 What is going on everybody? It's Stas here. Welcome back to another video. So as you guys read in the title of today's video, we're going to be talking about how to determine buy points and sell points when you are trading stocks, how to manage your risk, how to understand how much risk and reward is involved in every single trade. We're going to be going over those basics here in today's video. So let's hop right into the topic, guys, starting off with J&J, and we're going to be talking about a couple of different stocks here. I'm going to be doing analysis on a couple of different stocks here on my active watch list. So you guys can get a better understanding on what I personally do when I'm determining buy points and sell points, because it's very important to understand where you want to buy, understand where you want to sell, and to have a plan in place when you are trading in the stock market, whether it's day trading, swing trading, whatever you're doing. It's super, super important to have a plan. So starting off here with Johnson and Johnson, guys, I drew out some basic support levels and some resistance levels throughout the chart here on the 180 day 4-hour chart here. And pretty much, guys, the whole idea, when it comes to swing trading and day trading is a little bit different, but when it comes to swing trading, I like to look at the bigger timeframe charts, the 184-hour chart, maybe sometimes the one-year chart and even sometimes the three-year chart, so we can get a better understanding of the price movement of the stock and where we could potentially be headed over the next couple of weeks and the next couple of months, honestly, guys, because when you're swing trading stocks, sometimes the objective of that trade is to hold the stock for a couple of weeks and sometimes even a couple of months where using these longer-term charts like the one-year one-day chart can be very beneficial to you to determine the overall trend of the particular stock that you're looking to trade. So let's start off here with the 180-day 4-hour chart. We can see a basic support level at about $122, the next one being at about $125, the next one being at about $132, and the one we are currently at right now is at about $136. And notice, guys, on J&J's chart here, whenever we pop above a support or rather a resistance in this case, it becomes a new support level. When we bottomed off at about $122, this was a new support. And then we popped up above $126, that was a resistance making it a new support. And now we popped up above $132. That was a resistance. Then we held it as a support. Now we popped up above $136. That was a resistance. And now we're holding it as a support. So the general idea here, guys, when trading stocks and swing trading, this is very basic, is to enter into a position right around the support level of that stock. Once it does confirm the support and it slowly starts to reverse back to the upside. And once we understand the different support and resistance levels, we get to understand the risk and reward involved with every single potential stock that we want to trade. So let's just talk about that very quickly right now. And we can draw out another resistance right here so we can determine the potential reward of getting into Johnson & Johnson right here at about $136 if it does end up holding this old resistance as a new support. So let's take a look here very quickly. So from $136.75 where we currently are right now, let's say we consolidated there for the rest of the day today and into Monday, right at the time I'm recording this video is Friday. So let's say we consolidated and slowly started to push back up. We can have a potential for profit of around 2% in this particular stock up to the previous resistance at about $140. And let's say we set a 2% stop loss no matter what on every single swing trade that we take, the risk reward ratio on this would be a 2% potential reward versus a 2% potential for loss, which is not really the best potential risk reward ratio that we really want to see. But this is another but right here. If we do end up popping above this 2% level and we continue the uptrend, there could be even further potential for reward which would make or could make this trade worth it right which could make the trade worth it. So we can see here guys the next spot we could potentially go up to would be roughly about $141 which was a previous support here back in the middle towards the end of November of 2018 which is obviously now a new resistance. And let's say we draw another one here at about $145, $144. That would be another support from back towards the end of November the beginning of December which is obviously now a new resistance. So the whole idea here guys is to potentially add more money as we break through these barriers to further our reward potential. That's the whole entire idea here. So let's say we do get in here like we just mentioned, we have about a 2% potential for profit up to $140. Let's say we ended up getting in, we have that 2% locked in, well not really locked in because we didn't take our profits, but we're just up about 2% on our position. The next thing we can potentially do here is A, take our profits and run or hold up to the next resistance which in this case would offer a 3% margin of profit. And let's say we break out of that place, out of that resistance and we want to continue to hold, we could end up making upwards of 5% profit if we end up holding up to the next resistance which in this case is $144. And let me quickly go over an example here that I actually ended up trading a couple of weeks ago. And actually yesterday I ended up taking my profits here on Johnson and Johnson. So for those of you guys that recall, I was in Johnson and Johnson roughly at about $135 and we can draw out another level here that I actually missed. I got into Johnson and Johnson as we broke this resistance at about $135. I got in a couple of weeks back with an average cost at about $135.50. And the reason why I got in here, guys, was there was a ton of potential upside from this break here at $135 up to my sell target where I wanted to sell at about $140. That was about a 4.5% margin of profit that was opened. And I ended up taking my profits a little bit early because we did see a sudden sell-off in J&J stock yesterday. But you can do that, guys. You don't have to stick 100% to your plan all the time. Let's say if something is looking like it's turning to the downside and you want to take your profits, it's never a bad idea just to play it safe. But just for the example in this video, I got in here at $135 with the expectations of getting out at about $140, which was a 4.5% to 5% profit with a 1.5% to 2% potential for loss, which was my stop loss. And that's what I consider a pretty decent risk-reward ratio. A lot of people like to aim for a 10% reward versus a 2% loss. Sometimes that is not really attainable. That's a little bit far-fetched. I like to stick between, in terms of swing trading, about 5% reward versus a 1.5% loss, which is my stop loss in that case. I always, always, always have a stop loss in place when I'm swing trading. And let's say I'm up on a position. I like to use trailing stop losses to protect my profits that I've already made. Let's say I'm up 3-4% on my position. I like to put a trailing stop loss to protect those gains. So let's say it does turn to the downside. I don't lose all of that money that I've already made from holding the stock a couple of weeks. Does that make sense to you guys? Drop a comment down below. Let me know. So the whole entire idea, in terms of swing trading, guys, is draw the resistances, draw the supports, understand how much margin of profit is available from your particular level of entry. And honestly, guys, the best place, in my opinion, to get into a stock is once it is confirming the bounce or the consolidation and the slow pushup from a support level. It wouldn't really make sense to get into the stock right here with the hopes of popping up above here. It would make sense to get in on the dip buy. At least, that's what I personally do. That's the strategy that I personally use. So that is what I do in terms of a longer term basis chart here in Johnson & Johnson with our example when it comes to swing trading. And of course, like I said earlier in the video, I do use some smaller term charts here to understand where to buy and where to sell. And I use indicators like the SMAs. These are my favorite indicators to use, the Simple Moving Average indicators. I have a video tailored to how I use these to buy and sell stocks. Go check out that video. Just type in stock, surface, think, or swim indicators into the search bar on YouTube. It'll pop up. And pretty much here, guys, just like the support and resistance levels that we draw out or drew out on the longer term chart, these SMAs, the indicators, they can also act as support levels and entry points, potential entry points on the pullback and the confirmation of the bounce on the support levels for particular stocks. And let me just give you guys an example here on Johnson & Johnson. We can clearly see, like we saw on the longer term chart, and this is why it's super important to use multiple time frame charts, we can see the rejection at that resistance that we were talking about. And now we're seeing a nice pullback. Not only are we holding that support on the longer term chart that we just talked about on the 137 level, we're also holding that 180-day Simple Moving Average here. As a support, it seems like right now on the 20-day 1-hour chart. So we're seeing two levels of support on different time frames, which does indicate or not really indicates 100% that we're pushing up, that indicates that we're at a level of support right now, which could indicate in the next day or two, this could be a good entry for Johnson & Johnson if we slowly start to push up. And another way you can use Simple Moving Averages, not only as support levels, you can use them as resistance levels, of course, as well, if we're on a downtrend. And let me just show you guys a downtrending pattern here on Johnson & Johnson. Let's see. Perfect. Right here, you can see these indicators were resistance points. So if you are shorting the stock, if you are playing put options on the stock, you can use the same exact strategy in terms of a resistance. So you can potentially buy a put option here or short the stock up here as it's getting rejected by the 50 Simple Moving Average as a resistance. And then as we're slowly pushing down, obviously, when you're shorting or you're playing puts, you'd be profiting on the downside. Another way you can use them is to indicate whether or not there's bullish sentiment in a stock or bearish sentiment in a stock. So judging on this 184-hour chart here, we can see a cross in the 50 SMA above the 180 SMA. And I talked about this in my Think or Swim Indicators video. Whenever we see a 50 SMA cross above the 180 SMA, that is known as a bullish sign, more potential bullish moves, more green could potentially be coming from that. And the opposite is also true if we see a 180 SMA or rather the 50 SMA cross below the 180 SMA, that could indicate more bearish signs in a stock, more potential red in a stock. So the fact that we saw the cross up here, that indicated to me, okay, Johnson and Johnson could be pushing up right now. This could be a good potential time to buy and profit on this bullish move that we're seeing. And at this point, guys, we held above the support. We had a nice, fat margin of profit ahead of us. The cross above the Simple Moving Averages, there's a bunch of good different signs here that showed us, okay, this could be a good potential time to buy. So the whole idea here, guys, is to understand support levels, resistance levels, how much profit is there to capture. What is your reward on that stock? What is your risk? In most cases, your risk is going to be where you set your stop loss. And of course, if you don't set a stop loss, that's not too smart. That is not too smart. Your risk could be unlimited in that case. Because if the stock, let's say you hopped in here, for example, this is when J&J had that asbestos in their products. We all know what ended up happening there. The stock dropped. And let's say you didn't have a stop loss, you would have lost 20% of your money, 10%, 15% of your money. And your risk would have heavily outweighed your reward, which would be stupid, right? Stupid, stupid, stupid. You want to set a stop loss no matter what. So the whole idea, like I said, support, resistances, risk, reward, and multiple timeframes. And if you're swing trading, longer timeframes are your friend. And of course, if you're day trading stocks, guys, if you want to see some more, you know, intra-weak action, you can use these five-day five-minute charts and the same rules apply. Look at this chart, guys. The same rules apply. The moving averages can act as resistances. The moving averages can act as support levels. Just take a look here. Literally a couple of days ago, back in the beginning of March, the 180SMA was acting as a support. Take a look at that. Very nice, very nice. These could have been potential buy points, right? The pullback here, the bounce and the support. This could have been a potential buy point because the margin of profit was opened, the support was confirmed, and we continued to push up. And we see this is a bearish cross on the smaller term timeframes. Remember, when the 50SMA is breaking below the 180SMA, that is a bearish sign. And we can use that principle on every single timeframe, right? And we can see that cross came here, back on the 6th of March. And what happened from there, guys? The stock has been going red for two days in a row. So these are the basic principles that you need to use when you're determining to buy and when to sell a stock. Risk reward, support your resistances, moving averages, they are your best, best friend. So let's take a look at some other stocks here off the cuff, guys. I did not plan this ahead of time. So let's take a look at what we're going to be doing in terms of these stocks, right? We can see, okay, let me quickly just clear cat. Does cat look good right here for this? Cat, cat, cat. Screw cat, honestly, screw cat. Let's just do Tesla, guys, because Tesla is a stock that a lot of people love to talk about. So we can see here on the longer term chart on Tesla. Let's use a one year chart so we can get a bigger picture here of what's going on. So we can see Tesla, there's a couple of main support levels on Tesla. One, at about $250, we bounced there back a year ago, honestly, back in March of 2018. We held above $240. The next one being at $240, $250, or roughly $250 about a year ago. Now we're holding $250 or we held it rather back in October of 2018. And this is a clear support level, right? The next level is going to be right at about $275. The next one being, let me just quickly draw this for you guys right here. I guess we can say the next one is at about $280, because we did bottom off here at about the end of January of 2019. The next one being at about $290. And roughly guys, the next one probably being, let's see if I can get this one, maybe at about $310. And the next one being at about $315. You guys get the idea, right? Drawing out these levels gives you an understanding of where the stock is holding supports and where we could be potentially headed next. And we clearly see right now guys, real time action, Tesla is holding the $275 support very, very nicely from back in the middle of May in 2018. And it's been holding that level here for a couple of days, right? We can see we bottomed off at $270. This is actually where I ended up buying Tesla in my long-term portfolio a couple of days back. And from there, we've been holding this level very nicely. That's a very good sign that we're holding it as a support. And now what we want to see is a break above into the $280s, the $285s for that to be a nice, potential entry point, a potential buy point for Tesla. So I do understand that many of you guys probably look at this and you're very, very confused. Obviously, more of the beginners out there are definitely confused, more of the seasoned and intermediate to advanced traders. They all understand this already, right? And another thing you can use to potentially use as a buy signal or a sell signal are channels, guys. Channels. Take a look at this channel right here on Tesla. I didn't mention this on Johnson & Johnson. But on Tesla, this is way more evident and we can clearly see it. And what a channel is, is just a basic pattern that a stock is trading. And we can see it's hopped off here at $375, the next one at about $345, the next one at about $321. And we can draw a nice clear trend line that is showing the resistance at those points. And we can also draw a potential support of that channel like we see right here, which does indicate that Tesla could potentially have some more downside in the stock. But as of right now, guys, let's say we do end up holding this, we don't pop to the bottom of this channel to the downside. We do have a nice margin of profit here of about 10%, maybe 8% up to the resistance of this channel, which would be a point in time where we could potentially sell the stock if we get in on the confirmation of the bounce right here. So very, very simple, guys. You know, support to resistances. Channels are very important. And just like Johnson & Johnson, take a look. Tesla stock, unlike Johnson & Johnson, that's uptrending, Tesla stock is downtrending. And we see the 50 SMA cross below the 180 SMA, which again, is a very, very bearish sign. And what do we see after the cross, guys? The stock has fallen for the past couple of months since the beginning of the middle, rather of actually know the beginning of December, the stock has been falling down in price. So, you know, in terms of Tesla right now, guys, we are nearing a pretty good buy in terms of the support and resistance levels that we've drawn out. But let's say we break the support, the next level we're going to be looking at for a potential buy is going to be at the support of this channel, which at that case would be around 260. And let's say we break this channel, 250 is going to be the next area that we're going to be looking at in terms of Tesla stock. So let's do another one very quickly before I do end off this video. Let's see, maybe Square would be a good example here, Square. Okay, Square is looking pretty solid. And I already have all the levels drawn out here for you guys. So we can see, you know, let's draw a couple more out, the resistance or rather the support at about $50 here, the next one being at about let's say $60-ish. The next one being, let's see, did I draw this one? Nope, I did not draw that one. The next one being at around, let's say $65 support. The next one being at about $68. Then we see this one here where we're actually holding right now, which is a pretty good sign, is at about $70. We ended up, did we sell off the 70 in terms of Square stock? I think we did. Yep, 71, that was actually this morning. And we do see a potential confirmation of the bounce on that 70 support level. So this is actually a pretty good example here, that if we do end up holding this support level at about $70-71 and we break this resistance at about $74, the next point we're going to be looking to get to is at about $77, which offers about a 5% margin of profit. So this is a very, very good example here of a 5% reward potential versus a 1.5% loss where our stop loss would be or whatever your stop loss is set at. Mine is usually set at about 1.5%, 2%. When I'm swing trading and when I'm day trading, a little bit tighter than that sometimes depending on whether I'm trading and leverage DTF, a large cap, a mid cap, small cap, it all depends on what I'm trading and what the volume is looking like for that particular stock. And let's say we break that level, guys, we can have even upwards of 8% profit up to 11-12% if we get back into the $80 level. But another thing I want to warn you guys here for this example of square stock and I'm sure you can point this out on a bunch of different charts, we're slowly seeing a curl to the downside of the 50 SMA. And what does this mean, guys? This means that we could potentially see a downwards cross below the 180 SMA, which could signal further downside in square stock and especially if the markets continue to sell off heavily, which they have been over the past couple of weeks, this could end up pushing down a bunch of these stocks. So I'm going to end off the video right here, guys, but just to give you a quick little synopsis, a recap, what we look for in terms of buying and selling. We like to see support levels and resistance levels drawn out. We like to see more reward potential versus risk. Example, let's say we were to hop into the SPX index right here. There's a ton more risk than there is reward, right? Risk is outweighing the reward. It might not be too great of a time to hop into a stock index ETF that looks like that. Another thing, moving averages, they are your best friend on all time frames for support levels, resistance levels, understanding the trend of the overall stock. Are we pushing up? Are we pushing down? Is there going to be further downside, further upside? Understanding the 50 SMA cross above the 180 SMA, that's a very bullish sign. The downwards cross between, or rather, the downwards push of the 50 SMA below the 180 SMA, like we saw back here in the beginning of October on the SPX, that's a bearish sign, right? These are things you have to understand before entering a position. You can do this with day trading and swing trading. I hope you guys enjoyed this video. If you did, feel free to leave a like. Drop a comment. Subscribe to the channel. If you're new to the channel, my name is Stas. Again, I do daily market and trading updates throughout the week. I do trading tip videos like this, personal finance videos, some entrepreneurship videos here and there. If you're interested in that content, subscribe to the channel. Again, leave that notification bell on so you're notified every time that I do make a video. And for all you guys that are long-term viewers, I appreciate you guys so much from the bottom of my heart. I'll catch you guys in the next video. Peace out.