Technical Analysis Academy

Will DOW continue going down?

2008-12-03T23:48:00.000-08:00

This is the question in the mind of all trader and investor right now, will DOW continue to crash and slide down further more? What is the bottom line? Interesting question, as the DOW still holding above its previous support at 7500 points, no one know when the market will go crazy again and hit the bottom and crash beyond that again.

What is your opinion??? Feel free to voice out.

I would say the major market sentiment is very bearish, though we see some continous rally last week, but the bear can come strong and sudden, and wipe out any gain in a day!

My friend Adam has made an interesting video about the DOW crash, and I am sure you love to find out more, you can click on the link below to view the video. I am sure you will find this video informative and practical. If you wish to make some money from the market crash, you got to watch this.

Video Title:

The DOW Crashes Video

And if you want to view more video, you can sign up to receive alert when there is new video.

Happy trading ! You can find out more from TraderWork.com.

http://www.traderwork.com/ - Reveal the Secrets of Options Trading !

2008-11-28T17:34:00.001-08:00

If You are looking for free Options Trading Resources adn tips, this site is for you.

Present to you, TraderWork.com http://www.traderwork.com/.

I would love to share more information about options trading, tips, articles as well as my trading journal.

It is a wordpress theme with 3 column, 2 sidebar at the right with easier browsing other information I would to promote.

You can easily find the recent post, category and tag cloud at the right, or simply using the search box.
If you love articles, simply click on the article category, and my articles under Paul's article category.

Pages are all on top, just below the blog title, I have optimized it so user can find more useful information there.

Trading is an art, as well as building a website. I hope you like the new appearance.

Free free to stop by and give me some comments, both positive and negative, I welcome that!

Understanding day trading charts

2008-11-27T05:15:00.001-08:00

Day trading charts are graphical representations of stock price movements and their derivative calculations and statistics. There are many different types of charts a day trader may refer to in any given day to assess, calculate, time and determine when and what to trade in. A few of the more common charts are listed below:

Stock Price History and Volume Chart:

The stock price history chart is the most basic of day trading charts and shows the movement of a stocks value over time periods selected by the day trader. These charts are often accompanied by a volume overlay or separate chart just below the stock price chart that indicates how many shares of the stock are traded and to what extent. These charts can be viewed as either lines, candlesticks or bars, each of which highlights a different aspect of the nature and behavior of price movements.

Stock Options Chart:

A stock options chart is used by options traders to determine what price, and expiration date a stock option will be purchased at. These charts are not used by day traders alone, but also investment firms and investors. The stock options chart is divided into two sections puts and calls. The put section is for traders who are attempting to lock into a sell price on or before a certain date. The call section is for traders who are attempting to lock into a buy price on or before a certain date. Both the puts and the calls are divided further into month charts that extend several months into the future.

Technical Analysis Charts:

Technical analysis charts allow day traders to view many different forms of analysis all at once. These tools are called indicators and are either overlayed onto a basic stock price history chart or take the place of the basic stock price history chart. The trader can refer to the price of the stock in his or her analysis. Some examples of commonly used technical indicators and overlays are moving averages, candlesticks, and Bollinger bands. Each of these helps a trader infer patterns in price movement and volume with the intent of predicting future price movement.

The technical analysis charts can become quite complex and include several other indicators such as commodity channel index, on balance volume, and rate of change/momentum. The purpose of these and other indicators is to help signal the following trends to a trader:

-Daily patterns in a stocks price and volume.
-Price floors and ceilings.
-Support and resistance levels in stock prices
-Changes in trends
-Stock price volatility

Stock charts are one of the day traders most important tools as they are the platform from which a technical trader performs a stock analysis. Each chart indicator and overlay presents price and volume related information that may or may not be contradictory. It is the responsibility of the day trader to interpret the signals based on his or her experience and know how. The charts are useful tools but are not a guarantee of trading success. This is because the information presented in day trading charts is based on a wide variety of variables and not a controlled amount of factors as in scientific analysis. Nevertheless, day trading charts organize a large amount of data and analysis in to well presented graphical representation of what is going on. These representations most commonly take the form of graphs and sometimes numerical charts as in the case of options traders.

Sources:

http://stockcharts.com/school/doku.php?id=chart_s chool:chart_analysis
http://www.thebulltrader.com/

Learn more about this author, A.W. Berry.

Investment Strategies for Beginners by Dr Joshua Geralds

2008-10-16T01:26:00.000-07:00

Beginners are usually very zealous investors, but unfortunately also more often than not uninformed. This is a sad fact, because it is certainly no fun to lose all the money you have borrowed or save for the purpose of growing it. Although there is much to learn about trading Forex, getting a good grasp on the basics is very important. In fact the key to making money is in the basics and not all the advanced stuff. For a new trader learning what works best is the single most important step to take.

In Forex there are different types of tools that help us traders define and interpret the market data. In this article let's explore the 2 most commonly used tools and their strategies.

First is Fundamental analysis, heavy weights like Warren Buffet and George Soros swear by Fundamental Analysis. Fundamental analysis is news, it is information that will sway the minds of people and cause them to behave in a certain manner. A savvy trader whop knows how to "read the wind" will know from which direction this "wind" is blowing and then trade accordingly. Fundamental Analysis helps define the trend and for all traders trading with the trend is always good as that increases your probability of a successful trade. For example if the trend is on a downtrend, you should look at your set ups to go short. Since the trend is already falling, there will be more sellers than buyers, if you become a buyer; you basically give your money away to the sellers! Unless you have a lot of money to spare my honest suggestion is sticking to trend trading regardless of the trading plans you use. A counter trend trade is always risky and frankly I would rather not lose any hair by taking such risk as the returns do not justify the actions.

The second newer tool is Technical Analysis, the fact that there are charts means that you are using technical indicators already! Technical analysis is defined as the study of past price actions to determine future movements. Pure technical analysts believe that history will repeat itself and look to the charts to show this as the case. In a way that is correct, as a trader you deal with people, and people tend to be fairly predictable if charted on a large scale. Individually humans are hard to guess, but when you start taking large groups of people and then track their actions over a long period of time you will see patterns emerge. That is what technical indicators do, they define these patterns and then based on what we know happened in the past, there is a high probability that it will happen in the future. For example, you use 2 indicators on your candlestick chart, a stochastic slow and 2 EMA lines. When the stochastic hits a oversold position and the 2 EMA lines cross upwards you go long (buy) when it is in reverse you go short (sell)

Regardless of what sort of tools you decide to use, always integrate them with proper money management. For money management is the only way that will allow you to make consistent profits and grow your account steadily.

About the Author

Dr. Joshua Geralds is a successful investment specialist with over twenty years experience increasing the income of people world wide. For a limited time get his free Money Management to a Million Dollars e-course here: http://www.pipsalot.com

The Power of Technical Analysis by Daniel Kertcher

2008-10-09T23:57:00.000-07:00

Technical analysis is the study of share prices. By researching the past performance of a share, we can gain an insight into how it will likely perform in the future.

To fully appreciate the power of technical analysis it is important to understand the basics. There are three key principles upon which technical analysis is based:

● Everything is discounted and reflected in market prices.
● Prices move in trends and trends persist.
● Market action is repetitive.

Let's examine each principle in detail.

The first and most important principle is that everything is discounted and reflected in market prices. All knowledge, regardless of type (fundamental, political, economical, psychological or other) is already reflected in market prices.

It can be time consuming studying fundamental information such as company financial statements, earnings and P/E ratios in an attempt to determine the potential for a share to rise in value. The real value of a share at any point in time is determined solely by supply and demand, as reflected in trades made at the stock exchange.

Technical analysts do not care what the underlying forces of a shift in supply and demand are; instead he or she is interested in what occurs to the price.

If demand is greater than supply, prices will increase. On the other hand, if supply is greater than demand, prices will decline. The study of market prices is all that is necessary to make money from the stock market.

The second principle on which technical analysis is based is that prices move in trends and trends persist.

The supply and demand balance sets a trend in motion. Once in motion, a trend remains intact until it ends. For example, if a stock's price is moving up, it will continue its rise until there is a clear change in direction.

It is far easier to follow the trends, rather than fight them. The old Wall Street adage, "the trend is your friend" is true because, once begun, a trend is likely to continue once it is in place. A trend will usually give us warning that it is about to change direction. The warning can sometimes last a day or longer, so it is important to become familiar with recognising the signs.

The final key principle on which technical analysis is based is that market action is repetitive. Certain patterns appear time after time on charts. These patterns have meanings that can be interpreted in terms of probable future price movement. Although not infallible, the odds are in the analysts' favour. Common reversal patterns include Double Tops, Shooting Stars, Doji's and Head and Shoulders.

These patterns, when seen during an uptrend (bull run) consistently identify a likely trend reversal, i.e. a fall in share prices.

Human nature is such that it tends to react to similar situations in consistent ways. As a rule, people will act the same in the future as they have in the past. Since the stock market is a reflection of the actions of people, technical analysts study it to determine how people will react under certain conditions and thus, how share prices will move. Technical analysts analyse the recurrence of similar characteristics in an attempt to identify the likely future price direction.

As you can see, technical analysis can be defined as the study of individual share prices and the overall market based on supply and demand. Technical analysts record, usually in chart form on a computer, historical and up-to-date price and volume activity and deduce from that pictured history the probable future trend of prices.

About the Author

Passionate and energetic, Daniel Kertcher is an investment specialist with over 15 years experience in property, stocks, options trading, CFDs (contracts for difference), technical and fundamental analysis, futures and commodities trading.

Daniel is currently CEO of Platinum Pursuits. For more information, visit Daniel Kertcher

Trading Rule Part 1 - Set the Difference Between Novice and Professional Trader

2008-10-02T05:29:00.000-07:00

If you ask me what is the major difference between a novice and a professional trader, the difference is whether he or she set the trading rules and follow the rules. There are thousands set of trading rules that you can create or follow, what I recommend is that you do not need to create a certain of trading rules, you can just follow them which came from the famous investor and traders.

One of the famous investor that I admire and respect a lot is Warren Buffet. In his world, rules are more important than anything. His famous quote is as follow:

Rule 1: never lose money
Rule 2: never forget rule no 1

Funny enough? But the fact is, many people understand the importance of setting rules but never learn to follow the rules.

For part 1, I would like to share the rules that I follow before I enter the market.

Rule 1 - Always do market research before market open:
Open your CNBC or any finance website to get the latest update, understand what's happening in the market right now. Either is it oil price drop, or some where having a war, focus on news that may be making any impact to the US market and the stock you are trading. After learning the news, try to figure out the market sentiment, for example, is oil inventory going lower a good thing to the market? Certainly not! With the latest news in hand, it will help you to make a better decision when entering the trade.

Rule 2 - Limit your trading size:
Do not over trade, always make sure you have enough money to play for the next game. Thumb of rule is always using 1/20 of your total money for each trade. If you have $5000, each trade is $250, in that case you can have 20 games to play.

Rule 3 - Give your trade a reason:
Before entering the position, make a note and jot down what makes you buy or sell certain options, as well as what strategy you use, and why? Put all this down in your trading journal, so that you can revise it back. If you end up a loss, make sure you understand where the problem is. If you earn a profit, remember what you did right.

Rule 4 - Set exit level:
When you see a potential trade, holds your trigger, make sure you set your exit level before clicking the button. Many people are good traders, they know when to enter the trade, but do not know when to get out. You need to set two exits, one for your stop loss, one for your profit limit. Especially for stop loss, set at the level that you are comfortable with your risk level, from the technical point of view, you can set your stop loss at certain support level, when the stock break through the next support level, cut the loss and run.

To learn more about options trading, please find out from TraderWork.com Always trade with your passion!

I love options trading and I am here to share my humble experiences so that you can be benefited from it. You can find out more from http://traderwork.com Always trade with your passion! Cheers!

Article Source: http://EzineArticles.com/?expert=Paul_Liew

Fibonnaci and Gann Combination

2008-09-21T22:12:00.000-07:00

"For A Limited Time Only, You Can Now Own A Professional Fibonacci & Gann Trading Software That's Surprisingly Easy To Use For A Mere Fraction Of The Price..."

You may strike gold once or twice through pure blind luck, or even by mindlesslyfollowing the crowd. But without a reliable system of calculating potential price reversal points, you're exposing yourself to a much larger amount of trading risk than necessary.

When I first started trading 12 years ago, I worked for one of the largest grain trading companies in the world. I was directly responsible for placing their futures orders, which meant I had to devote myself to an intensive technical analysis of market trends.

In other words, I needed a highly accurate way of knowing when and how markets will react.

The more I studied, the more I became interested in the techniques used to "trade price and time". You see, most traders are only aware of calculating potential reversal points using price, but few trade when price and time meet.

Two of the best techniques for trading price and time are Fibonacci and the Gann "Square of Nine" .

I was intrigued by these techniques mainly because they were:-

Easy to understand and apply - Based on sound mathematical formulas, they can be easily applied and do not require any knowledge of how indicators work. Neither do you need to apply fundamental market data to a market.
Versatile. Can be used in conjunction with any trading technique - Usage of these technical analysis methods do not limit the trader. In fact, you may use price & time trading with other techniques you're familiar with, or by itself. The choice is yours.
Suitable for stocks and commodities trading - Whether you trade stocks or commodities, you'll find price and time trading methods equally relevant to you.

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Technical Analysis Basic Principles

2008-09-21T21:46:00.000-07:00

Technical Analysis is the study of prices and volume, for forecasting of future stock price or financial price movements.

What is Technical Analysis?

Technical Analysis is the study of prices and volume, for forecasting of future stock price or financial price movements. Technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time.

Technical analysis is not an exact science. It's an art and takes considerable experience. Not all studies work the same for every instrument traded. One study may give excellent buy and sell signals while another may not work for you at all.

Stock Market Technical Analysis Basic Principles

Technical Analysis is based on these three basic principles:

Price Discounts Everything
Prices move in trends
History repeats itself

#1- Price Discounts Everything

Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, and …

Stock Market Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.

#2- Prices Move in Trends

Technical analysts or chartists believe that profits can be made by following the trends. In other words if the price has risen, they expect it to continue rising; if the price has fallen, they expect it to continue falling. However, most technicians also acknowledge that there are periods when prices do not trend.

#3- History Repeats Itself

Technical analysts believe that investors en masse repeat their behavior and they assume that there is useful information hidden within price histories; that it is a way of analyzing the past actions of people in a particular market as reflected by their actual transactions.

By Mostafa Soleimanzadeh. Investing in the Stock Market Tips, Learn Stock Market Technical Analysis Basics in his website.

How To Spot Four Reliable Candlestick Reversal Patterns by Woods Richard

2008-09-14T22:50:00.000-07:00

One of the toughest decisions to make while trading is knowing when to sell. Gains can quickly turn into losses because many beginning traders use emotion rather than a system that is developed over time. One of the most reliable ways to protect gains is by learningcandlestick reversal patterns. Japanese candlestick charts have been used for hundreds of years to predict commodities markets and in recent history, equities, futures and Forex markets.

Outlined below is a list of some of the most reliable candlestick reversal patterns if a trader knows how to recognize them.

The Abandoned Baby

This reversal pattern appears after a strong upward move followed on the second day of little if any movement, either up or down, as bears and bulls struggle for control forming a doji. The third day confirms a sell off as sellers hit the exits forming a long bearish candle. The longer the down candle on the third day, the stronger the confirmation that the uptrend is over.

The Bearish Evening Shooting Star

This formation begins with a move up as buyers jump on with the second day continuing the pattern at the opening bell. However, as the second day progresses, sellers take over pushing the days candle back down to close near where it opened in the morning session. The second day candle is a good indication that the third day will see selling on the open the third day and is confirmed by a closing red candle.

Hanging Man

One of the best indicators to determine the exhaustion of a current upward movement is the hanging man suggesting a candlestick reversal pattern. The day after a move up, the market opens with a strong sell off forming a long shadow with buyers coming in to push the candle above where it opened the session. The hanging man formation is an indication that sellers are gaining in strength and buyers are losing control of the upward move.

Gravestone Doji

The Gravestone Doji is a possible candlestick reversal pattern that shows that there may be weakness in the current uptrend, signaling traders that a reversal may be coming. Buyers continue to push the market higher on day two but sellers have taken over by the time the market closes. A closing red candle on the third day confirms the signal that the current uptrend is broken.

Japanese candlestick charts form many different patterns and learning to read and understand what these formations possibly indicate can mean the difference between winning and losing while trading. Learning to recognize candlestick reversal patterns can help beginning traders learn when to sell at the best possible time, taking indecision out of the equation.

About the Author

Learn more about Japanese candlestick charts and candlestick reversal patterns.

Learn about the penny stock market.

Elliott Wave Forecast for 9.02.08

2008-09-02T02:18:00.001-07:00

Basics of Technical Analysis

2008-09-02T02:14:00.000-07:00

Technical Analysis Stock Picks, Learn to Read Stock Charts!

2008-09-02T02:12:00.000-07:00

Technical Analysis: How to use Technical Indicators – part 2

2008-08-31T08:55:00.000-07:00

In this article I'll describe two technical indicators: an oscillator that is Stochastic Oscillator and Bollinger Bands indicator.

In the previous article I described tree technical indicators: Momentum and Rate of Change (ROC), Moving Average Convergence/Divergence (MACD), and Relative Strength Index (RSI). Don't worry you can find link to complete article in the bottom of this article. Also, you can subscribe to our free Newsletter for new updates.

In this article I'll describe two technical indicators: an oscillator that is Stochastic Oscillator and Bollinger Bands indicator.

As I mentioned before, Oscillators are technical indicators that tend to cycle or “oscillate” within a fixed or limited range, and Momentum in general term means strongly movement of prices in a given direction.

Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator, it indicates whether the market is moving to new highs or new lows or is just meandering in the middle. This indicator is based on George Lane 's observations.

The Stochastic Oscillator is plotted in two lines Fast %k and Fast %D.

The formula is:

Fast %k = 100 * [( C – L (n) ) / ( H (n) – L (n) )]

Where: C is the most recent closing price.L (n) is the low of n previous trading day (or bar). H (n) is the high price of the same n previous day (or bar). Usually n is chosen 14.

A 3-period (day or bar) moving average is taken from Fast %k and called Fast %D. Fast %D is used as a signal line in the same way that the moving average of the MACD is used as a signal line for the MACD.

Stochastic Oscillator is plotted in two lines but, usually these lines cross each other many times. Now to smooth the chart, a 3-period moving average is taken from Fast %D and called Slow %D (Also, Fast %D is called Slow %K), so the smoothed chart is plotted with Slow %K and Slow %D.

Using of Stochastic Oscillator

1- Oscillators are used as an overbought/oversold indicator. A buy is signaled when the oscillator moves below 20, and then crosses back above 20. A sell is signaled when the oscillator moves above 80, and then crosses below 80.

2- Also, when %K crosses above or below %D, Buy and sell signals can be given. But, may be crossover occurs frequently in short periods and causes bad results. This using isn't very common.

Bollinger Bands

John Bollinger created Bollinger Bands in the 1960s; Bollinger Bands are used to determine support and resistance levels. This indicator consists of three lines; the middle line is an exponential moving average of price data and the two outside bands are equal to the moving average plus or minus standard deviation.

Standard Deviation is a statistical measure that indicates volatility of price. The bands will expand when price becomes volatile and they will contract during less volatile periods.

Using of Bollinger Bands

1- Bollinger Bands are used to determine the boundaries of market movements. If a market moved to the upper band or lower band, then there was a good chance that the market would move back to its average. In the other words, when price closes to upper band, market is overbought and when price closes to lower band, market is oversold.

2- Another using of Bollinger bands is that to indicate up-trends and down-trends. If price deflects off the lower band and crosses above moving average then price fluctuate between upper band and moving average, it comes to indicate upper price target. It is visa versa to indicate lower price.

Simply click the link to read complete article: Using of Technical Indicators

About the AuthorBy Mostafa Soleimanzadeh. Find Free Basic and Advanced Stock Investing Articles in his website.

Technical Analysis: How to use Technical Indicators – part 1

2008-08-31T08:54:00.000-07:00

Technical Indicators are used to know when to enter or exit a trade, how to choose good stock indicators?

There are dozens of technical indicators, how to choose good stock indicators? Technical indicators are used to know when to enter or exit a trade. If you know how to enter and exit a trade, you can easily make profits. That is why choosing good stock indicators are important.

Some of stock market indicators are more common and useful than others. Also you need a few of them to trade not all off them.

In this article I try to describe three oscillators:

Momentum and Rate of Change (ROC) Moving Average Convergence/Divergence (MACD) Relative Strength Index (RSI)

What are oscillators?

Oscillators are indicators that are usually computed from prices and tend to cycle or “oscillate” within a fixed or limited range.

Momentum and Rate of Change (ROC)

Momentum is an oscillator designed to measure the rate of price change, not the actual price level. This oscillator consists of the net difference between the current closing price and the oldest closing price from predetermined period.

The formula is:

Momentum (M) = CCP – OCP

Where: CCP is Current Closing Price and OCP is Old Closing Price

Momentum is simply the difference, and the ROC is a ratio expressed in percentage. Momentum and Rate of Change (ROC) are simple indicators showing the difference between today's price and the close N days ago. Momentum in general term means strongly movement of prices in a given direction.

Moving Average Convergence/Divergence (MACD)

MACD is computed by subtracting a longer moving average from a shorter moving average. MACD is used with a signal or trigger line, which is a moving average of MACD. If MACD and trigger line cross, then this indicate that a change in the trend is likely. MACD developed by Gerald Appel.

The MACD smoothes data, as does a moving average; but it also removes some of the trend, highlighting cycles and sometimes moving in coincidence with the market .

Relative Strength Index (RSI)

RSI measures the relative changes between up-moves or down-moves and scales its output to a fixed range, 0 to 100. RSI is an oscillator and Welles Wilder devised it.

The formula for calculating RSI is:

RSI = 100 – [100/ (1+RS)]

Where: RS is average of N days up closes, divided by average of N days down closes and N is predetermined number of days that usually chosen 14.

RSI can use as an overbought/oversold indicator. A buy signal is when the RSI moves below a threshold, into oversold territory, and then crosses back above that threshold, usually 30 is taken for oversold threshold. A sell is signaled when the RSI moves above another threshold, into overbought territory, and then crosses below that threshold, usually 70 is taken for overbought threshold.

Conclusion

Oscillators are used as an overbought/oversold indicator. A buy is signaled when the oscillator moves below some threshold, and then crosses back above that threshold. A sell is signaled when the oscillator moves above another threshold, and then crosses below that threshold.

Oscillators have the potential to provide good entry and exit points. So they have the potential to provide a high percentage of wining trade. Also they have some weaknesses; some of them can easily become stuck at one of their extremes, or don't capture some trends.

About the AuthorBy Mostafa Soleimanzadeh. Find Free Basic and Advanced Stock Investing Articles in his website.

Technical Analysis: Elliott Wave Theory Basics

2008-08-31T08:47:00.001-07:00

Elliott Wave Technical Analysis rules and guidelines applied to the charts, and will help you trade and invest successfully through a better understanding of the market to maximize opportunity and minimize risk.

R. N. Elliott developed his wave theory in 1934. It is a method for explaining stock market movements.

Elliott Wave Technical Analysis rules and guidelines applied to the charts, and will help you trade and invest successfully through a better understanding of the market to maximize opportunity and minimize risk.

Under the Elliott Wave Principle, every market decision is both produced by meaningful information and produces meaningful information. Each transaction, at once affects to the market and, by communicating transactional data to investors, causes other’s behavior.

According to the Elliott Wave Theory, stock prices tend to move in a predetermined number of waves. Elliott believed the market moved in five distinct waves on the upside (Motive or Impulse Wave) and three distinct on the downside (Corrective Wave).

Motive wave structure is denoted by numbers (1-2-3-4-5) and, corrective wave structure is denoted by letters (a-b-c).

Market cycles are composed of Motive Wave and Corrective Wave, So one complete cycle consists of eight waves.

Elliott Wave degrees

An important feature of Elliott Wave Theory is that they are fractal in nature. 'Fractal' means market structure is built from similar patterns on larger or smaller scales. Therefore, we can count the wave on a long-term yearly market chart as well as short-term hourly market chart

Elliott Wave theory categorizes waves by relative size, or degree. Elliott discerned nine degrees of waves, and chose the names listed below to label these degrees, from largest to smallest:

1.Grand Supercycle
2.Supercycle
3.Cycle
4.Primary
5.Intermediate
6.Minor
7.Minute
8.Minuette
9.Sub-Minuette

The major waves determine the major trend of the market, and minor waves determine minor trends.

For complete article with images refer to: Elliott Wave Theory Basics
About the AuthorBy Mostafa Soleimanzadeh. Beginning Investing in the Stock Market, Learn Technical Analysis and Fundamental Analysis in his website.

Technical or Fundamental Analysis

2008-08-31T08:45:00.000-07:00

In this article I compare these two methods of forecasting in the stock market. I'll give the reasoning that why technical analysis is superior to fundamental analysis.

As you know, technical analysis concentrates on the study of market action, and fundamental analysis concentrates on the economic forces of supply and demand that cause price movements.

Fundamentalists try to determine the intrinsic value of the stocks. They examine all factors that affect on price. If the intrinsic value is under the current price, fundamentalist sells the stock because stock is over priced. If price is below the intrinsic value then market is undervalued and should be bought.

Fundamentalists study the cause of market movements, but reasons of movements aren't important for technicians. Technicians believe that the price reflects the effect of all events that make change in price. Therefore study of price action is all that they require.

Most people use both technical and fundamental analysis to trade. Many technicians have basic knowledge on fundamental approach and many fundamentalists have basic knowledge on technical analysis. But, most people have more interest on one method.

Why Technical Analysis

Fundamentalists must find the reasons of price movement. Sometimes this act is very complicated; there are so many factors that make change on price such as political, psychotically events and so on. To trade the fundamentalist must study and research tremendous amount of data that takes so much time and effort.

Technical analysis is Flexible and Adaptable

You can apply technical rules to every market either stocks or futures or any other market. The technician easily can follow many markets in the same time. This is a great strength because you can catch big movements in each market.

Trading in different Time Dimensions

You can use technical rules for daytrading, swingtrading, long term trading and etc. rules are the same you only change time of charts. Some people say technical analysis is only suitable for short term trading, but it is not true. Using weekly and monthly charts that refer to several years has proven the strength of technical analysis for long term trading.

About the AuthorBy Mostafa Soleimanzadeh. Stock Market Tips, Learn Stock Market Technical Analysis and Fundamental Analysis in his website.

The CandleStick Warrior - New, Fun and Easy way to learn Candlestick Charting !!

2008-08-27T05:44:00.000-07:00

If you would like a thorough in depth, live and personal continuing education in Japanese candlestick patterns, and how to recognize them, and put them to use you've got to get Candlestick Warrior.
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2008-08-27T05:17:00.000-07:00

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Using the Stochastic Oscillator Momentum Indicator

2008-08-27T05:09:00.000-07:00

By Manny Backus

Trending the price moves of stocks helps any investor make the buying and selling decisions they need. Stochastic allows investors the ability to track the move of the market through price and time and is based on the idea that prices moves in waves.

The high and the low movements of the stochastic signify the overbought and oversold levels of stocks, and day traders can see that as price trends develop and mature, the closing price will show the shift that is occurring with the stock. When a stocks closing price is going higher, the stochastic will show this trend as moving upward. Conversely, when a stocks closing price is going down, the stochastic will be moving in a downward trend.

To make this day trading strategy effective, traders need to understand what the stochastic tells them. The display of the stochastic is typically made up of two moving averages - %K, which is the faster-moving average, and %D, which is the slower-moving average.

The typical timeframe for the stochastic is 14 periods, but keep in mind that the timeframes can be changed depending upon the timeframes a trader wants to examine. With that in mind, the timeframe of %K is generally in multiples of 7, while the timeframes for %D are moving averages of 3 or 5 periods.

Experienced traders are taught to examine the stochastic for a breakout - when %K crosses %D, but traders cannot use this method blindly. Traders need to look for another important factor when using this tool. They need to check for a confirmation of the crossover and ensure that it occurs between the 80 & 20 area. You might notice on your stochastic that the faster line crosses the slower line trending upward when both lines are beneath the 20 area (oversold area), but you need to get a confirmation before taking action.

Wait until both the fast and slow lines have crossed the 20 line before deciding what to do, as this area will tell you that the stock could be at a near-term reversal or that it is at support. In the overbought area (above the 80 line), the stochastic will tell you that the price could also be at a near-term reversal or that it may have encountered resistance.

In terms of day trading tips, you can use the stochastic to help you determine entry and exit points in the trade. In designing day trading systems, areas of support and resistance need to be identified on the chart. As %K and %D trend higher, look for areas of retracement as areas of support. If the price moves higher, but doesn't move higher on the stochastic and the support line is broken, this may signify a potential point of exiting the trade.

The stochastic is a popular momentum indicator that is used with both short term and long term trades. When day trading online, one thing to always keep in mind when trading against the stochastics is to confirm the price with the information you gather from the chart itself so that you are positioning your trade for success.

Manny Backus is an expert at helping day traders make hundreds or thousands of dollars within just the first hour of the trading day. Visit Day Trading Pro, http://www.daytradingpro.com/ for more information.
Article Source: http://EzineArticles.com/?expert=Manny_Backus

The Stochastic - The Ultimate Forex Trading Momentum Indicator For Bigger Profits

2008-08-27T05:06:00.000-07:00

By Monica Hendrix

I use the stochastic all the time and think there is no better indicator for timing your trading signals - its simply the ultimate momentum indicator and every forex trader should use it - lets look at this fantastic indicator in greater depth....

The stochastic indicator is:

A momentum indicator which warns of strength or weakness in advance, making it leading indicator to confirm trading signals in conjunction with support and resistance.

The Technical Bit

The stochastic is plotted as two lines %K and %D.

The %K line is the more sensitive line

The %D line is a moving average of %K.

The plotting of the stochastic is a bit similar to a moving average. Substitute the %K for the fast moving average and %D for the slower average.

The lines are plotted 1 - 100.

Here are 3 ways you can use the stochastic indicator to great affect, with crossovers from over bought - oversold being my personal favorite.

1. As a Overbought / Oversold Indicator

A common use of the stochastic is to use it as an overbought / oversold indicator. When stochastic moves below the 20% and above 80% trigger lines are crossed the Buy when the stochastic goes below 20% and then rises above that level and sell when the stochastic rises above 80% and then goes below.

2. Trading Crossovers

the crossover is my favorite way of using the stochastic from over bought above 80% or oversold below 20% Many traders simply buy when the %K line rises above the %D line and then sell when the %K line falls below the %D line.

This can work but you tend to get a lot of whips in price. I personally prefer to do crossovers from very overbought and oversold levels. In currencies you often get above 90 and below 10 and a recent currency signal I had was from 96!

When these levels are reached and you have cross the upside from oversold or down turn from overbought are great signals.

I know traders who simply use support and resistance and crossovers from extremes and make a lot of money with the stochastic and support and resistance lines.

Sure it's simple but it's very effective now the final use.

3. Trading Stochastic Divergences

Divergences between the stochastic and price can be used as a leading indicator for executing trading signals.

For example, if prices are making new lows and the stochastic moves higher or crosses to the upside you have a warning that prices may re bound as price move up. The opposite is of course true in a bear market.

Of course no indicator works all the time by itself - but in terms of a momentum and timing indicator for your trades, it's a fantastic indicator if used correctly.

As stated my preference is not just to use crossovers but crossovers from price chart extremes and this with trend lines and a little practice works.

I also like to use filters in line with the stochastic and use the Relative Strength Index (RSI) and Average Directional Movement (ADX). There great as momentum indicators and work well with the stochastic. Get the book they come from - New Concepts in Technical Trading - By Wells Wilder it's a great book and outlines them in more detail.

I have used the stochastic for 25 years and use it for swing trading and trend following and never execute a trade without checking it.

It's a very visual indicator and you can learn to use it in 30 minutes. If you don't know or use the stochastic, its time to make it part of your essential forex education.

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Article Source: http://EzineArticles.com/?expert=Monica_Hendrix

pls visit http://forextradingacademy.blogspot.com for more related topic.

Stochastic Indicator – The Ultimate Timing Indicator For Huge Gains!

2008-08-27T05:04:00.000-07:00

By Sacha Tarkovsky

While basic chart analysis will tell you the trend, the stochastic offers something more when used as a filter, it helps you time your trades with better accuracy and greater profits.

Its real value is that at significant chart points where you are looking for a top or bottom, it will help you enter or exit your trades for greater long term profits.

For long term trader’s day traders or swing traders it’s the ultimate timing filter, in currencies or any ther market.

An Introduction

George Lane, who developed the indicator, postulated that in an upwardly-trending market, prices tend to close near their high, and in a downwardly-trending market, prices tend to close near their low.

As an upward trend takes its course, prices tend to close further away from the high, and as a downward trend develops, price tends to close away from the low.

As a timing indicator

The theory of the stochastic is based upon these are the catalyists which indicate the beginning of a trend reversal.

The stochastic indicator defined:

1. Is a momentum oscillator that can warn of strength or weakness in the market, often well ahead of turning points.

2. Is based upon the assumption that when a financial instrument is rising it tends to closer to the high than when it is falling, where it tends to close near its lows.

How the indicator is plotted

The stochastic is plotted as two lines %K, a fast line and %D, a slow line.

The %K line is more sensitive than %D

The %D line is a moving average of %K.

The %D line triggers the trading signals.

Although this sounds very complicated, it is actually very similar to the way a moving average is plotted.

Think of %K as a fast moving average and %D as a slow moving average.

Don’t worry

You don’t need to know how an internal combustion engine works to drive a car and stochastics are the same.

Their plotted on most major chart services, take a look at futuresource.com as an example and there are many others.

All you need to do is look at the set up, all the maths is done for you

The lines are plotted on a 1 to 100-scale. "Trigger" lines are normally drawn on stochastics charts at the 80% and 20% levels.

A signal is generated when the lines cross. The zones above and below these two lines are referred to as stochastic bands.

Overbought and oversold levels

The 80% value is used as an overbought signal, and the 20% is used as an oversold signal.

The Stochastic Oscillator generates signals in three main ways:

1.Extreme values

When the 20% and 80% trigger lines are crossed.

Buy when the stochastic falls below 20% and then rises above that level.

Sell when the stochastic rises above 80% and then falls below that level.

The pattern of the stochastic is also important; when it stays below 40-50% for a period and then swings above, the market is then shifting from an overbought scenario and giving a buy signal and vice versa when it stays above 50-60% level for a period of time.

Stochastic Crossovers

Crossovers are very effective and work as follows.

Buy when the %K line rises above the %D line and sell when the %K line falls below the %D line. Beware of short-term crossovers that may generate false signals.

The preferred crossover is when the %K line intersects after the peak of the %D line ( known as aright-hand crossover).

Beware though, crossovers often provide choppy signals that need to be filtered with the use of other indicators.

Stochastic Divergences

Divergences between the stochastic and the underlying price trend also offer good signals to trade off.

For example, if prices are making a series of new highs and the stochastic is moving lower, you may have a warning sign of weakness in the market.

Caution

As with any technical indicator its does not work by itself, so make sure you have signals from the charts before adding the stochastic as a filter.

The ultimate trading filter

Used as a filter, it can warn of strength and weakness and get you into or out of the market, to maximize profits, or just as importantly help you minimize losses.

There is no better indicator for timing your trades than the stochastic.

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Article Source: http://EzineArticles.com/?expert=Sacha_Tarkovsky

Fibonacci Numbers - How to Use Them for Huge Trading Profits!

2008-08-25T22:27:00.000-07:00

By Stephen Todd

The Fibonacci numbers sequence and the golden ratio have fascinated mathematicians for hundreds of years.

While Fibonacci numbers have many applications, they have received considerable interest from traders due to their uncanny accuracy in spotting market turning points in advance.

You can use Fibonacci numbers as a predictive tool and when used correctly they can enhance a your analysis of the market, helping you to increase profits and decrease risk.

The History of Fibonacci Numbers

The Fibonacci number sequence first appeared as the solution to a problem in the Liber Abaci, a book written by Leonardo Fibonacci in 1202 to introduce the Hindu-Arabic numerals used today to a Europe still using Roman numerals.

The original problem in the Liber Abaci posed the question: How many pairs of rabbits can be generated from a single pair, if each month each mature pair brings forth a new pair, which, from the second month, becomes productive.

The Fibonacci number Sequence

The resulting Fibonacci numbers 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, are the result of the following equation.

If Fn is the nth Fibonacci number, then successive terms are formed by addition of the previous two terms, as Fn+1 = Fn + Fn-1, F1 = 1, F2 =

The ratio of any number to the next larger number is 62%, which is a popular Fibonacci retracement number. The inverse of 62% is 38%, and this 38% is likewise a Fibonacci retracement number.

Fibonacci Numbers and the Golden Ratio

Fibonacci numbers are found to have many relationships to the Golden Ratio F = (1 + /5)/2, a constant of nature which was of constant interest to the ancient Greeks, appearing in both Greek art and architecture.

Fibonacci Numbers and Market Analysis

Changes in stock prices are not simply a tug of war between supply and demand but also reflect human opinions, valuations, and expectations.

A study carried out by mathematical psychologist Vladimir Lefebvre demonstrated that humans exhibit positive and negative evaluations of the opinions they hold in a ratio that approaches phi, with 61.8% positive and 38.2% negative and that Fibonacci numbers are rooted in a trader’s psychology.

Predicting Market Movements with Fibonacci Numbers

Research shows markets as being perfectly patterned, explaining that humans, being part of nature, create perfect geometric relationships in their behaviours, even if they don’t realize it themselves.

The Golden Mean is the number 0.618. In Both Greek and Egyptian cultures, this number was highly significant. They believed that the number had important implications in many areas of science and art. This dimension was utilised in the construction of many buildings - including the pyramids.

The Golden Mean appears frequently enough in the timing of highs and lows and price resistance points that adding this tool to technical analysis of the markets can help to identify key turning points.

W. D.Gann and Fibonacci Numbers

Gann was a stock and commodity trader who reputedly made over $50 million trading the markets.

Gann made his fortune using methods which he developed for trading instruments based on relationships between price movement and time and his work was heavily influenced by Fibonacci numbers.

Gann divided price action into eighths and thirds. This yields numbers such as 1/3, 3/8, 1/2, 5/8, and 2/3. In percentage terms, these fractions are 33.3%, 37.5%, 50%, 62.5%, and 66.7%. These five ratios are commonly used retracement values. Gann placed strong significance on 50% retracements.

To learn more about using Gann trading methods please visit our web site: http://www.gann.co.uk

Article Source: http://EzineArticles.com/?expert=Stephen_Todd

Candlesticks Vol 1 - Candlestick Design

2008-08-24T07:29:00.000-07:00

Profiting with Candlesticks

2008-08-24T06:59:00.001-07:00

Candlestick Charting and Reversal Patterns - The Doji

2008-08-24T06:36:00.000-07:00

Candlestick charting is more popular than ever before, with a legion of new traders and investors being introduced to the concept by some of today's hottest investment gurus. Once mastered, candlesticks can provide unique visual cues that make reading price action easier and also help the trader in identifying turning points in a trend as it occurs, before a new price trend starts. Reversal patterns in western analysis often take many periods to form but the vast majority of candlesticks formations take only one to three time periods, and give traders more of a real time picture of market sentiment.

Many traders still don't know the major reversal patterns used in candlestick analysis and there is much misunderstanding concerning the practice. This article series will try to explain the different major candles, patterns and also when these signals are valid. We will start with the major candles and then graduate to the major reversal patterns. This is the first article in this series and we will be discussing the doji candle.

The Doji

Doji's are powerful reversal indicating candlesticks and are formed when the security opens and closes at the same level, implying indecision in the stock price. Depending on the location and length of the shadows (lines above and below the open and close), Doji's can be categorized into the following formations: doji, long legged-doji, dragonfly doji and gravestone doji.

As previously mentioned, the standard doji consists of a candle that closes and opens at the same price level. Doji's become more significant when seen after an extended rally of long bodied candles (bullish or bearish) and are confirmed with an engulfing candle. A long legged-doji is formed when the stock opens at a level, trades in a considerable trading range only to close at the same level as it opened. Long legged-doji's become more powerful when proceeded by small candles, as a sudden burst of volatility in a relatively nonvolatile stock; can imply a trend change is coming. Dragonfly Doji's are doji's that opened at the high of a session, had a considerable intraday decline, then find support to rally back to close at the same level as the open. Dragonfly Doji's are often seen after a moderate decline, and are bottom reversal indicators when confirmed with a bullish engulfing. Gravestone Doji's are the opposite of the Dragonfly Doji and are top reversal indicators when confirmed with bearish engulfing candle pattern. As the name implies, gravestone doji's look like a gravestone, and could signal impending end of a trend for a stock.

While the doji is one of the most powerful candles, it's best to wait until the next candle for confirmation before considering a trade. The doji by itself can mean a brief resting period or beginning of a price consolidation rather than a full blown trend reversal.

B.M. Davis is an active trader, trading coach and the publisher of Candlestick Trading For Maximum Profits. If you would like more information about candlestick trading or charting please visit http://www.candlestickcourse.com

Article Source: http://EzineArticles.com/?expert=B.M._Davis

An Introduction to Japanese Candlestick Charting Techniques By Jonathan Gibson

2008-08-24T06:04:00.000-07:00

History of Japanese candlestick charting can be traced back to the eighteenth century. A Japanese trader of a speculative market known by the name Munehisa Homma first propounded it. He made many successful winning trades with the help of his new candlestick analysis. Candlestick charts usually shows the open, close, high or low for a security each day of a particular period. In format, it has similarity with that of a bar chart. However, its specialty is that it extenuates the relation between opening and closing prices.

A shadow or a wick indicates the price range of the day. When the opening price is below the closing price and the body is usually white or green. However, in the opposite case, the body is filled with black or red color. Japanese candlestick chart is a useful commodity price chart that is very easy to learn. Candlestick charts bring a different perspective on the table. They are usually more visually attractive and the information relating to prices are much easier to grasp.

Visual attractiveness is one of the major advantages of candlestick charts. A candlestick chart shows the open, low, high, and the closing prices within a particular period like a standard two-dimensional bar chart.

For the proper analysis of candlestick charts, it is important that you know about the components that make it. In a candlestick chart, the body is usually referred to as the real body and it signifies open and closing price ranges. A narrow vertical line that lies below and above the real body indicates the extreme low or high prices. To a Japanese candlestick chart-analyst, the open and closing prices are of utmost significance and therefore special attention is given to them. Whether the closing price is higher or lower than the opening price is easily distinguished by simply glancing at a candlestick chart.

No introduction to Japanese candlestick chart is complete without a mention of different terminologies involved in this method. When the opening price is above the closing price the candlestick chart is usually referred to as the black candlestick while on the other hand when the opening price is lower than the closing price it is called white candlestick. A candlestick chart that is devoid of any upper shadow, it is called the shaven head candlestick. Similarly, the candlestick chart with no lower shadow is called the shaven bottom.

Candlestick charts can be used by the traders to show double tops and bottoms, heads and shoulders etc. However, while viewing candlestick reversal patterns the background of its past activity must be kept in mind. Candlesticks apparently alike might be quite different in meaning due to differences in the background of their previous trends and formations.

For being a successful trader of the speculative market, the traders require assistance of some trading tools and a clear knowledge of the candlesticks if effectively applied goes a long way to help the trader to make profitable speculations and thus excel in his trade.

To read more Forex Trading, click here: Forex Multimedia Resources. Jonathan Gibson makes his money from home and has an extensive experience in market trading. To get 4 Free ebooks and resources on trading from a 30+ year trader veteran, click here: Free Forex Course.

Article Source: http://EzineArticles.com/?expert=Jonathan_Gibson

Free Technical Analysis - Getting Free Technical Analysis For Triple Digit Gains

2008-08-23T06:55:00.000-07:00

If you want to get free forex technical analysis and build your own forex trading system for big long term profits then you can and this article will show you how...

There are certain basics you need to learn first, before you devise your system and besides the obvious searches, look up these key areas:

Support and resistance

This is the basis on which all successful forex trading systems are built around and generally, the more tests of the level the better and if the tests occur in spaced out time periods and far apart, they add to the validity of the level.

Breakout Methodology

When using support and resistance, look at executing your trading signals when levels break, rather than focusing on trading into ones that might hold.

The reason for this is that most major trends start from new market highs and going with these breaks can yield huge profits.

Most traders can't do this, they wait to get in at a better price but the market sails on and they never get in. It's hard to buy the break sometimes, as you miss a bit of the move - but don't worry, if it's a valid break it will continue and a great trend will develop.

Timing Your Trading Signal

When a breakout occurs you need to check price momentum and now its time to learn about momentum indicators. If prices velocity is accelerating then chances are the break will continue.

There are numerous momentum indicators - but the two we like are:

The stochastic and the RSI.

They only take half an hour each to learn, are visual indicators and are great for better market timing.

Now you need to find a free chart service and there are numerous ones on the net - so look for one which will allow you to use the above momentum indicators.

Make sure you use the weekly chart as well as the daily.

The weekly chart is a great way to see the wood from the trees and can give you targets and stop levels - then use your daily charts to time.

Be Patient!

Many traders think the more they trade the more they make but this is imply not true you need patience to wait for the high odds breakouts when you have a break do the following:

Check your momentum indicators if they are in the direction of the break go with it.

Put your stop below the breakout point

Wait for the trend to get in motion and trail your stop slowly.

You must not get it to close or you will be bumped out by normal price retracements - we like the 40 day moving average once the trend is in motion. You can also add to your positions by buying back to the 18 day average.

The system above is simple, easy to understand and robust and will get you on the side of all the major trends that yield big profits.

Keep in mind - forex trends last for weeks, months or years and you can catch a good chunk of these trends.

Many people buy forex trading systems but the free technical analysis tools and information available online, can provide you with ALL the tools you need to build a robust, profitable, forex trading strategy.

Free technical analysis online is there for you to use and if you use the enclosed article as a guide, for getting the right forex education, you can soon be on the road to currency trading success.

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Article Source: http://EzineArticles.com/?expert=Kelly_Price