They place the stop just little above the high
which was made during the first thirty minutes. At this stage the battle rages between
the bulls and the bears where bears try to push it down and bulls buy on every dip
and eventually one of them wins.

1.5.1 How I Trade Gap Up - By Buying Calls 1.5.2 How I Trade Gap Up - By Buying Puts

I watch the five-minute charts and see how stock When the stock gaps up on news then analyzing
is trading. Usually it oscillates between open and this news is very important. Before the market
high. I also watch buy and sell pressure to figure it opens reading the news on the stocks which are
out which side will likely win. Sometimes it is evi- gapping up is crucial to understanding what the
dent from the get-go who will win sometimes it is stock would eventually do after the stock starts
not clear till later stage. To enter long the ideal trading during normal market hours. If the stock
entry is when stock pulls back and comes closer to is gapping up for no good reason, that is no sub-
the open price but do not violate it. As soon as the stantial news to justify the gap, then it is likely a
stock comes close to open price and buying pres- good candidate for fading the gap. In other words
sure starts building up that’s when we could go if the gap is overly exaggerated the stock will like-
long with the stop either just below the open or ly reverse its direction to the downside and if the
below the support price which is below the open gap amount is significant then a trader can buy
price. This is low risk high reward trade and deci- Puts to take advantage of the reversal. Another
sion has to be made quickly and trade executed at factor which helps in my decision whether to fade
lightning speed.If the amount of gap is signifi- the gap or trade in the direction of the gap is
cantly high then the profit target could be just where the stock is trading at open with respect to
below the high made so far. Another entry for go- the resistance. If the stock gaps up and hit the
ing long is when stock breaks the high made dur- resistance and unable to conquer the resistance
ing the first 30 minutes. The stop in this case is right at the beginning then it has very high chance
below the open price of that day or the low made that it will fail to cross the resistance later during
so far. If there is a support level below the open the day and rather it will sell off. If this is the case
then the stop is below this support rather than then a trader can buy Puts with stop 50 to 70
below open. Usually the stock dips below the open cents above the resistance line and lock gains
to take out the stop and then it moves upward when stock approaches the support. The potential
very fast. between resistance and support should be enough
to justify buying Puts as option trading requires
When I am buying calls then I buy only half lot certain dollar amount move to justify the spread
and keep another lot to buy either at lower price between bids and ask.
(near open) or buy second lot when it breaks the
high made (within 30 minutes) decisively and
moves aggressively upward.
 1.5 How I Trade Gaps
Continued

1.5.3 How I Trade Gap Down - By Buying Puts

Gap down strategy is the same as gap up but in reverse. Stocks gap down due to some major bad news.
When stock gaps down a trader needs to evaluate the further potential in the trade, buy/sell pressure,
any major support nearby which could stop further decline in the stock move. For example, if stock gaps
down and 200 day moving average is close by then it has high probability that it will stop going down
further once it hits 200 day moving average. Even if it dips below 200 day moving average it could
bounce back above.

If the stock has gap down huge and there is no significant support nearby and selling pressure is rising
then the chances are that it will continue going down in the direction of the gap. During the first 30 min-
utes of market open - day traders try to fade the gap by going long and placing the stop just below the
low made during the 30 minutes. Once this low is broken then the selling pressure starts rising and they
switch their position from long to short. It is at this moment or knowing that stock is further deteriorat-
ing that a trader can buy put with a stop above the high made so far. However, if the gap is huge this high
could be far from the entry point and if stock reverses to the upside then trader can lose significant por-
tion of its trading amount by the time he stops out. Therefore, I look for another resistance point which
is way below the open or high and if stock closes above this resistance line then I close my Puts position
otherwise the profit target is slightly above the next major support. Since gap down trading can be fast
and furious and stock could reverse its direction after hitting the support therefore, I do not take risk of
greed factor to come into play. I place conditional order and let the price move take me out of the trade
with profit. In this way greed factor is eliminated and I am out of the trade with decent profit. Knowing
the resistance, support is the key to trading gap down trades.

1.5.4 How I Trade Gap Down - By Buying Calls

When stock gaps down and hit support it stops going down further. Not only it stops going down but
starts moving up aggressively. Recognizing this change in trend a trader can buy Calls with stop below
the low made during the first 30 minutes. The profit target is the first major resistance. The move could
be fast therefore, I prefer to place conditional order and let the trade close itself with profit. The condi-
tional order eliminates the greed factor.
JWN – October 17, 2017 FAST - October 11, 2017

PEP - October 4, 2017 MU - September 27, 2017

The market opens and your favorite stock is mov-
ing upward, so you decide to go long and purchase
shares or calls. Then are you left wondering why
2. How I Trade
Opening Range
after twenty-five minutes of the market open it
stalls and stops moving up? For example, one trad-
ing day you noticed that PSX opens at $50.50,
dipped slightly and made a low of $50.25 and then
started aggressively moving upwards. You decided
Breakout
to chase the stock and bought when it was trading
at $51.40.After you established your position, PSX
continued to climb further to $51.65.Then around
9:55 am EST PSX stopped its upward climb and
traded in the narrow range of $50.70 and $51.20
for the remainder of the day. I used to get stuck in
trades like these till I came across the concept of
Opening Range Breakout.

Statistics indicate that only 1/3 of stocks make

their high or low of the day within the first 30-
minutes of the market open. This means the re-
maining 2/3 of the equities make new highs or new
lows after the first 30 minutes has elapsed. So if a
trader buys a stock during the first 30 minutes,
there is a high probability that the trade will not
materially move up for the remainder of the day.
Therefore if you are determined to make decent
money trading stocks you need to understand and
apply the invaluable concepts of Opening Range
and Opening Range Breakout.

Let’s first understand the concept of Opening Range. The Opening Range is defined in terms of time and
price. The time element is simply the first X number of minutes in the trading day where the trader defines
the time element in accordance to his/her personal trading style. Since I am swing trader, I concentrate on a
30 minute Opening Range by progressively examining the 5 minute, 15 minute interval and then finally make
my decision on the 30 minute time frame.

To better understand the concept of Opening Range let’s consider the PSX example mentioned above. In this
example PSX made a low of $50.25 and a high of $51.65.Therefore, the 30-minute Opening Range for PSX is
simply defined as $50.25-$51.65. Market professionals mostly use a 30-minute Opening Range due to eco-
nomic reports being released at 10 am EST. These reports affect the market sentiment from bullish to bearish
or vice versa and thus stocks react positively or negatively. The other factor is also related to stocks them-
selves. Stocks may also have news which is driving their moves. Once the news is digested and analyzed stocks
move in normal fashion.

Based on the example above, the Opening Range price range element for PSX is $50.25-$51.65 using a 30
minute time frame? Therefore, when a stock starts moving above the opening range high it is considered as
bullish, whereas if the stock is trading below the opening range low it is considered as bearish. This is the fun-
damental starting point for the trader to understand and trade the Opening Range. However, there is more to
it than just price and time. The third variable is the volume, but before we bring volume into the picture we
need to understand the concept of breakout, resistance and support.
 Breakout occurs when a stock clears a price level that
for whatever reason has been a virtual cover on the
3. How I Trade stocks advance.Stock chart readers recognize it as the
moment when a stock has thrown off that cover and

Breakouts has the greatest probability of making meaningful

gains.Some stocks double in price in a matter of few
months.

“Breakouts and breakdowns attract many partici- Breakout stocks are stocks either rallying to a new
pants but require precise timing to turn a profit. high or into a price area with no resistance.Breakout
Insiders know that these hot spots attract dumb stocks typically break through a resistance area and
money. They initiate whipsaws after each volume rally quite quickly to a new higher price area.
surge to shake out weak hands. This ensures that
the majority enters positions just as the market All breakouts are questionable until they follow
reverses.” through.A perfect breakout is a clean breakout.Most
stocks tend to retest their breakout points a number
—Alan Farley of weeks into their breakouts.When they do this they
offer some of those investors who are tracking its
movements for a second chance to jump in.A clean
breakout stock does not even come close to its previ-
ous resistance line. Weeks after a breakout, statisti-
cally, a considerable number of stocks do retest its
support line. They can breach the support line but
should not close below the line.

For a successful and impressive breakout the stock

needs to be trading above its 50 day moving average
and 50 day moving average above its 200 day moving
average.Not all breakouts are from Cup-With-Handle
base formations.Stocks that successfully retest their
resistance level usually rebound forcefully to fresh
new highs.

One form of breakout is called “Continuation

Breakouts”. Continuation type breakouts are typi-
cal on up trending momentum stocks moving to new
highs.The resistance the breakout breaks through is
usually a weaker type of resistance.For example,
stock makes a new 52-week high around $151 and
then pulls back 3-5 points.Then it starts rising again
and breaks price point of $151 with volume.This is
considered as Continuation Breakout.

Higher quality breakouts (fast and big move) usually occur for flat top breakouts with longer top consolida-
tion periods (1 week to 1 month in time frame).Flat top breakouts usually allow for tighter breakout stop limits
enabling higher quality profit/loss trades.

When stocks breakout after strong rally then it is possible the stock may not go further up as the move has
already taken place.During the day of the breakout the volume has to be very high.


3. How I Trade Breakouts
Continued

Trader should be cautious on breakouts that occur

on earnings or news events (upgrades).These can
cause false breakouts.Some of the better breakouts
usually occur when there is no news.Therefore,
traders should be capable of recognizing the failed
breakouts and should get out of the trade immedi-
ately.The initial loss is the best loss in this case as
any hesitancy can result in disaster.Some price ac-
tion can indicate that a retest is way underway
while in the background that very price action was
the beginning of a sell off and eventual price
breakdown; with a close below its important sup-
port line. We also need to be cautious on breakouts
after a previous rally.While breakouts do occur
their profit may be less and stop loss may need to
be higher.

Trader should master the breakouts with unwaver-

ing execution.Some of the best breakouts can be
found by making a list of breakout candidates prior
to the actual breakout and then watch for the
abrupt upward stock movement to trigger an entry
point.I monitor breakout candidates like a hawk
and when it starts trading above the important re-
sistance line and volumes starts increasing and
meet my minimum criterion that’s when I enter the
trade with half lot.Once the stock establishes itself
as successful breakout then I add another half to
my position.Sometimes we all have the urge to
cheat a little bit and enter prematurely into the
breakout, thinking that if a stock is eventually go-
ing to breakout then why not buy it at low
price.This is not disciplined trading rather trading
with greed.If a breakout is going to happen then
the gain will be enormous so it is advisable to wait
for confirmation of the breakout.

Be cautious on breakouts after a previous ral-

ly.While breakouts do occur their profit may be less
and stop loss may need to be higher.
 HOW I CAN HELP YOU ACHIEVE
YOUR FINANCIAL DREAMS

Today, my income is entirely based on my trading success by implementing my trading strategies.

I only trade with funds from my own personal account. However, in the beginning, I was trading
part-time. I was very active in discussion groups focusing on stock and option strategies. As an
active member of these forums, I learned fast by asking questions. Because of my intense desire
to learn, I was noticed by the more successful traders who put me onto the right path to success. I
took their advice to heart and started devoting significant time to learning the ropes of trading.
The more I learned, the more I came to know how little I knew. I did know, however, that I was
very passionate about trading. Therefore, I promised myself to be successful and that I would
spend days and nights in mastering the art of trading. When I faced any question related to trad-
ing, I searched until I discovered the answer. Over time, I continued to refine my trading strate-
gies until I achieved consistent profitable results and my trading account grew at a rapid rate.

I know that a successful option trader develops and follows his trading strategies like a robot and
is highly disciplined throughout the trading hours. I conduct a six-month
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To find out more about my Six months “Mastering the Markets” coaching program, please send
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