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Trading Educators Blog

#1 Trading Blog Site
Dec
07

Does Volume Figure Into Your Trading?

I can't speak for others, but it didn't help me much in the past when volume was "a day late and a dollar short," back when only daily charts were available unless you were a floor trader. But these days, now that live volume is at your fingertips, it can indeed be a very useful tool. At Trading Educators, we use both contract volume and tick volume as guidelines and filters for our trading. Here'...

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  1443 Hits
Nov
16

Finding Success

During trading, it's easy to think that no matter what you do, you won't make a profit. The markets can be brutal at times, and it's tempting to fall prey to a "victim mentality". However, such beliefs may paralyze you. It's more productive to believe that if you take control, you'll make a profit. Even if you have no real control, it helps: you take action, you plan, and think of some sort of str...

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  1643 Hits
Nov
10

Trading is a Tough Business

Even the most exciting job can become boring at times. Trading is a tough business. If you lose your passion for trading, all it means is that you are human. Here's an obvious cure. Why not take the rest of the month off? Make it your own personal holiday season. Maybe you're just stressed out. A little rest will help put things back in perspective. Once you are rested, relaxed, and re-energized, ...

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  1441 Hits
Nov
02

Getting the Job Done

Do you ever make big plans for the trading day, but fall short of your expectations? Maybe during the off-hours you decide to make a dozen trades, but when you get down to actually doing the work, you end up making only one or two trades. Do you procrastinate, feel overwhelmed, and feel like you are ready to crack under the pressure? If you're feeling overloaded, perhaps you've taken on too much. ...

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  1466 Hits
Oct
26

Paralyzed

Do you have trouble pulling the trigger? Do you doubt your decisions, or close out a trade before your trading plans come to fruition? Do you over-analyze data and end up missing a major market move? How many profitable trades have you missed because you have frozen at critical moments? If you answered "yes" to any of these questions, you may have a problem with analysis-paralysis. Putting your mo...

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  1378 Hits
Oct
11

Fighting Well

The outcome of a trade is never a sure thing. There's always an element of chance. When going long, for example, all indications may suggest a strong and solid trend, but it's possible that an unanticipated, adverse event could ruin it all. You can never know for sure what will happen. But that's okay. You don't need to have everything fall into place every time you make a trade. It's not the outc...

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  1279 Hits
Oct
05

Stop Losses

Poor traders see every loss as a failure. But small losses aren't failures. They are victories – victories against big losses. You must avoid big losses at all costs. Few can survive a big loss. Good traders know this: Losses are part of the game, and small losses don't matter. As a trader, having an exit strategy is vital to your success. If you stick to your exit strategy, it can serve as a near...

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  1223 Hits
Sep
28

Accentuate the Obvious

In the 1992 election, the stagnant economy was on everyone's mind, and obviously, focusing on change was a sure vote-getter. But humans have a tendency to forget the obvious. We often think that life is more complex than the issues right in front of us, and that obvious solutions offer little solace when trying to find solutions to seemingly insurmountable problems. The markets are complex at time...

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  1082 Hits
Sep
19

Trying to Stay Detached

Winning traders approach the markets with a detached, unemotional, and rational mindset. As much as you've heard me say it time and time again in Chart Scan, it probably doesn't help to merely remind you of this fact. Cultivating such a mindset is easier said than done. If you are a novice trader, you're bound to get emotional when you trade. Your money is on the line, and you want to win. As much...

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  1065 Hits
Sep
14

Controlling Your Impulses

When your money is on the line, it's difficult to remain calm, rational, and in complete control. What happens if you lose? How will you recover? It's natural to become consumed with self-doubt and abandon your trading plan, or act irrationally in the midst of the chaotic market action. But winning traders control their impulses. They execute a trading strategy effortlessly and flawlessly, even un...

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  1068 Hits
Aug
24

E-Mini S&P 500 Q&A

Q: I bought your e-book "Day Trading E-Mini S&P 500" in 2012. Are there any changes or updates to original text due to market character changes, higher volatility etc. since last 10 years?  A: YES, THE BOOK HAS BEEN UPDATED BUT CHANGES ARE MINOR. I have some questions especially to the concept of 2 timeframes - 5-minute and 1-minute charts: 1. Q: Are these 2 timeframes adeq...

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  954 Hits
Aug
24

Signal Lines

Hey Joe! Last week in your article about MACD, you talked about signal lines. What is a signal line? Is it the same as a Trigger Line? I'm sorry, I forgot to tell you what Signal lines are. Signal lines are used in technical indicators, especially oscillators, to generate buy and sell signals or suggest a change in a trend. Oftentimes, signal lines are moving averages of a technical indicator, suc...

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  1088 Hits
Aug
17

Volatility

Joe! The markets seem to be so volatile. It's really scary with all those wild swings! I don't usually write about investments, but the question has come up with regard to volatility. The tricky thing about volatility isn't its wild swings. It's that we want to believe these wild swings are meaningful, and they're not. With reverence to colored bars and candles, when we see lots of green in the ma...

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  911 Hits
Aug
10

Technical Analysis

Hi Joe! Is there a difference between Technical Analysis and Chart Analysis? Technical Analysis is a trading discipline employed to evaluate assets and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysts, who attempt to evaluate a security's intrinsic value, technical analysts focus on pattern...

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  801 Hits
Aug
03

Stochastics

Hey Joe! I know you use Stochastics quite often and I want to know why. Is there some "magic" to it? Is a Stochastic indicator better than any other? First, let's define what a Stochastic Indicator is: Stochastics is a momentum indicator comparing a particular closing price of an under lying asset to a range of its prices over a certain period of time. The sensitivity of the oscillator to market m...

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  961 Hits
Jul
27

Open Interest

Hey Joe! What is Open Interest and how can I use it? First let's define what it is. Open Interest is the total number of open or outstanding options and/or underlying asset contracts that exist at a given time. Open interest is commonly associated with the futures and options markets, where the number of existing contracts changes from day to day. Open Interest is a strange statistic. It tells you...

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  774 Hits
Jul
20

Strike Price

Question by a Trader: Joe I am new to options and I'm confused about some of the terminology. What exactly do they mean by "Strike Price?" The Strike Price is the price at which an option can be exercised, and refers to the price of the option's underlying asset. In a call option, the strike price is the price at which the option holder can purchase the underlying asset. For a put option, the...

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  723 Hits
Jul
12

Vertical Spread

Mr. Ross, if I enter a spread long wheat and short corn, both for the same month is that a vertical spread? What if I spread March soybeans against November soybeans, is that a vertical spread? Not really! Vertical spreads typically apply to options not to trading in the outrights. If you look at the definition of a vertical spread, you will see that neither of the spreads you described fit what i...

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  669 Hits
Jul
06

Day Trading

Hey Joe what exactly is day trading? Let's face it, all orders are placed during the day, but placing an order during the day doesn't make me a day trader. In fact, lots of times, I am in and out of a trade in a single day, but only by circumstance, not intention. Day Trading is defined as the buying and selling of an underlying asset within a single trading day. This can occur in any marketplace,...

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  567 Hits
Jun
28

Selling Short

Joe, what does it mean to be a short seller? Very good question. Here's a definition of selling short as it applies to the stocks and ETFs: Short Selling (also known as "shorting," "selling short" or "going short") refers to the sale of a security or financial instrument that the seller has borrowed to make the short sale. The short seller believes that the borrowed security's price will decline, ...

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  529 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.