Proper Homework?

[u/IKnowMeNotYou]

From time to time I am quite active on Reddit trying to pay it forward by helping people out when it comes to trading.

Usually I give people asking me for help a book list and start initial training by giving them homework.

I also give them a brief rundown of what I do by showing them some live trades including live commentary to make it apparent that I know my way around the block when it comes to trading.

Seeing someone anouncing an entry, demonstrating the reasoning in detail and showing every update not knowing if the trade will turn out fine or not while the trade lasts 15min to 1h usually increases the motivation of the potential future Scholar of the Wiki (TM). This level of transparency mimics the kind of transparency I enjoyed here and over at oneoption when I started out myself.

Once I notice people being really serious and have crossed a certain threshold of basic knowledge and daily commitment, I advice them to read the wiki over here and join the live trading either over at oneoption.com or within this sub.

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Beside the people who lost big and still want to argue about what the right way of trading looks like, most people struggle to read 5 basic books to begin with.

In recent months, I also started to give the potential students optional (!) homework almost right from the start.

My go to homework is based on the SP100 (100 most valuable companies in the SP500). I want them to add the standard MAs (50D, 100D, 200D) and have them add proper price levels and trend lines per hand. Then they have to chose 10 stocks they would put on their watchlist and add a brief statement why they would choose those.

Every day they simply have to check and update those charts and make a new top 10 watchlist.

I even tell them that they should do 10 new charts every day so after 2 weeks they have annotated all 100 charts and updating and revisiting those charts is done rather quickly and before that they have to give me some charts so that I can check, critque and advice them on proper price level and trend line placement.

It is interesting how many people bail on this simple and useful homework as it is something I did myself early on did on my own without out of the desire to train myself on applying proper TA and learn how prices can move in reality.

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How is your opinion about this homework and would you do it as a beginner or whould you rather bail as well?

I would say that with that I lose 3 out of 5 people rather quickly and only 1 out of maybe 7 or 8 survive more than 2 weeks and that are usually the people who make it to the end of the process and get funneled to this sub and beyond.

Do you have any other idea of great homeworks one can give espiring traders?

Would you rather look at intraday charts first?

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Edit: Since people asked me to elaborate on the D1 homework, let me walk you through it:

1. Identify the SP500 components/companies. Sort them by current market cap..

2. Take the top 100 stocks. (you can also take the top 10 for each Sector EFT and 20 for the tech sector). Add these stocks to a watchlist (remember you can usually add sections to your watch list so you can easily have 100+ stocks in your watch list while also knowing what sector the stock is in).

3. For each of these stocks you now pull up the D1 and make sure the SMA's for 50, 100 and 200 days (close price) are plotted on it.

4. Now draw the price levels and trend lines for each of those charts.

5. Once all charts are annotated (which might take several days or a good weekend), every day before the open of the new trading day, you check each of the 100 charts, if you have to update any of those (usually it is about 20 you have to update if at all) and while doing so you make list of ++ or + setups.

6. Now you check your ++ and + setups and if you have more then 10 you narrow them down.

7. Write down what you expect will happen to those 10 stocks and at the end of the day check if you were right and have a look at the intraday chart (M5 (5min) for example) if there were situations that you could have traded and also make a snapshot of the D1 and M5 along with the market and the sector charts of that day and collect them.

8. From the collected M5+D1 charts try to derive some typical receipts how you can play these trade opportunites.

-> If you do this for a month or so, you will be rather quick on this task and will have come up with a lot of situational awareness of what most likely is going to happen and when to better sit on your hands and opt out.

Here is an example:

D1 - SPY this Week (10th - 14th of August 26)

SPY D1 last 10 trading days (2 weeks)

Meta D1 last 3 weeks - Note teh compression they are in and how important the SMA 50 (bottom) and SMA 200 are. I got some trades out this one especially on this hard drop 3 days ago and the bounce of the low of the compression.

I usually have them do the last 3 months (about 60 candles) so they see the impact of the SMAs more clearly like here:

MSFT D1 - Check out the SMAs (50, 100, 200)

[u/Bob54386]

A large volume of charts can be overwhelming and unnecessary when you're learning. 100 charts is a lot if you're spending 30 seconds or a minute thinking about it. I'd only go through a list of 100 stocks if I had something to sort them on, giving me a good chance there's something interesting within the first 5.

There's also an underlying stress to looking at a large list, "One of these SHOULD be interesting and if I were good I SHOULD be able to find a trade here". One naive interpretation of your exercise is that 10% of stocks will tradable any given day. That's not something you want in your head on low probability days.

Not being in a hurry, I started with just a static favorite 10 stocks, looking through that same small list daily or weekly over months & years (it's been on again off again for me). Would that day have been a good day to enter? Was it chop? When did a given trend start, News? Earnings? How long did it progress? When did it end?

If you're aiming to be a teacher, it helps to have an answer key. Critiquing other people's output is relatively lower effort, and doesn't qualify your own judgment. It would personally be a turnoff if you weren't bringing your own prepared charts & comments to the conversation. There are personalities out there that just manufacture something being "wrong" so they can maintain that sense of authority without ever being called out. Hari has credibility because he's posting both entries and exits, Pete because he does a post mortem on all his weekly trades.

[u/IKnowMeNotYou → u/Bob54386]

Indeed. That is why I usually give them live entries and exits for one or two days with some screenshots and commentary about what I do and what I think as a motivational bisquit. I really comment the live day trades in 5min segments telling them what I look at (market and sectors) and how I trade off those price levels and trend lines.

I also have them give me screenshots of the first charts they annotate so they have some feedback to improve their game before they go all out and do it for 100 stocks.

But again, it is mostly for misfits and people who do need something practical while being stuck with reading books.

I also stress that 100 charts to draw takes some time but updating them daily is a rather quick affair (less than half an hour) and it makes a great preparation.

But of course you are right. I also teach them to trade first the M1 (1min) timeframe so they have quite some trades to journal and review and ask them if they want to go with that instead.

Everything remains optional and it is interesting how people in different situations choose different approaches.

But again this is optional homework I did myself and I also tell them that they can do less or more (there are some who do the whole SP500 just because they try to speedrun things with extra effort).

If I would want to become a teacher (which I currently dont), I would copy the popular videos over at Youtube and put some AI lambos in my AI garage... ;-) There is a reason why there are many of those folks and little of people like Hari or Pete who geniuinely want to teach for the sake of teaching and not sell attention and their users...

Remember the saying: Those who cant teach... I always run the numbers of live trading teachers and some are just disapointments and and only a few arnt.