Traders' Library

Voted Best Book by TradersPlanet

Make Money Trading - How to Build a Winning Trading  by Jean Folger and Lee Leibfarth also won award from TraderPlanet!  It was voted #1 Best Book!

We also came in 2cd place with Steve Palmquits Money Making Candlestick Patterns: Backtested for Proven Results. (read the blog post!)

So here is a excerpt from our #1 book:

Chapter 5: Charting the Market

Chart Types

Bars and Candlesticks

Price charts simply provide a history of price and volume over a specified interval. This visual history of price action is only as useful as the data that is used to create it. In other words, a charting platform must have accurate and consistent data in order to provide traders with reliable charts. Since price charts are the primary means of making trading decisions, they must be dependable. Once data is received by a market analysis platform, the prices can be displayed in a variety of charting methods. Price charts are two-dimensional graphs that display price along the vertical axis, and the charting interval along the horizontal axis. In order to have useful price charts, an interval must be selected that reflects a snapshot of the price fluctuations for a given period. For each interval, several data points are recorded that include the price at which the interval began (Open), the highest price during the interval (High), the lowest price during the interval (Low), and the last price during the interval (Close). In addition, the number of shares or contracts traded during the interval (Volume), and the elapsed time for the interval (Time in minutes) are recorded.

Learning Video: Trading Short With Technical Analysis

In this part I will show you a second example with a short trade, how to make buy and sell decisions based on technical analysis techniques. I will apply the basic knowledge presented in the previous videos.

We are looking at the chart of Allegheny Energy Inc November 9, 2007. The first thing we do is, look at the long term trend with this weekly chart. The long term impulse wave [5] may be close to completion. I used my Elliott wave count indicator to help find a count that complies with the Elliott wave rules.

Next I used the start and top of wave {1} to project long term Fibonacci price targets. This projection seems to fit quite nice the targets reached already.

Sylvain Vervoort
http://stocata.org/

S&P500 Analysis Update Feb. 27, 2010.

Looking at the indicators, there is still the possibility for an extension of the (B) wave to a level of 1125-1130. Indicators are making a convergent move for the moment which also could point in the direction of a further up move.

On the other hand, looking at the price chart, there is strong resistance at 1115, the 50-days simple moving average, the Fibonacci retracement level and the last candle is a spinning top. Also the volume is not really supporting the up move and the big black candle we had on tuesday is not yet completely recovered.

So, if I have to make a decision now, I would still rather go for a short trade.

In a normal correction wave (B) scenario here, there is room and we can not exclude a further up move and even a new higher high index value. That would be the case if the index is making another zigzag extension for the longer term {C} and [B] wave. Since al indicators have room for a further up move, we should not exclude this scenario.

The SATS2 expert is still red, there are no open long positions.

If the assumed long term Elliott wave count is correct, I expect the index to fall back to 650 by September 2010. Look at the chart at the end of this page for an explanation.

All indicators are moving down.

Health care, ETF Summary, & Olympics

Health Care Investing: Time to Pay Attention (Dash of Insight)

February ETF Trend Summary (Big Trends)

Dual Intraday Divergences and the Reversals that Follow Feb 26 Dual ( Afraid to Trade)

Forex rule pushback (Buy the rumor sell the fact)

Technical Picture-Bulls Defend Support (Wall St. Warrior)

Midday Briefing for February 26th: Catching Day Structure (TraderFeed) 

Data Points: U.S. Market (WSJ)

U.S. scores six early goals to trounce Finland in semifinal (ESPN)

Meet Tom Sosnoff- 2010 Trading Forum Presenter

Tom Sosnoff is the founder of thinkorswim, Inc. and is responsible for overseeing the company’s corporate strategy; specifically dedicated to systems development and trading strategy. Prior to starting thinkorswim, Sosnoff served as an options market maker and managed a trading group at the Chicago Board Options Exchange (CBOE). He has also successfully traded index arbitrage strategies and managed a variety of hedge funds.

 

Be sure to check out Tom at our 2010 Trading Forum in Chicago April 23-25, 2010!

 

Q: How did you get into trading?
A: Almost my first job out of college. It was love at first trade.

Q: What have you learned from your trading mistakes?
A: Keep them small.

Q: What do you trade in your account?
A: Everything. Stocks, options, futures, and FX.

Q: Who are your trading mentors or role models?
A: None who are publically known.

Q: How would you define your trading style?
A: I consider myself an aggressive premium seller.

Q: What’s your number one trading rule?
A: Do the opposite.

Q: What are you watching closely right now?
A: Euro, VIX,  SPX vs. NDX

Q: What is the most important part of your trading routine?
A: Never listen to anyone else

What Every Trader Should Know about the Forex Power-Hour

By: Ellie Taft

With a centralized market like stocks and commodities everyone knows exactly what time the opening bell will ring. Traders also know that the first 15-20 minutes following the bell are critical for the entire day. But what happens with a 24-hour market like forex? Believe it or not forex has a critical power hour too. . .but it may not be the one you would have guessed.

For more information, please visit www.dadslegacy.us

 

FUTURES, STOCKS, BONDS, CURRENCY AND OPTIONS TRADING INVOLVES HIGH RISKS WITH THE POTENTIAL FOR SUBSTANTIAL LOSSES.

PLEASE READ. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THERE IS A SUBSTANTIAL RISK OF LOSS TRADING STOCKS AND OPTIONS WITH OR WITHOUT THIS OR ANY OTHER ADVERTISED PRODUCT, SERVICE OR SYSTEM. ALSO, HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

Trading TIps.

An Excerpt from the Timely Trades Letter.

Trading is based on being positioned to profit if the stock, or the market, does the usual thing in a given situation. Since stocks often bounce from support, candidates with a larger distance to support from the entry are more attractive because they have more ‘room to run.

I apply the concepts of support, resistance, and accumulation to the market itself to determine if trading is appropriate. If I am trading shorts  and the market is approaching support I become cautious. The reason is that the market often bounces or bases near support and thus shorts would be less attractive. When the market is clearly trending and well away from support I will use larger position sizes in my trades than when the market is approaching a support level. I cannot influence what the market does, but I can react to it and reduce my risks by taking smaller position sizes when the market is approaching a support level.

The upper Bollinger Band will often act as resistance to market moves, particularly in trading range markets. This tendency to retrace from the upper band during trading range conditions is something that can be used as part of a traders money management strategy.  In strongly trending markets the market may ‘ride the bands’, but it is quite common for the market to base or retrace when hitting the upper band during a trading range environment. Since I always want to be positioned to profit when the market does the normal, or usual, thing I take profits on positions when they approach the upper band during a trading range environment.

Chuck LeBeau Webinar Tonight

Just a friendly reminder to register for Chucks' free webinar, IT"S TONIGHT at 7 pm EST.

He is going to cover how to:

-Cut losses short and let profits run giving you the biggest returns possible,
-Automatically adjust to trend direction and volatility to increase profit in changing markets, -Provide completely objective exits to eliminate indecision and optimize gains,
-Work with short and long-term time frames to match any trading style.

A big thanks to MarketinDirection.Net for offering this great oppurtunity!

Long awaited pullback in stock index futures

*All rights reserved.  Reproduction or distribution of this newsletter without prior consent is strictly prohibited.

February 23rd, 2010

Check out Carley's recent radio interview with Vince Rowe discussing her new book "A Trader's First Book on Commodities"and curent market issues:

Segment 1 http://toinvestsmart.com/2010/021910/021910_1.mp3

Segment 2 http://toinvestsmart.com/2010/021910/021910_2.mp3

The light volume rally seemed to be suspect, and investors were looking for a reason to sell.  This morning they got what they were looking for with a much weaker than expected consumer confidence index.  The accumulating sell stops greased the pullback to leave the March S&P trading nearly 23 handles off of its overnight high. 

 

According to the Conference Board, its consumer confidence index dropped to 46 in February vs. a 56.5 reading in January.  If consumers act as poorly as they feel, retailers could suffer.  The news overshadowed optimistic earnings reports from the likes of Home Depot, Sears, Macy's and Target. 

 

If you were following overnight trade in the S&P, you were likely taken back by the sharp mid-night reversal.  This occurred on a headline across the pond stating that the Bank of England describes England's recovery as "fragile".  Also, German's business confidence index dropped for the first time in 10 months. 

 

After seeing the overnight rally reverse (just short of our resistance numbers), it appears as though the selling could continue in the intermediate term.  Our first support in the March S&P futures will be near 1088/1085 area, but a close below this could lead to a slide to 1052ish.  That said, markets rarely go straight up or down so traders should be prepared for some rather large bounces on the way down.  We see resistance near 1103 and then again just over 1115. 

 

If you are trading the Russell, we had been looking for a possible pullback to 607 but the market faces strong support near 619 and we will need to see a close below this price to keep the bears in control. 

 

The NASDAQ faces support near 1780, but a close below this could lead to a slide to the 1718 area. 

Consumer confidence plunges, Treasuries rally

*All rights reserved.  Reproduction or distribution of this newsletter without prior consent is strictly prohibited.

February 23rd, 2010

Check out Carley's recent radio interview with Vince Rowe discussing her new book "A Trader's First Book on Commodities" and other topics :

Segment 1 http://toinvestsmart.com/2010/021910/021910_1.mp3

Segment 2 http://toinvestsmart.com/2010/021910/021910_2.mp3

The Treasury complex benefited from flight to quality trade in light of a weaker than expected consumer confidence number and a faltering stock rally.  Yesterday's questionable auction has been long forgotten as the T-bond approaches our original upside target just under 118; the note followed suit to trade near (and a little above) our noted level of 118.

 

The day's volatility was triggered by an ugly consumer confidence report.  The index was reported at 46, over 10 points lower than the previous reading and nearly the same below consensus estimates.  Additionally, a relatively disappointing Case-Shiller index reminded traders of the turmoil in the housing sector...and without a recovery in real estate the economy will struggle to improve. 

 

The Treasury auctioned $44 billion in 2-year notes at a rate of .0895%.  The bid-to-cover was 3.33 and the indirect bidder (assumed to be foreign buyers) was 53.6%.  The auction was relatively well received and was scored as a B+ by CNB's Rick Santelli.  In post-auction trade the 30 year bond futures jumped nearly 15 ticks. 

 

With the Treasury complex approaching resistance, we are growing relatively neutral in the near-term.  After all, Ben Bernanke will be on the hot seat tomorrow and we have another 5-year note auction...and today's issue has set the bar high.  It is possible that we will see some back and fill trading but we prefer to wait for a clearer picture.  In the meantime, a close above 118 in the long bond could be signaling a continuation of the rally to the 120 area and this translated into the 118'27 area in the 10-year note.

 

If you were following our short bond put trade, our clients were advised to buy these back today at 8 or better.  Assuming a fill at 23 getting in and exiting at 8, this is a profit of about $234 per contract before commissions and fees.  If you are interested in this counter-trend option selling strategy and receiving our trade recommendations in real time, contact us by email or visit our website to view our recent webinar archives.

2009 TraderPlanet STAR Award Winners

We are really excited here at Marketplace Books!  We just found out that one of our titles came in 2cd Place in the 2009 TraderPlanet STAR Awards- Books category.

Congrats to Author Steve Palmquist for his stellar job on Money Making Candlestick Patterns: Backtested for Proven Results. This award is given to honor companies and individuals who influence the financial industry with there outstanding products.

Click here to read the Press Release and see all the categories and winners!

Why Options? From Simple Steps to Option Trading Success

Take a glance at chapter one of Simple Steps to Option Trading Success by Jim Graham and Steve Lentz.Click here to download the whole eBook!

 

CHAPTER ONE

WHY OPTIONS?

 

For anyone who is uncertain about how the stock market will act in the near term—and that describes just about every stockholder—options present tremendous opportunities. They let you leverage your investment capital, give you greater flexibility when making investment decisions, and allow you to tailor your risk to fit your personal comfort level. In short, options can be used effectively for a number of different purposes, including the three primary ones we will address in this book which cover using them: (1) to speculate in the market for profit, (2) to earn income and enhance your investment returns, and (3) to protect against a temporary decline in a stock’s value, or to hedge your entire portfolio against market risk.

 

The Benefits of Trading with Options

 

A key benefit options offer over other investment vehicles is that an option trader can profit in either an up or a down market. When you buy an option, you are hoping that the underlying stock will move in the direction you want. If you’re right, you make a profit. If you’re wrong, you lose money. But it’s really all a matter of two things: Time—since the option contract always expires at some point, and timing. Consistent with all forms of investing, timing is everything in options trading.

 

This book attempts to show how adding options to your trading arsenal can help you better reach your investment goals. How you use options depends on what you hope to achieve and how much risk you can afford to take. Some investors think of options only as a stand-alone and speculative product. And they can certainly be used that way. However, the potential uses of options go far beyond pure speculation—as we will endeavor to demonstrate throughout the book.

 

Early Bird Special is ending soon!

Just wanted to give all of our loyal blog readers a heads up that the our early bird special for our 2010 Legends of Trading Forum in Chicago will be ending at the end of the month.  So hurry and register this week—the price is going up on February 28th.

Also, the schedule has just been released!   The best in the business are going to be there that weekend and so should you!

Friday, April 23
TIME	Location	Speaker
6:00 pm-7:00 pm	Welcome Reception & Registration
7:30 pm-9:00 pm	Room 1	Opening Session with Jea Yu

Saturday, April 24
TIME	Location	Speaker
7:00 am-8:00 am	Breakfast & Registration
8:00 am-9:30 am	Room 1	Jake Bernstein
8:00 am-11:30 am	Room 2	Oliver Velez
10:00am-11:30 am	Room 1	Larry McMillan
11:45 am-1:00 pm	Traders' Hall of Fame Awards Banquet
1:30 pm-3:00 pm	Room 1	Tom Sosnoff
1:30 pm-5:00 pm	Room 2	John Person
3:30 pm-5:00 pm	Room 1	Robert Prechter

Sunday, April 25
TIME	Location	Speaker
7:00 am-8:00 am	Breakfast
8:00 am-9:30 am	Room 1	Norman Hallett
8:00 am-9:30 am	Room 2	Price Headley
10:00am-11:30 am	Room 1	Chuck LeBeau
10:00am-11:30 am	Room 2	Todd Gordon
11:45 am-1:00 pm	Lunch
1:00 pm-2:30 pm	Room 1	Larry McMillan
1:00 pm-2:30 pm	Room 2	TBA
3:00 pm-4:30 pm	Room 1	TBA
3:00 pm-4:30 pm	Room 2	TBA
*schedule is subject to change

For only $99 you can be part of live recordings.  Plus this year we have given you the option to register and get the DVDs from every session for only $395!

Learning Video: Trading Long With Technical Analysis

In this learning video, I will show you a first example of trading based on technical analysis. We start with a long trade, how to make buy and sell decisions based on technical analysis techniques. I will apply the basic knowledge presented in the previous videos.

We will be looking at the chart of Avery Dennison Corporation. The date is February 13 2009. The first thing you do is, look at the long term trend with a weekly chart.

January 26 price reached a long term high, finishing a long term Elliot impulse wave up. We will use my Elliott wave count indicator to find a count that complies with the Elliott wave rules.

Sylvain Vervoort
http://stocata.org/

S&P500 Analysis Update Feb. 21,2009.

I have changed the Elliott wave count, because a wave 2 was passing the start of wave 1. We have now completed an ABC correction, a higher degree (A) wave and we are in the making of a (B) correction wave.

The index reaches previous resistance and support now, inclusive resistance from the 50-days simple moving average and the 38.2% Fibonacci retracement left over from the complete (A) wave down.

Is this sufficient to stop the up move? Since I expect a correction on the hourly chart, it may be the turning point.

However, in a normal correction wave (B) scenario we can not exclude a further up move and even a new higher high index value. That would be the case if the index is making another zigzag extension for the longer term {C} and [B] wave. Since al indicators have room for a further up move, this scenario should not be excluded.

The SATS2 expert is still red, there are no open long positions.

If the assumed long term Elliott wave count is correct, I expect the index to fall back to 650 by September 2010. Look at the chart at the end of this page for an explanation.

All indicators are moving up.

Trailing Stops with Chuck LeBeau- Free Webinar

You’re Invited!

Keep More Profit by Preventing the Top Trailing Stop Mistakes

Who: Chuck LeBeau (2010 Traders' Hall of Fame Award Winner)
What: Free Exclusive Webinar
When: Wednesday, February 24, 2010| 7 PM EST
Where: Click Here to Register

What you don’t know about stops can cost you money. What you think you know about trailing stops can cost you all of your profit. Thanks to MarketDirection.Net, trading legend Chuck LeBeau has agreed to open his stop creation playbook and give Traders’ Library customers the solution he relies on to generate the ideal exits.

This meticulously crafted solution will:
-Cut losses short and let profits run giving you the biggest returns possible,
-Automatically adjust to trend direction and volatility to increase profit in changing markets,
-Provide completely objective exits to eliminate indecision and optimize gains,
-Work with short and long-term time frames to match any trading style.

The best part of all is that Chuck has just developed a new tool to generate the ideal re-entry point after you have been stopped out. If you want to get access from a trader so respected for his techniques and research he has been selected to receive the Trader’s Hall of Fame Award, this is the best chance.

Seats will fill up fast! Reserve your seat now!

Trading Tips.

An Excerpt from the Timely Trades Letter.

Trading is a statistical business, traders focus on risk management using systems that have been shown to provide an edge. Trading stock tips, news stories, stocks you are familiar with, and similar approaches can lead to mixed results. No one guesses right all the time. Trading is not about guessing or hoping. Traders need tools that are well understood, like an old friend. You usually know how a friend will react in a given situation, sometimes you are surprised but more often than not you have a good idea of their reaction to things. Trading needs to be the same way. No system reacts as expected all the time, if they did everyone would be driving a BMW to their Yacht. A traders job is to find a system that has an edge, learn how it behaves in different market conditions, and then be positioned to profit if the system does the normal thing.

Trading involves more than just picking a stock and entering a position. You don’t have a profit until you are back in cash. Exit strategies and money management techniques are important aspects of trading. Traders need to vary their position sizes and the number of trading positions used based on the current market conditions. In order to do this traders need to know how their trading systems perform in different market conditions. We cannot control what the market is doing, but we can react to it. During conditions that result in lower success rates for a trading system we need to either switch to a different trading system, or reduce positions sizes, as a way of reducing risks.

Selecting an Option Strike Price

By: Chuck Hughes

Selecting an option strike price is an often overlooked but important part of profitable option investing. Option premiums consist of time value an intrinsic value.

Option Premium = Time Value + Intrinsic Value

The strike price of an option determines the option’s time value and intrinsic value. Options lose all time value at expiration.

Options Lose All Time Value at Expiration

When you purchase an option the time value portion of an option is a decaying asset. Therefore the goal is to maximize intrinsic value and minimize time value when you purchase an option.

Goal is to Maximize Intrinsic Value and Minimize Time Value

In this video you will learn a simple method for selecting a strike price that allows you to maximize intrinsic value and minimize time value when you purchase an option.

For more information, please visit www.tradewins.com

FUTURES. STOCKS, FOREX AND OPTIONS TRADING INVOLVES HIGH RISKS WITH THE POTENTIAL FOR SUBSTANTIAL LOSSES.

PLEASE READ. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THERE IS A SUBSTANTIAL RISK OF LOSS TRADING STOCKS AND OPTIONS WITH OR WITHOUT THIS OR ANY OTHER ADVERTISED PRODUCT, SERVICE OR SYSTEM. ALSO, HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

Metals Remain Attractive For Good Reason

By Kevin Grewal, Editor at www.SmartStops.net

As developing nations continue to prosper, grow and decouple from the Western world, the demand for certain alloying metals is likely to surge making them a highly sought after commodity.

There is a direct correlation with the demand for alloying metals and economic growth.  In general, as economies grow, they consume and hence demand more alloying metals.  Some of these metals, like aluminum, iron and copper are invaluable building a modern economy due to their roles in the development of roadways, communications and other areas of infrastructure.

Additionally, these metals are vital to the development and expansion of a nation’s manufacturing sector.  This was seen in 2009 as China’s economy and manufacturing sector grew forcing increased consumption and demand of copper, which further resulted in higher copper prices. 

As for the coming year, developing nations are expected to be at the forefront of economic growth and will likely be the drivers of increased demand for these metals.  Copper has positive fundamentals and is likely to see a market imbalance on the supply and demand side resulting in a deficit in the metal, pushing prices up. 

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