The Cyclicality of the Market

It is so important to understand the cyclicality and expected life cycle of a stock, and the market as a whole, in order to make the best decision and the greatest profit. Often times, people wait until a stock has risen up and up before deciding to buy, just to turn around and have the stock fall. In this episode, we explain the RSI, relative strength index, as well as volatility, tools you should use to measure the movement of a stock, and how big those moves could be. I also share the current state of the market, a reason why the market is down, and share the status of recent options I sold.

Topics in this episode:

• 8:34 – The reason the market is going down
• 9:03 – There’s always a risk, and you must be willing to lose it all if it comes to that
• 12:33 – Ask Possible Promise: The psychology of a trader or investor
• 16:11 – How to know what the probability is
• 17:53 – GTC, good till canceled, order
• 20:17 – Main topic: The Cyclicality of the Market
• 22:40 – How the market moves as a whole (scroll to chart)
• 25:08 – The hype effect
• 30:10 The RSI, relative strength index, an indicator that measures the movement of a stock across multiple days and multiple weeks. The formula for the RSI: the average up move, divided by the average down move over the last 14 days.
• 32:22 – Defining overbought and oversold stock
• 33:06 – Interpreting the RSI
• 38:10 The RSI isn’t an exact science
• 40:56 Volatility: a measure of how much you can expect a stock to move, and how big those moves are expected to be.
  • Formula for expected move: (substitute with for single day expected move)

I hope you enjoyed this episode. I thought it was important to share the cyclicality of the market because once you know that, then you can use it to your advantage. You don’t have to worry about the direction the stock is going in. You’ll have the tools to understand how to make the most of it.

RSI Chart:

Resources:

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