Benjamin Graham is the creator of what is known today as value investing. He was the author of the classic book ‘The Intelligent Investor’ and co-authored ‘Security Analysis’. Graham was a successful money manager. He was also a teacher at Columbia Business School and UCLA’s Anderson School of Management with one of his top students, […]
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In options trading, moneyness is the relationship of the current price of the underlying asset to the strike price of a call or put option contract written on that asset. With options trading, the difference between ‘in the money’ and ‘out of the money’ is entirely based on the relationship between the strike price to
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Trading patterns in the financial markets are created by the action of traders and investors buying and selling positions in different time frames. Here are the different types of patterns that emerge through buyers and sellers behavior. Buyers and sellers are always equal with every trade it is the price levels that they meet at
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Technical analysis is the art and science of reading price action on a chart. Here is a quick reference guide that can be used as a cheat sheet. A range bound market can be identified by horizontal upper resistance and horizontal lower support. When price breaks out of a trading range it can signal the
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Here are some of the most common questions I get as a trader. What can I buy now to make a lot of money? How can I make a lot of money in the markets? What is the best stock to buy now that will definitely go higher? Will the market go higher? Will the
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Book value is a fundamental metric used to measure the intrinsic value of a company with the ratio of price/book value. This valuation metric can at times create a price support level for stock prices as this is the valuation that value investors will come in as buyers. To quantify the current value of a
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A wash sale happens when you sell stocks, bonds, or options for a loss but buy the same one back before or after in the same month. The losses from the sell of something you also bought in the same 30 days are not tax deductible from your profits in your trading or investing account
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Convergent trading strategies look for prices to revert back to a mean. This can mean that two assets that are extended away from their historical correlation will eventually regain their past relationship. Convergent can also describe a trading style of selling short an overbought asset or buying an oversold asset believing that the price is
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Options are interchangeable financial contracts that give the buyer the right to call or put a stock or commodity on someone based on the strike price and the underlier. Options contracts are are not assets like bonds that own debt or stocks that are ownership of equity in a company. they are more bets on
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The hammer is the name used for a single candlestick chart pattern that is a bullish reversal signal. Its name comes from the fact that it visually looks like a hammer. As the short body of the candle is on top of a long wick (shadow). Many traders believe for it to be valid the
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Backtesting is the process of applying entry and exit signals to time periods of past historical price data to quantify through an equity curve whether the system would have lead to overall profits in the past. A backtest is a look back at how a quantified trading system would have performed in the past. While
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In options trading, a debit spread or net debit spread play is created when a trader both buys an option with a higher premium and sells an option with a premium that is lower in price at the same time. The debit spread option play is when the value of options bought is greater than
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A hanging man is one kind of bearish reversal candlestick pattern. The hanging man is the name of a signal candle that is located inside an uptrend of higher highs and higher lows in price on a chart. The hanging man candle has a lower wick (shadow) that is longer than the body which is
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The fear and greed index was created by CNNMoney as an indicator to quantify the degree of emotions that investors are feeling about buying stocks in the current moment. This index tries to give a measurement of the market sentiment on a scale of fear and greed. Fear generally takes place during downtrends and market
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A trailing stop loss is a risk management tool for locking in profits on a winning trade. While a trade may start out with a stop loss after the initial entry to exit if the trade does not go in the right direction but instead goes low enough to show that a trade is wrong.
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This is a guest post by Beatrix Potter. Every Must-Read Psychology Book Every Trader Needs to Read At Least Once Whether you’re just starting out as a trader in the financial world, or you’ve been in the industry for some time, and you’re trying to figure out how to enhance your mindset and keep your
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A candlestick is a type of chart used in trading as a visual representation of past and current price action in specified timeframes. Depending on the timeframe of the chart each candlestick consists of each minute, day, week, or month trading range represented in a single candle. A candlestick consists of the ‘body’ with an
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The three white soldiers is a very bullish chart pattern that is created with candlesticks when there are three big candles formed in a row with higher highs and higher lows in a row. This pattern needs three data points across a timeframe to signal momentum and a high probability that a market will shift
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This is a Guest Post by Jake @TrendSpider. In this blog post, make sure to check out the top 5 TrendSpider charts posted this week on social media as well as the weekend video going over the broad markets and case studies from last week! Tune for “Coffee and Charts” Saturday morning at 11:00 AM
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A pivot point is a specific price level calculated and then used as a technical analysis indicator and trend filter in a chart’s time frame. A charts pivot point level is the average of the high prices, low prices, and closing prices from the last trading day. Price trading above a pivot point signals a
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