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Jan
14

Pyramid

During the years I've been in the markets, I have been trained by two super-disciplinarians. One was my great uncle, Julius, and the other was John Wooden. Both emphasized extreme discipline and both told me to be all I can be, which for me was not a great outlook. Having been dyslexic all my life, I grew up with an inferiority complex. My dyslexia was very much present in the area of numbers and ...

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  1342 Hits
Jan
07

Stock Options vs Futures Options

Hi Joe, I've attended some time ago the IIG webinar and it opens my eyes to the advantages of selling options. But I've found a lot of webpages on the internet where are listed the many benefits of selling Commodity options instead of Stock options (higher return, lower margin requirements, more liquidity, more premium far OTM..) In the IIG webpage on your website is written: "In 2007, we began to...

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  1181 Hits
Dec
30

Inverted Yield Curve

Lately, we've been hearing a lot about an Inverted Yield Curve. What is it, and what does it mean? Yield curve inversion signals late phases of bull market rally. The market's "melt-up" phase is coming. Some of the best gains lie ahead. Canaccord Genuity's Tony Dwyer is known for being incredibly prescient regarding his market calls. As a result, many Wall Street asset managers listen to whatever ...

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  1431 Hits
Dec
15

Insider Buying and Selling

If you are unfamiliar with the term, insider buying refers to when insiders of a company - such as CEOs or directors - purchase shares of company stock on the public market or via private placement. Sometimes, the purchase may be the result of a stock option exercise, but often they are public market transactions. Insider buying typically means that the insider is bullish on the company's stock; t...

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  1190 Hits
Dec
11

Options and VIX as Sentiment Indicators

I never knew so much about the VIX until I looked it up and began investigating its value. There are many popular and simple ways that options are used to gauge the sentiment of investors. They are used as contrary indicators. When at extreme levels, VIX calls Market Bottoms. VIX is extremely reliable. The CBOE (Chicago Board Options Exchange) Volatility Index – aka "the VIX" This indicator, known...

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  1238 Hits
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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  1212 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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  1193 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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  1227 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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  1274 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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  1313 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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  1208 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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  1365 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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  1392 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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  1418 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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  1138 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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  1175 Hits
Sep
17

Dow Industrial Average relative to legal holidays

Question from a subscriber: "Hey Joe, I just want to be prepared for the next legal holiday. I've been basically a Dow investor for years and now I've begun trading the Dow futures. Do you have any information about the Dow Industrial Average relative to legal holidays in the U.S?" Thanks to Yale Hirsch's excellent "Stock Traders Almanac" for the following: "The Dow closes higher before one day ho...

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  1108 Hits
Sep
10

Can you really make it as a trader?

You alone determine whether you will succeed or fail at trading. You alone are in control; take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens, it is what you do with what happens that makes the difference between profit and loss. You cannot marry a market or a single trading style. You have to look. Look at a var...

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  1281 Hits
Sep
02

Losses

Sometimes I write an article that elicits a good response from our readers. One of those articles is written below in blue italics. I blended together the gist of what some of you wrote back to me, and many thanks to those of you who did. "Why are losses such a big deal? I can tell you why. In your book Trading is a Business , you said that once we enter the market, we are the market. And you also...

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  1571 Hits
Aug
27

Six Steps to Becoming a Successful Trader

1. Focus on trading vehicles, strategies, and time horizons that suit your personality. 2. Identify non-random price behavior. 3. Absolutely prove to yourself that what you have found is statistically valid. 4. Set up trading rules. 5. Follow the rules. 6. Don't be afraid to abandon a rule that is no longer working. In a nutshell, it all comes down to: do your own thing (independence); trade what ...

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  1408 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.