I just completed the course and would like to use the Academy Simulator and Chart Game to practice. Where can I find a list of risers and fallers to inform my trading decisions that David mentions in his lessons?
David refers to the risers and fallers of each individual day as the highest movers, both up and down, in terms of dollar amount, updated continuously while the market is open. Most trading platforms compile their own list of risers and fallers. David uses ThinkorSwim. We also track risers and fallers, which we call gainers and losers, on Investopedia's Markets page.
Lists like these can be helpful to make informed trading decisions because they help measure the volatility of certain stocks and the market as a whole. If you'd like to practice trading, you can access the Chart Game under 'Bonus Material'. You can also practice on the Investopedia simulator game.
Can the techniques, chart setups, and rules taught in the course be applied the same way to buying and selling options instead of the actual stock? I'm very new this so I want to make sure I'm not trying to apply certain lessons to the wrong kind of trading.
The setups in this course apply to intraday signals on stocks only. These setups are NOT optimized for options. There are many variables associated with option trading (such as decaying time value, the strike price of the option, and the difference between the bid and the ask of the option price, to name a few) that would have to be fully qualified before they could be compatible with the setups David describes. Traders should not expect to be able to use these strategies with options unless they have made a very diligent study of options and thoroughly tested their preferred option choices with these setups.
My trading platform shows DEMA (Double Exponential Moving Averages). What is the difference between DEMA and EMA? Can I use DEMA to replace EMA?
Investopedia has a fantastic article on this very topic! Essentially, DEMA is not just a combination of two EMAs, but rather a calculation of single and double EMAs. Nevertheless, all moving averages are inherently lagging indicators. DEMA, however, has the benefit of allowing viewers to see longer term trends faster than other moving averages.
Ultimately, they are not the same thing and one should not replace the other. DEMA will give you signals quicker but they will be less meaningful than EMA signals.
What should I look for when choosing which stocks to invest in?
Investopedia Academy cannot and does not offer any form of advice regarding investing decisions.
There is an excellent series of articles already published on Investopedia titled Guide to Stock-Picking Strategies. They highly emphasize that there is no perfect way to pick stocks. They all go up and they all go down. There are, of course, things to look for that can help you make smarter investing decisions.
Another great article on this topic is How To Pick A Stock. It outlines the process for choosing stocks to invest in:
- "Determine Your Goals" - Figure out why you are building your portfolio to determine what kind of stocks to look into.
- "Keep Your Eyes Open" - Pay attention to the market and familiarize yourself with current events.
- "Finding Companies" - Look at ETFs in your industry, use screeners to narrow your search, and continue researching the investment space.
- "Turn to Corporate Presentations" - Read the financial statements as well, but corporate presentations tell you where the company is going.
There is no right way to pick a stock, but there are plenty of strategies and metrics used to help make the decision easier.
I am having trouble understanding how to use the (RPT)/(RPS)=SPT equation. What are each of the variables and how should this equation be used?
In the Money Management section of the course there is a lesson on Money Management and a Money Management Guidelines SCORM showing five flip cards. The fifth flipcard is the one you are looking for where it explains the equation as follows:
To determine how many shares you should purchase, simply divide your risk per trade (RPT) by the risk per share (RPS).
This formula is intended to help you understand how many shares to purchase so that you can control your risk with each trade and make certain you don’t lose too much on each trade. David defines risk per trade as the same as the goal you are trying to make. So if you are trying to make $200 on a trade, then that would also be what he considers your “Risk Per Trade.” In the same section of the course there is also a money management workbook with a trading matrix document. So as an example, David recommends 50 cents per share for any stock priced between $50 and $200 per share. So if you bought a stock priced at $100, and were hoping to make $200 on the trade, then you would consider your risk to also be $200 per trade. So now you can apply the formula: RPT / RPS = SPT. In this example, your Risk Per Trade (RPT) is $200, and the Risk Per Share (RPS) is 50 cents. So 200 divided by .50 = 400 shares.