Traders' Library Blog

Traders' Library: This week's bestsellers

1. Proven Chart Patterns: Key Indicators for Success in Today’s Markets

2. Trading the Fast Moves for Maximum Profit with William McLaren

3. Insider Strategies for Profiting with Options

4. Disciplined Trading: How To Trade Your Way to Financial Freedom

5. Charting Made Easy

6. The Four Biggest Mistakes in Option Trading, 2nd Edition

 

7. Forex Trading Using Intermarket Analysis: Discovering Hidden Market Relationships that Provide Early Clues for Price Direction

8. Forex Simplified

9. Naked Puts: Power Strategies for Consistent Profits

10. Market Wizards

To see the Top 25 Bestsellers of the Week click here!

 

Time Tested Trading Tips, November 29...

Steve Palmquist

Author of ‘The Timely Trades Letter’. ‘How to Take Money from the Markets’, andMoney-Making Candlestick Patterns.

 

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...

More Thoughts on Human Nature and Speculation

Continued reading from Tape Reading & Market Tactics.

Click here to read Chapter 17. 

Chapter 18

More Thoughts on Human Nature and Speculation

 

Greed

I have watched traders in brokers’ offices with deep interest, and have tried to learn the traits that crippled their profits. The desire to “make a killing”—greed—has impressed me particularly.

Perhaps this desire to squeeze the last point out of a trade is the most difficult to fight against. It is also the most dangerous. How often has it happened in your own case that you have entered a commitment with a conservatively set goal, which your judgment has told you was reasonable, only to throw over your resolutions when your stock has reached that point, because you thought “there were four more points in the move?” The irony of it is that seemingly nine times out of ten (I know, for it has happened with me) the stock does not reach your hoped-for objective; then—to add humiliation to lost profits—it goes against you for another number of points; and, like as not, you end up with no profit at all, or a loss.

Maybe it would help you if I told you what I have done to keep me in my traces: I have opened a simple set of books, just as if I were operating with money belonging to someone else. I have set down what would be considered a fair return on speculative capital, and have opened an account for losses as well as for gains, knowing that the real secret of speculative success lies in taking losses quickly when I think my judgment has been wrong. When a commitment is earning fair profits, and is acting as I had judged it should act, I let my profits run. But, so soon as I think that my opinion has been erroneous, I endeavor to get out quickly and not to allow my greed to force me to hold for those ephemeral, hoped-for points. Nor do I allow my pride to prevent an admission of error. I had rather, by far, accept the fact that I have been wrong than accept large losses.

Another helpful thing to do, especially when you feel in doubt about your position, is frequently to close out all commitments (except your investment backlogs) and stay out of the market for a time. This clears your perspective and allows your judgment to “congeal.” Never hold to a position because of pride in an original conclusion which your later judgment whispers is wrong. If you will limit your losses quickly and allow your profits to run, you have to be right only two or three times in every five to earn extraordinary profits.

For fear of being misunderstood, I want to explain that the foregoing is not to be construed as advising daily scalping, or in-and-out trading “for a point,” as, to my mind, there is nothing but grief to result from that in the long run. Rather, it offers suggestions for conservative speculation within the major or intermediate swings of stock prices. Concentrate your trading on these more important, intermediate moves and concentrate your mind on the action of the stock. Force yourself to forget “self” in order to trade in an impersonal, business-like manner.

Look Upon Your Stock Certificates as a Merchant Looks Upon His Merchandise

S&P500 Technical Analysis Update: Nov. 27, 2010.

There was very little change. Intermediate correction wave B up is probably not finished yet. I expect to see the top of this B wave next week. Followed by correction wave C. This C leg must complete the correction wave (4) down. Since the wave (2) correction was sharp, I expect a more flat correction for wave (4), towards the lower side of the up moving pitchfork and the active support of the lower Bollinger band and the up moving 50 day average (blue). 

The index has to go through this correction for wave (4) before reaching the top to complete wave (5). Best estimate for this top now is 1320.

The SATS5 expert remains red. There is no open position. Trading results can be found at the bottom of this page.

Longer term up wave {5} and with that correction wave {A} was completed and the index next made a medium term downtrend correction wave {B}. Now we are in the up move to complete correction wave {C} and with that long term correction wave [B].

Green means an open long position. First red or black candle after a green candle closes the long position. A black candle means an open short position. A green or red candle after a black candle closes the short position. Since SATS5 can trade profitably both with long and short trades, we will also trade short automatically. Follow for FREE the SATS5 signals given for 42 stocks at http://stocata.org/.

 

FOREX Update EUR/USD pair: Nov.27,2010.

Looking at the weekly chart and the idea that longer term wave {C} down has started, I am labeling the down move in the daily chart as an impulse wave down now in the making of wave (3). Most probably this wave will have an extension since all indicators are bottoming already. I expect the index to find temporary support on the 200 day average around 1.31.

Last week I mentioned: "stay alert! For the moment the up move is not supported by higher volume and the weekly chart suggests a further down move". And we actually got a bigger down move. And writing last week "So, we may only get a small up move (a wave 2?) and we may have already started the longer term down move"; it looks like that is what happened. The SATS5 expert function is red. The last long position was closed with a profit of 777 PIPS.

 

The Trading Week: Nov. 29 - Dec. 3

Nov. 26, 2010 (Allthingsforex.com) – In the week ahead all eyes will be focused on the U.S. Non-Farm Payrolls and Employment Situation report as traders look for signs of consistent improvement in the U.S. labor market.      

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe. 

1.    EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation, and Euro-zone Unemployment Rate, Tues., Nov. 30, 5:00 am, ET.

Inflationary pressures in the Euro-zone are forecast to remain at 1.9% y/y in November- same as the 1.9% y/y reading in the previous month. The unemployment rate in the Euro-zone is also expected to stay unchanged at 10.1%. 

2.    CAD- Canada GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Nov. 30, 8:30 am, ET.

The Canadian economy is expected to grow faster in the third quarter compared with the 0.5% growth in Q2 and 1.4% in the first quarter of 2010.
 
3.    AUD- Australia GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Nov. 30, 7:30 pm, ET.

On a quarter-over-quarter basis, the Australian economy is forecast to experience slower growth by 0.5% in the third quarter from 1.2% q/q in Q2 2010.

4.    USD- U.S. ADP-Automatic Data Processing Employment Report, a measure of jobs lost or added to the private sector of the economy, also serving as a preliminary estimate for the outcome of the monthly non-farm payrolls, Wed., Dec. 1, 8:15 am, ET.

Payrolls in the private sector of the U.S. economy are forecast to increase by up to 70,000 in November, compared with 43,000 in the previous month. Strong private sector jobs creation would be a welcomed sign of consistent improvement in labor market conditions.

5.    USD- U.S. ISM Manufacturing Index, a leading indicator of industrial activity, where a reading above or below 50 is the dividing line between economic expansion and contraction, Wed., Dec. 1, 10:00 am, ET.

The U.S. manufacturing sector could see another month of expansion with an ISM index reading of 56.3- a slight pullback from 56.9 in October. 

6.    EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Dec. 2, 5:00 am, ET.

The revised estimate of the Euro-zone GDP is forecast to confirm the expectations for slower economic growth by 0.4% in the third quarter, compared with 1.0% q/q in Q2 2010.

7.    EUR- European Central Bank Interest Rate Announcement, Thurs., Dec. 2, 7:45 am, ET.

In the midst of yet another EU debt crisis, the European Central Bank would be likely to keep the benchmark interest rate unchanged. It would be interesting to see if the fears of contagion following the Irish bailout could make it more difficult for policy makers to allow some of the accommodative monetary policy programs to expire and whether the ECB would be forced to keep the liquidity flowing into 2011.

8.    CAD- Canada Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Fri., Dec. 3, 7:00 am, ET.  

The Canadian economy could add up to 17,900 jobs in November, compared with only 3,000 jobs in the previous month, as the unemployment rate is expected to stay at 7.9%. 

9.    USD- U.S. Non-Farm Payrolls and Employment Situation Report, one of the most important indicators of economic health, measuring the number of new jobs created or lost in the world’s largest economy, Fri., Dec. 3, 8:30 am, ET.    

There is a potential for an optimistic U.S. Non-Farm Payrolls report with consensus forecasts pointing to a second consecutive month of jobs creation as the U.S. economy adds up to 135 K jobs in November from 151 K in the previous month, while the unemployment rate remains unchanged at 9.6%.

10.    USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Fri., Dec. 3, 10:00 am, ET.    

The ISM Non-Manufacturing Index is expected to show activity in the services industries registering a small increase to 54.4 in November compared with a previous reading of 54.3.  

Happy Thanksgiving and Happy Trading

Since the markets are closed today, sit back, relax and eat well!  Here are some funny tid-bits about this Thanksgiving Holiday!

-More than 40 million green bean casseroles are served on Thanksgiving.

-Twenty percent of cranberries eaten are eaten on Thanksgiving.

-Fossil evidence shows that turkeys roamed the Americas 10 million years ago.

-Every President since Lincoln proclaimed Thanksgiving Day. But in 1939, 1940, and 1941 Franklin D. Roosevelt proclaimed Thanksgiving the third Thursday in November to lengthen the holiday shopping season. This upset people.

-The First Thanksgiving lasted for three days.

 

Time Tested Trading Tips, November 24...

Steve Palmquist

Author of ‘The Timely Trades Letter’. ‘How to Take Money from the Markets’, and Money-Making Candlestick Patterns.

 

When I am trading I know exactly how I am going to exit the position before I ever enter it. Entering a position without a clear exit strategy usually ends up trading on emotions or hunches. Trading on emotions or hunches often leads to losses. Mary your spouse for life, but just date stocks. Always have an exit strategy. Always.

The current market conditions play a key role in determining exit strategies. Stocks behave differently in trading range markets than they do in trending markets. Since a key part of trading is adapting to the market (it will not adapt to you, you must adapt to it) traders exit strategies should change with the market conditions.

The market is the summation of a large number of individual stocks. In trading range markets most stocks tend to ‘pop and drop’ rather than show strong trends. When the market is in a trading range then almost by definition most stocks cannot be trending. If they were then the market, which is the sum of all those trending stocks, would also have to be trending. When the market is in a trading range it tells you that the typical stock is not going to run far before it retraces. Traders use this market information to realize that in trading range markets they need to focus on shorter holding times and quick profits. In trading ranges traders are trying to piece together a trend in their account from the brief pops in several different stocks rather than trying to catch the rare single stock that is trending. Traders pick up the initial move on a stock that triggers, close it then pick up another pop and keep trying to repeat the process. Looking for stocks that run far in a trading range is likely to just be frustrating, adapt to what the market is showing you. If you use the same approach in all market conditions you are likely to get a lot of practice exercising stops.

There are no perfect trading systems, no matter what those slick brochures we all get in the mail say. Trading is a statistical business where it is important to manage risk. Every trading system has a certain percentage of winners and losers. Examples of six complete trading systems and how they perform in different market conditions is covered in ‘How to Take Money from the Markets’

When the market is trending stocks tend to...

Volatility Indicators now on KINDLE!

We see that the eBook and eReader fad is here to stay, so we are working on getting more titles availble on kindle.  Our newest title added is Volatility Indicators: Techniques for Profiting from the Market's Moves.

You have probably been hearing a lot about volatility in today’s financial markets, and that’s because it is such a crucial factor in trading. Fluctuations in trading activity can be used to establish timing for trade that will yield maximum results—if you know what to look for.

You will learn how each indicator is:

• Constructed or calculated to completely understand the signals it provides,
• Used in today’s changing markets, including stock, options, ETFs, futures, and Forex to find winning trades anywhere,
• Most often applied—and how to vary standard usage for maximum gains,
• Affected by today’s advancements in technology in relation to usage and interpretation to continually improve effectiveness,
• Used to measure the probable range of a trade and answer the elusive question “When should I exit?”
• Easily combined with other types of technical indicators for maximum profit.

Download your copy to your Kindle now!

MARK DOUGLAS AND TYPICAL TRADING ERRORS

Mark Douglas, in his classic THE DISCIPLINED TRADER, outlines ten typical trading errors that traders should be aware of and seek to avoid whenever possible.  Here they are:

1.  Refusing to define a loss.

2.  Not getting rid of a losing trade when it is obviously a loser.

3.  Getting locked into a bullheaded opinion about market direction.

4.  Focusing on monetary value of trade instead of market structure.

5.  Revenge trading to recoup a loss.

6.  Not reversing a position when the market is clearly changing direction.

7.  Not following the rules of your strategy.

8.  Planning for a trade and then not taking it.

9.  Not acting on your intuition.

10.  Giving back recent gains due to overtrading or inconsistency.

We can learn a lot from the market, and from ourselves, if we would only listen.

See you later...IN THE CROSSHAIRS!

Steve Palmquist

Author of ‘The Timely Trades Letter’ and ‘How to Take Money from the Markets’

Sometimes traders will start trading more aggressively when they are down in an attempt to get back to even. Draw downs are a fact of life in trading. Trading is not like drawing a paycheck. You do not get paid because it is Friday. I research the systems and then use that information when trading. If I have a losing streak I know that is to be expected and just stay focused on using the knowledge and skills that come from fully testing and analyzing trading systems.

 Serious traders will go through a learning curve as they study marketbehavior and how their trading systems function. They will have times when they run into situations that have not been experienced or researched and they may be unsure of what to do. This is normal, it is the price ofadmission to the trading business. My general rule is that when I am unsure I close the position. It is hard to go broke taking profits so my focus is on needing a clear reason to stay in a position, not wondering whether or not I should get out. If there is no clear reason to hold I take profits and move on to another trade.

 When trading I am not holding out for the perfect trade, there is no suchthing. Trading is about managing risks and I use the current market conditions to determine how many trades to be taking and the appropriate position sizing to use. Setups with more room to run are prioritized above ones with little room to run. Setups triggering on stronger volume compared to the previous days volume are prioritized above ones with lower trigger day volume. Setups with shallower pullbacks are prioritized...

S&P500 Technical Analysis Update: Nov. 20, 2010.

Monday and Tuesday were down days most probably completing a first correction wave A down. Since Wednesday we are making the up correction wave B. I assume that we will start the C leg down next week after probably higher prices beginning of the week.

This C leg must complete the correction wave wave (4) down. Since the wave (2) correction was sharp, I expect a more flat correction for wave (4), towards the lower side of the up moving pitchfork and the active support of the lower Bollinger band and the up moving 50 day average (blue).

Volume is low in the up trend. This should confirm a limited up correction move.

The index has to go through this correction for wave (4) before reaching the top to complete wave (5). Best estimate for this top now is 1320.

The SATS5 expert turned red on Tuesday, closing the long position. I published this on 11/17/2010.

Longer term up wave {5} and with that correction wave {A} was completed and the index next made a medium term downtrend correction wave {B}. Now we are in the up move to complete correction wave {C} and with that long term correction wave [B].

SATS5 is losing profit but still holding the long position and is making an 8.6% profit at the closing this week since opening the trade on 9/3/2010. There is no open manual position.

SATS5 green means an open long position. First red or black candle after a green candle closes the long position. A black candle means an open short position. A green or red candle after a black candle closes the short position. Since SATS5 can trade profitably both with long and short trades, we will also trade short automatically. Follow for FREE the SATS5 signals given for 42 stocks at http://stocata.org/ .

 

FOREX Update EUR/USD pair: Nov. 20, 2010.

With the up turn on Wednesday, we may have completed the intermediate wave 4 correction, with price now moving back into the upward pitchfork. All indicators are turning up. We may expect a further up move to complete wave 5 and (5) and {B}.Stay alert! For the moment the up move is not supported by higher volume and the weekly chart suggests a further down move.

Since I still have the feeling that the up move is not finished yet, I was the previous week looking for a new Elliott count. I think that we have now completed correction wave 4 (green) and that this correction will be followed with another move up tot the level of 1.455. Price can expect support from the lower side of the up moving pitchfork, the lower side of the Bollinger bands and the 50 day moving average if price can move above this level next. However, be careful when opening a long position because the up move suggested by the daily chart is not supported by the weekly chart. So, we may only get a small up move (a wave 2?) and we may have already started the longer term down move.

The SATS5 expert function is red. The long position was closed with a profit of 777 PIPS.

 

The Trading Week: Nov. 22 - Nov. 26

Nov. 19, 2010 (Allthingsforex.com) – The Thanksgiving holiday-shortened week ahead will be filled with important economic data from the world’s major industrialized nations, but the U.S. economic growth and housing market reports will take the center stage.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe. 

1.    EUR- Euro-zone Composite Manufacturing and Services PMI- Purchasing Managers Indexes, two leading indicators of economic conditions measuring the activity of purchasing managers in the manufacturing and services sectors, Tues., Nov. 23, 4:00 am, ET.  

The preliminary flash estimate of the Euro-zone Composite PMI could signal a slowdown, with the manufacturing index forecasted to pull back to 54.4 from 54.6 along with a retreat in the services index to 53.2 from 53.3.

2.    CAD- Canada CPI- Consumer Price Index, the main measure of inflation, Tues., Nov. 23, 7:00 am, ET.

Rising inflationary pressures could improve the odds for the Bank of Canada to consider extending their campaign of interest rate hikes in the near future as the inflation gauge is forecast to increase by 0.2% m/m. 

3.    USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, Tues., Nov. 23, 8:30 am, ET.

The main spotlight economic event of the week will bring the second estimate of the U.S. Q3 GDP which is forecast to revise the U.S. economic growth higher to 2.4% in the third quarter, up from the preliminary estimate of 2.0% and better than the 1.7% growth in Q2 2010.  

Free Webinar with Jea Yu

Who: Jea Yu
What: FREE Exclusive Webinar
When: Wednesday, December 1, 2010 | 7:30 PM EDT
Where: Click Here to Register

The beauty of a profitable swing trading system is that you don't have to give up your life to make it work.

Short-term trading legend Jea Yu is generating profitable trades and is ready to share tactics behind his simple, winning swing trading money machine.

Jea has taken the intense research he used to build a complete intra-day trading system and has applied it to swing trades. Even better, before he breathed a word of this new swing trading method to anyone, he put his own money on the line and made sure it worked. Now his hard work has made it easier for the traders in his UndergroundTrader Chatroom to generate profit.

On December 1st, Jea is going to give a handful of traders a tour behind the curtain of his amazing system.

Those in this webinar will see the process of finding those 'needle in the haystack' swing candidates and planning out the swing trade plan.

This includes:

• The 5 elements of a SOLID swing trade that lead to profitable trades,
• Gauging the overall market direction and context to stack odds in your favor,
• Jea's personal filtering process that allows him to spot pattern set-ups and multiple pattern convergence for generating income producing trades,
• Proper share size allocation, scaling and money management to dial in the biggest possible return from each trade.

Jea's Swing Trading System has produced over 160% return in 2010 with + 25% return alone since Oct 1st, 2010. This is a rare opportunity to see under the hood of a winning system and find out how you can get in on the action.

Jea has maxed out the capacity of webinars in the past and this pre-invitation is your only chance to reserve your slot before the doors are opened to the public.

Click Here to Reserve Your Spot Now

"Buy the Rumor, Sell the Fact"; John Person on Current Market Conditions

"Buy the rumor, sell the fact." One of the best axioms for traders. But I have two questions:

1.) Should we be considering this mentality and applying it now to trading the stock market, especially after the S&P 500 has rallied to a high of just over 1220, which is a 9.0% year to date gain, or

2.) Should we be entering on the long side of stocks right now as the momentum is on a solid bullish path?

In order to answer this, let’s review the current events, seasonal statistics, and consensus studies, and then I want to review some technical analysis techniques.

The elections are out of the way and now we enter a period of what is called the “Lame Duck" session. This is the time period where ousted politicians are still in office until the new regime is sworn in.

THE 7 DEADLY SINS OF STOCK TRADING

In their book, Tools and Tactics For the Master Day Trader, Oliver Velez and Greg Capra, outline the 7 deadly sins of stock trading.  Are you guilty of commiting any of the following?

1.  Failing to Cut Losses Short:  The most frequently committed error among traders.  "We are of the school of thought that believes that traders' most precious commodity is their original capital, and that they are doomed to utter failure if they do not do everything in their power to prevent its erosion" (91).

 2.  Dollar Counting: Focusing on how much a trade is up or down at any given moment can rob traders of profitable opportunities.  "Once a trade is taken, traders must work to forget their profits...and focus on the proper technique" (94).

3.  Switching Time Frames:  This is the error of buying in one time frame and selling in another.  The trader may buy in a longer term time frame, say the daily, but see a reversal on a 60 minute chart and sell.  This is "nothing more than a rationalization to ignore stops" (96).

4.  Needing To Know More:  Everyday traders must face the fear of pulling the trigger.  One of the symptoms of this fear is the need to know more but "the fact of the matter is that the brass ring goes to those who can act intelligently without the need to know more" (98).

5.  Becoming Too Complacent:  It is easy to become complacent when there has been a string of winners. "When a winning streak has fattened your purse, you must do everything in your power to keep your hard-earned gains and maintain the same intelligent mind-set that helped to produce those gains" (100).

6.  Winning the Wrong Way:  Many novice traders make money the wrong way and will eventually pay for it.  Traders make money the wrong way by not adhering to a rule or a stop loss and end up making money anyway.  This sets up a "taste of false success, and the market will eventually ensure that they give back this unearned profit sooner or later" (103).  The next time a rule or a stop is ignored the losses will far outweigh the previous gains.

7. Rationalizing:  This is a form of denial when in a losing trade.  Honesty, real honesty, no matter how ugly the truth, will put you above most market players unable to summon such strength from within, preferring instead to be comfortable, blaming their losses on something or someone other than themselves" (106). 

No matter which one of the seven deadly sins we have committed, we should ask ourselves the question: have we learned from them, asked for forgiveness, and are we ready to turn over a new leaf?  The market is a great teacher if we will only listen and obey.

See you later...IN THE CROSSHAIRS!

 

S&P500 Technical Analysis Update: Nov.13,2010.

The expected wave (4) correction started on Monday with a bearish harami pattern, nicely confirmed on Tuesday. The week was ended with a low exactly at the 20 day moving average of the median line (green) of the Bollinger bands.

We can expect a small up correction now, before we will complete the wave (4) correction down. Since the wave (2) correction was sharp, I expect a more flat correction for wave (4), towards the lower side of the up moving pitchfork and the active support of the up moving 50 day average (blue).

Volume is decreasing in the downtrend. This confirms for now a limited down correction only.

The index has to go through this correction for wave (4) before the index will reach the top to complete wave (5). Best estimate now is 1320.

The SATS5 expert remains green. If the correction remains indeed limited, SATS5 will probably stay in the long trade.

Longer term up wave {5} and with that correction wave {A} was completed and the index next made a medium term downtrend correction wave {B}. Now we are in the up move to complete correction wave {C} and with that long term correction wave [B].

SATS5 is losing profit but still holding the long position and is making an 8.6% profit at the closing this week since opening the trade on 9/3/2010. There is no open manual position. Green means an open long position. First red or black candle after a green candle closes the long position. A black candle means an open short position. A green or red candle after a black candle closes the short position. Since SATS5 can trade profitably both with long and short trades, we will also trade short automatically. Follow for FREE the SATS5 signals given for 42 stocks.

 

Update FOREX pair EUR/USD: Nov.13,2010.

No further up move the past week. The bearish engulfing pattern we had at the end of the previous week was confirmed on Monday with a large down move. Also the rest of the week was correction time. SATS5 gave a selling signal on Tuesday. September 14 we bought at 1.2987, closing Tuesday at 1.3764 gives a profit of 777 PIPS.

Since I still have the feeling that the up move is not finished yet, I was looking for a new Elliott count. I think that we are now making a correction wave 4 (green) and that this correction will be followed with another move up tot the level of 1.455. With the idea that this is a limited wave 4 correction I did not open a new short position. Price is now touching the lower side of the up moving pitchfork, the lower side of the Bollinger bands and the 50 day moving average. This should be sufficient support to turn price up again. I will anyway wait for a new long position until there is sufficient proof of price turning back up. Looking at the weekly chart it is difficult to make a good prediction for next week.

The SATS5 expert function is red. The long position is closed with a profit of 777 PIPS. There is no new short position because I expect only a limited wave 4 correction down.

 

Volume, Market Conditions, and the Upper Band...

Steve Palmquist

Author of ‘The Timely Trades Letter’ and ‘How to Take Money from the Markets’

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...