“Trend followers use reactive technical analysis. Instead of trying to predict a market direction, their strategy is to react to the market’s movements whenever they occur. This enables them to focus on the market’s actual moves and not get emotionally involved with trying to predict direction or duration.” -Michael Covel Trading a trend in price […]
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Chart Courtesy of StockCharts.com Breakouts can be signals based on price breaking and closing above a declining trend line, horizontal trend line, or a close above previous price range resistance. Once a breakout is entered a stop loss can be placed at the low of the bar of the day of the breakout. If it
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Market Wizard Richard Dennis known as the ‘Prince of the Pit’ turned $1,600 into $200 million in 10 years trend trading commodities. What happened when legendary trader Richard Dennis put a want ad in the paper to hire traders? What kind of results would ordinary people have if they were given a winning system and
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No trading strategy works all the time because the market doesn’t stay the same. Markets change from range bound, to trending, and at times become very volatile but go nowhere. Quantified trading signals can be based on different types of price action patterns created in different types of market environments. Trend traders buy high in
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This is a Guest Post by Chuck McCleary @optionsappetite. When the Volatility Index (or VIX) gets above 20, most traders take their foot off the gas due to heightened uncertainty in the markets. But to options traders that sell premium, higher volatility equals more opportunity. Let me explain why. Historically, implied volatility (IV) is always greater
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This is a Guest Post by Jake @TrendSpider. In this weekend’s analysis, we take a look at the continued volatility during the month of August. The markets were anything but stable with huge moves to the downside and upside but SPY managed to hold above it’s weekly EMA (50) which has been a crucial level in
Daily Versus Weekly Chart Setups on $SPY $QQQ $XBI Read More »
The Donchian channel is a technical indicator used by traders as a tool for trading price ranges. It was created by the father of trend following Richard Donchian. A Donchian Channel on a chart is created by using the highest high and the lowest low of the last periods of the timeframe on the chart. The space between the
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Technical analysis is a process for evaluating the historical price action on charts to identify the current trend or chart pattern to establish the possible probability of price action in the future. Technical analysts analyze past price action trading activity and the pattern of price changes in a market to project possible future price movements. Technical analysis
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Chart Facts: The ascending triangle is a bullish chart pattern that usually forms during an uptrend as a continuation pattern. Sometimes an ascending triangle pattern will form as a reversal pattern as a downtrend comes to an end, but they are usually continuation patterns in an uptrend. Regardless of their location during a trend ascending
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This is a Guest Post by Jake @TrendSpider. TrendSpider is happy to announce our first-ever “Chart Pattern Beauty Contest” which will first be judged by the fintwit community through the hashtag #TrendSpiderContest19. Then, the top 25 charts with the most engagement will be judged by Steve Burns, Brian Shannon, TraderStewie, and John Caynor. Learn more below and see
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I like moving average signals for their power and simplicity in trend trading and here is why: Moving averages are a way to smooth price action and quantify a trend. Moving averages are tools that can work on any time frame. They can remove your predictions and opinions from your trading and replace them with
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After reading hundreds of trading books, here are the ones I found to be the best for helping me make money in the stock market specifically. ‘How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition’ This book shows the results of the extensive research that William O’Neil put
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On trade entry the risk/reward ratio measures a trades potential for loss versus the magnitude of possible profits. In backtesting the average of all the losses in a system compared to all the average gains gives you the system’s risk/reward ratio based on historical price action. Looking at your stop loss versus your profit
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This is a Guest Post by Troy Bombardia of BullMarkets.co. Market outlook: is this a V-shaped recovery? The stock market bounced this week after it tanked last week on trade war news. Is the stock market making a V-shaped recovery? Probably not. Technicals (short term, next 1-3 months): mixed. If I had to assign a probability to a
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This is a Guest Post by Jake @TrendSpider. In this weekend’s analysis, we take a look at the broad market ETF daily Raindrop Charts (TM) and weekly hollow candles into mid-August. The markets were everything BUT stable with huge moves both to the downside and upside in all major broad market ETFs. To learn more about
The Key Trend Lines on the Charts: $SPY $QQQ $BTC Read More »
I first read the original version of this book over fourteen years ago, and it was the book that finally cemented for me the overall structure I needed to understand all the dynamics of profitable trading. I have read hundreds of trading books, and this one still stands head and shoulders above the rest. It
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The fact that most traders don’t make money in the markets is no different a statistic than other fields. The majority of high school football players don’t go on to college scholarships and very few college football players get professional contracts to the NFL. Most players play for the passion and the dream. Traders have
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Contrarian: a person who opposes or rejects popular opinion, especially in stock exchange dealing. Being a contrarian trader is not as simple as going against the crowd on a trade. Doing the opposite of the popular opinion all the time will not win over time, instead it will likely put you on the wrong side
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The Average Directional Index (ADX) is a technical indicator that uses the Minus Directional Indicator (-DI) and Plus Directional Indicator (+DI) to visually show a group of directional movement indicators that can be used as a trading system and was invented by Welles Wilder. Mr. Wilder created the ADX to focus on the daily prices
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Markets only trend a small amount of the time, they spend most of their time going sideways or become volatile and go no where. While catching a big trend can be profitable after a break out or break down of a range there are other ways to make money. Swing trading is a trading method that
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