Stocks that participate in the same trend direction as the broad market will move further and faster in their trend. Those which are moving in a trend that is counter to the market will have difficulty moving large distances and therefore, usually offer less profit potential
Contrary to what some may assume, an Outside Range Day is not a day at the driving range, but a technical analysis pattern described as when the price makes a high that is higher and the low that is lower than previous day.
Last week, I responded to the claim that technical analysis was akin to reading tea leaves and held no place in proper financial analysis. Anyone who has used technical analysis knows the value of it in order to identify the most probable direction and timing of market moves. In the same spirit, I do not want to downplay the usefulness of fundamental analysis either.
So often in the trading world, I hear people talk about where price is likely to turn next, where is the next key supply or demand level, where is the next big market move going to originate from, and so on. The question I hardly ever hear anyone asking is, "Where is the next big profit margin?"
The unusual number of announced M&A deals last week, coming right in the middle of the traditional summer vacation prompted one investment banker to say in a television interview that his "black car indicator" had risen to an all time high for August.
Hardly a week goes by that I don't get an invitation to sit in on a webinar to learn to trade without stops. The invitation comes with warnings of the unnecessary losses traders suffer by using stops. Friends, nothing could be further from the truth.
On August 4, Reuters reported that Warren Buffett could "get in a bind" over options because of new provisions in the Dodd-Frank financial reform bill.
Over the past few years, Buffett's Berkshire Hathaway (BRK/B) has sold options for various worldwide stock indices worth billions of dollars without posting collateral. Does the Dodd-Frank bill now require the company to post collateral? Berkshire doesn't believe so
From a technical analysis perspective, the most important event occurred last Wednesday when the S&P 500 Index declined and then closed below the lower boundary of the potential rising wedge, thus setting off this bearish pattern.
The US Department of Education is in the process of changing the funding rules for these companies by requiring them to demonstrate that they are preparing students for actual jobs that give them the chance to replay the borrowed money. In this sector there are several stocks breaking down below their previous support levels.
The world where we humans live has always been and will always be a turbulent one. Life progresses smoothly for a while, and then unexpectedly, it can change. Success becomes failure, and sometimes failure can turn into a catastrophic loss.
Humans have many biases that are for the most part out of awareness; but biases are not inherently negative. There are many biases that can serve you; for instance, having a bias that looking at multiple time frames is supportive to having a sufficient amount of information. However, biases are often limiting in nature and therefore, become limiting beliefs
Trading psychology is a subject most books and so-called professionals keep separate from the mechanics and strategies of trading and investing. A reality largely misunderstood is that the underlying mechanics and strategies within trading and investing are a direct function of your psychological belief system.
Of the many strategies used by traders, the breakout setup is one of the most popular. There are many interpretations of this tactic, and therein lies some of the confusion. In this piece, I'll go over some of the higher probability, or as I call them, "quality breakout trades," that come from many years of observation, as well as the many traps associated with this setup.
Although calls and puts are not insurance products per se, they can be used to protect or hedge an investment, much like insurance policies protect an asset. Brad Zigler of HardAssetsInvestors posted an article on the "price of gold insurance" as measured by the options market.
Trading psychology is a subject most books and so-called professionals keep separate from the mechanics and strategies of trading and investing. A reality largely misunderstood is that the underlying mechanics and strategies within trading and investing are a direct function of your psychological belief system.
After several weeks of "risk on" followed by "risk off" perhaps, it is time to begin looking for the possibility of a developing trading range. In this post, we review the technical condition of the equity market and update our indicators followed by a strategy suggestion considering the development of a trading range.
In addition to the VIX futures premium at 21.12, which is worthy of some new hedging positions, we suggest considering the possibility that a trading range is developing.
According to the old adage, a fool and his money are quickly parted. In today's world, acting like a fool is a sure-fire way to lose all of your money. In this article I've outlined 3 ways to avoid.
When you have a profitable position in a stock you bought, you can often lock in most of those profits, while still taking advantage of further upside price movement.
How? Simply replace your stock with a call option
Each day the market defines a Market Profile (MP), a Value Area (VA) and a Point of Control (POC) all of which are invaluable trading the following day. Similar market derived data over longer time frames is also of great value to day traders and other time frame (OTF) traders.
It seems as if the Chicago Board Options Exchange (CBOE) is making weekly changes to its new "Weeklys" options. These are short-term options that are listed each week and that expire in about 7 days.
For strategies that include a component of being short premium, the maximum potential total profit or loss is only achieved at expiration. This effect is easily seen in the case of vertical spreads which only reach their maximum potential gain or loss at expiration or when the spread goes deep in-the-money or out-of-the-money.
As an options expiration day arrives, traders note that stocks sometimes get "pinned" to a specific strike price. But now that every week is an expiration week for a select group of stocks and ETFs, will we see this phenomenon every Friday?
This title assumes a great deal. It assumes that as a trader you are already profitable and that markets are not ordinarily scary. If you can identify with these assumptions, then you have come a long way in your development as a successful trader. In as much as 95% of traders fail in their attempt to become successful trader. I suggest I back up a bit and address this to those who would be amongst that 5% who are consistent winners in this zero sum game we call day trading.
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