This succinct guide explains how to understand the terminology and get the most from your subscription to The MTG Stalk Sheet. We recommend you print this page and keep it near your trade station as a quick reference guide. As always, please e-mail MTG with any questions or comments.
Graphical Chart = On each chart, MTG circles both the trigger and stop price for the trade setup. The letter "t" represents trigger price. The letter "s" represents the stop price. If a trade setup does not trigger on a particular day and is carried over to the next day for potential entry, the chart is only updated when a change has been made to the trigger or stop price. Otherwise, the chart will be a snapshot of the setup on the day we first listed it on the "Full-Serve" Stalk List.
Sector = Name and ticker symbol of the industry sector that the stock is part of
Side = MTG will buy stocks listed as "long" or sell short those listed as "short"
Shares = MTG always maintains the same maximum dollar risk for each trade setup, but the share size will change based on how wide the stop is. The share size for each trade setup is always based on a maximum projected risk of $1,000 per trade, which equates to a maximum capital risk of 1.0% of the $100,000 model account that is used to track MTG's trade performance. If, for example, the trade setup requires a 1-point stop loss, the maximum position size would be 1,000 shares (1 point X 1,000 shares = $1,000 max. risk). By properly adjusting position size based on the amount of the stop, losing one point on a $100 stock will result in about the same capital loss as a quarter point loss on a $25 stock. This keeps your risk the same with every trade setup so that no individual stock trade should be more important than another. MTG makes it easy for you by listing the number of shares for each trade setup, based on a $100,000 cash account (with 2 to 1 margin).
If you have a larger or smaller account than the $100,000 model, simply multiply or divide to achieve the proper share size for your account. For example, if MTG lists a setup as "600 shares," then a person with only a $50,000 account may consider only taking 300 shares of that trade. Note that it's very important to always adjust your share size based on the amount of the stop, or else you will be taking too much risk on the volatile stocks and not enough on the slow movers. Remember that consistently profitable traders are successful because they constantly work the mathematical edge on a large number of trades, not because they are "swinging for the fences" on any one trade.
Stalking Since = This displays the date the trade setup initially appeared on the "Full-Serve" Stalk List. The most recent additions to the Stalk List are listed at the top of the page, with the remainder of the setups listed in descending chronological order.
Timeframe = The anticipated length of time that is required in order for the trade to achieve its projected target price if the trade actually triggers. The timeframe is only a rough guide, as market conditions often enable trades to hit their targets sooner, and sometimes later, than the posted timeframe.
Trigger = Exact price that the stock must trade through before MTG will enter the trade. If a long setup, MTG will only buy the stock if it trades above the trigger price. For a short setup, MTG will only sell short the stock if it trades below the trigger price. It is important to not enter the position unless the trigger price is hit, otherwise the trade becomes much more risky.
If a stock does not trade through its trigger price on the first day it is listed in the "Full-Serve" Stalk List, Morpheus Trading will continue stalking the trade for entry on the next day, UNLESS it is removed from the next day's Stalk List. Removal would indicate something occurred the previous day that invalidated the setup. Otherwise, the trade setup is still valid.
Target = The anticipated price MTG is expecting the stock to achieve, which is usually based on a combination of support or resistance levels. The target, however, is only intended to be an estimate, as market conditions may require MTG to close a position prior to the target price. If you are not informed otherwise, always assume MTG has closed the position and taken profits whenever a stock hits its target price. This will subsequently be reflected in the next day's position summary.
Stop = The price at which MTG will close the position if it goes the wrong way, which is typically by means of a mechanical stop market order. MTG also uses trailing stops to lock in profits on positions as they become profitable. Changes to the stop price will always be posted in the Daily Stalk Summary section of the next day's MTG Stalk Sheet.
Red Text = Anything listed in red text simply indicates a change from the previous day's Stalk Sheet. This allows you to quickly and easily see any changes to the trade setups or existing open positions.
Important note about opening gaps and stops!
Due to large changes in overnight supply or demand, stocks will often open much higher or lower than where they closed the previous day, which is known as a "gap." Buying or selling short a stock that hits its trigger price due to an opening gap is sometimes riskier than entering a stock that trades through its trigger price in an orderly fashion. Likewise, open positions will sometimes gap open beyond their stop prices, but immediately reverse back in the right direction. Therefore, MTG has instituted the following rules to manage positions that gap open beyond their trigger or stop prices:
Click here to read more about the MTG Opening Gap Rules.
The "Self-Serve" Stalk List, updated every Monday, highlights stocks that MTG likes for potential trade entry if they trade through certain price points at any time during the week. However, unlike the "Full-Serve" Stalk List (above), annotated charts, stops and targets are NOT provided with these stocks. Likewise, the outcome of these trades will also NOT be tracked in MTG's daily trade statistics. As such, stocks listed in this section are "self-serve" rather than "full-serve," which is of great value to more advanced traders who prefer to take their own initiative with MTG's trade ideas. In order to receive maximum benefit from the stocks listed here, consider setting price alarms for each of the trigger prices so that you are instantly alerted when any of the stocks may merit new trade entries.
Understanding the Daily Stalk Summary
"Open Positions" is a summary of all current positions that have triggered, but have not yet achieved their target prices, nor hit their stop prices. Any updates to stop or target prices since the previous day's newsletter are highlighted in red text. "Unrealized Gain" is based on the closing price (mark to market) of the most recent trading day.
"Closed Positions" posted in the Daily Stalk Summary are trades that either hit their target or stop prices since the previous day's newsletter. Prices are based on the actual price at which MTG closed the trade, which includes slippage, as opposed to just the theoretical target or stop price listed for each stock.
Intraday E-mail Alerts
Because market conditions sometimes dictate a sudden change of plan, MTG occasionally sends "Intraday E-mail Alerts," as a courtesy, in order to quickly report changes to target or stop prices on any open positions. All subscribers will automatically receive these e-mail updates when generated, but simply let us know if you do not wish to receive these intraday alerts.