Hey hey, what's up my friend, so in today's video i want to share with you right to whether the stock market is it too high to buy right now, because a common questions that i've been getting recently is that hey reyna the stock market looks really expensive Right now should i buy. Should i enter a trade you know, but what if i buy and then the correction comes, i get stopped out and stuff like that. So so, let's you know analyze this step by step and talk about this uh this topic today. So if you look at this chart, this is the chart of the s p.

500. Right now we are trading almost the highs of our 4 000, which is here. We are almost at 39.50 around here as of right now, so you can see that this market is still very much in a long-term uptrend. Okay, does it look high? Yes, it looks high, it looks high.

Is it expensive? Yes, it looks expensive, but here's the thing right. I wanted to go back in time. Follow me and if you look at this right, you can go through the charts and you'll see what i mean at this point right at 3, 300 back in uh august. You can see back in august, the price is trading near 3 and it's near the all-time highs over here.

Just shy of the 3 400 price point on the s p. 500. So at this point you can see that on this day the market looks really high. It looks really expensive and then what happens? Well.

The market continue to hit higher with corrections along the way, but eventually still continue continuing its you know grind higher to where we are right now. So the first lesson that i want to bring out to you is that in the markets right what's high can become higher. Our job is not to buy at the absolute lows at the bottom of the market. We leave that to the value investors.

We are traders. We want to just stay on the right side of the market and to trade along the path of least resistance, and if you look at this chart right now, i'm sure you can agree with me that the long-term trend of the s p 500, is still towards The upside, it's still in the long-term uptrend, so as a trader, our job is to trade in the direction of the trend. Now i agree that at this point, market looks really high. It looks expensive, it looks like there could be a correction, a pullback coming along the way, that's possible, but we have no idea when the correction or pullback will come.

So you might be thinking, but right now, what? If i buy the stock and the pullback? The correction comes, and i get stopped up - that's possible right, but what is more important is that you want to set your stop loss right, at least at a level where it prevents you from getting stopped up on the short-term pullback. So for now, the first thing that i want you to agree with is that the overall stock market is in a long-term uptrend. We should be looking for buying opportunities right in this long-term uptrend. Next question: is this: what, if a pullback? What is for correction comes and you get stopped out well.

This is where you want to set a proper stop-loss and i'm going to share with you how to do it right now. If you look at this stock right, this is stock up work. It's basically a company that helps you know, connect freelancers with employers. It's doing well, since you know the kovit crisis and you know because most people are working from home.

So this is a stock of up work, trending up higher over time. You can see that it is in an uptrend, but i can assure you that, just because a stock is in an uptrend doesn't mean that traders are able to capital capitalize on this. You know up trending market. Why? Because they could be setting a very poor stop-loss on this trade, so let me give an example: let's say this stock breaks out at 38 dollars, some traders could buy, i would say, that's a decent trade and where would they set their stop loss, maybe below the Low of this scandal or somewhere here, and if you set your stop loss right too close to the market too close to the noise and the randomness of the market, you might get stopped up on the pullback and correction, and this is actually what happened.

Market did break out, then there's a correction before it breaks out higher. So often traders they get the direction right, but they have the wrong stop-loss a poor, stop-loss level that gets them out of the trade right before they can. Even you know take advantage of the trend so now the question is: how do you set a proper stop-loss? So there are a number of ways you can do this. You can, you know, use a percentage, trailing stop-loss, but for this video i will share with you what i call the uh setting your stop-loss based on the volatility of the market.

So what you want to do is to identify what is the current volatility of the market, and you can do this using the atr indicator. Okay, you just can go to trading view. You go indicator. You search atr, pull this one out.

The settings i use uh is 20 period because there's 20 trading days in a month - and i go with sma simple stuff, so you can see that right now the indicator tells you that this stock, the atr value, is about three dollars and 18 cents. How do i know that? Because it's actually shown over here this number would let me just point out to you over here, okay, so this number will fluctuate on a day-to-day basis right. It measures the historical volatility of this market over the the last 20 days and on average, these stocks move about three dollars: 18 cents a day. So what this means is that if you buy this stock and you set a one dollar stock loss, a two dollar stop loss.

A three dollar stop loss doesn't make sense, because you know that this stock on average moves three dollar and 18 cents a day. Your stop-loss needs to be wider than this to accommodate the random swings in the market. So for me, what i suggest is that you know go with a go with the longer-term trailing stop-loss right, don't just go with one atr minimum five or six atr right. So you can actually, you know capitalize on this long-term uptrend.

So in this case let's say we go with the six atr trailing stop loss and the way we do it is that you just take three dollar eighteen cents. You multiply it by six and it should give you okay, i'm going to do this uh based on my own math. I forget it. Let me use the calculator since it's here 318 times: six, that's about 19.8 cents! Okay! So what this will do? What this means right is that from this highs, okay, let's say it's x, you minus 19.8 cents.

Let's say it's equals to y. That is your trailing stop loss. So let me just walk you through this example. So let's say right now: it's about.

Let's make things simple: it's at 60: 50 cents, you take 60 and 50 cents, you minus 19 and eight cents; okay, so that should give you a stop loss of about 41.42, which is somewhere about here. That is your trailing stop-loss and again i don't expect you to do this manually, so there's actually actually a very useful indicator for this. It's called the chandelier crosstalk. You can just go to settings 20 period, look back 20 period, atr 6 atr as the multiplier okay.

So let me just get this out again: you can just go to indicators and search for this indicator name and you. You should see this blue line over here. Okay, so this one there's some slight discrepancy between this blue line and doing the multiplication of the atr indicator, but the discrepancy is very slight uh. It won't really kill you so anyway to make your life easier.

You can use this tool if you don't want to manually calculate the 6. Atr trailing stop loss and you can see for this stock. This upward, if you were to trail your stop loss using this blue line, which is in essence at 6 atr from the highs. It would have kept you in this trend since uh may 2020..

So that's you, that's how you go about. You know. Writing massive trend in the stock markets, identifying stocks in an uptrend and then trailing your stop-loss right, making sure that your stop-loss is not too close, not too near where the market is trading. So this gives you a good chance of writing trends in the stock market and that's how you go about setting your stop loss.

If you look at another example, right, sitm, sigma corporation again same thing, if i go with the 680, tr trailing stop loss. There are times where i almost get stopped out over here in november 2020, but generally uh. You would still be in this trade right for the long run. So, yes, stock market may be high, but we have learned that what's high can go higher.

Next thing is yes, correction and pullbacks: they are a natural phenomenon in the market and that's why, as a trader, you want to set a proper stop-loss, so you don't get stopped up prematurely and one technique to use is the six atr trailing stop-loss that i've just Shared with you so before we end this video, let me just share with you a couple of trading opportunities, i'm looking at right now and how how you can look to trade it so first one i want to share with you: is this stock right, sitm sydney? Corporation, you can see this stock is in a nice bullish up trade. So now, where can we look for potential buying opportunities? What i'm seeing over here is that this is an area of value where previous the swing higher resistance, which could become support right. That's that one's over here, so you can look for pullback into this area of value. This area of support look for a bullish price.

Rejection could be in the form of a hammer, a bullish, engulfing pattern. This is a hammer, something like this when this forms right. This is a sign that hey you know. There are buyers stepping in helping to push the price higher and what's more you're trading in an uptrend you're trading from an area of value.

When this happens, you can look to buy on the next day open. So now, where do you set your stop-loss? So remember the technique i shared with you, the chandelier crow stock 6 atr from the heist just use this indicator, which is this blue line over here, and your stop loss you can set it just. You know below this. Blue line okay, so this should give you right enough buffer, that, should the correction or the pullback come there's a good chance.

You can withstand it. Of course it's not guaranteed no 100 guarantee, because if the market goes, you know full blown correction, it drops 30 or 40 percent. There's a good chance. This stock right uh will, you know, exit more than six atr from the highs, but if it's just a normal correction, a 10 correction pull back right, you should be able to.

You, know, stay in this trade and to write the trend higher okay. So this is one potential setup to look at sydney corporation. Another one is etsy. Okay, if you look at this stock again, nice beautiful uptrend.

So where can we look for buying opportunities? If you pull out this 50-day moving average you'll notice that this stock tends to respect it right, tested once twice and possibly a third time over here, okay and what's more, this also has the confluence of the previous high, which could become support and possibly become support Over here once again, so i'm looking for buying opportunities around the 190 dollar price point again, you can look for bullish price rejection. Price comes in quickly, get rejected and close back above support. Look to buy on the next candle open, stop loss. Again, you can use the chandelier crosstalk, i pull it out somewhere about here, so make sure your stop loss.

I go below this there's a blue line that you see over here, which is a 680r from the highs, and that should you know, gives you give you a good chance right of writing this trend up higher. Now, if you want to learn more about stock trading stock trading strategies, techniques that work, then here's what i want you to do right, go down to my website trading with reynolds.com webinar i'll, be hosting a free two day online event on the 27th and 28th of February, okay, so in this two day right, here's what you'll learn day! One we'll talk about the trading habits right that keep most traders put without them, realizing it sniper trading entries that you can use right to better time the markets, simple price action trading strategy to profit in bull and bear markets and a ton of trading a ton Of trading examples chart examples like what you've just said day: two right: we'll focus right on stock markets right how to beat the stock markets consistently and profitably. Even if you've tried everything else oops, even if you have tried everything else and fail how to steal hedge fund winning trading strategies, so you can shortcut your learning curve and become a profitable trader fast. My top four trading tools that will save you a ton of time and money and a simple stock trend following system that works and much more so this event is completely free.

You can just go down to this website this page over here trading with reynolds.com webinar, and you can sign up for it and also, if you can't make it to this event, don't worry i'll, send you a copy of the recordings, but you must sign up for This event, so i know where to send the recordings to okay, so just go down to this page. Uh you'll see this blue. This green button green button, just click on it. You will be brought to a zoom registration page.

This is the platform that will be used to host the event, the webinar so just sign up your details, your first name last name, email and uh, the details of the webinar, the link, how to join and stuff like that will be sent to your email. So with that said, right i'll see you at this live event, profitable trading secrets on the 27th and 28th of february, so go sign up for it. I'll put the link below, and i will talk to you soon.