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Trading Educators Blog

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Dec
03

Oscillators

Oscillators tend to be somewhat misunderstood in the trading industry, despite their close association with the all-important concept of momentum. At its most fundamental level, momentum is actually a means of assessing the relative levels of greed or fear in the market at a given point in time. Markets ebb and flow, surge and retreat—the speed of such movement is measured by oscillators. An oscil...

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  959 Hits
Nov
26

The Break-Even Point

Once a trade is entered, there are two possible outcomes: Win or lose. Between the two is the break-even point, and because it is in-between, it's psychologically significant. Losing is involved with fear and hope. Winning is involved with greed. When on the losing side of a trade, the break-even point is a place that inspires hope. Being human we have a natural tendency to avoid risk and loss. Wh...

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  1194 Hits
Nov
26

Short-Term Pullbacks

Short-term Pullbacks provide opportunities to enter trades in the direction of the longer-term trend. Trade set-ups like these occur against short-term momentum (the pullback) but are in alignment with the longer-term trend and typically offer high probability and low risk trade ideas with a 2:1 (or better) reward-to-risk ratio. A great way to trade short-term pullbacks is to use a moving average....

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  945 Hits
Nov
19

Learn One Way to Trade and Stick with it?

Hey Andy! My plan has been to learn one way to trade and then stick with it. I would even prefer to learn to trade in a single market in order to simplify my life. What do you think? I think you won't be trading very often, and if you do, you will end up being a loser. When the market environment is not favorable for longer-term trading techniques, you should consider short-term trading techniques...

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  1309 Hits
Nov
19

Swing Trading vs Day Trading

Swing Traders tend to spend longer monitoring markets and considering trading opportunities than day traders. Swing traders utilize chart, fundamental, and technical analysis in their considerations. Since swing trading does not require hours of daily monitoring, it's a good strategy for traders who wish to explore trading without treating it as a full-time job. Of course, intraday charts also inv...

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  963 Hits
Nov
12

Overcoming Fear

There are three foes you must overcome in order to become an adequate trader. The first foe is fear. If a trader runs away out of fear and avoids trading, nothing will happen except that he will never learn. Fear causes your logic to become fuzzy and unclear. Lack of clarity becomes the second foe you have to overcome. Clearness of mind about the trading process removes fears. If you yield to the ...

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  1198 Hits
Nov
12

Swing Low

Swing Low is a term used in technical analysis that refers to the troughs reached by a security's price or an indicator. A swing low is created when a low is lower than any other surrounding prices. Successively lower swing lows indicate that the underlying security is in a downtrend, while higher lows signal an uptrend. A swing low's opposite counterpart is a swing high. Swing low can be effectiv...

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  1027 Hits
Nov
05

Double Bottom

A Double Bottom pattern is a technical analysis charting pattern that describes a change in trend and a momentum reversal from prior leading price action. It describes the drop of a stock or index, a rebound, a drop to the same or similar level as the original drop, and finally another rebound. The double bottom looks like the letter "W". The twice-touched low is considered a support level. \/\/ D...

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  1076 Hits
Nov
03

How much capital do I need to start trading?

I cannot count the number of times I've been asked this question. It seems as though every person who is new to trading asks this question, and sometimes it is asked by people who should know better. It's often the first question that pops up in my email, at seminars, and private tutoring sessions. Right up front I'm telling you I do not know the answer, and I often wonder if it is even the right ...

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  1223 Hits
Oct
29

Being confused while trading!

A thorough understanding of who you are and what makes you tick is essential in trading. How and what you think, what you believe, and how you behave are critical parts of winning in trading as well as winning in life. It seems very few traders understand, or are aware of this subtlety in the trading profession. You can get by without knowing who and what you are in most other careers but in tradi...

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  881 Hits
Oct
29

Cup and Handle

The cup and handle is a great trading pattern that works well with different time frames and with most markets like stocks, futures, commodities and foreign currency markets. Here's what it means, how to trade it, and tips to use it for potentially bigger profits. The Cup and Handle pattern is a bullish continuation pattern that begins with a consolidation period followed by a breakout. The patter...

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  940 Hits
Oct
22

Why is it that trading seems so unnatural?

When it comes to trading, you've got to unlearn what you've learned your whole life. It isn't all about you; it may just be the odds working against you. In other fields, probability plays little if any role. You put in effort, make sure you meet the expectations of the folks who pay you, and you're a success. In the traditional work environment, it makes sense to put a little ego and pride into y...

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  964 Hits
Oct
22

Relative Strength Index

The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset. Traditional interpretation and usage of the RSI is that RSI values of 70 or above indicate that a security is becoming overbought or overv...

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  1019 Hits
Oct
14

Spread-Trading vs. Day-Trading

Even if I do not want to generalize the following for each trader, there are some "general problems" in day trading. Here is a short list of why I personally think day trading is much more difficult than position or spread trading. - Fast decisions: You have to make very fast decisions when you day trade, especially when you day trade very short time frames like 5-, 3-, or 1-minute charts. When yo...

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  1080 Hits
Oct
14

The Squeeze

The Squeeze is the central concept of Bollinger Bands. When the bands come close together, constricting the moving average, it is called a squeeze. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities. Conversely, the wider apart the bands move, the more likely the chance of a decrease in ...

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  1151 Hits
Oct
08

Option Spreads to Sell Premium

Most options expire worthless, so lots of traders are interested in selling options. I certainly agree with that thinking. Options are a wasting asset. All things being equal, an option will lose part of its value day after day until finally, the option expires worthless. As time passes, the option seller earns premium from time decay. The risk to the option seller is that of a large move against ...

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  1098 Hits
Oct
08

Trade the Trend

Trend Trading is a trading strategy that attempts to capture gains through an analysis of the momentum of prices in a particular direction. Trend traders enter into a long position when a security is trending upward (e.g. successively higher highs) and/or enter a short position when a security is trending lower (e.g. successively lower highs). Higher highs and lower lows is about as basic a defini...

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  1150 Hits
Sep
30

Volume: A Basic Technical Analysis Items

Volume is the number of contracts or shares bought and sold each day in any given financial, commodity, index or currency instrument. High volume suggests that there is a heightened interest in the financial instrument, and if it is combined with a move higher in share price, then it is often used as a signal of strong upward momentum. Keeping an eye on volume will ensure that you are on the right...

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  919 Hits
Sep
24

Single-Lot-Strategy

Because some markets are very "expensive" and do not offer a mini or micro contract, many traders have to stick to a single contract once in a while. In this case, you might trade a single-lot strategy. Finding the right target for a single-lot strategy is tricky and depend on your general trading strategy. You have to study your results to see what target gives you the best performance. You need ...

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  1249 Hits
Sep
24

Reader Question

"Hey Joe! I'm pretty new at this. Can you tell me the rules for buy and sell stops?" When the market trades above a buy stop price order, it becomes a market order. The first down tick after the market order price is activated determines the highest price at which the buy stop order may be filled. The rule to remember placing stops is this, "Buy above and sell below." Buy stops are placed above th...

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  943 Hits

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.