FAQ

ADMINISTRATIVE QUESTIONS:

I want to cancel my membership, can you cancel for me please?

Because all membership payments are made through pay-pal we do not have the ability to unilaterally cancel your membership. You can do it yourself by logging into your pay-pal account, finding your original active “Subscription Creation”, and clicking the “Cancel Subscription” button.

Are you able to post when you close your positions?

I do. That is part of the Gold package. They are all in the forums.

What should I be looking at on BWT.com?

Before every market day make sure you go to:

Daily Commentary
New Positions
The forums (for my daily sells/covers)

They are always updated by 6am EST the next day.

TECHNICAL QUESTIONS:

What moving averages does Joshua use?

Joshua uses the 50 and 200 simple moving averages as these are the two moving averages that have been used historically by the greatest mutual funds when they go to support their top holdings when they have pulled back. In bull markets, the best stocks will either bounce directly off of these two averages or they will “Hang Out” around these two averages before resuming their uptrend. In stocks that go into extremely parabolic runs you can use the 21 day moving average as this has been a popular moving average recently in top stocks.

What are some other secondary indicators you use besides price and volume?

There really isn’t anything Joshua uses besides price and volume since every technical indicator is based off price and volume and sometimes time. He does like to look at the relative strength of a stock in relation to the SP 500 as stocks that are usually ranked 70-99 outperform the rest of the market by quite a margin. I also like to use BOP (a proprietary indicator by Don Worden on Telechart) with small-cap and mid-cap stocks as positive divergences and green to the max green BOP has correlated to some extremely large price gains.

What does Joshua look for in a chart?

When it comes to a perfect stock the most important thing is the market / sector. Is the stock market is in a very bullish market and the stock is a top stock in a leading sector in the bull market I normally look for a variety of setups like a cup with handle, a high tight flag, a double bottom, an ascending base, a cup pattern, or a bounce off the 50 DMA int new high ground that comes from a base lasting at lease five to seven weeks. The volume during the base should be very low during the pullback and there should be clear have accumulation on the bottom, right side, and breakout of the base. In a bear market I try to avoid going long unless the stock in one of the top three stocks in an industry group that is moving higher u the list against the market. These are very rare but they do show up (study my top stocks from March 2000 – October 2002)

When do you enter orders?

I enters all orders to be executed in the morning after the after-hours session is over. It doesn’t matter if I enter during or after the AH session, I am just trying to make it clear that they are not after-hours orders. They are just being entered after hours to be executed at or around the opening bell. Limit orders are for the next day and get executed whenever they get executed.

Do you ever trade intraday?

1% of my orders are entered intraday. This would be if a limit order is missed and the stock is still not to extended to be deemed to dangerous to add to. If it is still within a proper pivot point range then I will go in intraday and buy it. This normally applies to very thin stocks and if you are a newbie then you shouldn’t be investing in anything under $100 Mil market cap.

What is your favorite stock?

The stock that is moving up is my favorite stock. I do not label stocks as all stocks are bad except for your best stock and it’s only good if it is still going up. If the stock is not moving higher, it is not my favorite stock. My favorite stock is always changing. It is always the one moving the fastest in the correct direction.

When do you sell?

There are multiple answers to this. When I am cutting a loss, the normal procedure is to completly cut my loss as soon as the stock closes below the 50 DMA, if it doesn’t move higher immediately. Since all of my purchases come with the stock above this line, it should never trade below it initially after the purchase. As the stock is rising, the 50 DMA will continue to act as an area where I will partially sell some of my holdings. Other areas that I partially sell out of are when the stock hits new highs for a couple of weeks in a row on low volume when the stock goes into a climax / parabolic run on extremely strong volume, when the stock gaps higher after a long run on very strong volume, if after a long uptrend the stock breaks above the channel line, and if after a gain of more than 200% my final sell will be with a close below the 200 DMA.

What is your deciding factor in selling a stock?

A close below the 200 DMA after a very large gain, a close below the 50 DMA after the stock moves lower immediatly after buying it, or a close below the LOD of the purchase day if the stock produced a gain between 50 and 100%.

How much do you allocate to each trade?

At the start of a brand new bull market the perfect situation would be to have 10 perfect charts and put 10% in each one as I never put more than 10% in any one stock. Those with accounts under $25k may want to buy as much as 25% in one stock if the bull is brand new, the fundamentals are great, and the chart is perfect. As a bull market goes along, I normally don’t like to put more than 5% in any one stock as a lot of perfect charts fail a lot mroe often. By the time 2007 came along ASFI was ong 5% and TESO was 4% at the final buy. IST was 10%, FMDAY 8% and TASR 7.5% at my final buys when they broke out. I just get a lot more cautious as time goes along since my account has grown. With a smaller account you can focous more by making 5 stocks represent 100% of your account. In tis bear market I would like to make 12 stocks up 70% of my port in shorts, 15% in longs, and 14% in cash. What is in the other 1%? Well I wouldn’t mind 70-80 very small positions as I bet that 1% will outperform the 14% cash. However, I still want the cash on hand for when the longs show up with perfect charts. You want to defiantly have capital available for those.

What about averaging down?

If you have a couple of billion dollars then this strategy might be worth a look. But if you have a billion or less, you can make a lot more money by buying stocks that are moving up, shorting stocks that are moving down, and being in cash during markets that are crazy and go back and forth. The best stocks trend anywhere between 6 to 18 months and there are always good stocks popping up in bull markets to always have your money working in equities that are making you money. In bear makers, you can always find stocks that are breaking lower and constantly your money are in those to maximize your gains. Why throw good money at bad? Do you really want to trade like a muli-billion dollar fund? Cramer’s methods are not good for most. If you are here, chances are, they are not good for you either.

Do you buy bargains? On sale?

In the stock market you get what you pay for. Of the bargains of Enron, Adelphia, Ambak, New Century, Accredited Home Lenders, Engaging Technologies, Clarus, Citigroup, Beezer, Refco, and so many other stocks that have gone from 70 to 60 to 50 to 40 to 30 to 20 to 10 to 5 throughout the years. All the bargains you were. Every one a Pinto. None a Mercedes. On sale? they don’t cal it a fire sale for nothing. Most sales burn the stock to the ground. History has proven that stocks making fresh new 52-week highs go on to more than double the performance of stocks hitting fresh new 52-week lows. History has proven a stock hitting new highs for the first time usually keeps hitting them and the opposite is true of stocks hitting new lows for the first time.

Do you buy ETFs?

No, I never buy ETFS. they will NEVER! move like stocks. While and ETF rises 20%, you can look for leaders in the EFT sectors (for instance MOS and TNH in the chemicals arena) and always return more with the top stocks than ETFS. ETFS are for amateurs ad those that are afraid to trade or have run out of ideas. The only people who trade ETFS are those that do not do enough research to find the best stocks in the groups that you are interested in going long.

Do you structure your account to minimize income taxes by using a financial vehicle similar to a personal hedge fund, from which you then pay yourself a salary out of profits as needed and perhaps fund a 401k?

This is not my area of expertise. I am a simple stock market investor. I am setup in Hawaii and just pay the normal cap gains taxes. I have the best accountant in Lahaina and he does eveyrthing. I have absolutely ZERO interest in taxes and do everything I can to avoid them. I am for a flat tax of 20% or a sales tax. I HATE taxes.

Since I am moving off of Maui eventually (cost of living has gone nuts and it is no longer Paradise) I really have no idea about what to do in regards for that. I am a great stock market investor. I can turn thousands into millions but I have no clue about taxes. I apologize.

What tools do you recommend? Telechart? Anything else?

• Telechart (Gold is fine)
• IBD
• Daily Graphs Premium Equity Package
• RealMoney
• Stocks & Commodities Magazine
• SFO Magazine
• Tradesation, Interactive Brokers, MBTrading, Tradeking, Zecco, and Scottrade
• sharkinvesting.com
• yahoo and Fox news

I see how you recommend new positions both long and short, but where do you post your “unwind” recommendations when you reverse your position? Also, do you ever use options instead of the equities directly?

They are posted on the forums under the category ‘stocks I am selling’.

I never use options. 80% expire worthless. This game is about odds, anyone playing that game better have an amazing methodology or else you will never do as well as my returns on 4 to 1 margin. Options are simply either a game for COMPLETE amateurs as they see the “get rich quick” in it. Which is the ONLY reason it entices so many people: greed. The few pros that know how to use options normally write them or they buy low IV, long dated, inthemoney options of very liquid names. Trying to buy breakouts with options or short stocks for the pops lower will leave you with more pain than gain. I stick with the stocks and I have since 2001. I am never going back. I know my deal but to each there own.

How closely should I watch the stocks I just exited? I used to keep them on a watchlist and monitor them. It seems like many would reverse later and go on to be gains that I missed. It seems like I could have re-entered as they crossed back over the 50d, for example. I’ve even heard some speakers at investment club meetings say that you should follow previous holdings because now you have “experience” with that stock and have invested time in learning how it moves. But I’m not sure I believe that. Maybe if you are a day trader with a “bread & butter” stock that you churn every day, but probably not for Featured or swing trading.

But now I just put them behind me and never look at them again. No point in kicking myself about things I missed when there’s always another stock.

Is this different if you’re shorting? I know W. O’neil says that you may have to be persistent if your short doesn’t break down after the 2nd or 3rd attempt at a moving average. So would it be prudent to monitor shorts I just covered, as long as the market is bearish?

As soon as I sell a stock I am long!that is it. I don’t give a crap about it. I don’t care if I ever see it again, I don’t care if it goes lower, goes higher, exist, or delist. It doesn’t matter to me until the next time it shows up on one of my scans and is making a move that I need to do something with. I simply follow too many stocks to ever want to go back to something i just sold. I say live and let live. Move on and let go. It is like an ex-girlfriend. Sure it hurts A LOT that they left you. It does. But!.like stocks!.there will be another one eventually.

Amen, Brian. You said it!.put them behind you. Never look at them again. Because, if you sell and it goes lower you will pat yourself on the back for how much a genius you are (which isn’t true) or if it runs right after you dump it you feel like an idiot (which isn’t true). It is best to ignore former holdings until they show up again on your scans and then whatever they do to become another play is up to them. I just never worry about any long I was once long, even if it runs like EMS did in 2006-2007.

I accidentally sold all of my long in this stock when I should have only sold 25% back on 11/28/06 for a 20% gain. The rest should have produced a 200% gain in 11 months. Instead my SCREW UP netted me a 20% gain in three months. This was my biggest mistake in selling a long too early. It sucked but it sure didn’t beat me up.

I find it worse when I mess up an order like I want to buy 100 shares but instead type 1000. Why I think that is worse is because in December I bought a small amount of ASYS that ended up becoming much larger and a horrible fill combined with a nasty session did a LOT more damage than missing gains ever could.

I also find it worse to not go long a stock and then see it run 100%. I don’t care if it is even $500 in a $5,000,000 account. I want some of it!!!!!!! Especially when commissions are only between $1 to $5 on all of my platforms. If you are paying more than $5, you pay WAY TOO MUCH. Even $7 at scottrade is too much, nowadays.

When it comes to shorting, I almost expect to be wrong a few times before NAILING it. So yes it is different. You must monitor your favorite stocks for places to short since it is such a harder play with lower odds of success. Just look at chemicals. If they fail here and go to new highs, they are still the best leading stocks of the five year plus rally. Therefore, whenever their time comes I want to be there. No matter if it is now or 3 to 5 more attempts. When MOS MON AGU TRA TNH POT are ready to break they are going to break hard. I am looking for 75% gains in about a year’s time frame with these leading stocks in the top sector.

Do you ever buy a stock below the 200 dma? Do you ever go long a stock with the 200 DMA over the 50 DMA but price is still above both?

No. The biggest, fastest, and least volatile runs of the greatest stocks have PROVEN to ALL start AFTER the stock is above both the 50 and 200 DMA with the 50 DMA above the 200 DMA.

Do you ever put a little into extremely oversold markets like the one in 1987?

NO

RANDOM QUESTIONS:

Why don’t you participate in the Columnist Conversation at Realmoney?

Not yet. I am not going to get involved with that NON-SENSE until a new bull market starts. Then I can start getting cocky (like they do) with longs and reap some big winners. Then they will listen to me. For now!.forget them! But for the readers, I will participate later.

Router Issues
One of our members had problems navigating our members area and forums. After a lot of troubleshooting he found the issue with his router ( NetGear Rangemax N) :

By the way, in reading on Net Gear, it said sometimes XP Service Pack 2 firewall will conflict with the router’s firewall, basically two firewalls trying to do the same thing. So they suggested taking down the windows firewall which I did and all works fine, so now I don’t have to plug and unplug.

Live Chat Issues

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Often switching browsers will resolve login errors, if possible try switching to Fir Fox or Internet Explorer and try to login.

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More Chat Specific Info

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