Using the 250-day moving average as a green light to be long when price is above it or a red light to be in cash if price is below it can be used as a long term trend filter for trading the tech sector and tech stocks. This is a alternative to buy and hold […]
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Here are ten of the best stock traders I have followed on Twitter over the past decade. I think these accounts are a great place to start for new traders to Twitter or if you just want to follow and interactive with experienced traders that are good at what they do. Two rules that
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Risk management is used in all industries to mitigate the probabilities of the loss of assets. Risk management identifies, evaluatates, and prioritizes the frequency and magnitude of the potential probabilities of risk events. Risk management implements cost effective processes to use available resources to measure, minimize, and limit the impact and damage of both common
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There are three sides of risk management that are crucial to understanding before you trade. The odds you will have a losing trade. The average size of the loss you will experience. The odds you will blow up your account. The odds you will have a losing trade is your percent of losers. Whether projected
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The bearish butterfly option play, (not to be confused with the bearish butterfly chart pattern) is an adjusted butterfly option spread which is a neutral options trading play that is structured to profit from bearish price action. Option traders create this option play when they have bearish signals on a chart pointing to the market
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What are some good strategies to practice as trading drills to help improve your real money trading? For ideas to enhance performance into consistent habits and practices that have an impact on your trading you first must define your edge. Fully understanding your edge that creates profits comes before any plan for structuring repetitive deliberate
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What is the difference between positive skew versus negative skew? Skewness is the measurement of a a coefficient that has the ability to be positive, negative or neutral (zero). The coefficient of the skew is the measurement of the magnitude of the symmetry in the distribution of outcomes of a specific data set of occurrences.
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What does “Buying on weakness” mean? Buying price action weakness is a trading strategy that enters into a long positions by stepping in and buying on a chart while it is still falling before a reversal in price. Traders buying weakness are buying a stock, call option, future contract, forex pair, or crypto currency for
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Michael Burry is an investor and hedge fund manager of Scion Asset Management, LLC Holdings. He became famous by the best selling book “The Big Short” by author Michael Lewis that was also made into a blockbuster movie. Burry’s most famous trade was using derivatives to bet against the real estate market in 2008 which
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Implied volatility or IV crush are descriptions for when an options vega premium dropped dramatically out of its pricing. This usually happens after a major event has passed for the underlying stock or market for the option contract. The most common time to see IV crush in a stock option is after an earnings announcement
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The flat top breakout chart pattern gets its name from the top of the chart being flat as sellers and buyers have met and agreed at the key resistance level. Once trades take place above that flat upper resistance level it is considered a breakout above that level. Flat top breakout trading is used by
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What is market breadth? Market breadth describes the amount of stocks that are participating in the trend of a stock market index or exchange. If a stock index is going higher but over half the stocks in that index going lower, this is called negative market breadth and hidden bearish divergence. When a few stocks
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A breakaway gap is a chart pattern in technical analysis that shows a big opening gap in price above the previous day’s closing price. The gap in price action on the chart is where no trading took place between buyers and sellers. A breakaway gap to the upside has to break above previous resistance while
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The inverted hammer pattern is a type of candlestick located at the end of downtrend and is used by technical analysts as a bullish reversal signal from the lows. The inverted hammer candle visually looks like a hammer turned upside down with its handle pointing up. It is defined as a one day bullish reversal
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A buy stop order is a manual instruction entered into your broker’s platform to enter into a long stock, option, or forex position when its price rises to a predetermined level. When the price target is reached the buy stop converts to a live market order or limit order looking to be filled at the
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The Richard Wyckoff Theory of accumulation and distribution focuses on supply and demand for a stock, cause and effect, and the law of effort for a stock. Here are the five steps to the Wyckoff Method strategy for stock selection and trade entry: 1. What could be the probable future trend of a stock based
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An Evening Star is a group of candlesticks that create a chart pattern used in technical analysis to signal a high probability that a current uptrend in price could reverse. This is a bearish candlestick pattern created by three candles in a row consisting of a large white/green candlestick, a small candle that is usually
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The problem with the Turtle trading strategy is that during breakouts that reverse you can be a dead turtle. The Turtle Soup trading strategy was created by legendary trader and Market Wizard Linda Bradford-Raschke. This is an inverse strategy to the legendary Turtle traders trend following system that they used to make millions in trending
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Peter L. Brandt has been a full time professional commodity and foreign exchange trader for over thirty years. He has worked as a broker to large industrial clients, traded for his own account, and was one of the early pioneers in the commodity hedge fund arena. Along the way, Brandt published a highly regarded newsletter
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Even if you have a valid trading system and good risk management if you don’t have the right trading psychology you will not be able to execute it consistently over the long term. Here are the 10 principles of trading psychology that separate the winning traders from the losing traders. Stop looking for a Holy
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