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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Is there a simple moving average monthly trading strategy that crushes buy and hold investing? Buy and hold investing on the S&P 500 index with an exchange traded fund or a low cost mutual fund is a top performing system that few money managers and traders can beat. This is a good core strategy for
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Option trading can be explained as buying or selling a contract with the expectations of making money before the option expires. An option buyer wants an option to go higher and be able to sell it for more than they bought it for before expiration or have it exercised with intrinsic value for more than
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The McClellan oscillator is a market breadth technical indicator used by traders to analyze the New York Stock Exchange listings balance between the advancing and declining stocks over time. The McClellan oscillator quantifies the Advance-Decline Data on a stock market exchange, it could also be used on stock indexes, portfolio holdings, or any watchlist of
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The MACD-Histogram quantifies the distance between MACD and its 9-day EMA signal line. The histogram reads positive when MACD is above its 9-day EMA and reads negative when the MACD is below its 9-day EMA. The MACD-Histogram is a technical oscillator that moves both above and below the zero line on its chart. The MACD-Histogram
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In trading and investing post earnings announcement drift (or PEAD) is the theory that a stock’s price action tends to trend in the same direction as an earnings surprise causes it to go. This effect usually starts with a gap in the direction that it will go for the next few weeks or even months
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Stock backtesting software is a tool for doing historical research to discover if mechanical technical entry and exit signals would have lead to profitability in the past. Backtesting software has a store of historical price data and a platform for inputting reasons for getting in and getting out of a market using that data. The
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M. W. Toews / CC BY (https://creativecommons.org/licenses/by/2.5) Here is a quick overview for an understanding a standard deviation chart data set. You can see how the examples of the data will fall within one standard deviation of the mean for approximately 68% of the data set, staying within two standard deviations happen with approximately 95%
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A simple moving average is a technical indicator that you can use to quantify price trends and trading signals. Moving averages can be used for the following: Entry signal Exit signal Trailing stop Stop loss Profit target To scale into a position Trend indicator Risk management Quantify position sizing To measure volatility To manage volatility
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