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Found 250 results

  1. This trading option is mostly used by traders who favor the bulls, and are seeking additional levels of premium income. This is because premiums are received on the put trade and paid on the call trade, but the net is a positive, credited to the trader's account.
  2. The visible supply is a measure of whether the price of the commodity will rise, fall or stay static. An increase in visible supply means that it is likely that prices will fall, while an decrease in visible supply means that prices are likely to rise as a result of the created scarcity.
  3. The vault receipt is what shows who the owner of the spot metal is prior to settlement of an options trade which requires physical delivery of the precious metal from oner (seller) to buyer.
  4. This payment is made on a daily basis in order to reduce the risk exposure brought on by carrying risky positions.
  5. The variance swap has two legs: a variable portion which is based on the variance of the closing prices of the asset and a fixed portion which is the strike price set at the inception of the swap trade. The payout to the counterparty to the swap deal is the differential between the two legs.
  6. The variable price limit is usually set by the commodity exchanges on a daily basis and setting such variable limits allows the affected commodities to trade outside their normal daily ranges.
  7. Unparted bullion obviously has a lower value than parted bullion. The exact value of unparted bullion will depend on the metals used in mixing, the degree of mix and the proportion of the constituent metals in the unparted mixture.
  8. This type of options can be structured to provide definite risk reward payoffs.
  9. Unconventional oil is usually derived from shales, oil sands and tight sands, and the technology used to extract this unconventional oil is usually more expensive than if the oil is from deposits that are extracted using a drilling rig.
  10. Hello, I'm using below code in nest and it is showing good result there. I want to have an AFL so that I can use it in Amibroker. BUY = EMA(CLOSE, 5) > SMA (CLOSE, 20) AND RSI (CLOSE, 21) < 40 SELL = EMA(CLOSE, 5) < SMA (CLOSE, 20) AND RSI (CLOSE, 21) > 60 BUY EXIT = RSI (CLOSE, 21) > 80 SELL EXIT = RSI (CLOSE, 21) < 30 =============== With 5 minute internal it is showing me below signal in next now for nifty 0/24/2013 11:10 SHORT 6253.15 10/28/2013 13:55 EXIT SHORT 6114.25 I would greatly appriciate if someone can help me and create AFL from above code. Thanks,
  11. Have you ever prepared to buy a momentum-driven breakout on a stock that formed a great chart pattern (such as a cup and handle), but for whatever reason you missed the entry point on the day the stock breaks out? If you are like most swing traders (including ourselves), that has probably happened to you on numerous occasions. Indeed, it can be frustrating to watch a stock on your watchlist rally sharply higher on the day of the breakout, without you in it. But since breakout stocks usually pullback just a few days later, there is no need to panic. Instead, patient and astute traders can profit from trading these breakouts by simply buying the first pullback. Read on to learn an easy, yet highly effective way of buying pullbacks of strong stocks. 3 Breakout Stocks We Bought On A Pullback In September of 2013, we posted two videos that clearly explained our winning strategy for buying pullbacks of the best stock breakouts. 1.) On September 10, we walked you through our recent pullback entry into Yelp ($YELP), which we are still long in the model portfolio of our Wagner Daily newsletter. Presently, the $YELP trade is showing an unrealized gain of 35.3% since our original buy entry point. 2.) Then, in our September 18 blog post, we detailed how we used the same trading strategy to buy LifeLock ($LOCK) on a pullback. That momentum swing trade has since been closed for an average gain of approximately 17% (trade was closed with two separate exit points). 3.) Now, we bring you a third video that explains how we recently bought Mercadolibre ($MELI) on a pullback, a few days after the stock broke out from a chart pattern that was similar to a bullish cup and handle. We’re still holding $MELI from our original buy entry and the trade is up just over 10% as of the October 25 close. Below is the link for the YouTube video. For best viewing quality, click the square icon on bottom right side of the video player window to view in full-screen mode: Compared to other breakout stocks we’ve recently bought (such as Silica – $SLCA), the price momentum in $MELI has not been overly impressive (so far), but we believe the video has high educational value regardless. What do you think? By the way, just to eliminate any possible confusion, the video above was actually uploaded to our YouTube channel back on September 30 (which is why the current price of $MELI is higher than shown in the video).
  12. After the October 17 breakouts to new highs in the S&P 500 and NASDAQ Composite, I got to thinking about bull markets. I was pondering over how much traders and investors must be loving and profiting from this powerful rally stocks have had in 2013. But then a worrying thought popped into my head. It occurred to me it’s quite possible that not all traders and investors have actually been raking in the trading profits, despite the major indices being at new highs. Why? Because I fear that many traders and investors have been feeling the pain of the biggest mistake traders make in a bull market. I’m speaking from personal experience when I say it’s a very real concern. I’ll tell you why in just a moment, but first take a quick look at the breakouts in both the S&P and Nasdaq. The October 17 rally in the S&P 500 Index ($SPX) put the index at a new closing high for the year, which is a great sign considering where this benchmark index was only six sessions ago: The tech-heavy NASDAQ continues to extend above its prior swing high, and has now gained approximately 6% since our September 6 market commentary that suggested another breakout to new highs in the NASDAQ was coming soon: With stocks on a seemingly unstoppable upward trajectory, it’s easy to get sloppy and make careless mistakes in the stock market without having majorly negative repercussions. Yet, there is indeed one mistake that has some pretty damaging consequences (in the form of opportunity cost), even in a bull market. Have You Ever Made The Greatest Mistake? In a raging bull market such as the present, approximately 80% of stocks and ETFs will be dragged alongside of the main stock market indexes and move higher. Small and mid-cap growth stocks with a strong history of solid earnings growth will typically outperform the percentage gains of the S&P 500 and Nasdaq by a wide margin. These are the same stocks we focus on trading in bull markets. But even if you fail to buy the best stocks in the market, you can basically throw a dart right now and still have a good chance that the stock you buy will move higher (note this only applies in healthy bull markets). Nevertheless, roughly 20% of stocks and ETFs will still fail to move higher in a bull market. Obviously, it is a frustrating experience if you make the unfortunate mistake of buying one of these dogs. Yet, this biggest mistake is surprisingly common among traders, especially newer ones. So, let’s talk about an easy way to avoid this problem. Failing To Overcome Gravity When I was a new trader many years ago, I’m not ashamed to admit that I intentionally focused on buying stocks and ETFs that were NOT rallying alongside of the broad market (showing relative weakness). Why? Because I wrongly assumed they would “catch up” to all the other stocks in the market. Furthermore, I mistakenly thought stocks and ETFs that had already rallied a large percentage would probably not go much higher. Damn, I sure was proven wrong! What was the outcome of buying these stocks and ETFs with relative weakness? I was painfully forced to watch (what seemed like) every other stock in the market rally, while my positions failed miserably to overcome gravity. Adding insult to injury, the leading stocks that I thought “couldn’t possibly move any higher” ended up being the same ones that once again made the biggest gains on their next waves up. The worst part is I also discovered that when a stock is so weak that it fails to set new highs alongside of the broad market, that stock is typically the first to sell off sharply (often to new lows) when the broad market eventually enters into even the slightest pullback from its high. Once in a blue moon, a stock or ETF with relative weakness will suddenly start to show relative strength. However, that typically only occurs with the luck of some major news event. Betting on future news that may or may not cause a stock to rally is akin to betting on red or black in a casino (maybe worse). It’s All Relative, And That’s All You Need To Know As momentum trend traders, we focus on buying stocks and ETFs that are making “higher highs” and “higher lows,” along with chart patterns that indicate relative strength to the benchmark S&P 500 Index. In a moment, I will show you about a great way to quickly and easily identify relative strength, but let’s first discuss what relative strength (don’t confuse this with the RSI indicator) actually means. Relative strength - Any stock or ETF that has broken out over the past few weeks automatically is showing great relative strength to the S&P 500 because it has rallied to new highs ahead of the benchmark index. One such example is Guggenheim Solar Energy ETF ($TAN), which recently netted us a 44% gain. On the individual stock side, we are currently showing an unrealized price gain of more than 55% in Silica ($SLCA) since our July 8 buy entry, so this is another great example (we will remain long until the price action gives us a valid technical reason to sell). Neutral - Stocks or ETFs that are breaking out right now (in sync with S&P 500) are also decent buy candidates and may eventually outperform during the rally. These stocks and ETFs may not be as good as buying equities with relative strength (on a pullback), but can still offer substantial returns. One such example is Direxion Daily Semiconductor Bull 3X ($SOXL), which we are currently long in The Wagner Daily. Relative weakness - While stocks and ETFs that broke out ahead of the S&P 500 are the best stocks to buy, and some equities only breaking out now may be fine, you definitely want to avoid stocks and ETFs that are lagging behind. I’m speaking from personal experience here. Any stock or ETF that is failing to even keep pace with the current breakouts to new highs in the S&P 500 and Nasdaq has relative weakness. However, don’t confuse this with stocks and ETFs that already broke out to new highs within the past few weeks (ahead of the broad market) and are now building another base of consolidation. A Tool To Stop Being A Fool The good news is there’s a simple tool that enables traders to quickly and easily spot patterns of relative strength and weakness. This tool is a great way to know which stocks and ETFs to avoid right now (the 20% mentioned earlier). Surprisingly, the tool is utilized by simply comparing the daily chart patterns of any stock or ETF versus the S&P 500 Index. The chart below, comparing the price action in a Real Estate ETF ($IYR) against the S&P 500 ETF ($SPY), clearly shows how this works: It’s as simple as that. If you thought our tool for spotting relative strength or weakness was going to be complicated, I’m sorry to disappoint you. However, our proven trading strategy has always been about keeping our analysis of stocks simple, and this tool is in line with that philosophy. Putting The Wind On Your Back Notice that we compared an industry sector ETF (real estate) to the S&P 500, rather than an individual stock. We did this because it’s a great way to determine if a particular industry group or sector has relative strength or weakness. This is important to know because you don’t want to buy an individual stock that has a great looking chart pattern, but belongs to an industry sector with relative weakness. If you do, the stock will struggle to move higher, despite its bullish chart pattern. In trading, you always want the wind to be on your back. Making sure the individual stocks you buy are part of an industry sector with relative strength (or at least not with relative weakness) is one of the most effective ways to do so. Now that you know this highly effective and easy way to eliminate stocks and ETFs with relative weakness from your watchlist, you have no excuse for continuing to make one of the biggest mistakes traders make in a bull market.
  13. For the past six weeks, the NASDAQ Composite Index ($COMP) has been uneventfully oscillating in a sideways trading range (a 3% range from the upper channel resistance down to lower channel support). However, we have identified three highly reliable technical indicators that point to a strong likelihood of the NASDAQ soon breaking out to a fresh, multi-year high (despite continued weakness in the S&P 500 and Dow Jones). 1.) The Most Reliable Indicator You Probably Never Use We prefer to keep our technical analysis of stocks pretty simple. Although there are literally hundreds of technical indicators at our disposal, we rely primarily on price, volume, support/resistance levels (such as trendlines and moving averages), and the relative strength line. The relative strength line is a simple leading indicator that allows us to easily see how a stock or ETF is performing against the benchmark S&P 500 Index ($SPX). This is not to be confused with the RSI indicator (relative strength index). When the relative strength line is outperforming the price action of the stock (or the Nasdaq Composite in this case), it is a reliable bullish signal that often precedes further gains in price. On the chart below, notice how the relative strength line has already broken out to new highs twice, even though the NASDAQ has been trending sideways to slightly lower. This is a clear sign that institutional funds have been rotating out of the S&P 500 and into the NASDAQ: 2.) Salute The Bull Flag While the relative strength line is one of the most reliable technical indicators to predict future price action, the bull flag is definitely one of our favorite bullish chart patterns to identify and profit from. On the longer-term weekly chart, we clearly see the Nasdaq has been forming a bull flag chart pattern. This is annotated by the black lines we have drawn on the chart below: Notice that the rally off the lows in July created the flag pole part of the bull flag pattern, while the current sideways price action forms the flag. The tight consolidation of the past six weeks has retraced less than one-third of the last wave up. This is what we like to see, as the best-formed bull flag patterns should not pull back to more than a 38.2% Fibonacci retracement of last move up. Finally, since the flag pole and the flag are frequently symmetrical in time, we need to compare how long it took for the pole to form with the length of the flag. Since the pole was created over the span of six weeks, the anticipated breakout from the bull flag pattern should occur after the flag has formed for 5-7 weeks (we are currently on week 5). 3.) Already Leading The Market Higher When I began trading and studying technical analysis many years ago, I assumed that the main stock market indexes (such as the NASDAQ) led the way for the top-performing stocks to move higher. I was definitely wrong. The reality is the opposite situation; leading individual stocks set the pace for the broad market to follow. When the strongest stocks in the market (typically small to mid-cap growth stocks) are convincingly breaking out to new highs ahead of the broad-based indexes, it is a very bullish sign and the main stock market indexes usually follow suit. Conversely, it is a bearish signal when the major indices are trending higher, but without clear leadership among individual stocks. Right now, there is a plethora of stocks that are breaking out to new highs ahead of the NASDAQ. In no particular order, here are the ticker symbols of a handful of stocks breaking out right now, or have already broken out, to new highs: $QIHU, $LNKD, $TSLA, $NFLX, $KORS, $LOCK, and $YELP. We are presently long four of the above stocks in our Wagner Daily newsletter, and with the following unrealized gains since our original buy entries (based on Sept. 6 closing prices): YELP +23.2%, LNKD +10.0%, LOCK +9.1%, and KORS +7.1%. In case you missed it, you may want to check out our original August 21 analysis of Yelp ($YELP) (before it broke out and zoomed higher over the past few days). Death And Taxes – The Only Sure Things As my grandmother loved to tell me, “the only sure things in life are death and taxes.” I agree, especially when it comes to the stock market. Obviously, the Nasdaq has not yet broken out, and there is no guarantee that it will. Nevertheless, the combination of the three reliable technical indicators above suggest a strong likelihood that the tech-heavy index will soon break out of its range and cruise to a new, multi-year high (though the S&P and Dow are another story). If the Nasdaq suddenly rallies to new highs as anticipated, are you prepared to take advantage of the move? Do you know which stocks will offer the best odds for high profits? Be prepared.
  14. Trading the Head and Shoulders Reversal Any successful technical analysis strategy requires us to buy before prices head higher (in long positions) or to sell before prices drop lower (for short positions). This reality has inspired common market maxims like “always buy low, always sell high.” But those of us with trading experience know that it is nearly impossible to forecast true trend tops and bottoms with any regularity. In most cases, we will need to see evidence that the underlying trend is changing before we can establish contrarian positions. There are a variety of ways to do this: Doji patterns, oversold indicator readings, trendline breaks, and Engulfing candlesticks offer some options. In my own trading, some of the best market reversals have been seen with Head and Shoulders patterns (which can also give bullish signals when reversed). One of the reasons I prefer to look for these patterns is that the structures are much more complex than some of the other reversal signals mentioned above. These patterns unfold over broader time horizons and require a much more specific series of events in order to validate themselves. I also believe that these patterns match the spirit of what technical chart patterns are truly meant to do: Visually represent changes in market sentiment. Normally, I try to stick to the facts in these articles and avoid personal opinions but here I thought additional disclosure was appropriate because this is one of my preferred ways to trade. Head and Shoulders Patterns Defined Head and Shoulders patterns signal bearish reversals in an uptrend (shown in the first charted example). Reverse Head and Shoulders patterns signal bullish reversals in a downtrend (shown in the second charted example). In these charts, we can see that prices form a peak in the direction of the previous trend (creating the left shoulder). This is followed by a retracement and then a larger push in the same trend direction (creating the head). Finally, we have one more retracement and a smaller push in the direction of the trend (creating the right shoulder). The pattern should resemble the “head” and “shoulders” on the human body, with each component beginning at roughly similar price levels. This region is then referred to as the “neckline.” Interpreting the Pattern In the standard (bearish) pattern, price behavior is telling is that markets are making an attempt to extend an uptrend, with two higher highs (the left shoulder and head). Warning signals are sent, however, when the third peak fails to create a higher high (creating the weaker right shoulder). At this stage, anyone in a long position should consider exiting the market as there is now building evidence of a reversal. The reverse Head and Shoulders pattern is bullish, signaling the opposite scenario as the right shoulder marks a higher low. Trading Triggers But the pattern can do more than send warning signals for those already in established positions. These patterns can signal new entry points as well. Let’s look again at the standard pattern. Here, we can see that the troughs between the shoulders and the head can be connected using a trendline. It should be remembered that this trendline does not need to be perfectly horizontal, but this line (the neckline) should be viewed as an area of important support. Once prices fall below this neckline support, the pattern is activated and it is time to enter short positions. In the third charted example, we can see a real-time chart Head and Shoulders pattern, where prices form the low peak/high peak/low peak series and break below the neckline. Short positions should be initiated once neckline support is invalidated. The Reverse pattern is used for long positions, and a real-time chart example can be seen in the fourth graphic. In this case, the neckline forms above the pattern, and acts as an important resistance level. Once this resistance level is broken, long positions can be taken as this implies a new uptrend is place. Establishing Price Targets, Setting Stop Losses To construct the complete trade, profit targets and stop losses must be established. In the third and fourth charted examples, the profit targets are drawn out. This is done by measuring the price distance between the extreme point on the head, and then moving back down to the neckline. So, for example, if this is 100 pips, your profit target will be 100 pips after entry (taken after the neckline break). More aggressive traders can elect to close half the position once this target is reached and then move the stop losses to break-even for the remainder. More conservative traders should close the entire position once the objective is hit. Profit targets are relatively clear in these trades. Stop losses are not as clear-cut and will actually depend, to some extent on the size of the profit target. For those with a low risk tolerance, stop losses can be placed 10-15 pips above the neckline (for short trades) or 10-15 pips below the neckline (for long trades). For those with a higher risk tolerance (or smaller position sizes), stops can be set above the right shoulder (for short trades) or below it (for long trades). Most important for stop losses, however, is to maintain a favorable risk-to-reward ratio. So, for example, if the profit target is 100 pips, your stop loss should be no more than 50 pips (2:1 risk-to-reward ratio). This also goes far to determine whether or not you should take an aggressive or conservative approach in these trades. Complex Head and Shoulders Last, it should be remembered that with any technical analysis pattern, there will always be some separation between actual practice and the pre-determined ideal. In some cases, the neckline will be flat, others not. Similarly, the number of shoulder can also vary. For example, when multiple left and/or right shoulders appear, the structure would be classified as a Complex Head and Shoulders pattern. In the fifth and sixth charted examples, we can see a sample structure of what this might look like. Two left and right shoulders are accompanied by the head formation before prices push through the neckline. The underlying reasoning behind these patterns is that the initial trend makes a series of highs and low that support the trend. But when this is followed by highs or lows that suggest a turning point, and an eventual violation of the neckline, a Head and Shoulders pattern is in place. This activity can be used to establish contrarian trades. Conclusion: Head and Shoulders Patterns Offer Reliable Reversal Patterns for Contrarian Traders For traders not readily familiar with the Head and Shoulders pattern, the structures should be considered as an added tool in regular trading. These formations make up some of the most reliable reversal patterns that can be found in technical analysis, and they become easy to identify once you begin looking. Added confirmation of pattern validity can gained using indicator readings, violation of Fib support or resistance levels, or price proximity to Moving Averages as a measure of underlying momentum.
  15. Good Morning All; New traders often find themselves very challenged to have the discipline to follow the trading plans that they have created. The truth of it is, few have created any real plans and even fewer have a comprehensive working plan. Those that do, often find it difficult to follow their plan in the heat of the day. One of the reasons this can happen is because traders often do not spend their time properly, before, during, and after the market. Organize Your Time Of all the time a trader can devote to their occupation, most new traders usually fall into the schedule of spending 90% of their time actually trading the market. They spend 5-10% of their time preparing for the market, either the night before, or the morning prior. They spend 0-5% of their time following up on their trades after the market. Unfortunately, for new traders, this can be a big down fall. Being caught up in the excitement and overtrading, without stopping to evaluate trades, is a bad combination that can lead to failure. It is fine to be with the market all day. Just make sure your trading plan identifies what times you should be trading. It is a great idea when you start out to use about one third or your time preparing for every day, about a third of your time following up on your plays and reviewing them, and only one third actually trading. This is very different from where most new traders are. This does NOT mean that if you spend 6.5 hours trading, you must devote another 13 hours to your trading. You should have strategies identified that only take place at certain parts of the day. There should be parts of everyday where you will not be trading. You can use this time to review the morning trades, or the prior day's trades, and to update your record keeping and journals, and even paper trade new strategies. Closing Comments Many newer traders feel like they are missing something if they are not part of every possible trade. Patience will pay off for those who are selective and take the time to review each of their trades and learn from the ones that did not work out. The concept of following up on trades and how to do it is immensely important, and beyond the scope of this commentary. Make sure you understand it well, before trading.
  16. Because fear is a more powerful human emotion than greed, stocks nearly always fall much faster and more violently than they rise. As such, there are key technical differences in our trading strategy between the way we analyze and buy stocks, compared to short selling stocks. First, it is crucial to realize that trading in the same direction as the dominant broad market trend is the most important element of our swing trading system because approximately 80% of all stocks move in the same direction as the major indices. This is where our objective, rule-based market timing model really shines, as it prevents us from selling short when the main stock market indexes are still trending higher (or going long when the broad market is in a confirmed downtrend). Although it may seem counter-intuitive to new traders, we do not sell short stocks as they are breaking down below obvious levels of technical price support, as they tend to rebound and rip higher after just one to two days of weakness. Rather, our most ideal short selling candidates are stocks and ETFs that have recently set new “swing lows” (or are testing prior lows), and have subsequently bounced into resistance over a period of three to ten days. Yet, even though we prefer to wait for a bounce before entering a new short position, we also do not enter a new short position while the stock is still bouncing (trying to catch the high of the bounce). Instead, we first wait for subsequent confirmation that the stock is about to stall again. This typically comes in the form of either a bearish reversal bar (such as a bearish engulfing or hanging man candlestick pattern) or sharp opening gap down, which signals the short-term bounce is losing steam. Similarly, we always take the same approach on the long side when buying pullbacks of strong stocks; we wait for a pullback to form some sort of reversal pattern before buying (rather than trying to catch the bottom of the pullback). The daily chart of O’Reilly Automotive ($ORLY) below is a good example of what frequently happens when attempting to sell short a stock as it breaks down below an obvious level of price support. Again, entering a new short position while a stock is breaking down below the low of a range is not something we are very comfortable doing: A lower risk way of initiating a new short sale, which also provides traders with a more positive reward to risk ratio for short selling, is shown on the following chart of Check Point Software ($CHKP). This is an example of what we look for for when entering a short position (although the declines are not always as dramatic): On October 17, $CHKP gapped down sharply, on huge volume, due to a negative reaction to its quarterly earnings report. This caused the stock to crash through a four-month level of price support at the $44 area (dashed horizontal line). But over the week that followed, notice that $CHKP climbed its way back up to test new resistance of its breakdown level. If $CHKP subsequently manages to probe above the intraday high of October 17, it would see some short covering, as most traders would not have expected the price action to climb back to that level. Further, the 20-day exponential moving average is also just overhead, which lends a little more resistance. It is at that point ($44.50 to $45 area) that we would look for the first bearish reversal candle OR opening gap down to initiate a very low-risk short selling entry with a positive reward-risk ratio. By waiting for a significant bounce into new resistance of the breakdown before selling short, we can “be right or be right out” by keeping a relatively tight protective stop. Finally, drill it in your head that having the patience to wait for the proper entry points is crucial when short selling stocks, as the short side of the market is less forgiving to ill-timed trade entries than the long side.
  17. As you may recall from my August 18 blog post (How To Profit From Oil And Silver ETFs In This Stock Market Downturn), I have been bullish on both Oil and Silver ETFs (and, to a lesser degree, Gold) for the past week. Today, my patience is paying off because crude oil ($USO is the main ETF) has convincingly broken out above key resistance of an 8-week base of consolidation. Take a look: When the main stock market indexes are down sharply (as they are so far today), the benefits of ETF trading really become clear. Unlike stocks, most of which are correlated to the direction of the broad market, ETFs enables traders and investors to still profit in a down market because many types of ETFs have low to zero correlation to the overall stock market direction. Commodity ETFs such as $USO and $AGQ are two great examples of the above. Our current position in $USO is now showing an unrealized price gain of 7.7% since the swing trade buy entry in our nightly newsletter. Also, the position in our leveraged Silver ETF ($AGQ) is now up more 10% since our August 21 buy entry. If you have not yet added $USO to your portfolio, a secondary buy entry point into $USO would be a slight pullback to new support of the breakout level (consider a buy limit order around the $38.50 to $38.75 area).
  18. We have been holding Guggenheim Solar ETF ($TAN) as an intermediate-term swing trade since July 2, when we bought in anticipation of another breakout to new highs. This momentum trade has been working out well so far, as this ETF swing trade is presently showing an unrealized share price gain of 13.8% (based on our July 2 entry price of $24.20). Over the past four days, $TAN has been consolidating a tight, sideways range near its all-time high. This is healthy price action and has led to the formation of a “bull flag” type pattern on its daily chart. This is shown on the chart of $TAN below: Because of the bullish pattern that has formed, odds now favor another breakout to new highs for $TAN in the coming days. Since we presently have only 50% of our maximum share size in this trade, we will be adding an additional 25% exposure if the ETF rallies above the July 19 high. Additionally, traders who missed our original entry point for any reason may now also consider establishing a new position in $TAN, based on our same entry and stop price criteria. However, in this case, no more than 25% to 50% of maximum position size would be recommended because the average entry price on this trade would be more than 13% above our original July 2 entry price. Another ETF we are already holding is Market Vectors Semiconductor ETF ($SMH), which we bought one week ago when it broke out above resistance of its prior highs. Since then, the ETF has pulled back and is trading slightly below our entry price, but the current retracement from the highs now provides a low-risk buy entry point for traders who missed our initial entry point. The pullback is also an ideal level to add additional shares for traders who are looking to increase their position size: Notice that $SMH gapped down last Friday (July 19), but found support at its 50-day moving average, which neatly coincided with the intraday low of the session. Furthermore, the ETF formed a bullish “hammer” candlestick after bouncing off key support of its 50-day MA. Because of the hammer candlestick that coincided with a pullback to the 50-day MA, the actual entry point to establish a new position in $SMH (or to add to existing shares) is just above the July 19 high of $38.58. A protective stop could be placed just below major support of the June 24 swing low of $36.08. Alternatively, momentum traders with a shorter-term trading timeframe could place a tight stop just below the July 19 low, which would put $SMH back below its 50-day MA if the stop is triggered. We are already at 75% maximum position size with $SMH, so we are NOT looking to add additional shares at this time. Nevertheless, we wanted to give you a heads-up to this low-risk buying opportunity in case you missed our original entry or are too light in share size.
  19. Your level of confidence (not arrogance) as a trader will have a huge positive impact on your success. The more confident you are the less time you will spend on second guessing your decisions. The more confident you are the more positive energy you will focus toward your desired outcome. Confidence is based on two things; what you do and who you are. When a trade stops for a loss your confidence becomes rattled. This is because confidence is based on what you do. When confidence is based on who you are and your ability as a trader, one who is prepared for all outcomes whether a loss or a profit, then you are consistent with yourself no matter what the result. You will feel confident because you took the loss as intended or because you closed with a profit. You will choose correctly in either scenario! This is because confidence is based on you. Each time you correctly make a decision in trading whether it is for a loss or gain, the more confident you will become with your ability to act accordingly to the current market situation in a manner that is appropriate. Your confidence is now based on your awareness as a trader (you) not on failures, mistakes or missed opportunities. Let me say that again . . . Your confidence is now based on your awareness as a trader, one who will make the correct decisions. Help build confidence by reviewing your trades diligently to discover when, why and how you chose to act during the time of the trade. It will help your understanding of the markets and yourself. The more you choose to learn from each trade failure and success the stronger and more confident you will become. This confidence will increase your flexibility in your decisions and your behavior. This flexibility will help create comfort in your trading. This comfort will feed your confidence and the cycle continues. Begin working on your confidence today. Believe in yourself and have faith in your abilities. KURT CAPRA Contributing Editor Instructor and Traders Coach www.pristine.com
  20. Good Morning All; Have you ever felt the inability to pull the trigger to get in a trade at the right moment, and then chased the stock only to your detriment? Have you ever taken profits way before your target the first time a stock 'jiggled', only to sit on the sidelines as your stock ran to its original target? If so, you are experiencing the effects of fear. You are not alone. Psychological aspects make up 85% of the trading equation. Fear is one of the aspects. Ideally, we would all be "emotionless" traders. No fear, no greed, just pure discipline. While this may be a worthy goal, not many can take the leap to this level just because I say you need to. While most people cannot eliminate fear, there are some things you can do to keep it in check. Here are some suggestions. First, the greatest enemy of fear is a well-laid plan. Have a trading plan that you use that clearly spells out what strategies you will play, when, you can trade, when you cannot trade, how many shares you will play, how much money you are willing to lose on a single trade. There are many aspects to a trading plan, these are some of the basics. Next, plan the individual trade. When you see a trade come up that fits into your plan, study the play to find the proper stop loss and target. Play the proper share size so a stop out does not violate your maximum loss per trade. Make your decisions before the trades hit, while you have a clear level head, then follow the plan without question. You must "execute" the trades you have "planned". The next step may be the most important. Let your plan go to work. Let the play finish. Unless something changes about the trade, let it come to its natural conclusion, either the target or the stop, or perhaps management based on your plan; not an overreaction to what you see. Think about it. You have planned a trade while you had a clear head. You believe the trade is worth your hard earned money. Give it a chance to finish. There are sometimes reasons to end the trade early. Perhaps there has been a change in market environment. For example, you might be long in your play and the futures just took out key support. Alternatively, maybe you planned on reaching the target by reversal time and it is almost at the target with reversal time now here. However, this happens the minority of times; the majority of times you should leave the play alone. Do not be jiggled out by your Level 2 screen. The chart pattern is all that matters. If you are still so nervous that you can't handle it, try this next. Sell half the position at the reduced target. Get used to taking partial profits and this will let you have confidence letting the back half hit the target. This will also be likely to put you in a 'no lose' situation with the trade, giving you some patience. Good traders sell incrementally, on the way up all of the time. If that does not help, then you need to cut back on your share size so the size of the potential loss does not trigger your "pain factor". Closing Comments The real answer to this question is 'just do it', but few are able to. Playing with a share size that doesn't trigger your 'fear button' is critical until you develop a winning record. Try these ideas if you are having a problem with 'fear'. Paul Lange Vice President of Services Pristine Capital Holdings, Inc. www.pristine.com
  21. Stock breakouts are about more than simply buying stocks that are trading at new highs. In order for a breakout to be valid and without a high risk of failure, a stock must first possess a valid base of consolidation on its chart pattern. In this educational article, we clearly show you how to spot two “basing” chart patterns that precede the best breakouts: Deep Correction (Cup and Handle) and Shallow Correction (Flat Base). We suggest studying these chart patterns closely, as it will enable you to develop your eye and eventually read stock charts like a pro. Deep Correction – “Cup And Handle” Type Pattern Following are the technical characteristics of a deep correction, along with an actual visual example. *The pattern must form within an existing uptrend, and stock must be at least 30-40% off the lows. This rule is very important. Do not go looking for cup and handle patterns with stocks trading at or near 52-week lows! The best cup and handle patterns form near 52-week highs. Stocks that are breaking out to new all time highs are ideal because they lack overhead resistance. *The 50-day moving average should be above the 200-day moving average, and the 200-day moving average should have already been trending higher for at least a few months. The base typically forms on a pullback of 20-35% off the highs, and is at least seven weeks in length. *As the base rounds out and the price returns back above the 50-day moving average and holds, be on the lookout for the “handle” to form. The handle usually forms 5-10% below the highs of the left side of the pattern. *The handle itself should drift lower, and is typically 5-10% or so in width. Handles that retrace more than 15% are too volatile and prone to failure. *Handles should be at least 5 days in length and not form below the 50-day moving average. Putting it all together, this chart of LinkedIn ($LNKD) shows a valid cup and handle type pattern, based on the technical criteria above: On the chart above, notice the 200-day moving average (orange line) is in a clear uptrend. The 50-day moving average (teal line) is above the 200-day moving average, and the 20-day exponential moving average has crossed above the 50-day moving average. When the 20-day exponential moving average is above the 50-day moving average, and the price action is above both averages, it is the ideal time for a handle to form. The key to the handle is that price action should drift lower to shake out the “weak hands.” The buy point for this type of swing trade setup is a breakout above the high of the handle. However, over the years, we have learned to establish partial position size at or near the lows of a handle, and add to the position on the breakout above the high of the handle. This enables us to lower our average cost and provides a better reward to risk ratio. Shallow Correction – Flat Base A shallow correction is also known as a flat base, and the pattern should possess the following characteristics: *As with the cup and handle type pattern, a flat base must form within an existing uptrend. Typically, it will form after a breakout from a deeper correction (like a cup and handle base). *The best way to identify a flat base is by using the weekly chart timeframe. The majority of the base should form above the rising 10-week moving average (or 50-day moving average on daily chart). *The 10-week moving average should be trading well above the 40-week moving average *A flat base should be at least 5 weeks in length. *Flat bases usually correct no more than 15% off the highs The following chart of Pharmacyclics ($PCYC) illustrates what a flat base should look like: Although the weekly chart above is a great example of a flat base, the pullback was just a bit over 15% at 17%. A flat base should form around 10-15% off the highs, but 16-18% is okay, especially if the stock is volatile. If the pattern is 25% wide, it is probably not a flat base. Please just use common sense with these rules. Also on the chart of $PCYC, notice the entire base finds support at the rising 10-week moving average, which is a very bullish sign. Further, the 10-week moving average is well above the 40-week moving average, and both indicators are in a clear uptrend. The buy point of a flat base is on a breakout above the highs of the pattern. As with cup and handle patterns, we usually try to establish partial size before the breakout if possible. Keep It Tight! When finding bullish stocks patterns, it is crucial to look for a tightening of the price action on the right hand side of the base. The left hand side is the initial drop off the highs, where the price action cracks and becomes wide and loose. For the first few weeks, the price action is volatile and there can be quite a bit of selling. But after a few weeks of bottoming action, the stock begins to settle down and push higher. When the majority of price action is above the 50-day moving average, and the 20-day exponential moving average is above the 50-day moving average, this is when the stock should begin to tighten up. The following daily chart of Tesaro ($TSRO) clearly shows a tightening of the right hand side of the basing pattern: On the chart above, the initial decline off the highs (around $20) produced volatile price action for several weeks. However, notice the price action never really broke below the 50-day moving average for more than a few days. In early January 2013, the price action tightened up. By later in the same month, an extremely tight range develops above the 20-day exponential moving average. This is a classic snapshot of tightening price action, which is something we always look for. The rules above may be rather precise, but the details are worth studying and memorizing because they have been developed through years and years of experience. Since the most profitable stock picks in our swing trading newsletter nearly always possess the above qualities, the proverbial proof is in the pudding.
  22. Being a consistently profitable swing trader is a juggling act that requires one to constantly be focused on a variety of key elements of success: picking the right stocks, managing risk, determining when to sell, and even mastering the psychology of trading. In this educational trading strategy article, we will dive into the topic of knowing how and when to sell winning ETF and stock swing trades for maximum profit, using the example of an actual swing trade we are currently positioned in. As for when to sell losing trades, there’s frankly not much to say other than always have a predetermined stop before entering every trade and simply honor it. Since April 12, the model trading portfolio of our swing trading newsletter (The Wagner Daily) has been long Market Vectors Semiconductor ETF ($SMH). We initially alerted traders of the technical reasons we were bullish on the semiconductor sector (and $SMH) in this March 28 post on our trading blog. Since then, we have also reminded regular readers of our trading blog several more times about the increasing relative strength in semis. In the “open positions” section of today’s (May 13) Wagner Daily, subscribing members will notice we have trailed our $SMH protective stop higher for the fourth consecutive day. Because the ETF is already nearing our original target area of $40, while remaining on a very steep angled climb, we have been continually squeezing the stop tighter in order to protect gains, while still allowing for maximum profit. On the daily chart of $SMH below, we have labeled the increasingly higher stop prices we have used in each of the past four sessions: As you can see, our stop in each of the past four trading sessions has been raised to just below the low of the prior day’s session. Whenever an ETF or stock is nearing your target area and you wish to maximize profits while still protecting gains, setting a stop just below the previous day’s low (allowing for a tiny bit of “wiggle room”) is a great strategy. This is because basic technical analysis states the prior day’s lows and highs act as very near-term support and resistance (respectively). By using this method for trailing stops, you will be out of a winning position before the start of a significant pullback, while still allowing the gains to build as long as buying momentum remains. This system also provides an objective way for knowing when to close a winning swing trade, rather than guessing and potentially leaving significant profits on the table. Of course, there are many different ways to manage exits on winning momentum trades, and some of those methods are equally as effective as what is explained above. The reality is that any trading system can be a great one if the trader proves to be profitable with it over the long-term (even if the system involves trading by the cycles of the moon). As such, we would never imply that our system is absolutely the best way to manage stops on winning swing trades. But what we truly love about our exit strategy is its utter simplicity; simple trading strategies are the easiest to follow and thereby profit from. Why complicate a technique that has already been proven to work so well?
  23. Every trader at some point in his career will face one or several "losing streaks". This is a fact of this business, and whoever tells you this isn't so has not traded very long or at all. Losing streaks can be produced by the faulty use of a tactic, inefficient analysis of market direction and internals, or other situations. These consecutive losing events can not only produce a drastic drawdown in your account, but even worse, can cause considerable psychological damage that might take a long time to correct. Let's talk about some of these issues and some ways to correct them. The first problem with a losing streak is the fact that it "tends to produce mounting losses". After the trader has finished his paper trading period (Interestingly, losing streaks rarely happen at this stage), the trader will have to deal at some point in his development with the diminishing capital caused by a streak of losses. Depending on whether the trader has established a proper trading plan to deal with his development, this streak will be more or less bearable. Consistency in the application of a plan and a set of tactics takes time, so it's more likely that a trader will have to contend with losing streaks during his development when he is trying to grasp and refine his approach. Thus, a proper money management scheme that looks to protect capital during the developmental stages is paramount. As the trader gains consistency, his plan will protect him from extremely bruising losing streaks, by establishing maximum losses per day or month, and by regulating the steps a trader should take in case he is facing one of these streaks. Even more troublesome to the trader might be the psychological consequences of a bad losing streak. When you face a losing streak, and you lack a proper plan, you might have to deal with 'trader's paralysis". This occurs when you had a severe loss, which produces such a fearful state that makes it impossible in your mind to take a new position. Confidence is lost. To climb back in the saddle, the trader has to create a process to recuperate such confidence step by step. It should begin with a brief paper trading period. Then, when the trader begins to trade real money, it's a very common mistake to try to enter into positions with very small stops. This might be a huge mistake. I believe that in order to regain confidence, the trader should enter into positions with wide enough stops so that the probability of it getting hit short term is very small. He might even consider entering into positions with not so great risk/rewards, just so he'll be able to remain in the position for as long as it takes until it hits the target or stop. This might allow him to regain his confidence that he can hold a position. Small shares during this process is suggested until a regained good win to loss ratio is achieved. Of course, this is only to regain confidence, and afterwards the proper selection of risk-reward plays is still paramount to a trader's success. If you have not taken a trial to our Interactive Live Trading rooms in a while, drop on by to see how you can gain more experience in how you trade and learn from some of the profitable trading idea's we generate daily. Take a free trial or call your Counselor at 1-800-340-6477. Would love to see you drop by with any questions you might have or to just gain some great insights into trading the current market. Jeff Yates Contributing Editor Interactive Trading Room Moderator Gap, Intra-Day and Swing Trading Specialist Instructor and Traders Coach pristine.com
  24. Good Morning All; "Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'press on' has solved and always will solve the problems of the human race." Calvin Coolidge. Perseverance There is a famous story that is told about a prospector that set out to find fortune in the famous gold rush days. He took his life savings and bought the necessary mining equipment, and set out for the 'hot' mining spot. After months of drilling, he was on the last hole that his finances would allow him to dig. He was running out of money, and would not be able to set up in a new area. Another man came by and observed this prospector's operation. This man had seasoning and experience and made his living picking up the deserted mines of others. He had come to recognize when the rock formations in a mine were such that a gold vein was more likely to be close. He also knew that it was not hard to pick up old mines from miners who were broke and tired and had not found their fortunes. So it came to be that this man struck a deal to buy the prospectors equipment and rights to his mine that had not yet produced one cent of gold. The prospector had been mining for months, was tired and discouraged, and happy to get a little money for his worthless mine and equipment. He quit digging and sold all to the man. The man who took over only had to dig six more feet before running into what proved to be one of the biggest gold veins of that time. Had the prospector held out one more day, skipped one lunch, taken one less break, or done anything to delve six more feet, he would have had his fortune. Read today's quote at the top of the page. It is more than just a quote to fill in space. Today, it is the theme of the story and one of the best quotes of all time, and applies nicely to trading. Most traders who come to the market are talented, smart, and well educated. Most traders who come to the market fail at trading. You must resolve to do more than rely on your past successes. Read this quote and article again. It may prove to be one of the most important paragraphs you ever read. Closing Comments The process of learning to trade is unique because in addition to learning the technical skills, you are battling your emotions all the way. You will find that you will accumulate lots of knowledge, without seeing a marked improvement in your trading results. Then, all of a sudden, you will have what seems to be an epiphany, and soar ahead, and wonder how you could have even struggled at something so easy. Then you will stumble, and doubt if you are really making progress. If you are going to be successful, you will find your stumbles are less severe, last shorter each time, and your surges ahead are stronger. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
  25. Good Morning All; One of my favorite trading quotes; "You must be rigid in your rules and flexible in your expectations. Most traders are flexible in their rules and rigid in their expectations." Mark Douglas, Trading in the Zone. Rules and Expectations Read today's quote again. "You must be rigid in your rules and flexible in your expectations. Most traders are flexible in their rules and rigid in their expectations". This is from Mark Douglas in his book, Trading in the Zone. This should be one of the top quotes you keep near your monitor at all times. You may have read this quote prior to this, but perhaps many of you have now gained the experience to recognize the pure wisdom in the words. That is the reason an entire "Eyes" is being devoted to this quote, so everyone reading can recognize its importance. The reason that this advice is so important is because two of the most common problems among new or struggling traders are addressed here. The first problem raised is that most traders are flexible in their rules. Actually, the truth is most traders do not even have a firm set of rules they trade by. Sure, if you ask most traders they will say that they follow stops, and set targets. However, very few have the rules that are generated by a quality trading plan. Those that do, usually view them as optional, which really defeats the purpose of having rules. The second problem is that traders are rigid in their expectations. They form or acquire a market bias, or a 'feeling' about a particular stock, and hold to that expectation regardless of what the chart (reality) is telling them. When good news is released, they go long the stock and stay steadfast in their bullish view; even though the chart (reality) is telling them that the stock is falling. Some say that you cannot follow rigid rules, because trading requires your expectations to be flexible and change as needed, as the second part of the quote implies. Obviously, it is true that trading requires you to be flexible. However, all of the contemplated flexibility can be part of your plan and your rules. For example, you can decide ahead of time and define what a 'change in market direction' is and then define how you react to that new information. You could react by selling all of your position, selling half, raising the stop, etc. Closing Comments Those of you that have not embraced these concepts will hopefully take a new look at the quote above and use it to help improve your trading. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
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