0Posted by Michael Glass on February 18, 2012 at 2:26 pm
How to use
Pivot Points for
Stock Market Trading
Pivot Points are technical indicators derived by calculating the average of a particular stock’s, forex pair or futures high, low and closing prices. Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. Pivot Points have become very popular with day traders because of their ability to identify support and resistance based off of the prior days price action. If price action falls below the pivot point, it may be used as a new resistance level. Conversely, if the price action rises above the pivot point, it may act as the new support level.
Currently, there are several different ways to calculate pivot points. Using some simple arithmetic and the previous days high, low and close, a series of points are plotted on a chart. These points can be used as support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels. You can find one of the popular sites used to help calculate pivot points by clicking here.
Some trading strategies used by traders utilizing Pivot Points are:
0Posted by Michael Glass on February 5, 2012 at 5:53 pm
Bollinger Bands vs. Keltner Bands vs. Momentum Bands
Technical Analysis Comparison
Technical Analysis is a method of evaluating stocks, futures or forex pairs by analyzing the data generated by market activity, such as past prices and volume. Day traders do not attempt to measure what the intrinsic value of a stock may be, but instead use charts and other tools to identify patterns that can predict future price action. Many day traders attempt to categorize technical indicators.
For me, I like to use certain indicators to gauge overbought and oversold conditions. I use another set of indicators the assess the strength of the markets move. I also use a set of indicators to look at the volatility of the price action. This leads us to today’s discussion of Envelope indicators.
Envelope indicators define the upper and the lower margins of the price range. The band margins shifting is determined with the market volatility. Some examples of envelope oscillators are:
Bollinger Bands consist of a center line and two price channels (bands) above and below it. The bands will expand and contract as the price action of an issue becomes volatile (expansion) or becomes bound into a tight trading pattern (contraction).
Keltner Bands are upper and lower bands that adapt to changes in volatility by using the average true range.
Momentum Bands are a variation of Bollinger Bands devised by David Elliott.
Watch the video below to learn more about these indicators and how each give a different signal to day traders.
0Posted by Michael Glass on January 13, 2012 at 9:52 pm
How to
Identify and Draw
Trendlines on your Charts
A Trend in the stock market is the pattern of a stock to move in a particular direction. The best way to understand how the market fluctuates is to study trends. Keeping track of upswings and downswings of the stock market helps investors decide where to enter and exit their positions.
Day Traders have come up with many different ways to identify a trend. Some look at how moving averages are forming, others look at technical indicators that have been specifically created to identify trends and others–like myself–prefer to look directly at the price action on a chart.
What are the different types of trends?
A stock is in an up trend when the price is making a series of higher highs and higher lows.
A stock is in a down trend when the price is making a series of lower highs and lower lows.
A stock is in a sideways trend when the price is making neither a series of higher or lower highs nor a series of higher or lower lows.
Watch the video below to learn simple methods that can be used to draw any trend line in any market:
0Posted by Michael Glass on October 12, 2011 at 8:22 pm
How to Setup
your Technical Indicators
on your Charts
Technical Analysis is the predicting of future financial price action based on the review of past price movements. Similar to weather forecasting, technical analysis is NOT a guaranteed prediction about the future direction of price; however, technical analysis can help investors anticipate what is “likely” to happen to price action over time. Day Traders use a wide variety of charts and technical indicators that show price behavior over time.
Technical indicators look to predict the future price levels, or simply the current trend of price action. They do not analyze any part of the fundamental business, like earnings, revenue and profit margins. A Technical Indicator is a result of mathematical calculations based on indications of price and/or volume. The values obtained are used to forecast probable price changes. Many day traders utilize indicators as a way to time their entries and exits for trades.
Technical indicators can be found above or below the chart, and others are plotted on top of prices. The indicators help to predict where future prices are going and whether or not the stock is in an overbought oroversold condition.
Overbought: A technical condition that occurs when there has been a lot of buying and the price of the stock is considered too high and susceptible to a decline.
Oversold: A technical condition that occurs when there has been a lot ofselling and the price of the stock is considered too low and a rally in prices is anticipated.
Essentially traders use technical indicators for two things:
To generate buy and sell signals
To confirm price movement
There are two main types of indicators: leading and lagging
Watch the video below to learn more information on how to setup your technical indicators on your charts.
0Posted by Michael Glass on June 2, 2011 at 7:52 pm
Learn How to Trade
Double Tops and Double Bottoms
The double top and double bottom are a pair of well-known chart patterns used by investors to identify potential reversals in an existing trend. After price action attempts to once again test and break a previous swing high or low, momentum has run out and the trend is reversed and a new trend begins. When you look at these chart patterns forming, they will often resemble what looks like a “W” (for a double bottom) or an “M” (double top).
Double Top
The double top pattern is found at the peaks of an uptrend and is a clear signal that the momentum is weakening and that buyers are losing interest. The pattern is considered to be triggered when the price of a security breaks below the support level.
Double Bottom
This is the opposite chart pattern of the double top as it signals a reversal of the downtrend into an uptrend. The patterns is considered to be triggered when the price of a security breaks above the resistance level.
For both the chart patterns, volume should be an important focus. You should look for an increase in volume when the security falls below the support level or above the resistance level to complete the patterns. The double tops and double bottoms chart patterns are strong reversal patterns that can provide trading opportunities.
Watch the video to learn how to trade double tops and double bottoms
