Trading for a Living Blog » stock market

Wave Structure After The European Stress Test

Grega Horvat — Thu, 29 Jul 2010 09:25:44 +0000

Equity market was higher this week with S&P 500 up around 3.55%, and finished the week above resistance line connected from May 11th, 2010. At the same time the prices moved and closed above the 50 day SMA, for the first time since early May when S&P was falling from its highs. Technically the stocks market is now headed higher, towards the 1140 region, as we also pointed out in one of our past newsletters. In fact, markets now have a reason to move higher as the European Street tests results were positive, and only 7 of 91 banks failed the test, less than analysts expected. But the next question is how high can the market go and how investors see the European Stress tests results. Was the stress test too easy, and markets may react negatively?! Well, I am not fundamental analyst, so all I can say that time will tell if banks have enough of capital or not. Anyway, let’s see what the Elliott Waves are telling us.

Technical and “psychological” turning point on the stock market is still on my radar as I count five waves down from 1220 top to 1010 lows, followed by an upward bounce, which I believe it’s only a correction, black wave II in our case. Recently the sub-wave (C) of wave II got underway, which is now trading towards the 61.8% retracement level of a previous decline and also 100% projective level of wave (A), measured from wave (B) 1056 low. The upward target and also the significant resistance zone at the same time is around 1030-1040 region, around wave (4) top. If wave count is correct, then a turning point from there should send the S&P 500 back down, towards the 1010 region and even lower, while the 1220 top is in place.

S&P daily chart :

So, with S&P moving towards the 1030-1040 region, then Aud/Usd, which is one of the most correlated pairs with the U.S stocks market, should also move higher in the next week or two. Upside region that I will pay attention on is 125 pip range, 0.9050-0.9175 region, where upward price action shown from 0.8065 may find a top, since the structure looks clearly corrective, double zig-zag pattern.

Aud/Usd daily chart:

Euro is also showing a significant up-trend from 1.1875 low, and it looks that bulls are not done yet, either the upward structure is unfinished impulse wave or double zig-zag pattern. Move above the 1.3030 is expected considering to Aud/Usd and S&P wave counts, but the question is if wave (B) has already bottomed at 1.2730 region or not! On the one hour chart (shown a little bit lower) you will see that the price action suggests more upside to come, if you count a decline from 1.3028 as a three wave move. We will wait till Monday, before we send any signal to our subscribers, because firstly we need to see how European markets will react to stress tests results; test was for European banks, remember?!

If you do not want to miss a trading opportunity, or if you don’t have time to analyze the charts everyday and monitor the intra-day wave counts…we are here for you!! Check out Our Elliott Wave Service now and Register today.

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Forex Trading System Design Importance

Jay A Kay — Sun, 25 Jul 2010 17:56:17 +0000

Forex trading enables many people around the world to earn good money working just several hours a day. It does also cost some traders a lot money to. Every day we can hear the sad stories from the people, who lost their last money because there wasn’t enough care taken in learning to trade.

Some think the only way to succeed in foreign currency trading is to use automated forex trading system. Whilst this is one way it is not the only way obviously mechanical forex trading systems are very useful too.

You should already know that the automated or mechanical forex trading system design is not easy and can often be sophisticated software based using difficult mathematical algorithms. Forex trading systems can be much more simple than manual trading system to trade but to design not so easy.

Designing a forex trading system whether is its manual or automatic requires trading knowledge, trading experience, a logical thought process and an open mind. You will find when creating your own trading system you will go through many emotions and you will one minute think you have cracked the game of forex and then next all your new found hopes will be dashed.

But stick with it. Using some form of forex trading system will definitely help you become a more consistent trader. It will also make it easy to spot when your trading method is not working and you should stop trading it. Discretionary trading will always leave you with ‘ifs’ ‘buts’ and ‘maybe’ type questions.

Having a trading system will give you confidence in your trading. You will have some historical/backtest data to support your system idea. You should, if done properly, also have some forward testing data to backup you forex trading system.

This means that when it comes to entering a trade you are very confident in what you are doing and what the probably out come will be. This will also make taking losses much easier to stomach. Once you can master taking a loss and it not letting it effect your trading you are half way there.

In my opinion a trader using a self created (not a forex robot) forex trading system will be a discretionary trader any day of the week.

You can find Forex trading system information on how to create a system to suit your trading and also download forex Indicators for free on our website.

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The Trend Is Your Friend

Greg Matthews — Tue, 13 Jul 2010 13:40:30 +0000

One among the key skill in buying and selling is usually to buy and sell with — and not in opposition to — the trend. So what is a trend? A trend can be defined as a share market grouping sustained from a unique time frame. The trend might be either high, low or sideways.

An uptrend can be described as sequence of upper highs while a downtrend is simply the opposite: a series of lower lows.

That that explains the trend is the trendline. One among the more key skills in technical analysis is to have the ability to draw accurate trendlines. There are 3 simple ways to mastering this skill:

1. Begin with a cycle low. It is a clear foundation on the chart.

2. Locate a next point which may let you to draw a straight line. This second point mostly takes place after a pullback from an initial buying surge.

3. Locate a third point on the same line. Two points on a line allow you to draw a somewhat tentative and hypothetical trendline; as soon as 3 points have been touched, the trendline is confirmed.

If you have discovered this 3rd point, stretch the line “into space.”

If stock’s price stays over that trendline, through description the stock is in an uptrend. You should have the stock as long as the shares reside over the trendline or except you see certain initial caution signal given by indicators or candlesticks the trend may reverse.

The rules for drawing downtrend lines are exactly the reverse as those for drawing the uptrend line. However, rather than a cycle less, begin using a cycle up.

A broken trendline means certainly one of two things: either the stock will move into a period of sideways consolidation, or it is going to reverse route — an uptrend will become a downtrend, or vice versa. In both cases, gain taking is appropriate.

The broken uptrend line may be a potent signal when confirmed via indicators such as MACD, Stochastics or RSI.

Trendlines shouldn’t pass through the cost bars of stock. Occasionally it is certainly required to violate this guideline to obtain a straight line, however in nearly 95% of situations you must stick to this standard.

Trendlines of about forty five degrees in slope can hold for long periods when placed on arithmetic charts (equal space is given to each dollar increment vary in cost).

By contrast, trendlines with slopes much steeper than forty five degrees are apt to break rapidly. It is important to concentrate on this standard in order that you don’t prematurely leave over cost-effective positions or disastrous trades counter with the trend.

Sometimes you could find many suitable trendline on the chart. Let’s say, a stock can have a basic uptrend and then sharply accelerate upwards.

The greater times a trendline have been touched, the most important it can be.

Trendlines are normally separated into three time frames:

Most important: a extended-time trend that lasts from almost 6 months to a year or more, and named as a primary trend.

Intermediate: a trend which remains from about 1 to 6 months. This trend can represent a correction in the main trend. It can also be called a secondary trend.

Minor: a trend that remains from a few days to few months. It could refer to a correction or consolidation that represents a quick gap in the bigger trend. It is also known as a short-term trend.

Usually, the longer the trend has occurred, the more important it is. A major 3-year trend is much more significant than a 3-month or 3-week trend.

To best generate trendlines, I recommend you toggle between daily along with weekly time frames on the chart. A two or 3-year weekly chart often reveals a superb picture of a significant trend. Daily charts usually are best for showing intermediate or else less important trends.

Do you want to know what’s ticking on Wall Street? Signup for the Free Weekly Wealth Letter and get the latest stock market updates and expert opinions about the current trends of the stock market. Click here to download your free copy now.

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Tips For New Traders

Shaun Rosenberg — Tue, 13 Jul 2010 13:14:40 +0000

Stock trading is one of the most powerful ways to grow your wealth over the long term. There will always be challenges, but if you stick with it and learn from your mistakes it can pay off in the long term.

Before you begin your journey here are 4 stock trading tips.

1. Don’t Trade with Money You Need Today

Trading can be powerful, but it can be a double edged sword. You can lose a lot of money in the market if you are not careful. With this in mind you should not trade with any money that you will need to survive. Don’t buy a “hot stock” with your rent money. Instead trade with your, “trading money.”

2. Cut Your Losses Short

Anybody can make a lot of money on a single trade; it is not losing it on the next trade that is important. Always make sure that any losses you do have are small and have a minimum affect on your account. You can do this by using stop loss orders and position sizing.

3. Have a Plan

Have some basic guidelines on when to enter and when to exit. This will keep you from following the crowd and chasing every new “hot stock” that you hear about, which by the way takes us to the next tip.

4. Decide For Yourself What Stocks to Trade

There is a lot of noise out there, all telling you to, buy this stock, sell that stock, etc. It is better to not listen to it; there are a lot of pump and dump strategies and a lot of people who have no idea of what they are talking about.

Instead work on creating your own trading plan and making your own decisions. In the long run this is the only way to succeed.

For more free stock tips visit Shaun’s site about the stock market basics

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Iron Condor – Oh Man, I Want My Mommy…

Ted Nino — Sun, 11 Jul 2010 11:03:08 +0000

Of all the various option spread strategies out there, the iron condor strategy is perhaps one of the most popular, the most talked about, the most used (or misused) – and possibly the most dangerous and misunderstood option strategy of them all.

The problem is that way too many new option traders slap down significant money and start trading iron condors immediately upon discovering them without first equiping themselves with the proper knowledge and skills needed to trade them properly. They are so captivated by the stories and claims of ten percent months and 90 percent probabilities that somehow they don’t stop to think about what they are going to do if their trade doesn’t go exactly as planned.

And it seems that a good percentage of them – if not most of them – promptly wind up getting their groins kicked in, their heads ripped off, their eyes poked out, and getting hurt really, really bad.

Now wait -

Let me explain something here before you start to get the wrong impression.

I LOVE iron condors.

And yes – I really do think it’s a great and dependable way to trade.

And yes, I absolutely believe all those stories and claims you hear swirling around about iron condors generating ten percent plus monthly returns and providing trades that have the probability of winning somewhere in the range of eighty to ninety percent. In fact, I KNOW those stories are true because I see it happen all the time in my very own trading account.

Here is the problem: All those fresh, green and excited new option traders have no idea what they don’t know. This trading options for income thing is like an alien planet – with a whole new set of rules inside a brand new reality. And when the person who has introduced them to this new way of trading just tells them about the good but forgets to tell them about the bad – they wind up jumping in with way too much confidence, misunderstanding, and expectations that are completely wrong.

See what isn’t being talked about with iron condors is that while yes, they can provide great monthly returns and high probabilities of winning- they also come attached with a horrendous risk to reward ratio – sometimes as poor as 10 to 1!

This means that in order to achieve those 80 to 90 percent probability trades – you need to risk ten dollars to make just one – or to be more realistic – you need to put at risk $10,000.00 for the chance to make just $1,000.00.

And as my dear old mammy used to say: ‘that smells a lot like an awful bad egg’. Which in fact it is. That risk to reward ratio is nothing but a low down, no good, smelly rotten deal!

Because once you do the math you find that even with those glorious monthly returns with 80 to 90 percent probability of winning – all it takes is just one problem month to come along and cause a loss that will completely obliterate the 8 to 9 wins you’ve managed to rack up – as well as potentially the rest of your entire account!

Nevertheless…

All is not lost…

Like I said before, I LOVE the iron condor trade.

It’s one of my favorite trades – and it continually generates profits for me.

So clearly there must be a way to profitably trade this strategy without allowing that awful risk to reward issue to get in the way.

And there is.

It’s all in how you manage the trade.

As soon as you discover the ‘right way’ to place these trades initially – and then how to properly go about managing and adjusting them – that risk to reward dilemma instantly vanishes and goes away.

Once you possess the correct iron condor knowledge and know how – and understand how to apply a couple super easy to implement adjustment tricks – you’ll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the iron condor trading strategy for all that it’s ‘actually’ cracked up to be.

To learn these ‘tricks’ to trading the Iron Condor , go to this Iron Condor Adjustments site and watch my free video. It will show you an extremely simple method for properly placing, managing, and ADJUTING iron condor trades.

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Spread Betting Companies And Accounts

Tom King — Wed, 07 Jul 2010 10:14:39 +0000

I was recently looking a changing spread betting companies. To my shock there are about twice as many now as there were when I last looked. At first I thought ‘oh no where do I begin?’ but then it was obvious that I was in the driving seat. They wanted my custom.

Increased competition is great for a market place and just before we get into the detail of how to select one of the many spread betting companies, I want to talk about what this competition means. In a positive sense we as traders now get a better deal. The spreads are tighter, the minimum bet size is smaller and the trading software is better. That is great but something does worry me. To attract so much competition they must be making big money. They could be making it from you so just think about that.

Are you new to spread betting and want to open your first account? If you are then this process will be a little slower than if you already have an account open with another broker.

Do you know how you will be trading? Daily bets or binary bets? You need to know this before looking at the spread betting companies. This is a big factor as the type of bet is crucial to your trading system and it needs to align. If they don’t offer what you want then you can strike them off you list straight away.

Spread betting companies are very creative when it comes to markets. There are so many markets out there for you to choose from. Make sure that they offer the market that you trade in. Also think about other markets as you may wish to diversify your trading in the future.

It is clear that you should be absolutely clear of what you require from the spread betting companies. Make sure you know what you absolutely need and what you can do without. Once this is sorted then you should have no problems at all.

Before you look any further for spread betting companies please visit Tom’s website. Tom will show you what you need clear before looking at spread betting companies there are available.

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Find Out How To Trade The Forex, Stock Market, And Option Trading

Carol Smith — Fri, 02 Jul 2010 18:33:06 +0000

The first thing you should understand is what exactly a stock is before you delve into the intricacies of the stock market. Stocks, which are also known as shares, are portions of companies that people can buy, on exchange platforms such as the NASDAQ, and therefore own a small part of the company. But even though you may own a part of a company, only those who have invested a large amount of money and purchase large quantities of shares have any real say in how the company is to function.

If you are interested in learning the fundamentals of investing, you have come to the right place. Our primary mission is to educate the people how to invest in the stock market and other investment opportunities.

The information here will help you to better understand the stock trading and other investment vehicles such as Currency Trading. Zowes will teach you how to invest your money for the greatest possible gains while reducing the associated risks in the stock market and other investing opportunities. We’ve included full specs on penny stocks, Forex, and option trading.

The lessons I have learned during my investment career are passed on here to help guide you through the sometimes confusing world of the stock market. This information will give you the knowledge and expertise to make informed decisions regarding your portfolio. You will also have the opportunity of automating your investments by using our Automated Forex Trading Systems.

I know there are many people out there who want to learn how to invest, but are apprehensive because they just don’t have the education or the background to make informed choices. And admittedly there are many financial websites that you can visit to try to gain a better understanding of stock trading, and investing in general. The advantage here is that I designed this site to be extremely user-friendly with step by step instructions on how to invest that other investing websites do not match.

Many sites have so much information that it is overwhelming, so I am keeping this a common sense, simple to use, financial site to help people start from scratch and be successful with their investment portfolio. Zowes will show you the things you need to know as you start on this journey and I will be here to help you every step of the way.

Need new investing tools and considering equity stocks. You may also be interested in currency trading tutorial

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A Few Tips For Day Trading The Exchange

Jill Jordan — Fri, 25 Jun 2010 08:57:57 +0000

Day trading the stock exchange involves the rapid purchasing and selling of stocks on a day-to-day basis. This method is used to secure fast profits from the constant changes in stock values, minute to minute, second to second. It is rare a day trader will remain in a trade over the course of a night into the following day.

PC watching the markets twenty four seven in order to be a successful day trader?’

The answer is no. It is not critical to sit at a PC twenty four seven.

As with all financial investments, day trading is risky in reality, it’s one of the riskiest forms of trading out there. The stock prices rise or fall according to the behaviour of the market, which is completely unpredictable.

If you are constrained by a touch of capital, you may not be able to buy large amounts of a stock, but purchasing only a touch can add to the danger of a loss. And, obviously, it is not possible to forecast with certainty which stocks will result in profits and which in losses.

It is also crucial to know that in day trading, it’s the number of shares rather than the price of shares that should be the focus. If you day trade, you may face losses, but even for the dearer stocks, the loss should be questionable, because costs do not usually vary to an acute degree over the course of just one day.

The day trading industry deals in a large variety of stocks and shares. Here are only a few : Growth-Buying Shares shares made of profit, which continue to grow in value . Eventually, these shares will start to decline in price, and an experienced trader can usually predict the future of this type of share.

Small Caps shares of companies which are on the increase and show no indications of stopping. Though these shares are sometimes inexpensive, they seem to be a very dodgy investment for day traders. You’d be more safe to go with large caps and / or mid-caps, which are much more secure and stable thanks to a premium.

Unloved Stocks company stock that has not performed well during the past. Traders buy these shares in the hopes of generating profits if and when the stock rises in worth. As with tiny caps, unloved stocks can be a dodgy choice for day traders.

The best way to ascertain which kind of stock is best for you is to invest some time for careful research, a information understanding of market patterns, a solid technique, and a disciplined trading plan.

The key to successful day trading is to be prepared. Know as much as humanly possible about the industry before you start actually trading. You want to be taught how to trade ONLY when the market gives the right signals.

Find more on best stocks to buy and stock trading mistakes.

categories: stocks,stock market,trading,stock,finance,investing,investment,financial,business,news,real estate,taxes,forex,currency

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Invest In Stocks Using Indian Share Tips

Bill Shawn — Sat, 19 Jun 2010 10:50:29 +0000

Stock market is a great way for some people to earn money in India. It is important to be careful while making any decision for sale and purchase of stocks. Stock option tips are chosen by some people to make preference for the investments in a better way. Share tips make the people aware about the performance of share, profile of the company, future prospective and return values. It requires the detailed market research for getting nifty option tips.

Some Indian stock market tips are given below: Do not invest too much of money: Avoid investment of too much money in Indian share market at one time. It is always advisable to purchase in different stages. Money management is essential in the issues of investment in shares. You should invest after getting a proper watch on top gainers and losers in stock market. It is advisable to purchase the shares at the time when market falls. It merely reduces the risk for getting losses in the cases where the price of share falls.

Sale and purchase of shares: Be careful for the terms of stock trading. The purchase and selling of stocks at a right time with an adequate price is important. The fundamental strong shares should be taken and the companies with strong management should be chosen for investment. Multi sectored investment should be preferred.

Be assured that you are investing in the stocks of different sectors, such that if one sector is gets a loss or gain, there can be compensation made for your investments. It is preferable to sell the stock when the market is at a peak, which is never pre determined. You need to make proper research and analysis for a long time and then you can have knowledge about the market trends.

Invest by having a performance track: You need to make a track of the share of your choice before making a final investment for it. Try to make investment in the companies with verified management and avoid any issues regarding losses. The comprehensive research would make a difference. Any hasty decision can have adverse affects on the prospective of share market. NSE real time data should be examined well before making any decision. It is essential to keep a track over the performance.

Sell off the useless shares: If the share prices fall below manageable value and remains static for a long time, try to sell out those shares. Even if you do not get profit, you can make use of the money somewhere else. Keep the stocks, if you think that shares are prospective.

Proper research: Research and analysis should be given from the core of share market investments. You can take help from the market experts having proficient experience in market for a greater efficacy and high accuracy rate. Indian Share Tips can give you successful results for your efforts of research and analysis. Also, try to make your own judgment and analyze well about short term or long term investments.

niftyfutureking.com gives you the best Indian stock tips for getting a good track of the investments in stocks. The experts make the analysis and research from the nse realtime charts for getting the ultimate solutions for the fruitful investments in stocks and shares.

For more information please check Stock Tips and Indian share tips.

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Using Options To Increase Your Returns

Shaun Rosenberg — Fri, 18 Jun 2010 14:39:25 +0000

Did you know that there is a secrete way of increasing your stock market returns? If you are already making money by trading stocks you may want to consider looking into trading stock options.

A stock option is simply a contract that gives you the right to buy or sell a stock at a specific price on or before a specific date. Once more they can be extremely powerful and can greatly increase your returns if you are right, or increase your losses if you are wrong.

For instance say stock XYZ is trading at $48. We believe that this stock will make a large move upward in the near future and because of this we have a couple options here. We could choose to buy the stock or we could buy the $50 call option on it for $4. If the stock goes up to $58 then your option would be worth at least $8 ($58-$50).

This means that the option contract would have given you at least a 100% return whereas if you had simply bought the stock instead you would have made a 20.83% return. Of course both are great returns, but the second one will affect your account much more and will help you to achieve your financial goals 5 times faster than the first option.

But for every upside there is a downside. Since options are actually dated and will eventually expire you may find that your options will simply end up expiring worthless one day.

There are always ways to manage your risk, but if you are unable to trade stocks profitably then investing into stock options will pretty much only increase your losses.

On the other hand, if you are making money then stock options can be extremely powerful and can even help you to increase your returns and control more shares with less money. Just remember that you have to use these tools carefully and have a plan.

If you are just using them because you heard they were powerful and you want to get rich quick without a plan or experience, I would reconsider.

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