Welcome to the stock market millionaire podcast, episode number 27. My name is Robert Roy, and I thank you for taking the time to spend with us this day on this material. And today we’re going to talk about systematic trading using the US stock market news.
So US stock market news is a powerful tool that puts every single trader on an even keel. When you look at it, we all get the news the same way. When it comes out, it comes out, it comes out. When I was a brand new trader, one of the things that I remember, and I took it kind of the wrong way or morbidly when I was first told this by my instructor, but he said, “if you ever hear of a plane crashing, you need to go ahead and you need to buy, put options.” Like what make money on someone’s misery.
And he said, listen, if you don’t want the money, make it and give it to the people who, you know, just suffered. He said, “one way or another, there’s an opportunity to take advantage on the market when good news happens and or bad news happens.” Okay. So am I telling you, you need to go out and start doing that and finding those things? Well, at that point, there was a plane crash and two hours later, the market actually reacted to it. Two hours! Today, before you hear it on the news, the market is reacting to it because somebody has already heard it. Even though CNBC didn’t blurt it out, or your local news channel, your CBS, ABC, XYZ, whoever you watch did not blurt it out, Someone knows. It’s on your phone, it’s on your tablets, it’s on your laptops, it’s on the billboards that are in times square and everywhere else. News is out there.
So what types of stock market news are tradable? All right. Some of my favorites, and we’ll talk a bit more about this in a minute, one of them is earnings, right? Earnings is an amazing opportunity to take advantage of moves in the market. What kind of moves? Earnings happens to be what is called known news. I know it’s coming out and when, to the minute, almost on a regular basis. If I know that it’s coming out before the market, after the market, during the market, I can take advantage of that, potentially once the news is out or even before it gets announced, shh, don’t tell anybody. It’s not a secret earnings are out there. And all of this is out there, but you know, what’s missing a system for you to trade it a way that you can take advantage of it. Something that you have that I ain’t got, or many other people don’t got, or don’t have, is a way to take advantage of that trade.
You know, we’re going to do a training tomorrow, Friday and Saturday, we’ve got our live Inner Circle going on for our highest level coaching group that we have, and inside of that group, there’s one of our students, his name is Scott. I just saw him last week at an event we taught here in New York and he told me of a new strategy that he’s trading. He’s taken the day trading rules that I’ve taught him, and he’s incorporated the gap trading rules that I have taught him, and he’s trading very specifically on low vol, low risk positions, like the SPY and QQQs, he’s trading those gaps almost on a daily basis. I spoke with Scott today, he and I were texting back and forthh and asked him if he would be willing to share that with everybody. And he said, absolutely, I’d love to teach it right, because by teaching it, so you know, it makes you a better trader. Why do you think I do what I do? It makes me a better trader at what I do. Right?
So when you look at tradeable news, earnings and things like that are great. You’ve got economic reports. Well, what do we have today? Unemployment report came out. Yeah, but Rob, that’s an 8:30 report. Yup! There are pre-market reports like unemployment, but I can trade in the pre-market. You can not options, you can’t. Well, I can trade futures and I do. It’s a big part of our company is futures trading, right? You don’t, you don’t have to be relegated to what someone told you. If that’s the case, the only thing you’d ever trade – mutual funds, maybe some stock if you had a more aggressive broker. I’ve got money in an IRA that my dad left to me. And a lot of what dad had was bonds that were income producing bonds. Every month, every quarter, he got a check. Well, some of those recently got called away and now there’s cash in there. So I called the broker. Hey, what are we doing here? What do you think? “This is great mutual fund you need to look at!” Okay, mutual funds. Here we go. That’s the first place we go? There are no bonds that are paying decent rates that you can get anything good on, I completely understand that. “Take a look at this mutual fund!” I don’t want to pay loads. “No worries, you can use the C shares!’ …which pays the lowest rate on top of them. If you pay money up front and they take a big chunk from you upfront, then you can get a higher rate of return. Oh, great, fine, snd good. Not really for me.
Economic reports that come out during the day during the market being open, things like the energy stores report. Brandon Wendell, who teaches our e-Mini Think Tank every Wednesday trades the energy stores report that comes out at 10 o’clock right. There are ways to trade those reports, those newsy type reports, the CPI, the PPI, all types of reports like that. There are some more valuable than others, and we’ll actually be doing a training on what reports have the most value to them and how you can understand that yourself. Company news. Yes. Company news, apple comes out and says, they’ve got a brand new product. Or how about this today? Today’s news. Although it’s been out for a little bit, but they were talking about it again today. Facebook says that Apple is hurting them with their new iOS update that allows the end-user, you and I if you have an iPhone, (well, not I, but you, if you have an iPhone) to back out of the way it marketing happens and it prevents Facebook from marketing to you. Facebook’s angry about it. Okay. It’s Apple’s products, apple isn’t in business to help you, Facebook. But company news, that is tradable news, right?
Fed announcements. Oh my goodness gracious. They have been awesome. We had the fed announcement yesterday. I had everybody holding back to trade. Don’t do anything, wait for the announcements to come out, two o’clock. The meeting had happened east coast time, 2:30, Powell that on and started taking questions and, and talking about what they were doing and why and how they were and were not going to ease, snd the market had a nice sort of bounce from there. Today, the market is bounced even more. I did a bunch of long trades today, directional type trades, some were stocks, some were futures – not futures, sorry, options. Futures, I did one, but that was earlier this morning, but all kinds of fed announcements. See any kind of announcement that comes out, that challenges the status quo is a potential opportunity to trade.
Now, another one to look at is what I call the big SPAC attack. SPAC? Right! SPAC, merger news. Well, what the heck is a SPAC? Well, it’s a special purpose acquisition company. Now I got a definition off of Investopedia for it, so I make sure I get it right. Right. It’s known as a blanket check accompany. It basically it’s a shell corporation and it’s listed on an exchange, a major stock exchange with the purpose of acquiring a private company, thus making it public without ever going through the traditional IPO process, the scrutiny, the costs associated there. SPACs are a great opportunity. They come out as IPOs. They’re tradable, just as other vehicles are.
Now we’re talking news, right? What about fundamentals on stocks? What are fundamentals? Well, if you take a company, my favorite fundamental is called the PE. PE stands for price/earnings. It’s the price earnings ratio, right? What PE, what price earnings is your stock? If you have a stock that has a PE of 10, that’s a lower PE, that is better for a company. You have a stock that has a PE of 200, for every $200 of stock price, I get $1 of earnings versus $10 for every $10 of stock price. I get at $1 of earnings. See, what happens if you have a negative PE? Well, a negative PE how much earnings do I get at? Negative! Nothing, nada. Here, old world from my dad’s side of the family, “not a friggin’ thingski! Nothing!”
You have nothing at all, because there are no earnings. PE ratios change every quarter. That’s when the update happens, when the earnings see earnings, when the earnings are announced. You can trade off other fundamentals, but earnings themselves, anything around them, the PEs, they’re the ones that are most important to me.
Now, there are plenty of places that you can get your news. You can get on CNBC, you can get it on Bloomberg, you can get it from newspapers, Investors Business Daily, which they’re all online these days, right? You can also get stock market news apps, CNBC, MarketWatch, and so forth. There’s so many of them. So many of them. You can get the same type of news from your broker, right? Certain brokers TradeStation has some news, really not excited about their news. I normally – the way I sit in my office, my trading desk is set up where I’ve got a desk in front of me, that’s my primary desk. 90 degrees to the right is an L shape on my desk.
And then, 90 degrees behind that, in other words, my front and back desk with a side desk on it, 90 degrees behind that is the rest of the desk. Well, on the side desk is where my six monitors are my TV, which has CNBC on all day long is in front of the main desk off to my right to my left. Sorry. So when I am sitting, watching what’s going on with the market, I still hear what’s going on on CNBC. So if I’m focused on what’s going on with the market on my charts, when I turn around to get to that front desk, or I would turn around because I heard news on the TV, my ears are in tuned to listening for anomalies. “Something just happened.” Then I turn around and look, otherwise there’s absolutely no reason for me to. I focus on what I’m doing on my trading. That’s it. So in total, in my office, I’ve got the TV, that’s on the wall, I have two monitors on my main computer, I have my laptop that makes three. Many times I plugged into the monitor into the laptop, that’s four. And then I have my six pack, which I’m trying to figure out if I can make it an eight pack and get two more monitors in there. And, I do have another 40 inch TV that I might stick on the wall – don’t tell my wife, because she’s not happy about another TV in that room. But, I want to make sure that I’ve got all the information I need, right? Everything is right there.
I don’t ever have to leave. Everything is right in front of me at all given times, do I use all of them at once now? Does it look pretty cool? Oh yes. It’s pretty awesome to show it off. But do you need all of that? No. Here’s what I think you do want: you want a computer, laptop, or PC, Mac, I don’t care, but a computer plug in one additional monitor to that. That right there will help get you ahead and be able to use news on one monitor and trade off another where you’re not flip-flopping back and forth trying to find it. And many of these news outlets, the CNBCs of the world have live, news right on your computer too. Heck, I haven’t turned on in my kitchen, on my Alexa! It’s a, it’s not a tool. I forgot what they call it there, but, just, you know, “Alexa play CNBC” and I forget what they call it, but it comes on like an app almost that’s in there, a plugin, a tool, something like that.
So with that ladies and gentlemen, we’re done make it a profitable day, stay focused on the quest to becoming a great trader, keep crushing it. And remember, you’re just one trade away, take care. And I will see all of you at our next update. Bye for now.