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What Really Works for Technical Traders
By
phantom, in Technical Analysis
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By David Carter
My broker (Jones Mutual) advised me to use candlesticks when CFD trading, as the simple line graph option does not give you enough information - is this correct?
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By inthemoneystocks
One of the most important reasons why traders take big losses is because they often fail to recognize when a trade has gone wrong. You see, stopping out of a trade is probably the biggest fault of traders and investors. Often, this happens to young and inexperienced traders and investors, but I know many veteran traders and investors that struggle with this as well. Early in my own career I struggled with stopping out of a bad trade myself, so I can sympathize with this problem.
The problem with taking a loss is really two fold. First, the trader has to admit that he is wrong. As you all know, as human beings we all hate to be wrong. The ego simply gets in the way and we all want to always be right all the time. The first secret in this business is to check the ego at the door. The market does not care about your the color of your skin, religion or anything else. It will move in the direction of the money and that is the bottom line. Once a trader or investor goes into what I call 'hope mode' the trade is over. I'm sure everyone has been in this position at one time or another. Simply put there is no room for ego or hope in the stock market. The market is always right and there is no reason to fight it.
Here is the second problem with taking a loss, it hurts. Pain and pleasure are the two reasons why humans do anything at all. As a human being, we are always looking to have pleasure and avoid pain. Well, losing money is painful and many people would rather simply hold a losing equity than lock in a small loss and move on. I cannot tell you how often I see a trader hold a losing trade only to see the position move further out of the money. Many years ago I watched a day trader blow up a $200,000 account in a single day averaging in on a bad day trade. To this day I can remember the look on his face as his money vanished in thin air. Believe it or not, this trader could have exited the position with a $500.00 loss, but instead he kept averaging in and fighting the position until he was wiped out. As a rule, once you have your full position you should never average in on a trade. At that point, it is critical to know where your max loss is going to be and stop out if that level is breached.
Now when should we stop out? The answer to this question is not that simple, but here is what I personally do. I always place my stop loss below an important breakout or pivot on the chart. You see, prior breakout or pivot levels are usually defended when retested. After all, this is usually an area where institutional traders and investors got involved, that is why there is a pivot low or high on the chart to begin with. If that level is breached on a closing basis then I will move out of the position. So If I took a trade based on a daily chart pattern then I will usually check the daily and weekly chart levels. If there is a major pivot on the weekly chart then I will use a week chart close as my stop out level. While this method may not be perfect, it has saved me from much bigger losses when I have been wrong.
Nicholas Santiago -
By LindsayBev
Hello! I am new to this forum. I am interested in learning about candlestick reading. I would appreciate hearing from any that will answer this post WHICH book you found the most helpful?
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Brain Trend 2 Is a short term signals indicator. It is used for intraday trading. Brain Trend 2 identifies the short term trend using Williams percent R indicator and average true range. When a short term trend is confirmed by the indicator, it plots semaphores on the bar to show the trend. Bars with red boxes indicate downtrend and bars with blue boxes indicate uptrend. When a trend is identified, open positions in the direction of the trend. When red boxes appear open short position. When blue boxes appear open long position. It is more effective when coupled with other indicators. A moving average can be used as a trend filter. Set the moving average period to medium term or long term like 50 or 100. BrainTrend2.zip -
#EURUSD #ANALYSIS #Forex #followme #socialtrading The EUR/USD pair fails to hold on to recovery gains as it trades near 1.1070 ahead of the European session on Wednesday. The US #IndustrialProduction and #CapacityUtilization failed to please the #USD buyers as better than forecast prints of the ZEW Economic Sentiment for Germany and the Eurozone gained major attention. Also adding to the pair’s strength was the market’s risk recovery after Saudi Arabian diplomats showed readiness to overcome the recent damages due to drone attack within few weeks. Furthermore, news of the New York #Fed injecting funds through repo market and trade-positive headlines concerning the US, China and Japan also tamed the earlier #risk-off momentum. #Traders have been #cautious since the start of Wednesday with eyes on the US #FederalReserve’s monetary policy meeting announcements up from 18:00 GMT. However, fresh trade/political headlines help extend the latest risk-on. As a result, Asian stocks report gains and the US 10-year Treasury yield remain around 1.80% by the press time. Considering the high probability of the US Federal Reserve’s 0.25% Fed #rate, investors will be less surprised unless the US central bank offers less/more or no rate change. As a result, details of the quarterly economic forecast, press conference by the Fed Chairman #Powell and Fed’s Monetary Policy Statement will be the key to predict near-term market moves. The European Central Bank (#ECB) has recently shown its dovish bias and hence any hawkish statement from the Federal Open Market Committee (#FOMC) could be harmful to the pair’s latest recovery. On the economic calendar, final reading of August month Consumer Price Index (CPI) from the Eurozone and the US housing market numbers could offer intermediate moves ahead of the Fed decision. #TechnicalAnalysis Not only a falling trend-line since late-June, at 1.1090, but the 100-day exponential moving average (EMA) level of 1.1167 also could restrict pair’s near-term upside, which in-turn highlights 1.1100 and recent low surrounding 1.0925 as key supports. -
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