Homework #7 HOMEWORK ALERT – Complete your homework before starting Class 8 Welcome to your ACTIVE - DTC: #7 Quiz Name Email 1. What does RSI stand for? Real Strength Index Reversal Stock Index Relative Stock Index Relative Strength Index 2. If a stock sells off more than 10% in 5min what is a possibility? Bear Flag then continuation to the downside Bottom bounce scalp Circuit Breaker Halt All of the above 3. If the airline sector is extremely strong what do you do when you see 4 airline stocks on the reversal scanner? Wait for the first one to give a reversal indicator then short it. Watch all 4 stocks and try to short each of them Watch the sector and when 2 or more start to reverse, short the strongest of the 4 setups. Forget about shorting, the sector is strong, go long. 4. If the entire market is weak and there are lots of stocks on the reversal bottom bounce scanner how do you react? Take the best looking reversal setup on 5min confirmation Take the best looking reversal setup on the 5min setup but only if the market is ALSO bouncing Don’t take trades, the market is trending down and that means reversals won’t be strong. Go short and ride the momentum to the short side. 5. Where do you set your stop on Reversal Trades? Stop at low of day Stop at the low of the last 5min candle Stop below the half dollar or whole dollar Any of the above, but whichever is a tighter stop 6. When you see a reversal scanner alert what’s the first thing you do? Check the 5min chart to see how many consecutive red or green candles you have. Check the hourly chart Check the 15min chart Take a position with a 10 cent stop. 7. What time of day can you take reversal trades? 9:30-10:30 9:30-4pm 12pm-4pm None of the above 8. What makes a reversal trade especially appealing? 8 or more consecutive red/green candles A move of at least 2 dollars per share in the last 5min An extension outside the bollinger bands All of the above. 9. If a reversal trade doesn't work immediately, what should you do? Hold with a stop at low of day / high of day. Breakout of bailout. 10. What is the first technical profit target point for a reversal trade? The VWAP The 200ema The 9ema All of the above. 11. As a reversal trader, what is a level we could look at for a stock to potentially reverse? The 200ema A daily support or resistance level A whole dollar All of the above 12. When looking for half dollar and whole dollar entries on a stock selling off, what is the best approach for taking an entry? Prepare an order to buy at the whole dollar and leave it until it fills. Watch the stock to break a whole dollar and then as it comes back up and breaks through, buy. Buy as the stock approaches the whole dollar but before it breaks. All of the Above. 13. Would 10 consecutive candles on the 1min chart be as good of a setup as the 5min chart? Consecutive 1min candles can provide low risk entries and are often easier than 5min patterns. 5min patterns show a longer period of selling off. 5min patterns can respond better since more traders will watch them. All of the above. 14. When a candle is outside the Bollinger Bands what should we expect? Continued momentum in the same direction. Candles don't stay outside of Bollinger Bands long, reversal is coming. The stock will likely get halted. All of the above. 15. What is the biggest challenge as a reversal trader? Finding stocks to trade. Finding shares to borrow for shorting You're trading against the trend. All of the above. 16. What is a pin bar candle stick? A pin bar is a large body candle A pin bar is an inverted hammer candle A pin bar is a doji candle at the top or bottom of a run None of the above. 17. What is a topping tail candle? An inverted hammer candle A doji with a large upper shadow after a run up A doji with a large upper shadow after a sell off None of the above. 18. How important is low float when taking reversal trades? Very important Important Not important at all 19. How important is relative volume for reversals? We like to see above average volume. Above average volume is not required. 20. If a stock has an RSI of 1 or 99, should we take a trade right away knowing RSI can't get any lower or any higher? Yes, the stock is maxed out, time to reverse! No, stocks can remain at 1 or 99 RSI longer than you can afford to keep holding.