Global Courant 2023-05-30 11:35:29
Jack Kellogg, stock traderJack Kellogg
One of Jack Kellogg’s most important indicators is the volume-weighted average price (VWAP).
This shows the average price paid for stocks and helps him gauge sentiment.
He only uses indicators like at=rough guide, but never trades on them alone, he noted.
Jack Kellogg started trading stocks in 2017 from high school.
Five years after graduating, he has already been exposed to various types of market conditions, including the stock market crash of 2020the raging bull rallies of 2021 and the bear market of 2022. One thing he’s learned through all of this is to keep things simple and stay flexible.
“There’s an acronym: KISS, keep it simple stupid. I don’t think people need super fancy indicators to make money trading. I just use basic trendlines, support, resistance, volume, and those are all my indicators,” said Kellogg. “I think if you overcomplicate the indicators it will get in the way of your trading because you will be trading on the indicators more than the actual price action.”
This attitude has enabled him to become a versatile trader taking both long and short positions when necessary, helping him to keep trading through the 2022 bear market. His tax returns, viewed by Insider, showed that he reported more than $8 million in profit from day trading in 2020 and 2021. His return gained momentum in 2020 when he had a total income of $1.6 million. In 2021, that amount grew to a total income of $6.5 million.
Kellogg has come a long way since he started with $7,500, which is what he initially deposited when he started trading. His road to success was not a straight line. When he first tried trading, he lost a few hundred dollars. This made him realize that he didn’t know what he was doing.
So his next steps include turning off real trading and testing his skills through paper trading. Then he enrolled in an online course that his parents helped pay for. Created by Timothy Sykes, a trading teacher and former penny-stock trader known for his claim to turn his bar mitzvah money into more than $1 million in profit, the program helped him develop the skills and patience which he then used to develop his skill. .
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By the time the stock market started to rise sharply in 2020, it was ready to ride the upward wave. In 2022, as the market slowed, he continued to reap profits by betting on popular stocks like Bed Bath and Beyond (BBBY) and AMC (AMC), the latter of which earned him $60,000, according to a screenshot of his E-Trade brokerage account. He also traded a few small cap stocks and made big profits on some trades like Intelligent Living Application Group Inc. (ILAG), netting him more than $91,000, according to screenshots from his Guardian account.
Its top 4 indicators
The first indicator he uses as a sentiment guide is volume-weighted average price (VWAP), which shows the average price paid for stocks over all trades, adjusted for volume. He uses it on the daily chart as a guideline to determine a good buy-in price for the stock he is trading. This keeps him from being a chaser, the term colloquially used for those who enter a position too late or after a stock begins to rise.
If the goal is to buy low and sell high, you don’t want to pay more than what the average buyer paid, he noted. Therefore, Kellogg will not take a position if the price is above the VWAP line. The opposite is true if he shorts a stock: if the price is below the VWAP, he will generally not short the stock.
Often he will also use this indicator to determine when to exit his position, as that point can sometimes indicate where a stock’s price begins to fall. The same is also true in reverse: he sometimes uses the VWAP to determine the price at which he will cover his position. Therefore, if he shorts a stock at $9 and the VWAP is at $7.50, he will use that price as a point to lock in profits.
For example, on January 5, he took a short position on ticker AMTD at $2.50. VWAP midline was trending around $2.22. So Kellogg covered his position at $2.25 and made a 10% profit.
The next indicator is linear regression, which shows which direction the price is trending in and when it may change direction. It is three lines covering the candles. The bottom and top lines are the range of price movement or volatility, while the center line represents the average between the two. Price action above the top line indicates an overbought stock and below the bottom line indicates an oversold stock.
“So the better a stock respects the lines of the channel created, the more predictable I think the stock will be,” Kellogg said. This gives him a better sense that the stock’s price action will evolve according to his thesis.
The next indicator is volume, which shows the number of shares that are trading at any given time. Kellogg primarily uses volume as a potential indicator that a stock may turn.
“When I see big volumes coming through, I know that potentially a lot of people are on the wrong side. So if a big volume spike comes through near the high of the day, it’s possible that a lot of people are buying the stock and a lot of of the people hunt,” Kellogg said.
Finally, he keeps an eye on the support and resistance lines, the former being where price tends to hold and the latter where it tends to sell. The levels change throughout the day. Kellogg tries to find key levels by looking for a parallel increase in volume in those areas. He also looks at how often and how long a price level lasts to determine how strong that point is. While not an exact science, general areas where price fluctuates 30 minutes to an hour are the strongest, he said.
“Ultimately, you will see a bouncing ball type of price action as the stock moves lower,” said Kellogg. “So you see it bouncing from $7 to $8, then bouncing again from $7.30 to $7.50, and then bouncing from $7.40 to $7.10, then bouncing from $7.20 and finally break the support below $7. a resistance level of $7 and continue down?”
At the end of the day, price action is king, Kellogg noted. Even if you have a position on why a stock’s price may move in one direction, you should limit losses if the price moves differently.
“I never base my entire decision on an indicator. So if an indicator doesn’t match the trade position, then I will just cut my losses,” said Kellogg. “So I’ve never attributed any of my losses to any indicator, because I don’t let it get to that point. If the price action continues, then I’ll cut my losses or if the price action continues to rise, then I’ll cover my short position .”
Anyone can access and view the same data — it’s really about what you do with that data, he said. What most traders struggle with is the psychology of trading. You can have the best strategy and indicators, but if you don’t have the discipline to stick to it, you will constantly end up in a bad situation. Most people don’t make enough effort to control their emotions, he said.
Read the original article Business Insider
