Archive for August, 2008
by Leroy Rushing
Much of what we know about technical analysis and its ability to predict prices is relatively new. The study of technical analysis on the financial markets goes back to the 18th century, but what truly came out of technical analysis was discovered mostly in the computer age. Computer modeling has sped up innovation in price studying and trading more than other development.
The significance of a trend line
Trend lines are a part of many techniques and strategies designed to show how price has trended in the past to predict movements in the future. Commonly, trend lines are used as support and resistance, indicating where investors favor buying or selling. Trend lines can also be used as a part of a comprehensive trading plan to show the general direction of the market, without any interest paid to support and resistance.
The many different kinds of trend lines
Trend lines can be horizontal or vertical and anywhere in between. Generally, a trend line is drawn with a slope to mark even the most modest uptrends or downtrends in the market. Horizontal trend lines are also very popular for showing support and resistance lines at a common price point. It is fairly common that a stock will trade wildly around a common price point and do it even over the course of time. “Round” numbers such as $25 or $50 are more likely to be a place for a horizontal support or resistance because traders like to use round numbers as entry and exit points.
A trend line is worth its weight in gold
Professional traders, specifically day traders and swing traders, have success using trend lines because trend lines are a better indicator over the short run than the long run. For long-term investors, trend lines usually fall out of favor because they provide very little trades over the long term and are not as accurate over long periods as they are short term. The volume that can be found in short term trading mostly focuses around the small support and resistance points, thus making trend lines very important to day and swing traders.
Arguing against a trend line
There has been much debate between academia and traders regarding the worthiness of trend lines in market data. The academic theoretical position stipulates that a theoretical market is so perfect in nature that trending would not occur. The viewpoint of the trader focuses on the inner workings of the minds of hundreds of thousands of other traders, who all find certain price points more interesting and lucrative than others. The argument against trend lines is that they are self-fulfilling prophecies and do not work out to real world gains. However, the fact is that trend lines are used simply as guidance for future price movement based on how day traders value today’s positions, and many traders use technical analysis profitably.
Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders, Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading EveryDay, a distinguished provider of educational trading products and services.
Article Source: Significance of a Trend Line
by Leroy Rushing
Pivot points used to be a favorite on Wall Street, but like other technical indicators, pivot points are time consuming to calculate. Thanks to computers and plenty of web resources, it is now possible to calculate pivot points in seconds. Professional traders have long used pivot points as a way to define support and resistance lines before the market even opens. Pivot points are very successful because they predict the market rather than lag it.
How they work
Pivot points work best in sideways trends because that is practically what they predict. The lines that make up a pivot point calculation define a very tight trading range that isn’t very conducive to uptrends and downtrends. Many profitable traders use pivot points on a daily basis to get an idea of the next day’s trading range before the market even opens.
Open below the pivot
An open below the pivot point is considered to be very bearish and might induce a downtrend, but not for very long. The way pivot points are designed suggests that the price can only fall so long before it hits a support line that makes up the pivot calculation. Creative techniques for playing the bounce usually include shorting the price until it hits the next support line.
Open above the pivot
If the market opens above the pivot, it is said to be very bullish to the next resistance line built into the pivot calculation. Used with other creative techniques and technical analysis indicators, the open up can bring a strong uptrend. However, be careful, as the resistance lines in a pivot point tend to be very strong.
Playing the bounce off the middle pivot
In the center of each calculation is a very strong line known as the pivot. A bounce off the central pivot is always very strong, and breakthroughs come with the same strength. Some professional traders like to play the bounces off this line, while others instead choose to avoid it. Depending on your risk tolerance and ability to make quick decisions, the pivot point might not be the place for you.
Mixing pivot points with candlesticks
This is by far the best strategy
Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders, Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading EveryDay, a distinguished provider of educational trading products and services.
Article Source: 4 Powerful Pivot Point Strategies
by Leroy Rushing
Profitable traders know the significance of divergence; its significance is usually noted by the large movements that come after a true divergence in price and leading indicator. The most talked about is the RSI divergence, but there are many forms, such as MACD divergence, price volume divergence, and practically any kind of divergence between price and indicators.
Professional traders use divergence
Divergence is only profitable if it can be confirmed, and unfortunately, this is one part of the markets that it’s very hard to get a confirmation for. When prices move against an indicator, it could only be short term and change as the market changes. In a downtrend, RSI divergence could mean a breakout is near and an uptrend will begin, but as the market moves on, it would be easy for the indicators to realign, thus costing you time, money and a missed opportunity.
If you could call divergence every time, you would master day trading. While divergence is hard to confirm and should only be used with other indicators, it can be extremely rewarding. Divergence is very profitable because the price has to correct to end the divergence, and then it usually carries on the new path for a much larger movement. This creates a compounded profit potential where there are two booms to every move.
Divergence is usually pretty rare
Divergence doesn’t happen very often, especially on chart frames over a few minutes. Even on a 30 minute chart, a good RSI divergence may only happen once every few days. And that is only on the most active of investments. The chance of divergence happening is best at the end of uptrends and downtrends, and they rarely ever occur in a sideways trend. It’s best to find a peak or trough and look for divergence, indicating to get in the market. Don’t take trades just to trade; you must preserve trading capital while looking for good investments.
Creative techniques to profit from divergence are everywhere. Even professional traders are working hard to secure a way to trade divergence with overwhelming accuracy. The best strategies only take positions at the tops and bottoms of charts and follow candlesticks for buy and sell signals. Each time you limit an indicator and work a strategy
Let the market make the divergence
Trading discipline is very important with divergence. It’s easy to get sucked into trades before the full divergence shows through. You should always let the trade develop before taking a position, but often it can be difficult to know whether the charts are truly diverging or if it is just a short term difference.
Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders, Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading EveryDay, a distinguished provider of educational trading products and services.
Article Source: Significance of Divergence
by Leroy Rushing
Interpreting volume depends upon the kind of trader you are and what kind of returns you wish to generate. Day trading and swing trading call for a very in depth look at volume, while investing
The importance of volume
Professional traders put heavy importance on volume because of how it affects stock prices and liquidity. Investing in stocks with extremely low volume means that buying in will push up the price, and selling could be a difficulty. Profitable trading strategies would never recommend these stocks even to the most seasoned investors because good decisions and investments are replaced with sheer luck of the draw. Illiquid stocks can rise or fall whole percentage points just because of the time in between each trade.
Building a trading style on volume
Short term traders, such as day traders or swing traders, like to focus on volume as a way to find the best trading times. Looking at a NYSE volume chart, you see that trading spikes at the opening of the trading session, ebbs through lunch hour, then continues upward toward the close of the day. In 24/7 markets, such as the foreign exchange market, the situation is much different because each close is met with another open, though the highest volume is usually found when the US and European markets overlap for a few short hours in the middle of the day.
What does high or low volume mean?
For the most part, higher or lower volume just means more or less trading, and this can be due to a variety of reasons. High volume may be the result of day traders and swing traders trading a volatile market, or a large investor entering or exiting a position. As long as volume remains high enough for ample liquidity, the impact of volume is very little on the financial markets.
Developing a trading plan
It should be noted in your trading plan what kind of volume would warrant a particular position. If you feel that volume of 50,000 shares is needed to buy into a stock, note it in the plan and don’t break it. Many traders look for at least 30,000 shares traded daily to decide how liquid an investment is. A complete trading plan should also include when to trade, which is often decided solely on volume. Risk and money management tips should be considered, especially if you plan to invest
Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders, Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading EveryDay, a distinguished provider of educational trading products and services.
Article Source: Volume Interpretation
by Anoopkumar
Nowadays Spain has been offering exceptional property investment opportunities with foreign investors. From the investment point of view the British people find the Spanish property market as a profitable one. Among the Europeans, Spain is the second most popular home destinations. So if you are familiar with Spain, then this is the best place to invest
The excellent infrastructure and dream lifestyle attracts more people to Spain. Moreover Spain has already established European standards in both medical and social security services. With links to countless regional airports it is very easy to reach Spain from UK.
The wide-ranging geographical regions have played a typical role in determining the future of investment property in Spain. The southern part of the country offers some of the best beaches in the Mediterranean. The bordering region of Spain and France gives a visual delight with rivers, mountains etc. All these attract more visitors to Spain.
Spain offers wide range of properties like villas, apartments, farmhouses, traditional houses, and golf properties. Nowadays resort properties are getting a good demand in real estate business in Spain. The major places to invest in Spain include Costa Blanca, Costa del Sol, and Costa Brava. If you are interested to buy or let property in Spain, don’t forget to hire a good real estate agent or a lawyer for the smooth property transaction. It is always better to contact with a good real estate agent or lawyer who is from Spain itself.
Monte Pego is considered to be one of the most beautiful, rural and exclusive residential communities in the Costa Blanca North. Check out their Property in Spain as well as Resale Properties in Spain.
Article Source: Investment properties in Spain
by Melanie
Many people look forward to their tax return so they can spend up on some item of luxury like a bigger TV, that they don’t truly need. Why not make your money work more efficiently for you instead? Even if your refund is only a few hundred dollars, you can still invest
Paying off credit card debt is another good way to use your tax refund. Even if you pay off some and invest the rest, you’ve done a good thing financially. But don’t only pay the interest; pay off the principal too. Or if you are still paying off a mortgage, then adding the tax refund to the payments is being smart.
Other things to do with your tax refund include servicing the car or increasing equity in your home by doing some kind of renovation, putting it away in a term deposit, or saving it in an electronic account with high interest. However, if you never have much fun in life, maybe you could spend some of it on a night out and create a happy memory that will rejuvenate you for the year ahead.
By finding a great term deposit interest rate you can make sure you earn the most and beat the standard savings account rates. More online http://www.raboplus.com.au/term_deposits/default.aspx
Article Source: Ideas for Your Tax Return (Including Saving Some)
by Melanie
The New Year is a good time to start saving because the need to spend on Christmas goodies is now over. For several weeks or months before Christmas people are more intent on spending as they seek just the right gift for family, friends and relatives. This makes it hard to put money away - unless it is with the intention of using it to buy gifts.
Psychologically the New Year is a good time to make that resolution to start saving, because most people have been spending - perhaps too much - and their funds are sadly depleted. They may even be in debt. These are two good motivators to start to save. We often make ourselves promises to do something we think is better for us than we did last year. We can see how low our bank balance is and find it rather alarming when we know bills will be soon coming in.
New Year is traditionally the time of fresh starts. So starting afresh to save is easier. There is a long time until next Christmas rolls around, so spending can be cut back. And banks often offer better incentives for saving from the New Year. Yes, somehow it seems a little easier to start saving in the New Year.
Find great savings accounts to help start your savings, or investigate managed funds which could give you increased ways to save. More at http://www.raboplus.com.au/savings/default.aspx
Article Source: Why the New Year is a Good Time to Start Saving
by Jon Arnold
When you are talking to someone about the forex rate, what is it exactly that you are referring to? You are referring to the relative value between two different currencies, or how does one currency compare to the other one. For example, if the US dollar has a value of “1″ at a given point, the value of the British dollar (pound) by comparison is at “1.8369″. These are example numbers only but hopefully it will help you understand.
The forex rate is the most critical thing to be considered for a forex trader because he needs to determine how that rate will change amongst the various world currencies. If you have the desire and motivation to be involved with forex trading, learning about forex rates is critical to your success.
To be successful with your forex trades, you will be looking at forex rates constantly during the day. One of your tasks is to thoroughly examine the various trends in the countries and predict how these factors will impact the value of the country’s currency. For example, if all the factors you are watching, including the rate, seem to indicate that the British pound is beginning to increase in value compared to the Euro, you might want to consider swapping your Euros for British pounds. But it does not stop there, because as you continue to watch the rates, even on the same day, it may show that the British pound has become strong again, so then you would swap back again and realize a handsome profit because now the British pound is worth more than you paid to acquire it.
The factors that influence the forex rates are just about any social, economic, or political event that is occurring in that country at a given time. Is this a lot of data to consider? It absolutely is, but at the same time, it is imperative that as many of these variables be taken into account so you can make the best trade decisions possible.
Many of the most successful traders in the forex market use some type of forex software package to help them with all this analysis. The software will not make the trades for you automatically without you having to indicate that you do want to do a trade, but simply based on the sheer volume of data that needs to be evaluated, there is some very good forex trade software out there. Our web site outlines one of the best forex software packages available anywhere that has an outstanding track record.
Forex trading is not for the faint of heart. Even the most successful forex traders will occasionally make an unprofitable trade. But the key to the whole thing is to learn from such mistakes and to minimize your losses, which again is one of the key ingredients to the software package showcased at our web site. Your knowledge of forex rates and forex trading, combined with the experience you gain along the way will guide you to the incredibly profitable rewards that are associated with successful forex trading.
For more insights and additional information about understanding how a Forex Rate plays a role, as well as a review of one of the best forex trading software packages available anywhere, please visit our web site at http://www.forexcurrencysystems.com
Article Source: Understanding How A Forex Rate Works
by Jon Arnold
Nobody in their right mind would just jump into the forex market blindly. That would be even worse than attempting to pilot a 747 jet if you have never had flying lessons. Jumping in without a good understanding of the forex market is reckless at best, and you would save yourself a lot of time by simply lighting a match under your money. In order to get the gains and rewards that are very possible in the forex market, you need to study, lean, and understand how the market works, the ins and outs of forex currency trading, and the various factors that go into making an informed and intelligent trade decision.
Forex is probably the largest market on the planet and it is always changing, worldwide, 24×7. This aspect is one of the things that makes forex so exciting. With that kind of activity, it is not always accurately predictable, but you need to understand the market so that you can jump on profitable trades and minimize your losses in losing trades, which is all based on the strategy
You must understand that forex trading is a gamble, and like the advice offered to those who enter a typical Vegas hotel, never play with money you cannot afford to lose. There are no guarantees in the forex market, which means that you need to utilize all the tools at your disposal to ensure you have considered all factors that will impact a currency’s value, both now and in the future. The forex strategy that you use needs to allow for the possibility that you will make losing trades. Every forex trader on the planet makes an occasional losing trade, this is part and parcel of this market, but your strategy needs to protect your assets in that way to minimize your losses and maximize your wins.
One component of any good forex trading strategy is to avoid putting all of your investments in one currency. Do you remember the old saying about not putting all your eggs in one basket? This is the same thing and there is a lot of wisdom there. If you spread out your investment amongst many different currencies, it is far less likely that your investment would be wiped out in a single unsuccessful transaction.
There are many moving parts involved with successful forex trading, as well as a virtual mountain of data that needs to be analyzed, interpreted, and forecast as to how that will affect a particular currency that you may want to trade. The most successful traders use a forex trading software package that can help them do the required analysis. Such software would do the lower level work of doing the intensive and gut-wrenching analysis. Based on the number of elements that should be considered that can affect a currency’s value, trying to do work manually yourself is going to almost definitely be a losing proposition.
Many forex traders simply follow other forex traders. While this could be a strategy, can you see how and why it is not a good one? Other traders are not likely to share with you what they intend to do until after they have done it, and with the rapidly changing market, it is unlikely you could get in at the same forex rate that they did, which will minimize your income. The much bigger money is in doing the analysis and making your own trades, not by following others who have no incentive to tell you what they are going to do anyway.
Take the time to learn the forex market, since the financial rewards are huge, but make sure you also protect yourself by allowing for a potential loss.
For more insights and additional information about a Forex Market Strategy as well as reviewing one of the best forex software systems available anywhere, please visit our web site at http://www.forexcurrencysystems.com
Article Source: Developing A Successful Forex Market Strategy
by Kevin Matras
You can make money with individual stocks no matter what the market is doing.
But it is important to look at some key measurements. One of these measures is the moving average. Short-term moving averages help gauge the short-term direction of the market, while longer moving averages take a big picture view.
For example: if a stock breaks the 200-day moving average on its way down, that’s generally thought to be bearish, and the longer-term trend could be reversing. The 200-day moving average can also act as support. If a stock comes down, but stops at the major moving average and then starts moving higher from there, it can act as a firm underpinning of support for the stock.
Looking at the 50-day moving average can be quite useful as well. It’s more of an intermediate snapshot of the price trend and is more sensitive than the longer-term 200 day. A rising moving average with the price trading above it is bullish, while a descending moving average with the price trading below it is bearish.
More short-term signals can be seen with the 10- and 20-day moving averages.
Moving average crossovers can also be valuable. When the quicker moving average (50 day for example) is above the slower moving average (200 day), this is thought to be bullish. Likewise, when the shorter term is trading below the longer-term moving average, this is thought to be bearish.
Using a screener can be helpful in finding stocks that meet this criteria.
Of course, moving averages alone don’t tell the whole story. But a company with solid fundamentals while also trading above these momentum indicators can help you find stocks bucking a downtrend or confirming an uptrend.
The screen that I’m running today looks for stocks trading above their short term (10 and 20 day), intermediate term (50 day) and long-term (200 day) moving averages. I’m also demanding that their current quarter earnings estimates have been raised within the last 4 weeks (or at the very least, not lowered); their average broker rating has been upgraded (or at the very least, not downgraded): and they have a Zacks #2 Rank or Zacks #1 Rank (Buy or Strong Buy).
Here are 3 great-looking stocks that came through this screen (for Tues., 8/26/08):
AIMC Altra Holdings, Inc.
BDX Becton Dickinson and Company
GNK Genco Shipping & Trading Ltd.
Kevin Matras is the Research Wizard Product Manager and weekly contributing Editor at Zacks Investment Research who creates and writes the Zacks Commentary Screen of the Week. For more information, visit http://www.zacks.com
Article Source: Using Moving Averages
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