Anatomy Of A Stock Breakout

Here's a great example of a breakout trade for a very short-term stock trader. This is the kind of pattern that can work well in trading competitions, such as the one sponsored by CNBC. First, we look for the opening trading range of the first 15-30 minutes. The opening range tells us how market makers are establishing value for the stock (National Semiconductor, NSM; 5 minute bar chart). Note that the opening range (Point A) is above...

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How I Came Back From My Worst Loss

Mohammed Isah is a private trader and an independent technical analyst. He initially traded stocks and now primarily focuses on forex. You can contact Mohammed on his pivot points reports and other inquiries at:isahmo@gmail.com.Trading is an interesting profession and has no peak as in other occupations. It is in fact an endless journey of discovery of oneself and trading itself.Trading for me at beginning was very tough not that I was not successful in other endeavors but I took it like every beginner thinking that it was easy.With this perception,...

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What a successful daytrader does daily!

Before diving into Day Trading, please ask yourself if you have the following personality traits!ConfidenceThis is perhaps the most important personality trait of good day traders. You won't succeed at day trading unless you have a high measure of confidence in yourself. Lack of self-confidence will result in doubt, indecision and second-guessing which, in turn, will lead to missed trading opportunities and frequent losses. You must believe in yourself when day trading. If not, you will be better off pursuing some other endeavour.DisciplineIn order...

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Multicollinearity

Multicollinearity is a statistical term for a problem that is common in technical analysis. That is, when one unknowingly uses the same type of information more than once. Analysts need to be careful and not utilize technical indicators that reveal the same type of information.Here is how John Bollinger states it: "A cardinal rule for the successful use of technical analysis requires avoiding multicollinearity amid indicators. Multicollinearity is...

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5 minute intraday trading strategy

This strategy is originally created by Philip Nell a veteran stock trader with more then 10 years experience. This has been tested for trading EUR/USD and GBP/USD. I like the way it define market motion. Though this is a great trading system, I personally don’t use this since I don’t like trading in 5 minute time frame.It’s quite simple, what you need is 50 SMA, 21 EMA and 10 EMA attached on your 5M Chart. Open position when the angle of the 50 Simple...

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200Day Moving Average

Granville a respected analyst lists eight basic rules for interpreting the 200 day moving average charts. 1. If the 200 day average line flattens out or advances following a decline, and the price of the stock penetrates that average line on the upside, this constitutes a major buying signal. 2. If the price of the stock falls below the average line while the average line is still rising, this also is a buy signal. 3. If the stock price is above the 200 day line and declines towards it, but fails to go through and instead it turns up again, this...

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Phil Newton's Break out Strategy

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BANDS AND BANDS AND CHANNELS

Trading bands and trading channel are related. Both chart patterns act as a restraint on price activity, confining it within defined boundaries. The channel defines trend behaviour. The band defines support and resistance behaviour and can be used to set price targets. The trading channel is constructed with two trend sloping trend lines. These are parallel lines and as with any trend line, their value changes daily. The lines show...

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TREND LINE CONSTRUCTION

Look at the chart display. What is the trend for prices? Quite clearly they are going down. If we already have purchased this counter at $7.50, we should be worried. If we are potential buyers of this counter then the price move or break above $6.70 gives us a reason to buy the stock. The trend line gives us a way to decide which price action is significant, but only if it is accurately drawn. We use a straight edge...

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THE RELATIVE STRENGTH INDICATOR AND DIVERGENCE

Technical indicators are constructed by manipulating some aspect of price such as a moving average of prices over a 10 day period. The Relative Strength Indicator (RSI) tries to anticipate a change in the trend. This is a leading indicator of a trend change. The results are used to deliver messages about the strength of the market. It is called an oscillator because the indicator readings are converted into percentage results which...

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Gap Trading Tips

Know the zone! Where the gap opens relative to prior day support and resistance (e.g. Open, High, Low, Close) will greatly influence its probabilities of filling, as well as the optimal placement of your stop and target. It’s a three legged stool. To maximize profits focus on gap selection, stop placement, and target optimization. It takes all three. Don’t try to kiss all the pretty girls (or guys)! With gap trading, it pays to be selective. So, when in doubt, sit it out. The return may not be worth the risk. Just because a gap is small...

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9 Rules for Trading Divergences

There are nine cool rules for trading divergences. Learn 'em, apply 'em, and make money. Ignore them and go broke. 1. In order for divergence to exist, price must have either formed one of the following: Higher high than the previous high Lower low than the previous low Double top Double bottom Don't even bother looking at an indicator unless ONE of these four price scenarios have occurred. If not, you ain't trading divergence,...

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MOVING AVERAGES: TRADING PATTERNS

Running Cup and Handle The cup-and-handle (1) is typically a major reversal pattern that often precedes large rallies. It is formed when a stock sells off, bottoms, and then begins to rally, creating a "cup." After the rally, the stock drifts lower, forming the "handle" of the pattern. According to William O'Neil, who popularized the pattern, the best cup-and-handle candidates are stocks that already have staged a strong rally. One way to...

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200-Day Moving Average

STOCKS ABOVE THEIR 200-DAY MOVING AVERAGE In today's article I will discuss another key item that I use to gain a comprehensive picture of the state of the overall market--the percentage of stocks now trading above their own 200-day moving average. (To avoid repeating this long phrase, I'll just refer to this indicator as "% above 200.")The concept here is simple. The 200-day moving average...

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How to find breakout stocks

There are many ways to find breakout stocks. My method consists of two discrete scans, which each must pass before I buy a stock. Many investors depend on technical analysis alone, while others depend on fundamental analysis. I depend on both. The two parts of my method scan for technical and fundamental soundness.1) Technical scannerThis is the first scanner to run. The scan consists of finding all stocks that are breaking out to new 52-week highs on very high volume. The technical scanner is necessary because I only want to invest in stocks that...

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James16 price action patterns

James16 price action patte...

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WOLFE WAVE - An Outlook

Q. What is the Wolfe Wave?Ans. Simply put, the Wolfe Wave is a natural rhythm that exists in all markets. It is made up of waves of supply and demand that form their own equilibrium.The key to its accuracy is in properly identifying the 1, 2, 3, 4 & 5 points. These are what give it its proper balance of equilibrium. It is very important to identify the dominant Wave. It is somewhat like recognizing those 3-D pictures. After a while a smile comes...

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How You Could Have Seen Imclone's Implosion Coming

Warning: This will be an "I told you so" column. We're going to look at a recent horror story and see why you should have bailed out by now. If it hits too close to home, you might want to move on and read something a little more pleasant. We're taking no prisoners today.The RealMoney staff love to flutter their wings about the latest blowups. But I have a confession to make. I think the companies we chatter about are extremely boring.Enron? That's...

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Bilateral Trade Setups

When it comes to trade setups, it's not always an either-or situation. In fact, you can double your fun with bilateral trade setups.Start by overcoming directional bias when you look at a price pattern. Although you may see it in your mind as a long or a short, chances are it will work in either direction. The trick is to let the price action tell you which way to go.Let's back up a step and see how this works. Many patterns exhibit well-defined...

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