Penny Stocks A Profitable Roller Coaster

New investors are being drawn by the appeal of what is known as penny stocks because of the low price and the potential for quick financial growth which can soar as high as as one hundred percent or more in just a few days. But, on the down side, severe loss can occur just as quickly and many penny stocks can lose all of their value in the long term market. Some people will warn you that penny stocks are too high risk to invest in and that new investors should do their homework to be aware of the risks that are involved in penny stocks. These risks include limited liquidity, little or no financial reports, and, of course, fraud.

But, many new investors have had a great deal of good fortune with penny stocks. Even though a penny stock has fewer shareholders, and it will not trade as many shares per day as a larger company, penny stocks can still afford a newbie in the trading game an excellent opportunity to make a lot of money quickly that maybe invested in other strong companies.

As with any type of stock, a sudden change in the demand of a certain stock can lead to a great deal of volatility in the price of any company stock. This lack of liquidity with penny stocks can send a stock price soaring up very quickly, but it can come crashing down just as quickly. So making sure that you closely watch the penny stock market can help you make some shrewed investments that can have some very high payoffs.

Even with the lack of liquidity and volatility of penny stocks they can still be an ideal investment for many people who have the desire to increase their personal financial holdings and get the feel of trading and investing the stock market. Finding a good and reputable stock firm is the best idea for starting to deal in penny stocks. This helps to minimize financial loss and helps to avoid any fraudulent penny stocks that have become a common area for online scam artists.

So, if you have the desire to jump into the world of the stock market, but don’t want to invest a lot of your hard earned cash try penny stocks. They can be well worth the effort for short term income growth and lead to bigger and better things.

All stock trading activities cost a fee and they have a certain amount high level of monetary risks especially for the unwise and inexperienced stock traders and/or investors seeking a quick and easy way to make a lot of money in a short period of time. Also, stock traders and investors will have to deal with the costs of commissions, taxes and fees to be paid for the brokerage services. There is a myriad of fiscal obligations that must be observed, as well as the taxes that are charged by a particular state on the transactions.

Many companies offer courses in stock picking, and many have reported a great deal of success through technical and fundamental analysis. But many economists and academics have stated that because of what is known as efficient market theory it is unlikely that no matter the amount of analysis that one can do, it will not help an investor make any gains above the stock market itself.

via- daytrading.net

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M A N V S M A R K E T

M A N V S . M A R K E T | b y R O B B O O K E R

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Day Trading Gaps, Market Profile, Ergonomic Day Trading, technical indicators

via - http://www.SchoolOfTrade.com

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How to use doji cndlestick patterns

Doji:

The doji is a characteristic figure whose opening level is equal to the closing level. Indeed, one can interpret this figure as one in which UT Bulls and Bears have delivered a battle after which there was no winner.

Interpretation:

If the trend prior to the appearance of a doji is bullish (bearish), it means that buyers (sellers) during the firing up (down) because their buying frenzy (Panic selling) was very strong.


But beware, a doji should under no circumstances be regarded as a trigger signal to buy or sell, it shows only a hesitation in the market.


It represents a meeting point between bullish and bearish that depending on the configuration of time may be followed by a reversal, or a continuation of the status quo, so it is important to study the environment in which the doji appears rather that the latter himself.

Thus, it appears after a large white candlestick (black) that comes with a unidirectional pattern, the signal is very strong and announced, with high probability a reversal if the ongoing closure of Candlestick following are beyond the distal doji (see graph below) or a continuation of the trend if the ongoing closure of Candlestick following are beyond the upper end of the doji (see graph below), the only market force that managed to emerge d an area of uncertainty.

However, if a doji forms after a series of candlesticks with small bodies, we can consider that it gives no signal.


Note: When a doji is formed on a trough (peak), and is therefore synonymous with reversal, it is highly likely that these levels become a support (resistance).


The different types of doji


The long-legged doji or high wave

For this type of doji, there are again three alternatives:


The doji cross gives a bullish signal when it appears after a downtrend, while the doji cross inverted gives bearish signal when it appears after an uptrend.

The doji water-carrier in turn, demonstrates the strong market indecision.


The gravestone doji in


The opening price on the lowest of the UT and although they manage to score new highs, sellers regain control before the end of the battle and forcing the prices to recede to their opening level. This configuration gives a very bearish signal when it occurs during an uptrend. More shade, the stronger the signal is bearish. Indeed, consider the shade high as an area offering significant.


The dragonfly doji in or doji dragon


The opening price on the highest of the UT and although they manage to mark a new low, buyers regain control before the end of the battle and carry prices to their opening level. This configuration gives a very bullish signal when it occurs during a downtrend. More shade is low, the signal is more bullish. Indeed, consider the shade as a low area demand.


The doji without wick



This is a particular doji that appears almost exclusively on very illiquid markets. For such a doji appears, it is no exchange is made or that the carry trade is all one and the same price on the UT. It really does not start signal on the direction of the market but that it's a market that lacks liquidity and it is therefore more risky to enter it because it will be difficult to leave without leave feathers.
Doji: Application to the trading and investment:

The range of doji shows key levels which when crossed (upwards or downwards) by following the latter candlesticks are points of entry or exit privileged.

In the case of a reversal to the downside, we'll wait to closing under the low end of the doji to place a sell order. In the case illustrated, it will be realized by a sale at the opening of the second black candlestick. The protective stop is placed just above the upper end of the doji, which corresponds to the point of invalidating the hypothesis.

In the case of a continuation of the increase, we will wait to close above the doji's upper extremity to place a purchase order. In the case illustrated, it will be materialized by a purchase at the opening of the second white candlestick after the doji. The protective stop is placed just below the low end of the doji, which corresponds to the point of invalidating the hypothesis.

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Adam and Eve chart pattern

The dip in Adam and Eve is a variant of the double bottom. So a figure of reversal, it generally occurs after a downtrend. This figure takes the form of a double bottom it is different in that the first bottom is shaped like a "V" and the second bottom in the shape of "U".

via- Candlestick Course

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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 the prior day's close. That tells us that we are seeing increased value being placed in the stock.

At Point B we see a breakout from the opening range on increased volume. That tells us that large market participants are viewing the stock positively, jumping in to buy at new AM highs.

Point C represents the first pullback from the breakout, as some short-term participants take profits. When we see a shallow pullback on reduced volume, as we do here, it tells us that the higher prices are not attracting significant selling. This sets us up for further upside (Point D).

At each pullback in the stock (the horizontal blue lines), we see how far sellers could knock the issue down. Once we get a new move to daily highs, those blue lines can serve as trailing stops to lock in profits.

The nice thing about such setups is that it only takes a few winners to pay for a number of ideas that chop around and don't do much. A majority of profits will come from a handful of nicely trending trades.

via - http://traderfeed.blogspot.com/2007/03/anatomy-of-stock-breakout.html

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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, I approached trading without a plan or proper trading education on how the market works. What do you expect? Your guess is as good as mine. It was a total disaster after taking many losses; I was almost psychologically blown a way. At this stage, two important things happened to me, my P&L was in the red and I was down emotionally.

My Worst Trade

My worst loss that stands out in all my losses was a trade I took (bought EUR/USD) in anticipation of French Referendum thinking that it would be in favor of the European Union but alas I got a margin call after the result was negative.

Please do not ask me about a stop loss I did put a stop loss but I later removed it because I was so confident it was going to be a winning trade. Hey, can't you understand. I have been declaring losses so I thought this time round I would take a large position and cover all my losses. I was subsequently charged to court (trading), tried and found guilty (for losses). Punishment, six months without trading. While serving my term I embraced trading education especially technical analysis and trading psychology. So when I got a handle of certain strategies applying technical analysis and trading psychology I started trading again but not without losses but I followed my trading plan anyway and things improved especially when I became comfortable with losses as expenses in the business of trading.

Lessons

Never Trade Without A Trading Education - acquire proper trading education because the knowledge through trial and error in the market can be more expensive and time consuming than the normal trading education.

Never Trade Without A Plan - Having a trading plan is a most in this business if you want to succeed. This plan most specify and predetermine your entries, exits, stop loss, position size and your psychology (your emotion at the time you click enter). There could be more you could have on your plan but the most important thing is that you must follow it, because when you follow your plan you have a chance of succeeding in trading. You may be tempted to say do I have to follow this damn plan everyday, just go to a near by Airport and observe what pilots do everyday; they follow their plan and check each one before taking off. He can as well say, I feel better flying without my plan because I do it every time. That you know will be disastrous.

Do Not Be Smarter Than Your Emotion -What do traders do when they are tired? They wait for an opportunity instead of turning off their computers and call it a day they stay on waiting to initiate a position and when the trade turns out to be a loser they become angry adding to the tiredness. Hey, you know what, you can not win at trading if you are not in your right frame of mind. If you have problems with your spouse please do not trade, if you have a string of losses do not trade, take some time off and go over your losses until you know what went wrong before you can put on another trade. If any thing occupies your mind apart from the market and following your trading plan when you are ready to trade, do all you can to resolved it before you start trading for the day. If you cannot go golfing.

Cut Your Losses Shut And Let Your Winners Run -This one sounds familiar, right.The professionals do exactly as is stated here but what do novice traders do? They do the opposite by letting their losses run and cutting their winners shut.

In other words, they are patient with their losses and impatient with their winners thinking that their positions would come back. The hard truth is the market does not know whether you are winning or losing. It will go wherever it wants to go and do what it has been doing, which is moving up and down. It is now left to you to find opportunities within these up moves and down moves.

Becoming A Professional Trader Takes Time - This might sound funny. Do not ask any trader to tell you how many years it will take you to become a professional/experience trader. The truth is that real professional traders know that the education of a trader never ends. It is ongoing because market is not static, it changes so if you think you have acquired enough trading knowledge and market conditions change and you cannot cope with the changes you automatically become a learner. The fastest way to become a good trader is to learn from the professional traders (their strategies and how they apply them) taking into consideration your own psychological make up.

via - http://www.tradingmarkets.com

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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!

Confidence

This 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.

Discipline

In order to day trade successfully, you must develop a trading plan and consistently stick to it. You must avoid a "shooting from the hip" or a "seat of the pants approach" to day trading.

Get out of the market when you have reached your objective and do not let emotions like fear and greed influence your trading decisions.

Decisiveness

Good day traders do not hesitate to "pull the trigger" when entering and exiting trades. Traders who are in the habit of being tentative or indecisive will never become successful.

Passion

Most successful day traders have a true love or passion about their trading activities. If you do not enjoy reading charts, dealing with numbers, reading market news, interpreting quote screens, learning new trading strategies and working independently in a fast-paced environment, then day trading is probably not your cup of tea.

Ability to Accept Failure (and blame yourself for all failures)

Good day traders know that many of their trades will fail to meet the original objective. They do not, however seek to blame someone else for their loss, and they don't dwell on it. They attempt to learn from their mistakes and move on to the next trade.

Ability to Accept Risk (lose money)

Another personality trait of good traders is that they are comfortable with risk and are prepared to lose money from time to time. If you are afraid that you will, on occasion, lose money, then day trading is not for you.

Patience

Good traders do not rush into trades. They take the time to select good trading opportunities and do not place orders simply for the sake of holding a position in the markets at all times. On some market days, where few good trading opportunities exist, they are content to simply stand aside and wait.

Concentration

In day trading, a great deal of real-time information has to be absorbed, analyzed and acted upon in intense bursts throughout the trading day. This requires a great deal of concentration and stamina on the part of the trader, and the ability to avoid distractions. Day trading can be very hard work and a lack of concentration can doom a trader to failure.

These are the key personality traits that successful day traders tend to have in common! Do you??

via - www.Traderji.com

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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 simply the multiple counting of the same information. The use of four different indicators all derived from the same series of closing prices to confirm each other is a perfect example."

The issue of multicollinearity is a serious issue in technical analysis when your money is at stake. It is a problem because collinear variables contribute redundant information and can cause other variables to appear to be less important than they really are. One of the real problems is that sometimes multicollinearity is difficult to spot.

Technical indicators should be arranged in categories to keep from using too many from the same category. Here is a table that categorizes the indicators available at StockCharts.com:

Category		Indicators
Momentum		Rate of Change (ROC) Stochastics (%K, %D) Relative Strength Index (RSI) Commodity Channel Index (CCI) Williams %R (Wm%R) StochRSI TRIX Ultimate Oscillator (ULT) Aroon
Trend		Moving Averages Moving Average Convergence Divergence (MACD) Average True Range (ATR) Wilder's DMI (ADX) Price Oscillator (PPO)
Volume		Accumulation Distribution Chaikin Money Flow (CMF) Volume Rate of Change Volume Oscillator (PVO) Demand Index On Balance Volume (OBV) Money Flow Index

The best way to quickly determine if an indicator is collinear with another one is to chart it. Make sure you have enough data on the chart to get a good indication. If they basically rise and fall in about the same areas, the odds are that they are collinear and you should just use one of them.

The first chart below shows some examples of indicators that are collinear. Notice that all three indicators are basically saying the same thing. If your analysis was that this was supportive information, you would be falling into the multicollinearity trap. Pick one of the indicators for your analysis and do not use the others.

Below are some examples of indicators that are not collinear. These three are not similar at all and, when interpreted correctly, each will give different information. It may be supportive or it may not.

Bottom Line: If you are randomly selecting indicators to support your analysis, you will more than likely fall into the multicollinearity trap of using multiple indicators that are all saying the same thing. They are not giving you any additional information; in fact, they are restricting your overall view of the market. Don't search for supporting information among collinear indicators, it is just misleading

via - http://stockcharts.com/help/doku.php?id=chart_school:trading_strategies:multicollinearity

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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 moving average are greater than 20 degrees and the price retrace back into the zone of the 21 Exponential moving average and the 10 Exponential moving average. Set stoploss at 6 pips plus spread and profit taking at 8-10 pips. Move stoploss to breakeven as soon as 6 pips gain is obtained.

Below are some pictures for your reference:

via - http://www.forextac.com/5-minute-intraday-trading-strategy.html

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