For an introduction to Alessio Rastani, see my previous review of his Webinar: The Absolute Beginners Guide to Trading.
How To Make Money From a Market Crash
This is the second of Alessio Rastani’s webinars that I’ve been able to attend. I got so much information out of the first one that I had to take the opportunity go through another one. The main theme of this webinar is pretty obvious from the title of it; how to make money when the markets go down. Making money as the markets go up is something everyone understands and find easy to learn how to do. You buy X shares of Stock at Y Price, and when the new price is now Y + 10%, you sell those X shares and viola! 10% profit is yours. Instead of that, Alessio Rastani starts off this webinar with an explanation of what shorting a Market is.
This webinar recording is also now available for free at LeadingTrader.com
Alessio gives a good, real world example of what Shorting is; one that he’s used before in his trading videos I believe. The example goes something like this: You borrow a new car from a friend for 6 months. Because you have it for six months you actually sell it someone else for say, 25k (new car). 6 months later, you buy it back at a reduced price of 22k (no longer a new car) and give the car back to the original owner. Everyone’s happy, the original owner has his car back as agreed upon and you are now 3k up. Shorting is basically the same thing.
Take a look at the image to the right; you can click on it to increase it’s size. It’s AIG Stock from December 2010 through March 2011; but we are really focusing on the middle month as an example of shorting. Say you borrow 100 shares of AIG from your broker on January 9th with the promise to buy them back later. You then the sell those share on the same day @ $61.50 ($6150 total) and buy them back a month later on February 8th at a price of $42.00 ($4200) and then return them to the broker. You kept your end of the deal, the broker has his stocks back, and you now have the difference as your profit ($6150 – $4200 = $1950).
Alessio is not just doing this Webinar solo like the last one, he has as a guest Kevin Burton of EzeeTrader. The rest of the Webinar is spent going back and forth between Alessio and Kevin. I will note some differences between the actual webinar and the recorded version. The recorded version is a little over an hour, while the original webinar lasted over 2 hours. However, do not fear; Alessio and Kevin re-recorded a bunch of things to squeeze down the information into a one hour package rather than the 2+ hours of the original. They were able to include everything important so don’t feel that you missed out on 1+ hours worth of info. Personally I was quite drained after the 2+ hour webinar so I’m glad they put in a bunch of extra work to bring the time down.
Overall Kevin expresses his desire to discuss the following topics: Intra-day/End of Day, Price Behavior, Technical Indicators and Timeframe Analysis.
Most of the time is spent on a Technical Indicators called Stochastic and RSI. The Stochastic Oscillator is a momentum indicator that attempts to predict peaks/valleys by comparing it’s price to the range it’s been trading in. The RSI (Relative Strength Indicator) looks at the number of Higher Highs to Lower Lows to determine momentum. After the webinar’s demonstration of their use I personally use both indicators on a frequent basis. Stochastic Indicators help determine when pullbacks are exhausted. When the indicator reads as under 20, it indicates that the stock is oversold, and when it reads above 80 it indicates that it is overbought. This is obviously not a sure-fire method, but a useful indicator. The webinar discusses some of the finer points of reading the indicator like do you trade when it first crosses into the overbought/oversold area or do you trade when it leaves the overbought/oversold area or someplace in between?
Kevin briefly touches on trading time frames. Intra-Day or End of Day? Intra-day trading tends towards Income Generation while End of Day trading for Wealth Building. Now why is this? Well, if you have the time to intra-day trade you must either work when the market’s are closed or intra-day trading is your “job”. Thus, income generation. If you are like me and have a full time M-F job, you can’t intra-day trade because you’d have to be doing that at work; which has its own issues. End of Day trading – holding onto stocks for multiple days before selling – is for Wealth Building because that is exactly what I’m trying to do: Increase my wealth & learn how to trade so I could do it for income generation if necessary. Overall I’d be happy to be continue doing End of Day trading as income generation but in order to do that you probably still need to be “good enough” to intra-day trade in order to generate income through End of Day trading.
Near the end of the webinar Kevin put up a few slides with Stochastic indicators showing and asked if we should sell or buy or do nothing. Generally they were pretty obvious using the information Kevin had just given us; but examples is an excellent learning tool and I’m glad he put those up.
At the end of the Webinar Kevin offers a fantastic deal for EzeeTrader products which was initially only available for the day of the webinar so anyone who didn’t attend the webinar wouldn’t have been able to purchase the products at a steep discount. However, once the recording was made public Kevin extended the offer to 12/6/11 which was quite generous of him. You’ll find the information and the recording here; however at the time of this blog posting the deadline has passed.
Overall I got some useful information out of this webinar. Because the original webinar went so long I wasn’t as fond of it initially. I did personally get more information out of the Beginners Guide to Trading webinar but I am glad to have experienced a good explanation of some additional indicators. In the end, if the recorded version was 2+ hours I probably wouldn’t recommend watching it, but with the highly improved 1hr version that contains all the necessary information it is definitely worth your time if you are interested in trading and in learning details on the things I touched on in this post.