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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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By Stocks4life · Posted
$ARRY Array Technologies stock great day off the 10.96 double support area, from Stocks To Watch, https://stockconsultant.com/?ARRY -
By Stocks4life · Posted
$MSFT Microsoft stock back up top of the range, breakout watch , https://stockconsultant.com/?MSFT -
By Stocks4life · Posted
GBTC Grayscale Bitcoin stock top of range breakout watch , https://stockconsultant.com/?GBTC -
By Stocks4life · Posted
$FSLR First Solar stock nice bull flag breakout, from Stocks To Watch, https://stockconsultant.com/?FSLR -
By HFblogNews · Posted
Date: 22nd May 2024. UK Inflation Drop Boosts GBP, But Analysts See Correction Signals. The NASDAQ forms its 5th bullish wave resulting in the index trading 8% higher this month alone. Investors are waiting for NVIDIA’s earnings report. The market awaits the release of the latest FOMC Meeting Minutes for further indications on the potential rate adjustments. The US Dollar Index declines to a 7-week low, but can tonight’s Meeting Minutes change the trend? Read below what economists are predicting. UK inflation declines from 3.2% to 2.3% in its largest drop since December 2023. The Pound increases as the inflation rate did not decline to 2.1% as previously GBPUSD – UK Inflation Drops But Does Not Meet Previous Expectations! The GBPUSD is trading 0.30% higher after the release of April’s UK inflation figures. The US Dollar and the Japanese Yen are the worst performing currencies of the day. Traders looking to speculate a rising Pound may benefit from these weakening currencies. The GBPJPY is trading 0.47% higher so far. However, investors should be cautious of any change in price action as the next session (European Market) opens. The UK’s inflation figure fell from 3.2% to 2.3% which is the largest drop in 2024 so far and brings the Bank of England closer to its target. This would normally pressure the currency, but there are some factors which have triggered a bullish Pound. This includes the Core Consumer Price Index which fell from 4.2% to 3.9% instead of falling to 3.6% which were the previous expectations. Also, certain sectors did not see a decline in inflation in April, which is a continued concern. For these reasons, investors have increased their exposure to the Pound, supporting the currency. Also, economists are advising that the weakening inflation rate can increase investment demand which also further supports the country’s economy and subsequently the currency. Furthermore, investors will also need to take into consideration the price condition of the US Dollar individually. Dollar traders will be focusing on tonight’s Federal Open Market Committee’s Meeting Minutes. The market will particularly be looking for clarity on how many adjustments are likely in 2024, if any at all. In addition to this, if an adjustment is likely in July, September or later in the year. If the report indicates less cuts and a delay, the US Dollar potentially can witness further demand and a change in trend. This is something which was particularly seen in April 2024. The price action of the GBPUSD is forming a bullish trend and most trend-based indicators are signalling a higher price. However, there are signs that the price may correct back to the previous range. For example, on the 4-Hour chart the price is witnessing a divergence signal. in addition to this, the price is also trading at a significant resistance level from November, December and January. Though, for the resistance level to become active, the Dollar will likely require support from the upcoming Meeting Minutes. In the short term, sell signals are likely to materialize after crossing 1.27400 and 1.27268. USA100 – Bullish Trend, But Investor Focus On Meeting Minutes & NVIDIA Earnings The NASDAQ saw a decline in the price as the US Open was approaching, however, the price momentum quickly changed when US investors started trading. The index rose 0.30% by the end of day and was the best performing US index. During the US Session 62.5% of stocks holding a weight of more than 1.00% rose while 37.5% fell. The main price drivers which supported the upward price movement were Microsoft, Alphabet, Apple, NVIDIA and Netflix. Investors will closely be monitoring the upcoming earnings report for NVIDIA, but also the FOMC’s Meeting Minutes. A more restrictive monetary policy can pressure the stock market, but the level of pressure and downward price movement will also depend on the results of NVIDIA’s earnings. Additionally, shareholders will also focus on Intuit’s Quarterly Earnings Report tomorrow evening, but this will have a lesser effect compared to NVIDIA. A concern for intraday traders is the decline in indices around the world in markets which are currently open. For example, the DAX, FTSE100, CAC and Nikkei225 are all trading lower. In addition to this, the US 10-Year Bond Yields are trading 0.0027% higher which is additional pressure on equities. Nonetheless, technical analysis in the medium to longer term continue to point to a continued upward trend. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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