Charting in Active Trader Pro®

T R A N S C R I P T Charting in Active Trader Pro®

Sam Short: Thank you Jonathan, definitely welcome everyone to join us for an hour

to talk about Active Trader Pro. As Jonathan mentioned, I’m with Fidelity’s

Trading Strategy Desk, so is Nick here. And really, we’re here to help with

education, to make you a self-directed investor who has a more repeatable

process that you can work with. And certainly, Active Trader Pro is a really

essential tool for a lot of active traders who are utilizing technical analysis and

utilizing charting as part of their process. So the focus today on charting in

Active Trader Pro definitely very much toward that end. The representatives

on our Trading Strategy Desk all are either chartered market technicians or

chartered market technician candidates. We all have years of experience here

at Fidelity. Personally, I’ve been here for just a little over nine years, over eight

of those years working with Fidelity’s active trader clientele.

And we do also offer four-week courses for people who are beginners, who

are new to both technical analysis and for those who are just starting out with

option trading. In addition to those classes, we also offer standalone courses,

which you can access at Fidelity.com/coaching. Usually we have three or four

of those a day, so certainly these webinars are a fantastic resource, but really

1 on top of these webinars, you have these additional classes that you can attend, these coaching sessions, for sort of more specialized learning on different topics.

As Jonathan mentioned, you can access the install file for Active Trader Pro on

Fidelity.com, and a really common question we often get is how do I log in?

And it uses the same login credentials as on Fidelity.com. You don’t lose access to Fidelity.com, nothing of that sort, but you’re able to use both interchangeably and even at the same time, if you wish.

So, for the session today, we’re going to try to cover really all of the charting functionality in Active Trader Pro. Especially with an eye toward using that functionality to help with risk management in your trading process. If there are follow-up questions, certainly reach out to us here at Fidelity. You can reach out to your local branch, you can reach out to us at the Trading Strategy Desk, and with our active trader team. And we’re a fantastic ongoing resource that you should utilize, you’re never really on an island with your trading, we want to make sure that you’re able to maximize everything that we have to help you be the most successful trader that you can be. With that, let me let Nick introduce himself, and then let’s get started on taking a look at looking at some of the charting tools in Active Trader Pro.

Nick DeLisse: I really appreciate that Sam, and good afternoon everybody on the

East Coast, good morning to everybody else. My name is Nicholas DeLisse,

I’m with Fidelity’s Trading Strategy Desk. And I just have a passion for

education just like Sam does. Haven’t been with Fidelity quite as long, I’ve

been with Fidelity for about seven years, but my journey to the Trading

Strategy Desk kind of mimics Sam’s. I’m also a chartered financial analyst, in

addition to pursuing the CMT designation, and I really see that, you know,

charting, understanding price movement, can really help with that timing

decision, and also with risk management. And it’s tools that a lot of traders,

they forego, because they -- you might focus just on security selection, rather

than that timing decision.

Now, we’ve gone ahead and we’ve shared our Active Trader Pro screen, and

let’s go ahead and get into the swing of things when it comes to, you know,

when it comes to charting. Active Trader Pro really is a powerful platform and

a powerful tool. One really quick and easy thing that a lot of traders, they

might miss when it comes to Active Trader Pro, is our linking tool. If you look

at the very top left-hand corner of the chart, you’re going to see something

that says unlink, or change link, if it’s not linked. Currently, this is, of course,

set to the gray link tools. The importance of this being gray is a default. So

3 let’s say you have a watchlist or a positions list, you can just double click on the positions list, and it will then automatically load that in the chart, you see the stocks change to OEX, and we can change it to SPX, and even go back to the semiconductor select sector. So it’s just something that’s really quick, easy to use, from, you know, looking down your positions if you’re charting. But let’s go and jump into some of the other really important settings of a chart.

Very bottom left-hand corner, this will control your timeframe. In essence, what this part of the chart is doing is, this kind of zooms you in, and zooms you out. Right now, we’re just on a six-month basis, but if you wanted to go out to a one-year, you know, two-year basis, or even, you know, jump into a one- month basis, you have that ability to do that down here. Now if your chart is smaller, or if it’s not quite as expanded like ours is, you might actually have to click and have a little bit of a dropdown menu. Let me go ahead and make this a little bit smaller, that you see that right now, it’s set on today, you might have to click on this dropdown menu like this, to actually get that change.

So kind of expanding this out, just the right of this, you can see something that says frequency. What this is going to control is the different bars up here.

Right now, we do have it set up to be candlestick versus the default open high/low close, that you might actually see when you log into Active Trader

Pro for the first time. This frequency is very important, because this is what any indicators you might add to Active Trader Pro are going to be based on. Right now, the frequency is set at daily, meaning each of these bars represent one day’s worth of information, of course, over the last six months. Now we can change this frequency to a minute, so that each of these bars now represent one minute’s worth of information. The important part of this is that let’s say you have a simple moving average on your chart. It’s a 20 period simple moving average. Well if we change the frequency to one minute, that moving average is now a 20-minute moving average. It is no longer a 20-day moving average. The same thing if you change frequency to maybe an hour. It’s now a 20-hour moving average, and it’s definitely something important that you have to keep in mind.

Now, if you noticed when I changed the frequency to one minute, I’m no longer on that six-month time horizon. That’s because different timeframes allow different frequencies. Of course, you can’t look back and have one minute bars going back three months, and so it’s going to reduce that to the appropriate timeframe, where you can get those one minute bars. And to really get that sub-day, to see a frequency less than one day, you need to be on a one month or less. So as we go to one month, we see we have this 60- minute frequency, but as soon as we kick it up to three months, this frequency

5 drops to daily. And what this will also do is you get this warning, frequencies below will change the timeframe, and you’ll notice we change the 30 minutes, this of course adjusts that timeframe appropriately so that you’re able to see the information you’re looking for.

So kind of coming back to a six month, one other thing that a lot of traders will notice is there’s a histogram, there’s this history viewer down here.

Sometimes, Sam and I will speak with clients, and they’ll say, we see this mountain graph at the very bottom, what does it mean? Is it special? And all this is, is this is just a different viewer, showing you different information. So what this has done is this picture right here represents this information we get up in the top screen. And as opposed to changing the date and timeframe in the bottom right, we can actually drag this left and right to see different times.

We can drag this wider, if you want to. And it’s just a different way to enable us to see the data that we want to, to zoom in data that we want to, that maybe we specifically want to take a look at this little peak part right here, well we can do this with the history viewer. So if you want to hide the history viewer, you’re simply looking at the little triangle in the bottom left-hand corner of the chart. I’m going to go ahead and go back to six months.

In addition, if you want to zoom in other ways, the very top right-hand corner of the chart, you’re going to see the zoom in feature, just click the plus magnifying glass, this lets you zoom into exactly what you’re looking for, you can click the minus magnifying glass, and this’ll back you up a little bit more.

An incredibly useful tool to take a look at maybe a specific part of the chart that you’re wanting to dive into.

Now, settings. There are a lot of different settings, of course you can change in the chart. Most of these settings, of course, are accessed at the settings menu that you see at the very top. We click on settings, this will load up the menu, this is where you can easily change from that candlestick, to open high/low close, to mountain. As we see these changes apply in the background, you can hit cancel, of course it will cancel all these changes. But this is where you might change the different views of your chart. From here, this could also be where you might add different parts of the chart. So right now, of course, we’re on a daily frequency, so if you wanted to show extended hours, we could check this box, and once we go to a one-month or shorter timeframe, and we change that frequency to maybe hourly, it will actually show us the extended hours information. Of course right now, since we’re on a daily frequency, it is not going to show that for you right now.

Volume chart is also something that a lot of traders like to see. They want to see the volume that’s going on, and of course, we have an index loaded up, so it’s not really showing that volume information like it would if we had an individual security. And we can definitely show you some additional aspects of that. Price volume distribution is something else that a lot of traders might like to see in addition to showing that previous close. And so let me go ahead and add all of these features on, I’m going to hit apply, and maybe we actually take a look at an ETF that is actively traded compared to an index, and now we can see the volume panes, in addition to price volume distribution, that kind of shows you which aspects and which price points had a lot of that particular volume.

Now coming back up to the settings page, if of course we don’t want to show price volume distribution, we can check that box, want to change any kind of the gridline opacity. Maybe you don’t like the gridlines. You can remove that, or you can make them darker by dragging this back and forth. It’s the same thing with the watermark and the background that lists the particular company symbol. If you don’t want to see that, you can show that, and you can hide that, of course.

Now, in addition to that, you can also, if you want to remove the volume pane, like any of the other indicators, you can simply click on the X button here in the top right-hand corner, and that will also remove that. So, something else, of course, with the settings, is some traders, they might like to change the colors that are used, and so if we go to, you know, candlestick fill, you know, maybe you want to look at the more traditional candlesticks. And so, as opposed to down being red, down might be black. And as opposed to up being green, you might use more of a gray. So it kind of shows that white if you’re doing the filled. Of course, if we go to white, that’s going to blend everything back into it, and you won’t really be able to see much of that information. But there’s a lot that you can, of course, customize from this particular menu.

Now you can also access a lot of the settings menu information by a simple right-click. If you right-click and come down here to settings, you’re going to see some more information, if you want to hide or show volume, hide or show extended hours, and everything else, you can change the styles from here.

With this, you can, of course, change the pricing axis from linear to logarithmic if you wanted to. Or this can apply as some traders, they might to take a look at a long timeframe of information, and when you start to do that, when you’re looking at a very, very long timeframe, logarithmic can help identify that, because a, you know, as you might see in the news, a maybe 500 point

movement in the Dow today, yes that’s a bigger movement, but that’s not

outrageous, where a 500 point movement in the Dow back in, you know, 1995,

you know, that might be in essence it doubling overnight, if it went up 500

points, or dropping, so it’s definitely something that, you know, traders will

look at when looking at longer term time horizons, and you can, of course,

change that back by coming back to settings, pricing access, and going to

logarithmic.

SHORT: Yeah, one other thing that’s also important to recognize is some people may

not have a layout, or they’ve already put a chart into it. If you’re ever wanting

to open up a chart, what you can do, of course, is click on charts in the menu

along the top, and then new chart. Or, let’s say we’re at our layout for Active

Trader Pro, and we’re looking at the VIX, and we want to pull a chart up for the

VIX. Next to each of the symbols, there’s going to be a little button that you

can click on. When you click on that menu button, third selection there is

going to be charts, and it’ll pull up a new window with a chart for you to then

go in and start customizing. So there’s a lot of different ways to get to the

chart, and then of course, one you’re there, you have the customization that’s

available in all of those settings.

So now let’s start to take a look at the ways that we’ll utilize the price data that we’re seeing on the chart with what we’re going to refer to as the drawing tools. So we’re going to go through most of the menus here along the top of our charts, let me go ahead and maximize the chart again. So we’re looking at a nice big chart, easy to identify. And along the top of the chart, we have a listing here that says draw. The first couple links in the draw menu aren’t really drawing tools, per se, but allow different ways to interact with the chart. So as a default, it’s going to have the little arrow, like most of you are probably familiar with any sort of Windows-based program, you have your little arrow.

But let’s say you’re having trouble identifying exact price points and dates when looking at the chart. There’s two ways that you can really help yourself with that. One is, if you put your mouse on a given bar, in the upper left-hand corner of the chart, it will tell you, numerically, what date you’re on. So right now, I’m on the 1st, or probably the 15th of January from this year. And then it also gives you the numerical data for the open, high, low, and close. But what you can alternatively do is if you go to the draw menu, and select the crosshair, you’re going to notice it gives you a crosshair on the chart. And then, you can drag that crosshair to whatever point you want on the chart. It can be along the bar, so you can say here’s what was going on, on January the 31st. Or you can even look at points where there’s not even a bar to see what the price point would be at that given point. Maybe you’re trying to draw a line across,

11 and having a little bit of a difficulty identifying well, what price point would that have me at, the crosshair can help with that.

As well in the drawing tools, we have our little hand that we can choose from.

And here’s where we can scroll along the chart. And this is the way we can add white space to the top of the chart. There’s going to be a little bar where if you put your mouse over it, you’ll get the double-sided arrow, or on the right-hand side of the chart, we can add extra white space to that side of the chart, as well. If we ever want to go back to what we were on, all we have to do is go up here, click on the name of our chart again, and it’s going to bring it back for us.

So, with drawing on the chart, one of the most common things that traders are going to look for is what is the trend of the security? I’m even going to back it out a little bit further while we’re doing this trend identification. And the way that they’ll identify a trend on a security is by plotting a trend line. And that trend line, for a stock that’s in an uptrend, will connect the value of the troughs that exist in the price action. If we’re in a downtrend, you’re going to be connecting the peaks. So in our drawing menu, we have our little sort of barbell looking icons, you’ll notice if you put your mouse over any of these icons, you get a little tool tip that gives you a description of what it is, but if we

12 click on that, and then if we left-click on a point on the chart, we can drag our trend line out. So let’s say we want to drag our trend line to, let’s do it to this price point here. On the trend line, at the top of it, it’s going to tell you what is the percentage price move that that trend line is showing. So here, that’s a

17% increase in price from where I started the trend line around Christmas Eve of last year, to that early March date that the trend line is on now.

Certainly, if you draw a trend line and it’s something you want to get rid of, or maybe we want to adjust it in some way, if you put your mouse over the trend line, it’ll get a shadow around it, and you can either grab the end of the trend line and drag it to a different point. You’ll notice, you can also drag it to points where it’s not right on the price. Or, if we left-click on the trend line, we’ll get a little menu. And this is one of the features of plotting trend lines that I know I personally have a lot of trouble with, very handy thing to change, is if you select snap to price, it’s going to go ahead and adjust the beginning and end point of your trend line to be along the price of the security. So if you can’t exactly drop the trend line in the right place, highly suggest going in here, choose snap to price, hit apply, and now you’ll notice when we’re dragging our trend line along, it’s moving along the prices that exist for the security.

Now, when we’ve identified our trends, a lot of times we want to see an extension of well, what does the slope of this trend look like if it continues? So if we go back to our menu here, some of you may have cheated ahead a little bit, and you can choose to extend this to the right, and we’ll see it project that out to the right-hand side. Alternatively, we can extend it to the left, and here’s also where we can make adjustments to the coloration. So let’s make it this really sort of dotty kind of pink. And we can even make it bolder.

Now, when using trend lines, certainly they have a very handy risk management purpose of, if you’ve identified a stock that’s on an uptrend, you’ve entered that position. Well, the stock breaking that trend line can be a circumstance where you’re looking to exit that position. Some traders, if they’re really worried about sort of a stock that may whipsaw or bounce around on that trend line a little bit, will apply what’s commonly referred to as the filter. So they’ll look for maybe one close, or two closes beneath that trend line, or maybe they’re looking for a certain percentage below the trend line.

And in doing so, it can be very handy to go ahead and sometimes set stop prices based upon that, maybe you want to set up a price alert so that you know well, when it exceeds this price point, I want to look at exiting the security. So for instance, while the NDX is not a tradeable security in and of itself, if we had a position in the NDX, so to speak, perhaps when it breaks

14 through this trend line, if we had entered around Christmas Eve, or maybe we even entered in that March timeframe, perhaps we would have looked at exiting in the early May timeframe.

Of course technical analysis is going to be one approach to analyzing stocks, there are a lot of approaches you should use. You should always use the one that you’re most comfortable with, and certainly using NDX here is really an illustration. We’re not trying to say you should sell NDX if you own NDX positions, NDX-based positions right now, or anything of that sort. But it really gives us a good example here of a security that was in an uptrend, based on the trend line that we drew, and then it’s breaking through that trend line. To delete the trend line, you can just click on it, and you may have noticed there’s a remove button here along that trend line.

So, also in our drawing menu, there are a few other things we can choose from. Another common thing that traders are going to draw on their chart are going to be support and resistance lines. So price points where the stock commonly seems to reverse. So if it’s above the price of the stock, or above the price of the market for an index, or ETF, or what have you, that’s going to be our resistance point, where it seems that excess supply seems to be coming in, and the price has trouble exceeding it. Conversely, to the

15 downside, we’ll have support levels that we’ll draw, and those’ll be price points where the stock has trouble getting below, because all of a sudden we see supply coming in when that occurs. So, we can do that with sort of identifies, resistance lines, and support lines here, and it’ll give certain coloration to them. Or, you have the ability just to draw a horizontal line. So maybe we draw a horizontal line here for us along these peaks that we’ve seen from roughly the past year.

Now, there’s going to be a flag that shows up on the right-hand side, giving us the exact price point. And sometimes it can be a little difficult to sort of drag this horizontal line to exactly where you want it to be. If you left-click on it when it has that little shadow, similar to the trend line, we can remove it, or we can adjust how it looks, whether it’s a bold line, or a dash line, or green, or pink, or blue, or what have you. But we can also set an exact value. So if we say we want this trend line to be at a round number, so we’ll put it at 7,700, all we have to do is go in here, type in 7,700, hit apply, and it’ll move that trend line immediately to the point where we’ve identified. In our drawing tool, or drawing menu, here’s also where we’re going to have, if there’s tools that you’re familiar with, the various Fibonacci tools, both time zones and retracements. The Gann fan is also available in here. These are probably slightly lesser used tools than trend lines or horizontal lines. But for those of

16 you who are looking for, or familiar with those tools, here’s where you can access them.

The couple other drawing tools that I want to show is, we can draw a regression channel, so very similar to how we drew a trend line, if we begin at one point, drag and then release on an endpoint, it’s going to draw a regression line based on the price action that occurred in the range of time that you picked, and then it’s going to draw a channel around that line, based on the furthest distance that the stock reached in that period, and plotting that above and below that line. If you want to do just the regression line itself, you don’t want it to draw the channel, let’s go ahead and remove this, you’ll notice there was also a regression drawing tool to the right of where we had the regression channel.

The last couple of things here are going to be if you want to draw shapes. So perhaps you’re someone who realizes maybe for my support and resistance levels, I don’t necessarily want to draw a specific line, I want to interpret it more as a range of prices. And I don’t want to sort of be psychologically pigeonholed into thinking it’s just one line, versus a range. We can draw a rectangle to recognize our resistance level to the upside, and that resistance level, if we think we’re trading in a range, might be where we’re looking to exit

17 at our profit target, conversely if we had drawn a support level, maybe that’s where we’re looking to exit, to try to avoid additional downside losses if we break beneath the support level that we’ve identified.

We can also add notes to our chart. So if we go in here, click note, and let’s say we want to add a note right here for that low. So we’ll call this “Christmas

Low.” And we can hit apply, and you’ll notice puts it right there on the chart, so it’s always easy for us to identify later. Though one thing to keep in mind about the note tool is it is going to stay as such. So if you click somewhere else, it’s going to have you draw another note. So, we’ll call this the “Spring

Low,” because that happened towards the very end of spring, beginning of summer. And then if you ever want to get rid of notes, we’ll go back up to draw, set our arrow to normal again, you’ll get a shaded box around it, you can click on it, and go ahead and remove that note. And of course, if you put those notes on a given security, those notes are going to stay there. So if I close Active Trader Pro, come back to it two weeks from now, open up my

NDX chart, I’m going to have my “Spring Low” identified there with the text box that I drew. Or maybe I put a note there, if I was eyeing a certain security inside the NASDAQ 100 during that time. Or maybe I realized the same time the NASDAQ 100 made that low, maybe some other index like the Russell or

the Dow also made a low, or something of that sort. Anything where I want to

note immediately on the chart, where I can constantly refer back to it.

So, the drawing tools certainly offer a lot of power to be able to really draw

your eye to things on a chart, and even set a context for some of these entry

and exit decisions around the trend a security is in, around support and

resistance levels, but really, the other types of usage that we have, and of

course our next menu along the right-hand side here, is really going to take us

into starting to use some of the indicators. So breaking down price action into

looking at it in different ways, in different technical studies on the chart.

DE LISSE: So, one interesting thing about the indicators that we add to charts,

compared to the draw tools, is of course, if we change the symbol, all of our

indicators we’ve added will stay where the draw tools don’t. So now, let’s say

you’ve added a whole bunch of draw tools like Sam has done in the chart, you

want to remove them. Well as Sam showed earlier, we can just come up here,

and we can reload the chart that we have, and all of the sudden we have that

blank default chart that we’ve saved in the past.

Now, indicators are a really important tool when it comes to charting, when it

comes to analyzing price, when it comes to analyzing information. In essence,

19 what they’re doing is they’re helping digest the information that you see. I’m sure a lot of you have heard that saying about, you know, missing the forest for the trees, this can, indicators can help you kind of take a step back to really look at the information you’re seeing, and look at it from a potentially different viewpoint. It can be just critical to helping you manage your risk like what Sam was saying.

Now of course, there are three main types of indicators that traders have historically used with a fourth type coming to the scene a little bit recently.

You know, those are, of course, trend indicators, momentum indicators, and volume indicators are the three big different types of indicators. With that, that fourth one that’s a little bit newer, of course, with being able to use computer technology, being volatility indicators. And that’s just because of calculating volatility, calculating standard deviation, is very calculation- intensive, and you know, if you went back 40 years ago, it’s a lot more difficult to calculate that by hand than maybe adjusting a simple moving average.

Now of course, if you want to add something like a simple moving average to your chart, all you’d have to do is come up here, you can click on indicators, you can then find that particular indicator on the chart. Now as you noticed, as

I’m moving my mouse over all these different indicators, it is giving you kind of

20 a demonstration view of how it would be added to your chart. If we’re looking for a simple moving average, we can simply scroll to the right until we find it, it’s all, of course, alphabetically. And with that, we can then add simple moving average, or SMA.

Now this has, of course, added one to the chart. You know, we see it’s already been added. And from this, we might want to add more than one to the chart, and there are many different ways you can, of course, add them to a chart. So coming up to indicators, we could also type the search, we can simply type

SMA, and that reduces down, of course, what we’re seeing, and we can add one that way.

In addition to that, we can even come over here, and we can click on recently used, and this will show some of the more recently used indicators that we’ve added, of course, to our chart. So we want to add a third SMA, or simple moving average line, that way.

Now, it’s also important to know how to modify and change these particular indicators that you’re adding to your chart. Because not everybody only wants to use a 20 period simple moving average. If we come up to the very top where it lists these, you’ll see in parenthesis, it’s showing 20, meaning this is a

20 period simple moving average. If we left-click on this, and we come to modify, we can actually change that information. And maybe in addition to having a 20 period moving average, we want a 50 period moving average. We can change that to 50, and we can hit apply, and now we have a 20 and a 50 period moving average. Let’s go ahead and modify this third one, and we’ll make this a 200 period moving average. With this, as Sam showed with trend lines, we can change the color, we can change the thickness, we can change the style, we can even change the source information, of course, if you want, if you want to have this based on, you know, the open, the low, the high, something else other than the close. We can, of course, change that source information.

Now most traders, of course, they’re going to leave something like this at at the close, but there’s a lot that you can do when it comes to customizing these particular moving averages. And now we have the, you know, two of the more common moving averages that you might see, you know, when you’re watching the news on TV. Of course that 50-day, and that 200-day moving average. It’s important to note, again, that if we come to daily, and we go to one minute, that now these are no longer a 50-day and a 200-day moving average, these are now a 50-minute and a 200-minute moving average, which are very, very, very different. So kind of coming back to, you know, six

22 months, we now have shifted back to that frequency. And from a risk management tool, a lot of traders, they might use a moving average kind of like a support or resistance line. You know, in essence, giving you a period where you might place a stop order, you know, just like Sam was showing with those resistance, or those support lines you might draw on a chart, just give you some more tools to help you manage your risk.

Of course, there are other types of indicators that traders will use. Simple moving averages are, just happen to be common trend type indicators. Of course, these are also price overlay indicators, where it’s displaying on the price chart. Other indicators are what might be considered oscillators. They’re not displayed on the price chart.

And another commonly used one that traders might look at is the relative strength, RSI. We simply type in RSI, or you could type in relative strength index, that will pull that up. We want to go ahead and click on this to add this to your chart, and as you see, this is an oscillator that shows up below the chart, and not as a price overlay. Most oscillators of this type are going to go between, you know, zero and one, or zero and 100, sometimes have a negative one to positive one. But they’re in essence going to kind of shift back and forth, they’re going to oscillate between two separate values.

With the relative strength index, there are a lot of other things you can, of course, customize. This is based on the last 14 days worth of information, because we’re still in frequency. You can customize this by coming up and going to modify, just like everything else. Some traders, they might look to change the overbought, oversold levels, for example, of the relative strength index. Maybe they want overbought to be 60 versus 70, or oversold to be 40 versus 30. And as we see, once we made these changes, we see these changes being displayed below, and as they’re adjusted. Of course, we can also change the opacity, right now opacity is set at zero, but once we do this, it shades that area above those particular overbought and oversold levels. And then go ahead and cancel this, just to undue the change that we’ve made. If you want, you can even change the period associated with the relative strength index. Now, a lot of traders, they won’t modify something like this unless they become very, very comfortable with the tool, with the information it’s showing. But it’s definitely something that you have the ability to change if you’d like to.

In addition to that, what a lot of traders that use our charting tools don’t realize is you can actually add indicators to other indicators. So let’s say, for example, this is just really spiky up and down. So let’s maybe go to a today look, and we

24 see RSI is just kind of spiky, a little bit more up and down, it’s not quite as smooth as it was on that daily timeframe. We can actually click, left-click on

RSI, and we can add an indicator. And maybe you might want to add, let’s say, a simple moving average to RSI to kind of smooth it out. If we left-click on this, modify, of course again the default is that 20 period, but maybe you might change it to a 3-period moving average, and so it kind of smooths some of that information out. Of course, this does make the chart a little bit busier. So we can always come back, we can modify, we can change the color, and kind of a nifty trick is if we change the color to being white, it’s going to blend in with the background, and we’re not going to see the RSI line, we’re only going to see the moving average that we plotted to smooth information out. And this is how indicators can help you, they can aid with what you’re seeing, because it’s going to smooth things out, it’s helping you see the forest, and not just the trees, not that jerky information, so to speak. And this is how this can be a very powerful tool for you.

Of course, so far we’ve just covered momentum and trend indicators. Another very common indicator, of course, is a volume indicator. If you come up to indicators, you might add something like an on balance volume. On balance volume, or we’ll do OBV, to pull that up. Now of course, it had that dash in there, so it didn’t quite come up in the search, you can kind of play with that a

25 little bit. And you become more familiar with the different indicators that we have. So as we add this, on balance volume is now down here below. But maybe we just want to see this, and we don’t want to see RSI. As I said, we can click this little X box to remove RSI, or we can even come up to the top left-hand corner and delete indicator. Maybe we did not want to see moving average on RSI. We can left click and delete, and it’s been removed. So jumping back out to six months, again, as you can see this can get a little bit busy with your chart. You know, maybe you want to see just RSI, so you might drag this taller, and it’s increased that. Or you could, of course, drag this smaller, and you see a lot less information, but you see a larger price chart part of that. A lot of choices, a lot of different ways you can, of course, customize.

You can drag this left and right to see a little bit more information.

Something else, of course, with indicators, is as Sam was showing us the draw tool, you can even draw on indicators. And a lot of traders might use this to take a look at, to see if there’s positive or negative divergence between different indicators, where you might be seeing momentum is trending down, while price might be trending up. And so you can do a lot of things on indicators, just like you could, of course, on your price chart.

Now that fourth type of indicator, of course, that we’ve discussed earlier, was volatility. And two big volatility indicators traders might look at are historic volatility, and then of course, a price overlay example might be Bollinger bands. So if you were to add historic volatility to your chart, it is, of course, going to add as an oscillator at the bottom. No, but if we come and we add

Bollinger bands to the chart, this adds a price overlay. With this, just like anything else, you can left-click, you can modify, you can change things. Of course, this is based on that 20 period moving average that we already have charted. But maybe you want to change the standard deviations on your

Bollinger bands to be simply one and a half standard deviations, make those bands a little bit tighter, or a little bit wider. You can also change the opacity if you want thicker bands, if you want darker bands, or if you just want it to kind of show you where those outside lines, and you don’t really want to shade it in the middle, you can, of course, make that modification.

You know, all these tools are, of course, just to help you kind of manage your risk, help you, you know, take a look at, and then of course digest the information that you’re seeing on the chart. If you have any questions, of course, you can always, you know, call in, you can speak with us, be more than happy to walk you through any of these indicators separately on, you know, a

one on one basis over the phone. Of course, those group coaching sessions

that we have.

SHORT: Yeah, so another common thing that we’re going to take a look at is how is

our given security performing compared to other securities, and also, what’s

going on with our stock? What is the, when did earnings come out? When are

there dividends? When did we buy it? We want to see all that information on

the chart. So in our sort of dummy account here, I’m going to go ahead and

change the stock that we’re looking at to Bank of America, because our

dummy account has a share of Bank of America in it. And maybe if the chart’s

looking a little busy, we can go back in here, clear it off, so go back to our

default, so all of the sudden, very boring looking chart. We just have one year

of price history of our stock.

In the events menu, we can go in and it’ll allow us to draw on the chart, or it’ll

draw for us on the chart, really, when dividends have paid out, when the stock

has had earnings, and we can also identify any tax loss that may exist. There’s

also a selection for splits, although of course in the past year, there has not

been a split on Bank of America. So you’ll notice, for each of the dividends,

you get this gray box. If you put your mouse over it, it’ll give you the details

about the X date for the dividend, the pay date, and what the amount of that

28 dividend was. With each of the earnings announcements, and this is really a common question that we’ll get, is you’ll see it shows up in green for a number of these. If you put your mouse over it, it’ll give you what was the actual date, it’ll give you what was the earnings per share, but whether it appears in green or red, a lot of people for some reason intuitively want to think it’s because they beat or they missed the consensus estimate. And actually, what we’re doing in Active Trader Pro is we’re comparing that quarter’s earnings to the same quarter from the prior year, and identifying whether the company earned more or less.

So if we look at each of the past four earnings announcements that it shows here, so if we take this January announcement, January 2019, the fact that it’s in green means that they earned more that quarter than the quarter that reported in January of 2018. It’s not making a statement compared to consensus estimates, nor is it comparing it to the quarter immediately preceding. It’s same quarter, prior year is what we’re looking at when we take a look at that. So certainly, that can come in handy if there was a gap, maybe it was because of earnings, so we have this gap that occurred on, in January. It was a gap up, so Bank of America, we know, reports before market open, like most of the bank stocks do. And so, it started trading at a higher price on that day. Maybe to help us more easily identify if the gap has closed, we combine

29 this with one of the drawing tools. We go in, we can draw a rectangle for that gap, and then we can see where that gap finally filled come the late March timeframe. So about three months later or so. We can, of course, delete our rectangle just as easily.

Now, maybe we want to see if Bank of America is sort of best of breed, or if it’s doing best compared to other banks. Well, of course we can go in, and we can find the data, find numerically how it’s been performing by comparison, but if we click on compare here, we can actually compare it to any other symbol. So if we want to compare it to another bank, we can plug in C for

Citigroup, and we’ll see we get a second line right on the chart in green, and that’s showing us the price action of Citigroup. It’s going to change this axis as a default, as showing what is the price performance over the period of time that we’re looking at. So this is really a circumstance where the answer to the question that we’re asking is going to be very dependent on the timeframe that we’re looking at. So looking at one year, it looks like Citigroup has outperformed slightly. But if we change our chart to a one month timeframe, we have a lot more outperformance from Citigroup, up almost 6% versus flat.

And let’s say we zoom out and look at two years, all of the sudden, Bank of

America becomes the leader and Citigroup the laggard. So we’ve got to remember, whenever we’re looking at these comparisons, it’s always going to

30 be a question of well, what is our starting point? What is the period of time that our comparison is over?

Let’s go ahead and make our chart a little less busy, so we’ll clear off all of the events that we have. And then, you’ll notice as a default, we can go in and compare against the index, so maybe we want to compare against the S&P

500, it’s going to add that, and it’ll have it as a different color. And if you want to remove any of these, you can go up here, up at the top, click the one you’re wanting to delete, delete it off there, and a common comparison a lot of traders will do is comparing it to the industry that the company falls within. So

I can go in here, type in the banking industry, hit enter, and it’ll go ahead and plot Bank of America’s two-year performance compared to the banking industry, and we can see at the end of the two years, it has outperformed, and outperformed pretty appreciably with the industry up only 10%, and this given stock up nearly 20%.

We can also go in and instead of having it plotted based off the performance, if you choose dual axis comparison, it’s going to go in and you’ll notice on the left-hand axis, we have the different price points for the banking industry. On the right-hand axis, we have the different price points for Bank of America. So if we want to do that comparison where it’s more of an overlay, see if they

have similar patterns that are appearing versus just seeing what is the sheer

performance over that period of time, we’re able to go in and do so. Of

course, if we go in and zoom into a shorter period of time, it pulls the data

similarly, and we can even drop down our frequency if we’re looking at shorter

term data, to see maybe is there a divergence over the past week or maybe if

we’re looking at intradays, they’re a divergence intraday between the given

security that we’re looking at, and maybe the whole market if we’re using the

S&P 500, or in this example right here, versus the given sector, using Bank of

America.

Now, we have some tools that try to automate some of this for you, and help

with some idea generation. And it’s going to be the last sort of tool, the last

functionality that we go through here.

DE LISSE: So with this, this is where Recognia pattern analysis comes into play. And

we have a lot of information from Recognia, of course, on our website, where

we have different securities showing the potential bull or bearish of the day. In

addition, if any of you have used our stock screener to potentially screen for

technicals, it is, of course, pulling from that Recognia information. Now, if you

come up to technical analysis, you have a couple different things you can, of

course, click on. One thing that I found to be, you know, very interesting and a

32 lot of traders like, if you come to patterns and events, you have different choices you can click on, and Recognia, based on of course, algorithms, will show you different patterns and events that might have happened. And so,

I’m going to go ahead and click on short-term, intermediate term, and just so it shows us a bunch of information, I’m going to go ahead and hit select all, and then hit apply. Now, this has, of course, added a different pane, you know, below the price chart. And I can show this as a bit of a shorter timeframe, so

I’m going to click on six months, and what this will, of course, do, is you’ll be able to see, you know, green boxes for bullish events, and red boxes for bearish events. I’m going to go ahead and change this to Citigroup real quick, the other security that happens to be in this account, and to pull some of that information.

So with that, traders, they might use this particular tool, you can mouse over it, and it will pop up a box, and you can even add that, of course, to your particular window, and maybe have the moving average cross over, it will actually show that, where there is a bullish or bearish event because it was a moving average crossover, and then it’ll automatically add those particular moving averages to your chart, and draw a box around where that particular change happened. In addition, it will describe kind of the methodology of that particular event, which of course, you know, could be very useful when you’re

33 learning more about technical analysis, and you want to see what is going on more in the background, and it’ll kind of explain this as bullish because of this, etc.

What it will also do, come back to technical analysis, and go to patterns and events, there’s an anticipated events tab right here. You do that, it might then show you that if price goes above or below a certain point, it will change the moving average to, in essence, give you a trigger in the future so that you know that maybe your trading plan is based on if moving average crosses over, you’re going to get out. Well this would let you know that if price went to that particular point, you might actually have that particular moving average crossover.

Something else that is very useful, Sam was of course talking about support and resistance earlier, we can click on this, and have Recognia add those particular support and resistance levels for us automatically. In addition, this will also add, you know, different stop levels that you can talk about, you want to have very tight stops, very loose stops, where it’s based on, you know, some volatility information. It will automatically, of course, generate those levels for you.

Now, one of the last things that we want to address is maybe you’ve added a lot of these different indicators to your chart. I’m just going to add a couple random indicators, just clicking on the chart, and you want to save this particular chart. Well if you click on this old school floppy disk that you noticed

Sam and I clicking on to kind of load the previous saved charts, you can actually come down here and you can save chart. And you can name this chart whatever you’d like. Maybe for example, we might name this chart TA, for technical analysis. Or we might name it webinar, you know, for webinar. We can choose what we actually want this to save. You know, we can have it save indicators that we’ve added, with the different settings we might have changed. Of course, timeframe or frequency, that way whenever we bring back up the chart, we don’t have to keep reinventing the wheel and keep adding the different indicators to the chart.

Something else, of course, is tabs. You see in the very top left-hand corner where the tab that is the today tab, a lot of times by default in Active Trader

Pro, you’re going to see two tabs on the default chart. One is going to say today, one is going to say one year, because traders, they might like to quickly go back and forth between those different timeframes on the same security.

In addition, you might have different tools you might be using on those different timeframes. You know, maybe you’re using a longer 50 and 200

35 period moving averages on that longer timeframe, but on the shorter timeframe, you’re using something like a 20 period moving average to show you a little bit of different information. Now you can, of course, simply right- click, you can come down and copy current tab, and this will very quickly copy all of the indicators that you’ve used, or you can, of course, simply hit the plus sign, and it’ll add a new blank tab with nothing having been changed. From here, you can of course, make all those changes, and of course, save all those changes however you’d like.

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