Consistent low risk profits from trading and investing is a challenge many millions of people take on, yet only a select few are ever able to attain. The objective and mechanical rules for consistent low risk profits are very simple, yet the layers of illusions keep most from ever seeing what is real in trading and investing.
Traders have been increasingly eager to speculate on the future direction of interest rates. The volatility implied by options on 2-, 5-, 10-, and 30-year Treasury notes and bonds has lifted the Merrill Lynch MOVE Index above 110.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
Here at the end of the low-volume trading season it is time to update the working Head & Shoulders Top pattern first outlined in August.
This is generally viewed as a contrarian indicator. More calls being traded is often viewed as a short-term bearish signal, while more puts being traded may indicate short-term market bottoms.
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
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
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.
How the time of day impacts your trading.
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?"
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.