Foundations: The End is Where We Begin Part 3

On April 23rd of 2020, I published my first Foundations of Stocks and Options blog Breaking Down a Stock Chart, which covered class 1 of FOSO Level 1. Since then, I have blogged my way through all twenty-four classes of the Foundations series and covered what I felt was the main takeaway from each class, and presented to you, our faithful readers. Now, let’s do a quick review of my progress during FOSO Level 3.

As with the first two FOSO Levels, I am still using TradingView for all virtual trading needs. Again, I highly recommend using a virtual trading platform until you are ready to trade with actual money, as you have nothing to lose and a real experience to gain.

As for my trades during the Foundations of Stocks and Options Level 3 series, I placed twenty trades, and two of them lost money. Not bad, as setting stops usually protected me from any significant losses. You can see where a lot of my trades only earned a dollar or two; it was because of the trade moving the other way, and the price of the stock hitting my stop. Granted, I tend to set a stop as soon as the trade moves in the green, which leaves very little room for price fluctuation for the rest of the day, but I would rather be protected than lose money at this point in my trading, even virtual money.

I also employed my first trading strategy during this session. I used the Golden Cross pattern to locate my trades. A Golden Cross pattern occurs when a short-term moving average crosses over a longer-term moving average. This crossing pattern usually signals a bullish move. The reverse of the Golden Cross, which is known as the Death Cross, signals a downturn and can be the harbinger of a bearish move in the stock price.

In the example above, I have placed a rectangle around a few places where the 10 EMA moved over either the 20 EMA or the 50 EMA. The first example is located in the green box on the left side of the image around the July 20th mark. It is a weak Golden Cross as it was coming out of a continuation pattern, and the move upward was not as strong as it could have been, but it was there. The second Golden Cross, which fell around the October 1st mark, was, by comparison, more decisive in its move.

The same can be said of the two death crosses that appear on the chart and the red rectangle on the right side of the image near the November mark. The first one is on the weaker side, while the second is more aggressive in its downturn as it crosses over the 50 EMA mark. Needless to say, I have more to learn when it comes to using the Golden Cross; it will be an area of study in the months ahead.

Finally, I learned about the Golden Cross strategy while attending one of our Coaching Sessions, which are offered every Monday evening here at Tradesmart. A typical session will touch on a specific topic for the evening; however, instead of being a straight teaching session, they are designed to be more interactive and open to questions. These are great class sessions to take if you want or need a more hands-on approach. If this sounds like something you would be interested in attending, you can register for the classes here if you wish.

In closing, I hope you enjoyed my journey through the Foundations of Stocks and Options classes series and if you did, then stay tuned as I will be diving into more classes at Tradesmart during the 2021 calendar year. Finally, if you wish to learn more regarding this topic, please consider signing up for our Foundations of Stocks and Options class, which you can do here. And remember to check in with us next Thursday for new official blog content. Thank you!