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Welcome to the Beginners in Stock Trading Newsletter! Over the next several months, you’ll receive expert insights, proven strategies, and real-world examples from some of the greatest stock traders in history.
Every newsletter has 2 sections. The 1st section is devoted to learning. Each building on the previous day’s lesson in logical order. Giving you a full, free trading education on an important concept in under ten minutes a day.
Missed a day? You can find all of the previous newsletters online to catch up or if you joined later.
The 2nd half of the newsletter is a briefing on 1-3 stocks in the news. Read it. Then click on the links to see the corresponding charts inside the original articles. This will accelerate your ability to read the charts.
Learning to how to trade will change your life.
Daily Lesson(each builds onto the next)
Today You’ll Learn
Why the stock market is literally a live, 6½-hour auction — not a slot machine.
How bids, asks, and the order book create every price you see.
The four “invisible pipes” (exchanges, ECNs, market-makers, clearing firms) that route your order.
Shake-out vs. support test: what happens in the order book when professionals “shake the tree.”
How William O’Neil spots high-volume surges that tip his hand, and why Mark Minervini refuses market orders in thin names.
Bitcoin’s new $104 K pivot: why a tight handle above six-figure support could signal the next blast-off.
The Market Is an Auction — Here’s the Gavel 🔨
At 9:30 a.m. ET, thousands of buy (bid) and sell (ask) tickets collide on 16 U.S. exchanges and dozens of electronic-communication networks (ECNs). Matching engines pair the highest bid with the lowest ask; the meeting point becomes the last sale you see in your app.
Jargon | Plain-English Meaning | Example |
|---|---|---|
Bid | Highest price a buyer is willing to pay | $25.10 for 100 sh. of XYZ |
Ask/Offer | Lowest price a seller will accept | $25.11 for 200 sh. |
Bid-Ask Spread | The penny (or dime) gap between them | $0.01 wide in Apple; $0.25 in a small-cap |
Limit Order | “Buy 100 sh. @ $25.05 or better — never worse.” | Minervini’s default entry method |
Market Order | “Fill me now at the best available price.” | Fine in super-liquid ETFs, dangerous in thin IPOs |
“Wall Street is simply a big merchandising machine. Figure out where the merchandise is scarce and you’ll know where price must rise.”
— Jesse Livermore, How to Trade in Stocks (1940)
Why Scarcity Matters
O’Neil’s CAN SLIM ‘S’ factor (Supply & Demand) lives inside the order book. When a growth leader rips to a new high on volume 50 % above average, institutions are lifting offers faster than sellers can refresh — textbook demand shock.
Four Hidden Pipes That Route Your Order 🛠️
Your Broker’s Smart Router – scans venues for the best combination of speed, fill size, and price improvement.
Exchanges & ECNs – NYSE, Nasdaq, IEX, ARCA, BATS… each posts quotes and rebates/liquidity fees.
Market-Makers – e.g., Citadel Securities, Jane Street. Provide bids/offers when natural buyers or sellers vanish.
Clearing & Settlement – DTCC nets all trades; cash and shares officially swap T + 1.
Minervini rule: “Route limits directly to primary exchanges in thin names — you want institutions to see your bid sitting there.”
Support, Resistance & “Shaking the Tree” 🌳
Support is a price zone where demand reliably refills — think 50-day or 200-day moving averages on a growth leader, or a round number like $100 K in Bitcoin. Pros will often probe that floor: they flash offers below support to see if supply gushes.
Two to three tests on tame volume = constructive.
A heavy-volume “break” = changing character.
Resistance is the flip-side — a ceiling of supply. A stock may bump that level repeatedly; each tag thins out sellers until only weak hands remain. When buyers finally punch through on volume, that old ceiling often flips to new support.
Livermore’s “Shake-the-Tree” Play
Livermore noticed pool operators (today: hedge funds) would sell a slug into bids, pushing price through support just far enough to trigger stops. Once weak holders were gone, the operator pivoted, soaked up the freed shares, and catapulted the stock higher.
Real-World Example: Bitcoin’s $104 K Handle
Context: BTC blasted from $62 K to $110 K in eight weeks — a classic right side of a cup.
Handle Watch: This week BTC has chopped between $102 K and $105 K on diminishing volume. That’s the textbook low-volume pullback O’Neil wants to see.
Pivot Math: A decisive close above $105,500 on volume 40 %+ above its 50-day average would mark a breakout toward $120 K targets. Failure = deeper shakeout toward the 10-week line near $96 K.
Practical Checklist ✔️
Action | Why It Matters |
|---|---|
Use limit orders in anything with a spread wider than $0.05 | Protects you from hidden pockets of thin liquidity |
Track volume vs. average at potential breakouts | Confirms institutions are the ones moving price |
Mark prior highs/lows on your chart | You’ll instantly see where support/resistance lives |
Log every fill: route, venue, slippage | Over 20 trades you’ll learn which routes treat you best |
Watch the bid-ask spread width expand just before a news drop | Tells you insiders/algos sense something coming |
TL;DR
Every tick is an auction; supply-and-demand imbalances, not “news,” move price first.
Study the order book and volume clues just like Livermore staring at his tape.
Protect yourself with limit orders and by knowing where the liquidity really sits.
Support/resistance are battle lines drawn by repeated testing.
Bitcoin hovering at $104 K is a living example of a low-volume handle.
Quote of the Day
“Stocks are not bought in a casino; they are bought when demand overwhelms supply — it’s visible for anyone who knows how to read the tape.”
— William O’Neil, How to Make Money in Stocks (4th ed.)
Further Reading 📚
Jesse Livermore — Reminiscences of a Stock Operator (Chs. 2–3 on tape reading)
William O’Neil — How to Make Money in Stocks (Part I, “S = Supply & Demand”)
Mark Minervini — Trade Like a Stock Market Wizard (Chap. 5 on execution & order entry)
Quick Quiz 📝
What two things must you see on a legitimate breakout?
Why does a shrinking bid-ask spread usually precede a strong up-move?
How many support “tests” are constructive inside a handle?
Train Your Eyes On This Pattern(of the week)
Cup with Handle
📌 Understanding stock price growth:
Look up the historical stock chart of Apple (AAPL) from 2004 to 2024. Notice how the stock’s price has risen steadily over time with some pullbacks.
Use these market tools to scan for and review stocks:
✅ MarketSmith (MarketSurge) – Premium Market Analysis and Scanner Tool
✅ Charts.com – Budget-Friendly Charting Option
✅ TradingView – Free & Subscription Stock and Crypto Charts
✅ DeepVue – MarketSurge Inspired Analysis and Scanner
👀 Seeing real-world stock patterns helps train your eye for long-term trends.
Our Sister Newsletter. Because everyone’s a Beginner in something.
News(Sunday recap)
SOFT INFLATION, QUIET TRADING CAP A LAZY FOUR-DAY WEEK
A holiday-shortened stretch kept Wall Street in first gear. Post-Memorial Day volume stayed thin, and early gains from Nvidia’s blockbuster report faded as traders shifted focus to Friday’s PCE numbers. Retail stood out for the wrong reasons—Salesforce, American Eagle, and Foot Locker each slipped after cautious outlooks—yet home-improvement names steadied thanks to solid Lowe’s results. By Friday’s close the S&P 500 and Nasdaq were fractionally lower, the Dow eked out a tiny uptick, and all three held above key moving averages.
The headline PCE gauge matched forecasts and core prices rose just 0.2% in April, easing nerves over another jolt in rates. Yields dipped, but buyers kept plenty of cash on the sidelines ahead of fresh remarks from Fed officials in the coming days. Chip leaders, still digesting last week’s surge, will likely set the tone as June gets underway.
Stock Spotlight
Costco Wholesale ($COST ( ▲ 1.85% ) )
Bulk-club bellwether powers past resistance
Costco jumped 3 % after a solid fiscal Q3 beat and fresh price-target bumps from five brokerages. Earnings climbed 13 % and revenue advanced 8 %, pushing shares above a long, flat base. Traders saw steady demand at the 21-day exponential moving average, hinting that institutions remain active.
Fast Facts
Price: see live chart above
Buy trigger cleared: $ ?? (flat-base pivot)
Q3 EPS: $ 4.28 (+13 % YoY)
Q3 revenue: $ 63.2 B (+8 % YoY)
Same-store sales: +5.7 %; U.S. stores +6.6 %
Paid households: 79.6 M (+6.8 % YoY)
Analyst moves: CFRA, Morgan Stanley, Evercore ISI, Loop Capital, and Bernstein each lifted targets
What Traders Can Learn
Membership engine: recurring fees cushion margins, giving Costco flexibility on headline prices.
Volume tells the truth: note how trade swelled on the breakout; repeated heavy days on up moves often signal funds building stakes.
Short-term guidepost: the 21-day EMA has acted as a springboard; a pullback that finds support there can offer a secondary entry.
Refer a friend
5 referrals How to Make Money in Stocks Complete Investing System by O’Neill
10 referrals How to Make Money in Stocks Success Stories by O’Neill
15 referrals How to Make Money in Stocks, Getting Started by Matthew Galgani
30 referrals Trade Like a Stock Market Wizard by Mark Minervini
50 referrals Lifetime access to the upcoming video courses and 50% off live events and digital products
How to Make Money in Stocks Set
Thank you for reading. We’re all Beginners in something!
-Beginners in Stock Trading Team