Technical Analysis

2008-05-02T02:10:00.000-07:00

Candlesticks And The J-Hook

01/04/06 02:10:15 PM PST

by Stephen W. Bigalow

Combine candlestick signals with technical patterns.

Candlestick signals provide a tremendous advantage to investors when evaluating market trends. The implied logic built into the signals creates a platform that always places the probabilities in the candlestick investor's favor. Not only do the signals work well on their own, but applying candlestick signals to easy-to-recognize trading patterns also creates a platform for taking advantage of high-profit moves.

Ever hear of the "Santa Claus rally"? It's the statistically expected rally that appears during the last few trading days of the year, but it doesn't happen every time. So how do you prepare an investment strategy that could take advantage of a strong, expected year-end move that may not occur? Candlestick signals and trading patterns provide a format with which to position a portfolio to exploit situations like the Santa Claus rally.

HUMAN EMOTIONS
In the financial markets, fear and greed are the predominant factors when it comes to making investment decisions. That is why large-volume days are seen at reversal points: panicked investors sell out at the bottom, while the irrationally exuberant buy at the top. But who buys when the panicked sells, and who sells when the world looks great?

Once you understand that candlestick signals capture emotions in a graphic depiction, you can take advantage of a crowd's known weaknesses. The knowledge you gain from examining candlestick charts can ultimately help you eliminate that same weakness and profit in your own investment decisions. Combining the candlestick technique with other technical methods increases your chances of success.

THE JAY-HOOK
Let's see how we can use candlestick signals to help identify chart patterns. One powerful pattern that can help you predict trend and crowd emotions is the Jay-hook pattern, a variation of a 1-2-3 wave price move. Simply, the J-hook pattern is a pullback with a rounded bottom that starts a move back up, forming a hook (Figure 1). The J-hook starts with a strong uptrend that produces stronger than normal returns in a short period of time. This strong upmove is significant enough to create the normal wave pattern, followed by a reversal caused by profit-taking, followed by a declining trajectory of the pullback, and then the continuation of the uptrend. Most investors have difficulty understanding when to sell after a price has made a strong move, but — when used with candlestick signals — adding the J-hook pattern makes it easy to identify.

Figure 1: AN EXAMPLE OF A JAY-HOOK PATTERN. Note the pullback that eventually rounds out at the bottom and starts resuming the upmove.

The J-hook provides some simple profitable applications. The first uptrend usually shows candlestick sell signals when the initial upmove comes to an end. You could confirm this with other indicators such as oscillators. The top will form with the oscillator in the overbought area. When a J-hook sell signal becomes evident after the strong initial uptrend, you take your profits.

IDENTIFYING THE J-HOOK
The J-hook can be identified by analyzing market trends. For example, if a stock price had a strong runup while the market indexes had a steady uptrend, but if the market indexes do not appear to be ready for a significant pullback, then a strong stock move could warrant some profit-taking. After a few days of pullback, use the candlestick technique to watch for buy signals. Candlestick patterns such as doji, hammers, inverted hammers, and bullish harami can all warn that the selling is starting to wane. These signals indicate it's time to get out of the trade.

Taking profit when the first sell signals occur eliminates the downside risk. Even though the strength of the initial move may indicate that a J-hook pattern may be in the process of forming, there is no guarantee the pullback could not retrace 20%, 40%, 60%, or more. When it is time to get out, don't hesitate! Get out!

Suppose that small candlestick buy signals start to form after four days. There is nothing wrong with buying back into the position, as the trade's second entry now has clearly defined targets. The first target should be the of the recent high. Although it may not be a huge percentage return moving to that level, at least the probabilities indicate it should be profitable.

Candlestick signals can also be applied if that recent high is tested. If another sell signal occurred as the price approached the recent high trading level, that would indicate that the recent high was going to act as resistance. In that case, you would take quick profits and get out of the trade. On the other hand, if you saw strong signals as the recent high was breached, that would indicate the high was not going to act as a resistance level; a new leg of the trend could be in progress.

After a strong rally, we can expect a profit-taking period. Candlestick signals will allow you to better decipher whether the rally has ended. A full-scale reversal may have occurred, but seeing some candlestick buy signals after a few days of pullback allows you to formulate a strategy. That strategy should involve deciding whether to short in that market or reestablish long positions.

TRADING WITH CONFIDENCE
Understanding how to utilize candlestick signals and chart patterns allows an investor to prepare trade executions with confidence. As illustrated in Figure 1, a J-hook pattern was forming into the last trading days of 2005. Candlestick buy signals confirmed an uptrend probability after a strong rally occurred from mid-October into the end of November. This was a clear setup for a possible breakout, confirming the J-hook pattern.

Figure 2: LOOK OUT BULLS. The Jay-hook pattern that you see forming in the Dow toward the end of the year is indicative of a year-end rally.

Once there is a possibility that a J-hook pattern could appear, you can get ready to move one way or the other. If short positions were established at the first sell signals, then you can prepare to cover those positions when the time comes.

Individual stock positions can be evaluated with respect to the market trend when it comes to identifying a potential J-hook pattern. If, during a market uptrend, a stock price has moved up with greater magnitude than the trend in general, that becomes the first alert, since that stock trend is inordinately strong. A pullback occurring in that stock, when the market trend appears to be continuing, also gives rise to watching for a J-hook pattern to occur.

The ability to correctly project the current market trend makes long-term investing, swing trading, and daytrading much more accurate. Being able to implement candlestick signals into established chart patterns dramatically enhances the accuracy of trend analysis.

Stephen W. Bigalow is an author and the principal of www.candlestickforum.com, a website that provides information and educational material about candlestick investing.

RELATED READING
Bigalow, Stephen W. [2005]. High Profit Candlestick Patterns: Turning Investor Sentiment Into Profits, Profit Publishing.
____ [2001]. Profitable Candlestick Investing, John Wiley & Sons

2008-04-29T19:14:00.001-07:00

Stay In The Market With Stop-And-Reverse

01/15/02 04:40:43 PM PST

by Rudy Teseo

If you hate being out of the market, you should take a look at this system.

The parabolic time/price system indicator was developed by J. Welles Wilder. Often referred to as parabolic SAR or simply SAR (for "stop and reverse"), the term comes from its appearance as a parabola when viewed on a chart.

A SuperCharts help file describes SAR as "a system designed to allow more leeway or tolerance for contratrend price fluctuation early in a new trade, and then to progressively tighten a protective trailing stop order as the trend matures." The indicator is a stop-setting entry and exit trading system designed to keep the investor in the market at all times. The idea is that if a trade is not continually producing profits, then it should be liquidated. But instead of waiting for the price to bottom and then re-entering with a long position, why not take advantage of the profit opportunities on the way down?

USING SAR

The SAR indicator displays as a series of dots one dot for each price bar, regardless of the time frame being used. In a long position the dots are below the price, and in a short position the dots are above the price. Using SAR begins with exiting your long position and entering a short position when the price falls below the SAR, and the dots switch from below to above the price. Likewise, you exit your short position and enter a long position when the price crosses above the SAR, and the dots switch from above to below the price. (If you have a very sophisticated charting program, it may be possible to have the trades entered automatically for you if you have the guts to follow any system blindly.)

CALCULATING SAR

The formulas used to calculate this indicator are:

SARb = SARp + AF(H-SARp)

SARs = SARp + AF(L-SARp)

Where:

SARb = The long-side sell stop price, at which you exit long and enter short

SARs = The short-side buy stop price, at which you exit short and enter long

SARp = The previous bar's SAR

H = The new highest price, since the current long trade was opened on a stop buy order

L = The new lowest price, since the current short trade was opened on a stop sell order

The SAR = The value returned by the parabolic function of your program.

AF stands for an acceleration factor that begins at 0.02 when the trade is opened, and increases by 0.02 each period that the price rises toward the highest level (H) since the trade was opened. The SAR moves up each period regardless of the price action. Thus, as the price starts to flatten, the price approaches the SAR until it crosses and creates the switch signal. You may anticipate the impending switch by monitoring the rate of change of the distance between the price and the SAR. You can make your trades several bars before the actual crossing and thus pick up a few extra points.

Naturally, you will not use this indicator by itself. The first rule in technical analysis: A good money management system is more important than a trading system. The second rule: Never use an indicator without confirmation.

In the following charts, I have used the directional movement index in the form of DMIp (plus) and DMIm (minus). More often than not, DMIp crosses above DMIm within a day or two of the SAR going long.

SOME EXAMPLES

In Figure 1 you can see a display of the SAR on a chart of International Business Machines (IBM). Note the short position as the market was falling on its way to the low of April 4, 2001. On April 9, IBM went long, coincident with DMIp (green) crossing above DMIm (red). Prior to this date you will see some whipsawing between March 26 and April 6. (No system is perfect!) The four bars flattened out before the SAR went short on May 7, foretelling a closure with the SAR. You could have gotten out at 118 instead of at 111 if you had heeded this warning.

Figure 1: International Business Machines (IBM). Here four bars were relatively flat, signaling a reversal in trend.

Figure 2 displays a chart of AOL Time Warner (AOL), with SAR and DMI. AOL went long one day after IBM, and the DMI followed two days later. SAR went short on May 29 and DMI also went south three days later. Again, several bars before the SAR went short, we saw the price approaching the SAR rather than moving away from it, signaling a closure with the SAR.

Figure 2: AOL Time Warner. Using the SAR with the DMI triggers some worthwhile signals.

Figure 3 displays a chart of JDS Uniphase (JDSU) with SAR. This is a good example of how the SAR can keep you out of trouble. JDSU is the kind of stock many traders would jump into as soon as the market appeared to be reversing. But after an initial long position on April 11 followed by DMI crossing six days later, you can see that SAR would have kept you out of any sustained long position.

Figure 3: JDS Uniphase (JDSU). Here's another example of how SAR can keep you out of trouble.

Parabolic SAR is not a panacea, of course, but if you haven't been using this unique tool, you owe it to yourself to at least try some paper-trading with it.

Rudy Teseo is a retired communications and computer consultant. He has also taught courses in investing, technical analysis, and options trading. You can e-mail him at rftess@juno.com.

Trendlines And Consolidations

03/05/02 04:03:05 PM PST

by Dennis Peterson

Here's a technique that produces more accurate trendlines.

Drawing trendlines correctly is more challenging than many traders realize. The rule is that the more peaks and valleys you connect with a straight line, the more valid the line is in defining a trend. But simply connecting a set of the more prominent peaks or valleys can cause you to miss consolidations, since the smaller peaks and valleys that are skipped over could be defining a consolidation pattern. Consolidation patterns are important because they can be used to gauge how much farther an equity will move.

When an equity is traded it is either in an uptrend, a downtrend, or it is moving sideways. There are two types of sideways movements. One is what might be called an accumulation phase, which is a series of daily price changes that vary less than 5%. If the price was $50, then price would vary no more than $2.50 for several weeks.

The other type of sideways price movement, a consolidation, is one where price moves up and down by 5% or more in a channel. Keep in mind that patterns you want to trade should have high average daily volume. Some would like to see at least 500,000 shares per day, but I prefer the number to be closer to one million.

I have found the key to defining trendlines is to use pivots; doing so makes consolidations more apparent. It also allows you to practice a useful analysis technique called the Andrews pitchfork*. Pitchforks deserve their own discussion, but let's focus for now on drawing trendlines using pivots, and the benefits of doing so.

A DOWNTRENDING EQUITY

Figure 1 is a simple illustration of an equity whose price is in a downtrend. Each of the peaks and valleys is a pivot. To define a pivot, look for two lower trading bars before and after a pivot peak, and similarly, higher bars on each side of a valley pivot. (See my Working Money article "What Are Pivots?")

Figure 1: Idealized downtrend with consolidation. Each peak and valley, A through E, is a pivot, with a clear downtrend evident from point A to F and a sideways move from B to E.

You can put more risk in your analysis by having just one lower bar before and after a peak, or you can be more conservative and require three bars (a valley is similar, with either one or three bars being higher than the pivot valley). Let's apply this method to the Nasdaq Composite, a popular index that is analyzed extensively (see Figure 2).

Figure 2: Daily Nasdaq Composite prices. The red trendline satisfies the condition that a straight line connects two or more peaks, but it misses the consolidation in October. The blue lines are an alternative set of trendlines connecting several pivots.

The natural tendency is to just start connecting peaks with a straight line (red line). But first you should identify the pivots. Before that, you must decide what constitutes a pivot in terms of meaningful price action. Again, I prefer at least two bars before and after a high or low to define a peak or valley. Using this two-bar rule, we can identify the pivot point labeled B in Figure 3.

By connecting points A and B (blue trendline) and extending the line to October, it becomes apparent that the downtrend was broken in mid-October. This leads you to wonder what direction price will take next. The ensuing price action is a sideways movement defined by pivots X, Y, Z, and C (Figure 3).

Figure 3: Nasdaq daily price. The price bars leading up to and following pivot B have been identified in the blue square. Pivots Y and Z share bars, since the two bars lower than pivot peak Y are the same two bars higher than valley Z.

Before continuing, let's consider another way pivots can be significant. A pivot is a point where a price turnaround occurs, and by definition some traders profit and some don't (especially if they don't use stops to take themselves out of a position). The market has yet to return to these levels (Figure 3; prices at pivots X, Y, Z, and C), and it will probably "remember" them, because those who bought on the dips at pivots X and Z have seen prices go on down. When prices return to these levels now, those who were caught before are likely to want to sell. The longer it takes to return to these levels, the more likely it is that market participants have given up in disgust and taken their losses. The volume matters in this analysis as well, since the volume at any given pivot gives you a measure of how many traders were caught long or short, and thus, how strong the market's "memory" (resistance or support) will be at this level.

By late November it is clear that prices have finished consolidating. Your next question might be, "What is the likely pivot point for the next major move?" This is where consolidations become significant.

CONSOLIDATIONS

Consolidations often occur halfway through major moves. This allows you to estimate the duration of a trend by finding the distance between the start of the move and the consolidation. On September 1, 2000 (pivot A), the Nasdaq Composite closed at 4234. The midpoint of the consolidation is at 3278, so the continuing downtrend should see the pivot for the next major move at 3278-(4234-3278)=2322. The chart confirms this estimation the next move is an upswing at around 2322 in early January 2001 (Figure 4).

Figure 4: Nasdaq daily price.
Using a definition of two bars before and after a bar peak or valley allows you to define additional pivots at X, Y, and Z. Since a consolidation marks the halfway point of a move, then the prediction would be that the Nasdaq should see a turning point at about 2322, which is what happened.

Again, the rule is that consolidations mark the halfway point in major moves. A major move could consist of trends interrupted by several consolidations. The longer and more volatile a consolidation, the more likely it will result in a strong move to continue the trend.

Consolidations can also occur at tops and bottoms, but for this method you need to look for prices that are breaking out of the consolidation pattern in the same direction they entered. That is why you would wait until late November to determine that you haven't seen a bottom but a consolidation. The key is the bar circled in red (Figure 4). Two bars prior to that is a pivot peak, which tells you the market has decided where it's going to go — that is, down. You would place an order to short Qqq on November 17, 2000, after seeing the high of that day was not going to be any higher than the midpoint of the previous day. This gives you an idea of how far to ride this trend.

Consolidations also exhibit some other behaviors that are useful. Figure 5 identifies some trendlines, consolidation lines, and one symmetrical triangle.

Figure 5: Daily price chart of Home Depot (HD). When you analyze a chart you should look for both trends and consolidations. The market considers trends in three ways — first, a gradual change is tolerated and not likely to have consolidations because they are not needed; second, faster changes will be challenged with consolidations to test the price rate change; and third, extreme rates of changes are going to end up as either intermediate or major tops or bottoms.

Stocks spend most of their time going sideways, versus being in uptrends or downtrends. From early 1997 to early 1998, Home Depot (HD) is in a long gradual uptrend. The rest of the chart, starting with the first trendline break, is more typical price action, with steeply sloped trendlines and consolidations. The steeper the slope of a trend, the more unsustainable it is, whether it's moving up or down.

Let's analyze this chart, going from left to right:

1 By middle or late May 1998, there is a confirmed trend break, as prices rise steeper. This faster price rate should alert you that the market is looking for a place to retrace, since it is not comfortable with changing its slope.
2 By late November to early December you can see that prices have gone through a consolidation; you would estimate that 30+(30-24)=36 (the upper limit on the consolidation plus the width of the consolidation) is going to be a price at which the next decision is going to be made. 3 In going from the first consolidation to the second one, the uptrend, 24 to 40, is even steeper than the previous uptrend, and by early October 1999, you can see you have gone through a consolidation between 36 and 44. Now you make a rough calculation where price is going next by calculating 40+(40-24)=56 (the midpoint of the second consolidation plus the price movement from the trend break to the midpoint of the second consolidation).
4 At 56 price makes a move. This is an uptrend with an unsustainable slope, going from 56 to 69 in approximately two weeks of trading (December 10, 1999, to December 27, 1999).
5 Using the same type of calculation as above shows that 44+(44-36)=52 is a price that forms a degree of support.

From this analysis you can see that the width of the consolidation can be used, the midpoint of a consolidation can be used, and that if you compare the slopes of the trendlines, you can anticipate that the market is going to want to think about what it has done. HD topped with an M pattern, which is a short consolidation. In addition, when you look at the price chart of Home Depot, it should seem obvious that unless something dramatic occurs, 52 is the highest price the market will pay for HD for a while.

As an aside in this discussion, let's look at the symmetrical triangle on the chart in the second half of 2000. Is there any predictive value in this pattern? This triangle pattern calculation is worth mentioning because it is similar to the rules for consolidations.

The rule for triangles is to use the length of their base as the amount of movement predicted when a stock breaks out of the triangle pattern. In this case the lower end of the base is at 47 (May 22, 2000), while the upper end is an extrapolation of the upper trendline to May 22 with HD at about 64. The base is therefore 64-47=17, and the axis of the triangle about 52, so the move down from the triangle pattern should end at 35 (52-17), which it does.

NOW ON THE NASDAQ

What would you learn if you were to apply the same consolidation pattern analysis technique to the Nasdaq Composite?

By mid-March 2001, the chart of the Nasdaq Composite displayed in Figure 6 exhibits three trends — the last two are roughly parallel, and the first one has a slope that's a bit steeper than the other two. In fact, the steepness of the first trendline (A) only portends a rebound at some unspecified, future time, and of course it comes initially at pivot X in mid-October 2000 (Figure 4). By mid-March 2001 it is possible to draw a third trendline. When you see three roughly parallel trendlines, each displaced to the right, you know that the trend will be displaced because price has moved sideways. So what is this big "consolidation" area?

Figure 6: Applying consolidation pattern analysis to the Nasdaq. When you see consecutive parallel trend lines shifted to the right, you have to assume price has gone sideways.

The pivot peak of 3482 and a pivot valley of 2297 define this area, since they are the pivots defining the extremes. You may think this doesn't look like price moving sideways, but it is. It moves sideways, then down, and then sideways again. What you should see is a downswing in prices leading to the "consolidation" and a downswing leaving it. This variation works often enough to warrant taking the time to construct it. My midpoint is 2890, (3482+2297)/2, and my estimate of a turning point is 2890-1185=1705, where 1185 is the width of the "consolidation." After hitting 1638 for a low, the next day the Nasdaq Composite opens at 1706.

And how is 2297 holding up as resistance? The highest the Nasdaq composite has reached is a close at 2313 on May 22, 2001. So far it is resisting strongly — it seems the market is remembering. The close of 2313 is followed by a close of 2243 on May 23.

Dennis Peterson may be reached at DPeterson@Traders.com.

SIDEBAR
ANDREWS PITCHFORK

Curious about the Andrews pitchfork? Refer to the daily chart of the Nasdaq Composite displayed in sidebar Figure 1.

Sidebar Figure 1: Applying the Andrews pitchfork. Daily price is overlaid with a zigzag using a 6% change. An Andrews pitchfork is drawn using the bottom at 4/4/01 and two pivots at 4/20/01 and 4/26/01. The two dashed magenta lines form the envelope for prices to move within.

Take a pivot high or low and find the next two pivots (B and C). Next, draw a line from the pivot high or low (A) through the midpoint of the other two pivots (solid purple line). Construct two lines parallel to the line going through the midpoint, but place these two lines at each of the two pivots to form a channel (dashed purple lines going through pivots B and C). You now expect price to move within this channel.

One of the features of this device is that you can foresee a problem. After constructing the pitchfork, price would have to follow the red line to hit the upper channel, which is not even remotely likely. The price does something more rational and moves outside the envelope, which reveals the most likely case for price movement. By looking at the pitchfork, you can make a good estimate of what's likely to happen next. This is one of the reasons that chart technicians are wary of fast-climbing stocks. — DDP

The Shark Attack Strategy And Fibonacci Levels

03/17/04 03:59:37 PM PST

by Ashwani Gujral

Discovered long before there were stock markets, the Fibonacci method has proved to be useful for traders.

One of the key goals of stock market traders is to find a way out of the maze of the stock market. Toward this goal, traders have resorted to using astrology, rocket science, fundamental analysis, technical analysis, and more to achieve this goal. The Fibonacci method is one such attempt to unravel the mysteries of the stock market, in this case by relating the market's movements to the Fibonacci series. Fibonacci series were discovered long before there were stock markets, but they relate amazingly well to the stock markets and other natural phenomena.

Leonardo of Pisa, a 13th-century Italian mathematician better known by his nickname, Fibonacci, is credited with the creation of the Fibonacci series. The series has its first two numbers as zero and 1. You arrive at the remaining numbers by adding the previous two numbers. For example,

0+1=1
1+1=2
1+2=3
2+3=5
3+5=8
5+8=13
8+13=21
13+21=34
21+34=55
34+55=89 and so on.

Thus, we arrive at a series of numbers: zero,1,1,2,3,5,8,13,21, 34, 55, 89.

These numbers are related to each other by a ratio. Many phenomena in nature, science, and astrology can be explained by using this property of the Fibonacci numbers. Fibonacci numbers also have an interesting relationship with each other. Using the sums from the examples above, we get 21/34 = 0.618; 34/55 = 0.618; 55/89 = 0.618. Similarly, 34/21 = 1.618; 55/34 = 1.618, 89/55 = 1.618. This ratio is known as the golden ratio and forms the basis of the Fibonacci methods in technical analysis.

The other two fractions, 0.382 and 0.5, most commonly used in technical analysis are calculated as follows:

(1 - 0.618) = 0.382 and 0.5 is the mean of 0.382 and 0.618.

FIBONACCI RETRACEMENTS

Fibonacci retracement tools are conveniently available in most software packages. To use it, we must:

Identify a swing high and a swing low in the price action.
Generally, use the 38.2%, 50%, and 61.8% values (Figures 1 and 2). If those values do not hold, 25% and 75% can also be used.
Look for supporting evidence along with Fibonacci retracements, such as extreme values in short-term relative strength index (RSI) or stochastics, or confluence of Fibonacci levels across time frames.
Focus on regions of support and resistance.
In very strong bull and bear markets, look for prices that often do not retrace more than 25-38.2%. In moderately bullish and bearish markets, prices can retrace up to 50-61.8%.
Finally, keep an eye out if prices start breaking the 61.8% to 75% retracement. If this happens, the main trend may be under threat.

Figure 1: Fibonacci retracements in an uptrend

Figure 2: Fibonacci retracements in a downtrend

Figures 3 and 4 display examples of Fibonacci retracement levels in upswings and downswings.

Figure 3: Fibonacci retracement levels in an upswing

Figure 4: Fibonacci retracement levels in a downswing

CONFLUENCE OF FIBONACCI LEVELS

With almost five Fibonacci levels to contend with, traders can often be confused. They are often left wondering which of the levels might most likely hold. In such cases,

The confluence of two Fibonacci levels measured from two different swing lows to the same swing high in an upswing is considered the most significant support level.
On the other hand, the confluence of two Fibonacci levels measured from two different swing highs to the same swing low is considered to be the most significant resistance level.
When the stock gets close to a confluence level, traders should look for supporting evidence in order to act. Fibonacci levels like other indicators cannot be acted on in isolation.

The 60-minute chart of the Nasdaq composite in Figure 5 shows the confluence of levels at 2115, which acts as a strong support.

Figure 5: Nasdaq composite 60-minute chart

SHARK ATTACK

Now, here's a strategy using the Fibonacci levels. This strategy, developed by Derrik S. Hobbs, is available in his book Fibonacci For The Active Trader. The shark attack strategy details how retail traders are learning conventional, predictable theories in technical analysis and are not doing themselves any good. Haven't you seen it happen?

Think of it. Whenever you position yourself for what you believe is a sure traditional setup, smart traders and institutions come in and move the market sharply in the opposite direction, coming in for the kill, much the way sharks do instinctively. In this, the shark attack is similar to the turtle soup strategy made popular by Larry Connors and Linda Bradford Raschke in their book, Street Smarts. That strategy is another example of how smart traders and institutions take advantage of retail traders using traditional setups who become trapped on the other side of the trade.

If you become aware of how the shark attack strategy works, you can avoid the consequences. Here's how the shark attack strategy can be used with Fibonacci levels for both short trades and long trades:

Conditions for the short trade (Figures 6 and 7)

Assume the market is in an upswing and forms a swing high point 1, retracing normally to point 2. I wait for the market to test the previous top. Two possibilities arise:

1 The market forms a double top and comes down sharply.

2 The market breaks the previous top and continues to rally to point 3.

Figure 6: Short trade shark attack

Figure 7: Short trade shark attack

The third possibility is the shark attack that is, the market breaks its previous top and rallies between 1.272 and 1.618 of the previous correction, which is point 3, and retail traders go long with it.

After this, a sharp decline takes place, taking the market down to at least 1.272 of the last rally. At that point, pressured retail traders scamper away, and should prepare for shark attacks whenever traders act in a bullish or bearish consensus, expecting a breakdown or breakout.

The short trade can be taken when the low of the previous bar is broken and the second higher high can be used as the stop-loss. The profits on the short side can be 1.272 times the difference of point 3 and point 2.

Conditions for the long trade (Figures 8 and 9)

The converse is true for the long trade. Assume the market is in a downswing and makes a swing low at point 1, and retraces upward to point 2. You should wait for the market to test the previous bottom. The market could either form a double bottom and rally sharply or break the previous bottom and continue to decline to point 3.

Figure 8: Long trade shark attack

Figure 9: Long trade shark attack

Once again, another possibility is the shark attack, which occurs when the market breaks its previous bottom and declines to about 1.272 and 1.618 of the previous correction (point 3), making retail traders go short with it. After this a sharp rally takes place, taking the market up to at least 1.272 of the last correction, as once again, pressured retail traders scamper away and cover their short positions.

The long trade can be taken when the high of the previous bar is broken and the second lower low can be used as the stop-loss.

In both the long and short trades, traders must tread with caution on the simple breakout/breakdown trades and should be ready for shark attacks whenever retail traders act in a bullish or bearish consensus expecting a breakdown or breakout. These trading strategies have some differences from the strategy that Derrik Hobbs uses, but the principles are the same.

Ashwani Gujral is an India-based technical analyst, commentator, author, and trainer. He follows both Indian and US markets. He is an active short-term trader and money manager.

Continuation Triangles With Fibonacci Targets

09/08/04 03:20:46 PM PST

by J. Mark Kinoff

Triangles should continue the trend in motion.

Triangles and wedges are often categorized as continuation patterns, areas where the market consolidates before resuming its current trend. Continuation triangles are one of my favorite patterns, and one of the easiest to recognize. When triangles or wedges confirm that a trend is continuing, you can use a simple breakout for your trade entry and a Fibonacci ratio calculation to determine the optimal target area to exit the trade profitably. By trailing a stop until the target is hit, losses will be kept at a minimum and profits will be maximized. On occasion, you may choose to place multiple contracts at the entry point, exit some of them at the optimal target area, and trail a stop on the rest in an effort to catch a larger portion of the longer time frame trend.

This is a basic targeted trading strategy. Many technical analysts have speculated on the percentage of triangles or wedges that continue, rather than reverse, the trend. The numbers vary, but most agree that statistics favor a continuation of the trend. This article will look at trading continuation moves out of triangles.

Most traders have an opinion about which direction the market will trade on any given day. While that may be helpful on those occasions when they happen to be correct, it is not necessary for profitable trading. The majority of traders do not need to know where a market will be trading in the future to make money consistently. Trading is about using natural market forces; markets follow a predictable and orderly path frequently enough to allow profitable trading. We only need to know the possible outcomes when placing a trade. Knowing such outcomes while combining them with proper risk management will increase profitability.

There would be many mornings that a few other floor traders and I would ponder the likely direction of the market for the day. We would try to predict the opening from the information gathered from the cash prices of the previous afternoon session (after the futures market closed). Some would look at the thin overnight trading to get an idea of direction, while others used different leading indicators such as the foreign currencies, metals, or even the price of crude oil or stock indexes.

From watching all these floor traders, I learned that holding an established opinion can actually reduce one's overall success in trading. When you ask several floor traders where prices will go today, they will each usually have an underlying opinion — but the most successful among them simply reply, "I don't care as long as I make some money today." Doesn't it make sense to follow this strategy?

Most days, floor traders read the order flow for clues on short-term direction. We know at what point we should find support or resistance, or where we are likely to encounter stops. Many of us will look at the charts when we arrive on the floor in the morning to check some key price areas. Others will actually work off their charts, using short-term time frames with some attention even given to weekly charts. Because bond floor traders regularly trade from 3,000 to 10,000 contracts on any given day, the difference between a losing day and a profitable day can be a matter of identifying a very brief continuation pattern and trading with it. Identifying a continuation pattern will allow a trader to profit without having any idea where the market will be at the end of the day, and this is what I want to illustrate with the continuation triangle.

Markets go through two dominant phases: range expansion and range contraction. Range contraction is also referred to as congestion or consolidation. It is a constricted price area where the market will trade for a period of time. Range expansion occurs when price moves dramatically in either direction, after which it often finds a new price level to establish another range contraction.

The simplest and most effective time to enter a market is after a contraction phase and at the beginning of an expansion phase. I want to have my stops in place while the markets are quiet, and exit my positions when the market has run to its new level. This gives me minimal risk and slippage on my entry, and offers positive slippage when exiting the market while it is still moving in my favor.

The common triangle is essentially just such a period of range contraction, where the trading range narrows toward a single central price (or apex), leaving a triangular shape on the chart. After studying the examples in this article, with some practical application, you should be able to see triangles as they are forming.

Entry rules

While flipping though some intraday charts on TradeStation 2000i, I spotted a triangle in the late stages of formation in the May 2004 cocoa futures. In Figure 1, we see that the market was forming a triangle after a move higher. Because in real time we only know that there is a range contraction (we don't know whether it will be a continuation or reversal pattern), we start to place our stops above or below the last touches of price on the triangle (depending on the direction of the trend prior to the formation of the triangle). Only pivot highs and pivot lows are used when constructing the lines of a triangle. A pivot high occurs when the high of both the preceding and the following bar are lower than the pivot bar's high.

The reverse is true for a pivot low. As you can see on the chart, these bars are used to delineate the boundary lines of the triangle. As soon as there are enough points to draw two lines with opposing slopes (a minimum of two touches on each line), we have a possible triangle trade in the works.

Figure 1: Drawing the triangle. The lines were constructed using the last swing high and low and the next pivot bars.

Figure 2 is a 46-minute bar chart. I prefer 46-minute bars in cocoa because they break the trading session into five equal time periods, but the formation can be seen on any period intraday chart. When price breached the upper trendline without taking out the high of the second touch on the upper trendline, it formed my favorite triangle pattern. This is one with three touches on one line and two touches on the opposing line. While two touches on each line is fine for trade selection, I personally prefer triangles with three touches on one line, as these give me a clue as to the direction in which the breakout will occur.

Figure 2: Placing entry orders. The buy stop, in this case, is moved down when we trade above the triangle without taking out the previous high pivot.

As seen in Figure 2, the cocoa chart printed a bar that penetrated the upper line of the triangle (at the arrow on the chart). This was the third touch, and it led me to believe that the breakout would be to the upside. While the bar was still being formed, the long entry would have been five ticks above the high of the second touch. Once the bar closed without triggering that stop, a new buy stop would be placed five ticks above the high of the third-touch bar. In this case, the high of the third-touch bar was 1490, so the stop would be set at 1495.

The stop was hit during the formation of the last bar in Figure 2. I was using a mental entry stop, and as luck would have it, when I got to the phone we had printed 1495 and the market was backing off. I placed an order and bought at the market. I was filled at 1490. The market closed shortly thereafter (while I was still calculating my exit targets).

Exit rules

Figure 3 demonstrates the simple exit rules for this method. Following these rules will help increase your odds of properly managing this trade by taking out all the emotion. They are simple, yet quite effective, and they should increase your edge over the markets. Here is where the Fibonacci ratio comes into the equation:

Figure 3: Managing the trade. Once we have entered the trade, we calculate the stops and profit targets using the rules.

In Figure 3, the opposing arrows at the midpoint represent 50% of the time elapsed from the base of the triangle calculated from the longest side to the apex (where the lines will intersect). At this midpoint, we calculate the height of the triangle in points. The height is the distance in price between the upper trendline and the lower trendline at the midpoint of the triangle. The entry for the long trade is at 1495, which is five ticks above the last high that either touched or penetrated the upper line. Our initial stop would be just below the apex, which in this case is 1464. Please note — it does not matter where the fill was! Too many traders relate their stop-loss set point to their fill, but there is no correlation between them. Always place the stop just beyond the apex of the triangle. Then take what the market gives you.

To calculate the Fibonacci targets, use the ideal entry point. To determine this point, first add the height of the triangle to the midpoint height to derive the optimal target. In this case, the midpoint height of the triangle was 39 points, so the optimal target was 1534 (the ideal entry price of 1495 plus the midpoint height of 39 points). In a strongly trending market (defined by many other available indicators), we would likely see the upper extension target reached.

This price target is calculated by multiplying our midpoint height of 39 by the Fibonacci ratio 1.618, and adding it to our entry price, that is, 1495 + (39 * 1.618). This equals approximately 1558. If we were to reach that point, I would expect to see a reversal and wait for another congestion pattern to reenter the market. In this fashion, we merely enter the market at the end of a range contraction and exit on a range expansion, with no particular concern about where the market will ultimately go.

To maximize the effectiveness of stop-loss placement, start by placing the stop just beyond the apex of the triangle on the side opposite the entry. For a long position, once we trade above the highest high in the base (1519 in this example), we move our stop to just below the low of the entry bar (in this case, 1484). We would proceed in a similar (but opposite) fashion if the breakout had been to the downside. Following this process lowers the amount at risk if the pattern should happen to fail.

Because I did not have any confirmation from other indicators that this would be a strong market, I chose to take my money off the table at the optimal target and to look for another good setup.

Strict money management rules will improve the rate of success for the individual trader. The patterns and rules I have described take the emotions out of trading and will allow you to be disciplined in your approach to the markets. The less you care about direction and the more you focus on using proper techniques and discipline to let the market take you into and out of trades, the more rewarding your efforts will be. See Figures 4 and 5 for two more examples.

Figure 4: Price reversing at target areas. Price often reverses at target areas.

Figure 5: Note another dramatic reversal. After we have reached the upper target using the Fibonacci extension, a reversal move is the norm, not the exception.

J. Mark Kinoff is a CTA, a member of the Chicago Board of Trade, and has traded bonds, grains, and the Dow Jones Industrial Average as a floor trader. His website is www.Corefutures.com, and he can be reached at Jck@Corefutures.com.

Forex Risk Management

2008-04-29T18:26:00.000-07:00

Forex Risk Management

06/29/05 12:24:07 PM PST

by Rudy Teseo

It's not how much you make, but how much you don't lose!

Risk management is the key to determining how much you don't lose — by this, I mean limiting loss so you have enough capital left in your account for the next trade. The case is the same for the foreign exchange market.

However — and this is important — forex risk management is more difficult to achieve than in any other tradable. If the trend is your friend, then the stop-loss is your bosom buddy and will keep your head above water and prevent you from drowning. In this situation, drowning means losing so much on a trade that there's insufficient capital left to trade again. There may be some money still there, but not enough for margin and investment.

STOP-LOSSES AND FOREX
If your experience is primarily with stock trading, you may be using a 7% stop-loss (considered a prudent strategy) with every stock you buy. But there is no single stop-loss strategy that works with every currency trade. In forex trading, your stop will be dictated by the size of your capital, the reward/risk you hope to achieve, and the time frame you are trading. One of the many online tutorials I've studied stated that in FX trading there are two time frames: three days or less, and more than three days.

Let's analyze these situations by discussing the mini account, assuming you want to get started with a minimum cash outlay.

The mini account has a 200:1 leverage, which means that the minimum trade (one lot = $50) controls $10,000. Further assume you are trading a currency pair where the US dollar is the second currency, and one pip = $1. You open an account with the minimum $300. How does the size of the account dictate the stop-loss?

Here's a real situation. One of the stop-loss strategies that has been around for ages is setting a stop at 2% of the investment: 2% of $50 is $1 = one pip. My trading program (and most others) will not allow stops and limits tighter than seven pips, so a fixed percentage is out, unless you want to let the program's limitations set your stop. Set the stop at seven pips, which is 14% of the investment. If you're comfortable with that, fine. But how does that tie in with the reward/risk you want to maintain?

Say you have determined from a 30-day daily chart that the pair you're interested in has an average daily range of 100 pips. You could set a profit target of 100 pips. But that would mean getting in at the very top of the top or the bottom of the bottom. That's not very likely! So at the time you want to enter the trade, say the price has bounced off support and is up 20 pips. You could set a reasonable target of 80 pips before hitting resistance. If you wanted to maintain a 2:1 risk/reward ratio, you would set your stop-loss at 40 pips below your entry price. You are risking $40 to make $80.

So far, so good. But suppose you want to go one step further and trade four lots to make the investment worthwhile. The trade goes against you and you are stopped out. You have lost $160, which is more than half your capital. If you were trading two currency pairs with the same result, you would be getting a margin call.

NOW WHAT?
It's obvious you have to rethink what you can do with a $300 account. Putting aside the idea of increasing the amount of capital, the only option is to work within your budget, which may mean waiting till the moneys you wish to allocate to forex trading reaches an amount where you can afford the risk. Once you reach that stage, you should start by planning on only one lot in one pair initially. Build up your capital until you can afford to take on more risk. One lot is $50 of margin.

A word of caution here: This is not like buying stock or options, where the most you can lose is $50. You are trading on margin (borrowing from the broker or bank). Without a protective stop, you could end up in serious debt! It is similar to selling a naked call without a stop-loss. You could decide that the most you want to lose is $25, which would mean you set your stop 25 pips below your entry. But how does this relate to the risk/reward you want to achieve? Are you risking $25 to make $20? You can't set a stop mechanically without considering the entire trade and evaluating the profit potential.

So remember, risk varies inversely with knowledge and experience. To reduce your risk, you have to increase your knowledge of the foreign securities market and your experience in trading in it. You have to learn which economic indicators influence the direction of the various currencies and which do not. Currencies are much more volatile in short periods than the security market (in general). If you set the stop too tight, you could get stopped out on a whipsaw, and then watch the price soar on a recovery.

Here's where experience counts. Start with a demo (paper trading) account. Experiment with indicators you like, and the many different time frames you can monitor. A one-minute chart will not give you the same picture of the trend the way a one-hour or daily chart will. Consider all of the caveats, develop a risk management strategy, and test it. Set a profit goal, say a 25% increase in your initial capital, and when you've hit it, go a step further and trade real money. It's an exciting and rewarding experience. Go for it!

Rudy Teseo is a private investor and currency trader who has taught classes in option trading and technical analysis.

SUGGESTED READING
Teseo, Rudy [2005]. "Forex, Anyone?" Technical Analysis of Stocks & Commodities, Volume 23: July.

Rudy Teseo

Rudy Teseo is a private security, option, and currency trader, and has taught classes in option trading and technical analysis. He can be reached at rftess@optonline.com.

Anatomy Of A Candlestick

2008-04-29T17:57:00.000-07:00

Anatomy Of A Candlestick

09/17/03 09:27:42 AM PST

by Clive Lambert

Take a closer look at this strong reversal pattern.

I have been writing daily analysis on the futures markets for five years now, and over this period I have also started to teach various groups about technical analysis methods. One method of growing interest among futures traders is candlestick analysis, as championed by Steve Nison in his book Japanese Candlestick Charting Techniques. I have noticed that although people end up with a few candlestick patterns that stick in their minds, they don't quite grasp why a specific candlestick pattern is a reversal, a continuation, or anything else, for that matter.

I have been working in the futures market for quite a while, first as a broker and later as a commentator on current or recent market action. For this reason my approach to candles may have been slightly different from the norm, in that I was already aware of the price action that leads to the formation of patterns. This made it much easier for me to understand the reasoning behind certain candlestick patterns, particularly reversals. Let's take a look at one of these patterns, the hammer.

THE HAMMER

Taking a daily candlestick pattern and having a quick look at the intraday (say, 10-minute) chart instantly gives you perspective and makes understanding the patterns that much easier. I thought I'd illustrate this with the hammer, since it's one of the simpler candle reversal patterns.

For those of you who are new to candlesticks, or who may be a little rusty, here is the basic set of rules that apply to the hammer pattern:

The hammer appears in a downtrend
It has a small real body at the top end of the day's trading range
It has a long lower shadow
The long lower shadow is at least twice the length of the short real body
There is little or no upper shadow
The color of the real body is not important.

Now let's look at a couple of charts. Figure 1 is a chart for the Dow Jones futures between November 13, 2002, and January 14, 2003. You can see that the market sold off sharply between December 2 and the end of the year, culminating with a session on the last day of 2002 that complied with the rules. Thus, we have our hammer. This was a strong signal to go long.

Figure 1: The hammer as a reversal.

This was a hammer pattern, and it worked well. Why?

First, let's get a grasp on that hammer session by looking at the 10-minute chart for that day, illustrated in Figure 2. It's pretty clear from the chart what went on that day, but let's just go through it anyway: The market opened at 8320, traded down to 8220, then rallied, trading up to 8340 before finishing the session at 8331.

Figure 2: An intraday look at what happened on the day the hammer formed.

Remember that up until this day the market had spent the last month trading down. There hadn't been much good news for the bulls up until this point, had there?

But on that day they fought back! The market dropped 100 points, but the bulls stopped the decline. Not only that, but they kept buying it until we got above the open — and even made a new high for the day. They kept the momentum going as well, making sure the close was up near the high of the day. Victory to the bulls!

SUPPORT AND RESISTANCE

But there's more to this particular session than meets the eye, and this is where candlesticks can be combined with basic support and resistance analysis. Going into that day we had a key support level at 8280, which had been breached on December 27, 2002. However, this breach was only slight (we closed at 8270 that day), so we were looking for further confirmation. This failed to appear the next day (December 30) when the market closed at 8307 after having put in a low at 8237.

So we had two very strong levels at 8280 and 8237 that the bears took us through on the day the hammer formed. But they missed their chance when the bulls stepped up to the plate, saying "No, you don't!" to the bears' attempts to smash through these key supports.

The next day was a great example of a confirming day. Candlestick patterns, like anything else, are fallible, but you get a lot more confidence if the next day sees a continuation of the upward direction seen in the latter half of the hammer day.

Now we can see that a hammer is formed because of a paradigm shift in the balance between bulls and bears over the course of a trading session. We were in a market where the bears were in control, but on this day the bulls reentered the fray and made sure they were going to come out on top — quite a change from what went on before.

So a hammer is a day where we see a selloff followed by a rally, which is how we get our small real body and long lower shadow.

It all seems so simple when put into this context, but I've seen people's faces light up so many times when the pattern is explained in this way. That in turn makes my face light up — living proof that candlestick analysis can light the way!

Clive Lambert, founder of FuturesTechs, writes daily technical analysis on the world's leading financial futures markets. He can be reached at clive@futurestechs.co.uk.

Candlestick Corner - The Engulfing Pattern

2008-04-29T17:49:00.000-07:00

Candlestick Corner - The Engulfing Pattern

10/11/01 03:56:15 PM PST

by Sharon Yamanaka

This major reversal pattern is simple to use. You don't even need additional indicators. Find out how.

Security: MSFT

Candlestick formations originated in 18th-century Japan, where the market action was explained in much the same way that we describe stock market sentiment today: as an ongoing battle between bulls and bears fighting for control. Compared to the bar chart, candlesticks use the same information (high, low, opening, and closing prices), but the opening and closing prices are emphasized by converting them into rectangular bodies, or candlesticks, that are closed (dark) when the close is lower than the open, and open (white) when the close is higher (Figure 1). These bodies emphasize the bullishness or bearishness of the market. One glance will give the investor an overall impression of darkness or light that can highlight a stock's rise or fall, even when the overall trend isn't particularly apparent. And therein lies the strength of this charting technique.

Figure 1: Identifying the parts of a candlestick vs. a bar chart.

DEFINITION

The engulfing pattern is considered a major reversal pattern. Unlike other candlestick patterns — such as those I've written about in previous issues of Working-Money.com, in which I used technical indicators as the primary signal and the candlestick formations as the secondary, entry signal — I've found the engulfing pattern can work very well alone, needing only a trailing stop in order to trade effectively.

The engulfing pattern consists of two candlesticks. The second body must begin and end above and below the first body, respectively, giving it the illusion of "engulfing" the first candlestick, and the two bodies must be different colors (Figure 2). The shadows or "wicks" are irrelevant in this pattern. As a second condition, in order to get a reversal signal, the security must be in a trend, either going steadily up or down.

Figure 2: The engulfing pattern.

For a bottom reversal, where a stock is slowly losing value (in a downtrend), the first candlestick body will be black, and the second, engulfing candlestick will be white. For a top reversal, the opposite would occur with the first candlestick being white and the second black. This is explained in terms of market sentiment as the opposing bullish (bearish) forces taking control of the bears (bulls), ending the day on a strong, positive (negative) note.

ADDITIONAL VERIFICATION

Although the engulfing pattern is considered a major signal, there are ways to confirm it:

1. The signal is particularly strong if the second candlestick body is 30% larger than the first.

2. The third day confirms the reversal movement of the two-day formation. If it's a top reversal, the third day should close down, and if it's a bottom reversal, the third day should close up.

3. Other technical indicators such as volume, moving averages, and oscillators can be used to confirm trend reversals.

Examples of these are displayed in Figure 3.

Figure 3: Confirmation signals.

IDENTIFYING A TREND REVERSAL

The engulfing pattern itself is easy to identify: either it's there or it's not. What's more subjective is whether it's occurring in a trend. How can you tell if a stock is trending? Basic technical analysis says that any given stock is going up, down, reversing, or going sideways in a consolidation pattern. While this might be the equivalent of telling an art student that everything is made up of either straight lines or curves, it does give parameters that can be used as a beginning point for analysis.

A more analytical definition of an uptrend is a succession of higher highs, often calculated using a stock's closing prices. A downtrend is the opposite, with the stock closing to a succession of lower lows. Reversing patterns are those where upward or downward momentum slows down and a peak is formed. Visually, this can be seen in Figure 4, which shows the Sakata method of identifying trading patterns.

Figure 4: Trends.

The Sakata method is attributed to Sokyu Honma, who lived in 18th-century Japan and is credited with originating candlestick patterns. Honma became known for his ability to predict the upcoming day's rice trading prices based on the activity of the previous day or days. His method included a complete trading philosophy, part of which defined three types of reversal patterns: a rounded top (bottom), two-mountain top (bottom), and a triple-mountain top (bottom) as shown in Figure 5. These three patterns may take anywhere from two weeks to several months to form, and generally show up quite well on a chart with a six-month duration.

Figure 5: Reversals.

This very basic definition of trends lends itself to Western trading patterns. The three-mountain reversal pattern (also called the Buddha pattern) is similar to the Western head and shoulders top; the double-top likewise appears in both cultures; and the dumpling top/frypan bottom is similar to a rounded top/bottom. Presumably anything that fails to reverse in three tries is no longer going to reverse, but enters a consolidation pattern (Figure 6).

Figure 6: Consolidation pattern.

Generally, consolidation patterns should continue in the same direction they were going prior to the consolidation. Granted, that is a fairly large and glaring generality, but the engulfing pattern seems to be particularly strong in giving consistent signals in both trending and consolidation patterns, as shown in the following example.

MSFT ENGULFED

Figure 7: Fifteen-month chart of MSFT from May 2000 to July 2001 with arrows showing where all the engulfing patterns occurred, and which ones were followed. Figures 7A and 7B show closeups of the candlesticks during interesting trading periods.

Figure 7A: Closeup of June-July MSFT candlestick patterns.

Figure 7B: Closeup of July-August MSFT candlestick patterns.

A 15-month chart of Microsoft Corp. (MSFT) from May 2000 to August 2001 is displayed in Figure 7. The upward-pointing green arrows in the chart are the engulfing pattern bull reversal signals, and the red arrows pointing downward are the bearish reversal patterns. These can be seen in Figures 7A and 7B. The highlighted arrows are engulfing patterns occurring in a trend, whose signals I determined were valid to follow. I decided I would buy in on the following day at approximately the opening prices. I rounded off all prices for simplicity.

With an original investment of $1,000, my results were as follows:

Buy 64 Sell 79 $1,234

Buy 70 Sell 66 $1,163

Buy 64 Sell 68 $1,236

Buy 44 Sell 58 $1,630

Buy 55 Sell 67 $1,985

For the most part, like signals came in bunches, with buy signals following buys and sells reinforcing sells. One signal I did pass over was the buy signal in late June 2000 (Figure 7B). This buy signal seemed to appear in an uptrend or possibly a continuation pattern rather than in a downtrend. When in doubt, I look at confirming indicators. The MSFT chart has a nine- and 18-day exponential moving average (Ema). Emas are standard trend reversal indicators, and in the MSFT example, I can see the exponential moving average approximately reinforces the buy/sell signals provided by the engulfing patterns, except for the signal at the end of June. MSFT has just had a decent run up on the price and seems more likely to go down or consolidate rather than continue up. I bought in late August when I received a strong buy signal and MSFT seemed to be completing a bottom reversal pattern. As it turned out, it was the system's one losing trade. But it wasn't particularly catastrophic.

I bought again in mid-February 2001, and from there until mid-June I received nothing but bullish engulfing pattern signals. In June a weak bearish engulfing pattern emerged. This one occurred in what looked like a consolidation pattern, so I decided not to sell. It was followed by a buy, and then another, more alarming bearish engulfing pattern. I could have sold at any one of these signals, but held on until the third sell signal, when MSFT seemed to be starting to drift down, forming a large top reversal pattern. Now that I had a clear reversal pattern, I sold the stock.

During this time period, MSFT began around $65 and ended in August at about the same level. My initial $1,000 investment almost doubled using this system. Before using this system on Microsoft, I had looked at a number of stocks to see how well they worked with the engulfing pattern. Microsoft seemed to lend itself best to the pattern, and it was a fundamentally strong company.

ADDITIONAL TESTING

Even though the engulfing pattern worked very well on Microsoft, I wanted to backtest the pattern for the same 15 months using a more objective approach. My decisions to buy and sell were based on my ability to detect a trend, and there were too many instances where I wasn't confident in my choices. Backtesting using set rules to trade might give me a better system. At the very least, it would familiarize me with the engulfing pattern's tendencies.

With that in mind, I went back and traded MSFT using the engulfing pattern only, leaving out any trend formations. I came up with the following results:

Buy 64 Sell 69 $1,234

Buy 77 Sell 66 $1,058

Buy 64 Sell 68 $1,124

Buy 44 Sell 56 $1,430

Buy 57 Sell 70 $1,757

Buy 69 Sell 69 $1,757

Buy 70 Sell 68 $1,706

Buy 65 Sell ??

I was very encouraged. Everything I've read suggests that the engulfing pattern could be profitable on its own with nothing else involved. It's a clean and simple trading system. But in examining each trade, I saw two obvious flaws. One was that the pattern needed a stop-loss (which all traders and investors should use anyway), and the other was that it was buying and selling while the stock was in a consolidation pattern. It was being whipsawed, confirming the need to trade only in a recognizable trend.

I then conducted a second test that used a $5 trailing stop-loss (easier to calculate in the absence of a trading program than percentage stops), and decided to use a five-day minimum time span between trades. With these new rules, I got eight round-trip trades that turned the initial $1,000 into $1,764. This was slightly better than the engulfing system alone, but still inferior to the original trading system.

CONCLUSION

Although I would only fall back on using any of the backtested systems if I were unsure of interpreting a signal, they did help me by reinforcing the importance of placing a stop and the susceptibility of the engulfing pattern to whipsaws, and therefore the wisdom of trading this pattern in a trend. Both are valuable pieces of information as I continue to trade this candlestick pattern.

Sharon Yamanaka may be reached at SYamanaka@Traders.com.

Continuation Patterns

2008-04-29T17:39:00.000-07:00

Continuation Patterns

09/25/01 10:28:21 AM PST

by Amy Wu

The rising three and falling three candlestick patterns can help you confirm trends, add to positions, and grant you a cease-fire from the battle between the bulls and the bears.

Candlestick charting extends well beyond confirming support and resistance levels and predicting market tops and bottoms. Active markets always attract traders, but sometimes recognizing market inaction is as necessary as finding activity in the market. There are times to sell, times to buy, and times to rest, and the continuation pattern recognizes those times to rest. But just because the market is resting doesn't mean you should be. Continuation patterns are an excellent way to confirm trends, add to positions, or even trade on the short side.

CANDLE BASICS REVISITED

Candlesticks, which originated in Japan several hundred years ago, are a unique and subtle way of looking at charts. Usually, we think of bars when we want a security charted. But candlesticks are only a different form of bar charts, a form that lends greater insights.

The four major components of the candlestick are the open, close, high, and low of whatever tradable you are charting. A candlestick can be thought of as a vertical rectangle similar to that shown in Figure 1. If the price of the close is lower than the open, it is a black (or red) candlestick; if the price of the close is higher than the open, the candlestick is white (or green). I think of it as a Star Wars situation, with the forces of dark versus the forces of light. If a security closes higher than its open, it's considered bullish; if a security closes lower than its open, it's considered bearish. The range or difference between the close and the open will depend on the size of the body of the candle. If it is long, then the difference between the open and close is large.

Figure 1: Comparing a tick on a bar chart to a candlestick. They have all the same components, but the candlestick emphasizes the direction and depth of the opening and closing prices.

Candlesticks also have thin vertical lines extending from the top and bottom of the body, like wicks. These wicks, or shadows, represent the high and the low for the day. Highs extend above the body and lows extend below the body. As with the body of the candlestick itself, longer or shorter lines show the relative difference between the high/low and open/close.

There are many names for the different kinds of candlesticks. (For more information, see the suggested reading references at the end of this article.) With or without the names, however, you can intuitively see the direction of market sentiment using candlestick charting.

THE THREE METHODS

One major continuation pattern is called the three methods and can be classified as a rising three (bullish) or a falling three (bearish). Both signal small breaks in the trend; they do not signal a reversal. From the view of supply and demand, the three methods are spurred by uncertainty in the market. However, the market corrects itself when bulls see that a new low can't be made, or when bears see that a new high can't be made. In either scenario, the original trend continues: the bulls become bullish again, and the bears become bearish again.

The three methods are related to support and resistance lines, which can often be detected by candlestick charting during an uptrend or a downtrend. But support and resistance lines can be penetrated, and the rising and falling three methods (Figure 2) are ways of confirming that the attempted penetration will fail, and that the trend will continue.

Figure 2: The three methods. Both the falling three and the rising three are continuation patterns.

THE RISING THREE

The rising three method begins with a long white candlestick. This candlestick is representative of the current uptrend. When this candlestick is followed by a group of small-bodied candlesticks (most often three) going in the opposite direction, you will be able to see a small break in the trend. These smaller candlesticks are normally of the opposite color, black, but can also be white. For this to be a continuation pattern, these small-bodied candlesticks should be within the high%ADlow range of the first candlestick. The final candlestick of the pattern should follow the direction of the original candlestick, but they should close outside the first day's close.

Classically, this pattern consists of five candles, but there is room for leeway. The pattern can have more than three small-bodied middle candles, and these reaction candles can go outside the range of the trend candles. If the candles don't tend to go in one direction, the pattern could be a mat-hold pattern (Figure 3), which is a bullish continuation pattern that allows more flexibility in the small-bodied candles.

Figure 3: Mat-hold pattern. A bullish continuation pattern that is more flexible than the three methods.

THE FALLING THREE

Sometimes, it is confusing to remember which is the rising three method and which is the falling three. The confusion lies in the fact that the five-candle representation will have reaction candles going in the opposite direction of the candle. Remember: If a correction takes place, the name of the method refers to the trend, not the reaction candles.

The two methods are the same type of patterns, only going in opposite directions. The falling three begins with a long black candlestick followed by a group of upward reaction candles. These candles all fall in range of the original candle, but are smaller-bodied. Normally, the small-bodied candles would be white (since the trend candle is black).

The fifth and final candlestick is the same as the original trend candle, but in this case, it closes at a new low and opens under the close of the previous day. The only difference is that the candle will be higher or lower, depending on the trend of the original candle.

CONTINUING CANDLESTICKS

Recognizing continuation patterns is important, whether you are in a long position or a short one. Besides adding positions, it also confirms your other indicators. Even if you are trading on the short side, the three methods can help you use the continuation pattern to do much more.

Amy Wu is a student at Princeton University.

Pure: Support and Resistance (part 2)

2007-07-31T20:47:00.000-07:00

part 2

In part one we established that a rising trend is a series of rising peaks and troughs this is true but we need to take it a step further.

There 3 types of rising trend ,these are

NORMAL TREND
CREEPING TREND
BLOW OFF TREND

A NORMAL TREND is when the price is making a series of rising peaks and troughs and the price does not move substantially into the range of the previous peak quite often in a normal trend the price will come within a few pips of the previous peak before turning back up again these are great opportunities to trade with the trend.

A CREEPING TREND is when the price is making a series of rising peaks and troughs and the price moves back into the range of the previous peak but not as far as the previous trough and then turns back up ,its quite normal to find this type of trend at the beginning of a very good trend.

A BLOW OFF TREND is when the market is making a series of rising peaks and troughs and the price does not come close to the previous peak creating a gap, these normally occur near the end of a normal trend and usually are a very fast move .Its important to check the higher timeframe with this type of trend because sometimes what looks like a BLOW OFF TREND can be a retest of a peak on the highertimeframe so its important to distinguish between the two in order to know where to set the profit target.

REVERSE EVERYTHING FOR DOWNTREND

Some result

2007-07-31T10:34:00.001-07:00

Pure: Support and Resistance

2007-07-31T10:23:00.000-07:00

Part 1
If you have read the first post and decided to participate and taken my advise about looking at a blank chart with no indicators and marking some peaks and troughs here is how your chart should look.

First of all its pointless trying to look at a chart using the full height and width of the screen,so ive posted a blank indicator which you should load onto the screen three times so your screen looks the same as the picture below.

Here are the basic rules that you will need, when i say basic thats what they are nevertheless do not dismiss them ,as these rules are the basis for all the systems and indicators that are being created on this and other forums.

Resistance is any part at which the market stopped going up and turned down
Support is any part at which the market stopped going down and turned up
An uptrend is a series of rising peaks and troughs
A downtrend shows a series of descending peaks and troughs.
A sideways trend is a series of horizontal peaks and troughs, with prices moving within a range, failing to make new highs at the top of the price range and failing to make new lows at the bottom of the price range
Role Reversal
One of the most interesting phenomena regarding support and resistance occurs when the price is finally able go above and beyond an identified support or resistance level.
When this happens and a previous trough is broken it is not uncommon to see this previous level of support change its role and become a new area of short-term resistance.
The opposite of this process occurs when the price breaks above resistance or previous peak.,this area now becomes a new area of short term support.

Camarilla Pivot Calculator

2007-05-10T19:56:00.000-07:00

Hello to day i got something to you
Camarilla Pivot Calculator.... i believe many of you had heard about this pivot before :)

this is the Camarilla pivot equation

Camarilla Pivot Points

R4 = C + RANGE * 1.1/2
R3 = C + RANGE * 1.1/4
R2 = C + RANGE * 1.1/6
R1 = C + RANGE * 1.1/12
PP = (HIGH + LOW + CLOSE) / 3
S1 = C - RANGE * 1.1/12
S2 = C - RANGE * 1.1/6
S3 = C - RANGE * 1.1/4
S4 = C - RANGE * 1.1/2

don't worry with the equation.....hehehe...

i will give some calculator..yes...it free... no need to calculate manually
you can download it and practise with the camarilla pivot
i will update with chart ....how to use camarilla pivot in trading

Good luck...
http://www.badongo.com/file/3011886
http://www.badongo.com/file/3011880

Linear Regression Channel

2007-04-22T15:01:00.000-07:00

Linear Regression Channel

Linear Regression Channel is built on base of Linear Regression Trend representing a ussual trendline drawn between two points on a price chart using the method of least squares. As a result, this line proves to be the exact median line of the changing price. It can be considered as an equilibrium price line, and any deflection up or down indicates the superactivity of buyers or sellers respectively.

Linear Regression Channel consists of two parallel lines, equidistant up and down from the line of linear regression trend. The distance between frame of the channel and regression line equals to the value of maximum close price deviation from the regression line. All price changes take place within Regression Channel, where the lower frame works as support line, and the upper one does as resistance line. Prices usually exceed the channel frames for a short time. If they keep outside of the channel frames for a longer time than usually, it forecasts the possibility of trend turn.

lesson 2 : Pivot Point

2007-04-13T21:44:00.000-07:00

It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.

Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.

As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from "bull" to "bear" or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can’t break the pivot point, a possible bounce from it is plausible.

Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.

Pivot Points

In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.

Why PP work?
They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.

Calculating pivot points
There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).

Pivot point (PP) = (High + Low + Close) / 3

Take for instance the following EUR/USD information from the previous session:

Open: 1.2386
High: 1.2474
Low: 1.2376
Close: 1.2458

The PP would be,
PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this number tell us?
It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.

Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT.

Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.

Support 1 (S1) = (PP * 2) – H
Resistance 1 (R1) = (PP * 2) - L
Support 2 (S2) = PP – (R1 – S1)
Resistance 2 (R2) = PP + (R1 – S1)

Where, H is the High of the previous period and L is the low of the previous period

Continuing with the example above, PP = 1.2439

S1 = (1.2439 * 2) - 1.2474 = 1.2404
R1 = (1.2439 * 2) – 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 – 1.2537) = 1.2537
S2 = 1.2439 – (1.2636 – 1.2537) = 1.2537

These levels are supposed to mark support and resistance levels for the current session.

On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.

S1, S2, R1 AND R2...? An Objective Alternative

As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.

We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today’s chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.

LOPS1, low of the previous session.
HOPS1, high of the previous session.
LOPS2, low of the session before the previous session.
HOPS2, high of the session before the previous session.
PP, pivot point.

These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.

The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don’t know the reason, and we don’t need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.

What is important about his approach is that support and resistance levels are measured objectively; they aren’t just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.

This mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.

How we use our mapping method?
We use the mapping method in three different ways: as a trend identification (measure of the strength of the trend), a trading system using important levels with price behavior as a trading signal and to set the risk reward ratio of any given trade based on where the is the market relative to the previous session.

Lesson One : Trendline

2007-04-07T22:42:00.000-07:00

What is a trendline?

According to Schabacker, "a trendline is a straight line drawn on a chart through or across the significant limits of any price range to define the trend of market movement."

Trendlines were one of the first technical aspects of the market to be discovered. Technical analysis is based on the fact that the prices of market move in fairly definite trends. Prices trend for individual stocks and for the market as a whole. Technical analysts use trendlines in two ways:

first, to identify the direction of the movement of stock prices.

second, to determine if and when the movement will change.

How do technical analysts use trendlines?

Stock prices move in trends. Once a trend has been clearly identified, it's likely to continue for a time. Technical analysts look to trendlines for their ability to support price declines or resist price advances.

When prices are moving neither up nor down, trendlines have little importance. Technical analysts looking for a profitable trendline will search for ones that slope up or down across the charts. These illustrate stock prices that are clearly trending either up (as illustrated by an "up trendline") or down (as illustrated by a "down trendline").
A trendline not only shows the trend but it also defines the limits of price swings of the stock. Assume a stock's price is trending upwards. If the stock's price dips significantly below its trendline, it may mark a reversal - the end of the trend.

No trend continues forever. Technical analysts are as concerned with the breaking of trendlines as they are with watching a trend continue.

How are up and down trendlines created?

An up trendline marks the upward progression of a stock's price. The line is drawn on the chart by connecting the low points the stock hits as its price continues to rise. Each low point will be successively higher than the previous low. This progression gives the trendline its upward slope.
A down trendline marks the downward progression in the price of a stock. It is formed by drawing a line on the chart connecting the high points the stock hits as it continues to fall. Each high point will be successively lower than the previous high. This progression gives the trendline its downward slope.

How do you know when a trendline is dependable?

It's not easy to determine whether or not a trendline is valid. Experience and common sense are two vital skills to possess. According to Schabacker, "no one can take a chart, immediately draw trendlines on it and be certain that they are the proper, or even the best, trendlines that could have been inserted for continuation of the current movement. That is just as impossible as is the absolutely certain forecast of definite future prices by any finite individual."

Cautious investors look for more than two points on the chart which touch the trendline. They'll be watching for a third and fourth point which confirm the trendline they've identified. In addition, experts advise watching for points on the trendline (highs for a down trendline, lows for an up trendline) that are fairly evenly spaced along the chart.

A common mistake is to draw a trendline that is too steep. Often a major movement in the market - which begins very steeply on a chart - will look like it's starting a trend. Many trendlines level off significantly after an initial burst of activity. This is where the experience of drawing and redrawing trendlines can pay off for the investor.

When drawing and redrawing trendlines on a chart, the investor can end up with a chart where the trendlines, which start out steeply, become ever shallower. These "trend reduction lines," drawn from the same starting high or low, create a fan pattern on the chart, giving them the name of "fan lines." According to Kahn, fan lines are, by definition, congestion zones as buyers and sellers position themselves.

Are there different types of trends?

Edwards and Magee divide trends into three basic varieties:
1. Major or primary trends - a trend of at least one year's duration which shows a rise or decline of at least 20%. When the primary trend is up, this is called a bull market. When it's down, it's referred to as a bear market.
2. Minor trends - brief fluctuations (usually less than six days and rarely longer than three weeks). Taken together these short-term fluctuations make up an intermediate trend. Experts will often define an intermediate market as composed of three or more minor fluctuations.
3. Intermediate or secondary trends - these trends move in the opposite direction of the primary trend and usually last for three weeks or more. For example, a secondary trend could be an intermediate decline during a bull market or an intermediate rally or recovery during a bear market. These secondary trends tend to retrace from one-third to two-thirds of the gain or loss in prices recorded in the primary direction.

How do you play the trend?

According to Achelis, "the goal is to analyse the current trend using trendlines and then either invest with the current trend until the trendline is broken, or wait for the trendline to be broken and then invest with the new (opposite) trend."

An investor should not rely on a trendline alone to make a trading decision. Trendlines are one tool that should be used in combination with other signals, including reversal and continuation patterns, which form over time.

All trading decisions are highly dependent on the type of trend being followed. Schabacker advises that it is much safer and much more profitable to play the intermediate movements that run in the direction of the basic major trend, rather than the minor corrections that run counter to it. According to the trader's axiom, the trend is your friend.

Many traders advise that primary trendlines serve the useful purpose of preventing investors from taking profits prematurely. In other words, the trendline tells investors to stay "long" if the trend is up, or "short" if the trend is down.

Keep an eye on fan lines. They can provide a sign of a reversal, signalling the end of a trend. Many analysts suggest that a reversal may occur when the third trendline is touched. According to Kahn, if that third trendline successfully supports or resists prices, then the original trend is still intact. Like any technical pattern, investors should hold their trading until the pattern is clearly and unequivocally resolved.

Patterns help greatly in interpreting trend lines. The formation of a pattern can have great significance in determining whether a trendline is broken. This serves as an important reminder to the investor to use all of the technical tools available and not to rely on any one single tool.

How do you know when a trendline is broken?

Schabacker warns investors to be more conservative with longer trendlines. The longer the trendline, the greater the possibility that its angle may be slightly off. This means that any price that appears to have broken the "slightly off" line may, in fact, not have broken the true trendline. "Consequently, the longer our line has run from its origin the more critical we must be of any price action which apparently breaks the line, and the more conservative in taking action on it."

There are several factors to consider in determining whether a trendline is definitively broken:
1. Volume - In some cases, penetration will be accompanied by increased trading in the stock.
2. Significant price movement - A slight correction in price is seldom a signal of a true break in an intermediate or major trend.
3. Closing price - Analysts will usually ignore breaks in the trendline which occur during the trading day, focussing instead on the closing price for the day.
4. Presence of a pattern - Analysts like to see a pattern formation at the end of a major or intermediate trend. A pattern signalling a reversal reinforces the importance of the break in the trendline

How To Become A Successful Forex Trader

2007-03-13T19:42:00.000-07:00

What are the four ingredients in the recipe for forex trading success?

Ovidiu Garvasuc explains that in his article "The 4 Wheels That Take A Forex Trader To Success". According to Ovidiu, the most important requirements in order to be a succesful forex trader is not the knowledge of complicated technical indicators and proficiency at using them. Much more important are certain character traits, such as:

will
discipine
self-control
honesty

The most important piece of advice from Ovidiu - don't argue with the market... "Arguing with the market is very expensive. If the market is right and you are wrong it costs you money, and remember what I said about when the market is right?A L W A Y S...so..be honest: If you are not making profits the system should be improved."

Bonus Part 4

2007-02-02T01:56:00.000-08:00

Greetings to all traders around,

Here are some other links to trading material for you bellow ..
Feel free to download !
Turn off download managers if you are using them (seems like this site doesnt support it)
Most files are compressed (RAR or ZIP) so unpack before reading ...

Good trading to all !

http://www.loombo.com/dl/5270 - Day Trading Courses - Part 1
http://www.loombo.com/dl/5271 - Day Trading Courses - Part 2
http://www.loombo.com/dl/5272 - Day Trading Courses - Part 3
http://www.loombo.com/dl/5273 - Day Trading Courses - Part 4

http://www.loombo.com/dl/5274 - Day Trading Patterns and Swing Trading - Part 1
http://www.loombo.com/dl/5275 - Day Trading Patterns and Swing Trading - Part 2
http://www.loombo.com/dl/5276 - Day Trading Patterns and Swing Trading - Part 3
http://www.loombo.com/dl/5277 - Day Trading Patterns and Swing Trading - Part 4
http://www.loombo.com/dl/5278 - Day Trading Patterns and Swing Trading - Part 5
http://www.loombo.com/dl/5279 - Day Trading Patterns and Swing Trading - Part 6
http://www.loombo.com/dl/5280 - Day Trading Patterns and Swing Trading - Part 7
http://www.loombo.com/dl/5281 - Day Trading Patterns and Swing Trading - Part 8

http://www.loombo.com/dl/5282 - Stocks Trading - Forecasting Cources (Part 1)
http://www.loombo.com/dl/5283 - Stocks Trading - Forecasting Cources (Part 2)
http://www.loombo.com/dl/5284 - Stocks Trading - Forecasting Cources (Part 3)
http://www.loombo.com/dl/5285 - Stocks Trading - Forecasting Cources (Part 4)
http://www.loombo.com/dl/5286 - Stocks Trading - Forecasting Cources (Part 5)
http://www.loombo.com/dl/5287 - Stocks Trading - Forecasting Cources (Part 6)
http://www.loombo.com/dl/5288 - Stocks Trading - Forecasting Cources (Part 7)
http://www.loombo.com/dl/5289 - Stocks Trading - Forecasting Cources (Part 8)
http://www.loombo.com/dl/5290 - Stocks Trading - Forecasting Cources (Part 9)
http://www.loombo.com/dl/5291 - Stocks Trading - Forecasting Cources (Part 10)
http://www.loombo.com/dl/5292 - Stocks Trading - Forecasting Cources (Part 11)

http://www.loombo.com/dl/5293 - Stocks Trading - Immediate and Substantial Gains

http://www.loombo.com/dl/5294 - Technical Analysis - Essentials (Part 1)
http://www.loombo.com/dl/5295 - Technical Analysis - Essentials (Part 2)
http://www.loombo.com/dl/5296 - Technical Analysis - Essentials (Part 3)
http://www.loombo.com/dl/5297 - Technical Analysis - Essentials (Part 4)

http://www.loombo.com/dl/5298 - Trading - Candlestick Charting Explained (Part 1)
http://www.loombo.com/dl/5299 - Trading - Candlestick Charting Explained (Part 2)
http://www.loombo.com/dl/5300 - Trading - Candlestick Charting Explained (Part 3)
http://www.loombo.com/dl/5301 - Trading - Candlestick Charting Explained (Part 4)
http://www.loombo.com/dl/5302 - Trading - Candlestick Charting Explained (Part 5)
http://www.loombo.com/dl/5303 - Trading - Candlestick Charting Explained (Part 6)

http://www.loombo.com/dl/5304 - Trading Futures and Forex - By the book (Part 1)
http://www.loombo.com/dl/5305 - Trading Futures and Forex - By the book (Part 2)
http://www.loombo.com/dl/5306 - Trading Futures and Forex - By the book (Part 3)
http://www.loombo.com/dl/5307 - Trading Futures and Forex - By the book (Part 4)
http://www.loombo.com/dl/5308 - Trading Futures and Forex - By the book (Part 5)
http://www.loombo.com/dl/5309 - Trading Futures and Forex - By the book (Part 6)
http://www.loombo.com/dl/5310 - Trading Futures and Forex - By the book (Part 7)
http://www.loombo.com/dl/5311 - Trading Futures and Forex - By the book (Part 8)
http://www.loombo.com/dl/5312 - Trading Futures and Forex - By the book (Part 9)
http://www.loombo.com/dl/5313 - Trading Futures and Forex - By the book (Part 10)

http://www.loombo.com/dl/5314 - Trading System - Smarter Trading (Part 1)
http://www.loombo.com/dl/5315 - Trading System - Smarter Trading (Part 2)
http://www.loombo.com/dl/5316 - Trading System - Smarter Trading (Part 3)
http://www.loombo.com/dl/5317 - Trading System - Smarter Trading (Part 4)

http://www.loombo.com/dl/5318 - Trading System - Swing Trading (Part 1)
http://www.loombo.com/dl/5319 - Trading System - Swing Trading (Part 2)
http://www.loombo.com/dl/5320 - Trading System - Swing Trading (Part 3)
http://www.loombo.com/dl/5321 - Trading System - Swing Trading (Part 4)

http://www.loombo.com/dl/5322 - Trading System - Turtle Trading (Part 1)
http://www.loombo.com/dl/5323 - Trading System - Turtle Trading (Part 2)
http://www.loombo.com/dl/5324 - Trading System - Turtle Trading (Part 3)
http://www.loombo.com/dl/5325 - Trading System - Turtle Trading (Part 4)

http://www.loombo.com/dl/5326 - Trading - New Trend Detector (Part 1)
http://www.loombo.com/dl/5327 - Trading - New Trend Detector (Part 2)
http://www.loombo.com/dl/5328 - Trading - New Trend Detector (Part 3)
http://www.loombo.com/dl/5329 - Trading - New Trend Detector (Part 4)
http://www.loombo.com/dl/5330 - Trading - New Trend Detector (Part 5)

Bonus part 3

2007-01-03T21:38:00.000-08:00

What type of trader are you?

2006-12-08T22:02:00.000-08:00

First thing to know before being forex trader

what type of trader are you?

Each person have different personality , emotionality and etc
That why we are different in trading type...

I try to list down all the type below.. let see and consider what type are you?

1) Scalper: Looking to hold positions for a matter of minutes

2) Day Trader Looking to close out all positions by the end of the day

3) Swing Trader: Holding a trade open for between a day and a week

4) Position Trader: A trader who is looking to hold a position for a number of weeks

5) Long Term Trader: Someone who is holding a trade open for months at a time

6) Buy and Hold Trader: A trader who is looking for a return over a number of years

Bonus part 2

2006-11-29T19:00:00.000-08:00

hello sorry for late update this blog
I think that is ok because you all have enought time to read and study all the book in part 1

Ok now ..
Here are some other links to trading material for you bellow ..
Feel free to download !
Turn off download managers if you are using them (seems like this site doesnt support it)
Most files are compressed (RAR or ZIP) so unpack before reading ...

Good trading to all !

http://www.loombo.com/dl/5099 - Contrarian Investment Strategies - part1
http://www.loombo.com/dl/5100 - Contrarian Investment Strategies - part2
http://www.loombo.com/dl/5101 - Contrarian Investment Strategies - part3
http://www.loombo.com/dl/5102 - Contrarian Investment Strategies - part4
http://www.loombo.com/dl/5103 - Contrarian Investment Strategies - part5
http://www.loombo.com/dl/5066 - Encyclopedia of Trading Strategies
http://www.loombo.com/dl/5067 - Farley - The Master Swing Trader
http://www.loombo.com/dl/5068 - FOREX MANUAL IN ENGLISH
http://www.loombo.com/dl/5069 - Forex Report - Predicting Price movement
http://www.loombo.com/dl/5070 - Hidden_Divergence
http://www.loombo.com/dl/5104 - Ultimate Trading Guide - part1
http://www.loombo.com/dl/5105 - Ultimate Trading Guide - part2
http://www.loombo.com/dl/5106 - Ultimate Trading Guide - part3
http://www.loombo.com/dl/5107 - Ultimate Trading Guide - part4
http://www.loombo.com/dl/5109 - Ultimate Trading Guide - part4
http://www.loombo.com/dl/5108 - Trading Market Handbook - part1
http://www.loombo.com/dl/5110 - Trading Market Handbook - part2
http://www.loombo.com/dl/5111 - Trading Market Handbook - part2
http://www.loombo.com/dl/5072 - Jones Money Management
http://www.loombo.com/dl/5073 - Currency trading strategies
http://www.loombo.com/dl/5075 - Mathematics of money management
http://www.loombo.com/dl/5076 - Forex Trading Sure Fire
http://www.loombo.com/dl/5077 - Trading strategies I
http://www.loombo.com/dl/5078 - Trading strategies II
http://www.loombo.com/dl/5079 - Money Management Strategies for Serious Traders
http://www.loombo.com/dl/5080 - Monthly moving Averages an effective investment tool
http://www.loombo.com/dl/5081 - Multi Dimensional Trading

Screenshot

2006-10-31T17:58:00.000-08:00

answer for the email :)

2006-10-31T17:32:00.000-08:00

In the morning, when i check my email i very suprise with 5 email
from my blog reader that asking me to share all ebook that i got
accually i very happy because many people want to learn and discuss
about forex trading with me :)

i will share all of it for free
if you got question just ask me in this blog

at last i show some screenshot for motivation to all of you

Math Murray Lines

2006-10-27T20:33:00.000-07:00

8/8 th's and 0/8 th's Lines (Ultimate Resistance)

These lines are the hardest to penetrate on the way up, and give the greatest support on the way down. (Prices may never make it thru these lines).

7/8 th's Line (Weak, Stall and Reverse)

This line is weak. If prices run up too far too fast, and if they stall at this line they will reverse down fast. If prices do not stall at this line they will move up to the 8/8 th's line.

6/8 th's and 2/8 th's Lines (Pivot, Reverse)

These two lines are second only to the 4/8 th's line in their ability to force prices to reverse. This is true whether prices are moving up or down.

5/8 th's Line (Top of Trading Range)

The prices of all entities will spend 40% of the time moving between the 5/8 th's and 3/8 th's lines. If prices move above the 5/8 th's line and stay above it for 10 to 12 days, the entity is said to be selling at a premium to what one wants to pay for it and prices will tend to stay above this line in the "premium area". If, however, prices fall below the 5/8 th's line then they will tend to fall further looking for support at a lower level.

4/8 th's Line (Major Support/Resistance)

This line provides the greatest amount of support and resistance. This line has the greatest support when prices are above it and the greatest resistance when prices are below it. This price level is the best level to sell and buy against.

3/8 th's Line (Bottom of Trading Range)

If prices are below this line and moving upwards, this line is difficult to penetrate. If prices penetrate above this line and stay above this line for 10 to 12 days then prices will stay above this line and spend 40% of the time moving between this line and the 5/8 th's line.

1/8 th Line (Weak, Stall and Reverse)

This line is weak. If prices run down too far too fast, and if they stall at this line they will reverse up fast. If prices do not stall at this line they will move down to the 0/8 th's line.

Bonus Part 1

2006-09-30T00:59:00.000-07:00

hello there i hope all of you fine and happy
today i have something special to you who read my blog

As we all know that to master forex trading we must learn..
learn and learn :)

For that reason, i will give you free gift right now

ebook collection...

you can download all ebook for Free :)

Here are some other links to trading material for you bellow ..
Feel free to download !
Turn off download managers if you are using them (seems like this site doesnt support it)

Most files are compressed (RAR or ZIP) so unpack before reading ...
If you don't have uncompression program (WinRar) you can download it from here (http://www.rarlab.com/rar/wrar351.exe)
For multi-part books, first download all parts to your computer and then uncompress them!

http://www.loombo.com/dl/5047 - 18 Trading Champions Share Their Keys to Top Trading Profits
http://www.loombo.com/dl/5048 - 123 Trading System
http://www.loombo.com/dl/5049 - Arps, Jan L - Surfing The Market Waves - The Swing Trader's
http://www.loombo.com/dl/5082 - The Complete Day Trader Vol I.part1
http://www.loombo.com/dl/5083 - The Complete Day Trader Vol I.part2
http://www.loombo.com/dl/5084 - The Complete Day Trader Vol II part1
http://www.loombo.com/dl/5085 - The Complete Day Trader Vol II part2
http://www.loombo.com/dl/5052 - Bigalow, Stephen W - Big Profit Patterns Using Candlestick
http://www.loombo.com/dl/5053 - Bortucene Macy - The Day Trade Forex System
http://www.loombo.com/dl/5054 - Branch, Ben - The Predictive Power of Stock Market Indicator
http://www.loombo.com/dl/5055 - Bressert, Walter - Intraday Timing for Low Risk Swing Tradin
http://www.loombo.com/dl/5086 - CBOT - A Six-Part Study Guide to Market Profile.part1
http://www.loombo.com/dl/5087 - CBOT - A Six-Part Study Guide to Market Profile.part2
http://www.loombo.com/dl/5088 - CBOT - A Six-Part Study Guide to Market Profile.part3
http://www.loombo.com/dl/5057 - Chan, Jegadeesh Lakonishok - Momentum Strategies
http://www.loombo.com/dl/5058 - Technical Analysis - How to Develop and Implement
http://www.loombo.com/dl/5059 - Clayburg, John - Pinpointing Entry Exit Points.zip
http://www.loombo.com/dl/5060 - Intra-Day Trading Strategies, Proven Steps to Sucess
http://www.loombo.com/dl/5061 - Crisp, Mark - 123 Trading Signal
http://www.loombo.com/dl/5062 - Daytrading University - Advanced Daytrading two-day seminar
http://www.loombo.com/dl/5089 - Daytrading University Trading Course.part1
http://www.loombo.com/dl/5090 - Daytrading University Trading Course.part2
http://www.loombo.com/dl/5091 - Daytrading University Trading Course.part3
http://www.loombo.com/dl/5092 - Daytrading University Trading Course.part4
http://www.loombo.com/dl/5093 - Daytrading University Trading Course.part5
http://www.loombo.com/dl/5094 - Daytrading University Trading Course.part6
http://www.loombo.com/dl/5115 - Daytrading University Trading Course.part7
http://www.loombo.com/dl/5095 - Day trading options part1
http://www.loombo.com/dl/5096 - Day trading options part2
http://www.loombo.com/dl/5097 - Day trading options part3
http://www.loombo.com/dl/5098 - Day trading options part4

technorati

2006-09-30T00:38:00.000-07:00

Technorati Profile

Alligator

2006-09-21T10:35:00.000-07:00

In principle, Alligator Technical Indicator is a combination of Balance Lines (Moving Averages) that use fractal geometry and nonlinear dynamics.

The blue line (Alligator's Jaw) is the Balance Line for the timeframe that was used to build the chart (13-period Smoothed Moving Average, moved into the future by 8 bars);
The red line (Alligator's Teeth) is the Balance Line for the value timeframe of one level lower (8-period Smoothed Moving Average, moved by 5 bars into the future);
The green line (Alligator's Lips) is the Balance Line for the value timeframe, one more level lower (5-period Smoothed Moving Average, moved by 3 bars into the future).

Lips, Teeth and Jaw of the Alligator show the interaction of different time periods. As clear trends can be seen only 15 to 30 per cent of the time, it is essential to follow them and refrain from working on markets that fluctuate only within certain price periods.

When the Jaw, the Teeth and the Lips are closed or intertwined, it means the Alligator is going to sleep or is asleep already. As it sleeps, it gets hungrier and hungrier — the longer it will sleep, the hungrier it will wake up. The first thing it does after it wakes up is to open its mouth and yawn. Then the smell of food comes to its nostrils: flesh of a bull or flesh of a bear, and the Alligator starts to hunt it. Having eaten enough to feel quite full, the Alligator starts to lose the interest to the food/price (Balance Lines join together) — this is the time to fix the profit.

2006-09-11T19:03:00.000-07:00

Ichimoku

The Ichimoku Kinko Hyo indicator determines forex market trends, levels of support and resistance, and generates buy and sell signals. This indicator works best on the week and day time forex charts.

When assigning a dimension of parameters, four time frames of different extent are used. The significances of the separate lines that make up this indicator are based on these intervals:

–	Tenkan-sen - displays the average value of the price for the first period of time; defined as the sum of a maximum and the minimum for this time frame, divided by two.
–	Kijun-sen - displays the average value of the price for the second time frame.
–	Senkou Span A - displays the midpoint between the previous two lines, shifted forward on value of the second time frame.
–	Senkou Span B - displays the average value of the price for the third time frame, shifted forward on value of the second time frame.
–	Chinkou Span displays the closing price of the current candle, shifted back on value of the second time frame. The distance between the lines, Senkou, is shaded on the schedule with other color and is named as 'cloud'. If the price is found between these lines, the market is considered without a trend and the edges of a cloud will derivate levels of support and resistance.

If the price is found above a cloud, its upper line will derivate the first level of support, and second - second level of support. If the price is found under a cloud, the lower line will derivate the first level of resistance, in upper - second.

If the line, Chinkou Span, intersects the chart of the price bottom-up, it is a signal to buy. If it intersects top-down, it is a signal to sell.

Kijun-sen is used as a parameter of movement in the forex market. If the price is higher than the Kijun-sen, the price will most likely rise. When the price intersects this line, changes in the trend are likely.

An alternative version of usage for the Kijun-sen is the submission of signals. The buy signal is generated when the line Tenkan-sen intersects Kijun-sen bottom-up and a sell signal is generated when the Tenkan-sen intersects Kijun-sen top-down. Tenkan-sen is used as the indicator of a forex market trend. If this line grows or drops, the trend exists. When it goes horizontally, the forex market has come into the channel.

Relative Strength Index (RSI)

2006-09-06T18:06:00.000-07:00

The Relative Strength Index Technical Indicator (RSI) is a price-following oscillator that ranges between 0 and 100. When Wilder introduced the Relative Strength Index, he recommended using a 14-day RSI.. Since then, the 9-day and 25-day Relative Strength Index indicators have also gained popularity.

A popular method of analyzing the RSI is to look for a divergence in which the security is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the Relative Strength Index then turns down and falls below its most recent trough, it is said to have completed a "failure swing". The failure swing is considered a confirmation of the impending reversal.

Ways to use Relative Strength Index for chart analysis:

Tops and bottoms
The Relative Strength Index usually tops above 70 and bottoms below 30. It usually forms these tops and bottoms before the underlying price chart;
Chart Formations
The RSI often forms chart patterns such as head and shoulders or triangles that may or may not be visible on the price chart;
Failure swing ( support or resistance penetrations or breakouts)
This is where the Relative Strength Index surpasses a previous high (peak) or falls below a recent low (trough);
Support and Resistance levels
The Relative Strength Index shows, sometimes more clearly than price themselves, levels of support and resistance.
Divergences
As discussed above, divergences occur when the price makes a new high (or low) that is not confirmed by a new high (or low) in the Relative Strength Index. Prices usually correct and move in the direction of the RSI.

Calculation

RSI = 100-(100/(1+U/D))

Where:
U — is the average number of positive price changes;
D — is the average number of negative price changes.

2006-09-04T02:08:00.000-07:00

All markets are characterized by the fact that on the most part the prices do not change too much, and only short periods of time (15–30 percent) account for trend changes. Most lucrative periods are usually the case when market prices change according to a certain trend.

A Fractal is one of five indicators of Bill Williams’ trading system, which allows to detect the bottom or the top.

Fractal Technical Indicator it is a series of at least five successive bars, with the highest HIGH in the middle, and two lower HIGHs on both sides. The reversing set is a series of at least five successive bars, with the lowest LOW in the middle, and two higher LOWs on both sides, which correlates to the sell fractal. The fractals are have High and Low values and are indicated with the up and down arrows.

The fractal needs to be filtrated with the use of Alligator. In other words, you should not close a buy transaction, if the fractal is lower than the Alligator’s Teeth, and you should not close a sell transaction, if the fractal is higher than the Alligator’s Teeth. After the fractal signal has been created and is in force, which is determined by its position beyond the Alligator’s Mouth, it remains a signal until it gets attacked, or until a more recent fractal signal emerges.

Parabolic SAR (2)

2006-08-24T20:05:00.000-07:00

Picture above show us the indicator parabolic SAR. From that chart we can see ... the indicator stop and revesal direction when it touch the price line/japanese candle stick. ( like it name "SAR" stop and revesal)

using this indicator, we can use it to make entrypoint/exitpoint. when the indicator had touch the price we can start make a entry or exit.

From this picture also, we can know the trend, when the indicator is below the price it mean uptrend and when the indicator is above the price mean it a downtrend. this indicator good for swingger trader :)

that all for today, i hope you get it...good luck :)

ADX

2006-08-13T02:30:00.000-07:00

Average Directional Movement Index Technical Indicator (ADX) helps to determine if there is a price trend. It was developed and described in detail by Welles Wilder in his book "New concepts in technical trading systems".

The simplest trading method based on the system of directional movement implies comparison of two direction indicators: the 14-period +DI one and the 14-period -DI. To do this, one either puts the charts of indicators one on top of the other, or +DI is subtracted from -DI. W. Wilder recommends buying when +DI is higher than -DI, and selling when +DI sinks lower than -DI.

To these simple commercial rules Wells Wilder added "a rule of points of extremum". It is used to eliminate false signals and decrease the number of deals. According to the principle of points of extremum, the "point of extremum" is the point when +DI and -DI cross each other. If +DI raises higher than -DI, this point will be the maximum price of the day when they cross. If +DI is lower than -DI, this point will be the minimum price of the day they cross.

The point of extremum is used then as the market entry level. Thus, after the signal to buy (+DI is higher than -DI) one must wait till the price has exceeded the point of extremum, and only then buy. However, if the price fails to exceed the level of the point of extremum, one should retain the short position.

Calculation

ADX = SUM[(+DI-(-DI))/(+DI+(-DI)), N]/N

Where:
N — the number of periods used in the calculation.

2006-07-26T20:36:00.000-07:00

Parabolic SAR

Parabolic SAR Technical Indicator was developed for analyzing the trending markets. The indicator is constructed on the price chart. This indicator is similar to the Moving Average Technical Indicator with the only difference that Parabolic SAR moves with higher acceleration and may change its position in terms of the price. The indicator is below the prices on the bull market (Up Trend), when it’s bearish (Down Trend), it is above the prices.

If the price crosses Parabolic SAR lines, the indicator turns, and its further values are situated on the other side of the price. When such an indicator turn does take place, the maximum or the minimum price for the previous period would serve as the starting point. When the indicator makes a turn, it gives a signal of the trend end (correction stage or flat), or of its turn.

The Parabolic SAR is an outstanding indicator for providing exit points. Long positions should be closed when the price sinks below the SAR line, short positions should be closed when the price rises above the SAR line. It is often the case that the indicator serves as a trailing stop line.

If the long position is open (i.e., the price is above the SAR line), the Parabolic SAR line will go up, regardless of what direction the prices take. The length of the SAR line movement depends on the scale of the price movement.

Calculation

SAR(i) = SAR(i-1)+ACCELERATION*(EPRICE(i-1)-SAR(i-1))

Where:
SAR(i-1) — is the value of the indicator on the previous bar;
ACCELERATION — is the acceleration factor;
EPRICE(i-1) — is the highest (lowest) price for the previous period (EPRICE=HIGH for long positions and EPRICE=LOW for short positions).

The indicator value increases if the price of the current bar is higher than previous bullish and vice versa. The acceleration factor (ACCELERATION) will double at the same time, which would cause Parabolic SAR and the price to come together. In other words, the faster the price grows or sinks, the faster the indicator approaches the price.

2006-07-19T15:56:00.000-07:00

Envelopes

The envelope study is a derivation of the moving average study. The parameters used to compute the study are:-

The period, the number of bars used to calculate the moving average, basis the close
Percent, a percentage deviation from the moving average

Calculation

Top Band = * ((100+P)/100)
Bottom Band = MA * ((100-P)/100)

MA = Moving Average basis the close
P = percentage offset

How to use
This indicator needs to be tuned to each individual market, beginning with a Moving Average that needs to be applied to smooth the volatility of the market. The percentage offset then needs to be ascertained so that the bands envelope the previous or recent trading activity. Half the average daily range or a little above is a good starting point, using a daily bar chart.

The theory is that when the market is stretched to an extreme price, relative to recent activity, it's either trending or about to change direction. In general, the market spends most of the time not trending. It varies from market to market, but as a rule of thumb (basis a half hour chart) markets trend for only about 20% of the time. The rest of the time, about 80% of the time, is spent oscillating within a trading range.

If the market is trending, then it should be obvious or we can use another trend type indicator, like the ADX, to determine this state. If it's not trending then we can assume that as price approaches the top band it will attract sellers and as it approaches the bottom band it will be advertising to buyers. In simple terms we can say that there is a buying opportunity at the lower band and a selling opportunity at the higher band.

On the other hand, if it is determined that the market is trending or in a position to start a new trend, then price moving outside the envelope is actually a signal to go with the market. In the example below it is clear that during a trend period, the market price will continually penetrate the leading edge, in this case the top band of the envelope.

BollingerBand

2006-07-17T18:41:00.000-07:00

Trading bands, which are lines plotted in and around the price structure to form an envelope, are the action of prices near the edges of the envelope that we are interested in. They are one of the most powerful concepts available to the technically based investor, but they do not, as is commonly believed, give absolute buy and sell signals based on price touching the bands. What they do is answer the perennial question of whether prices are high or low on a relative basis. Armed with this information, an intelligent investor can make buy and sell decisions by using indicators to confirm price action.

But before we begin, we need a definition of what we are dealing with. Trading bands are lines plotted in and around the price structure to form an "envelope." It is the action of prices near the edges of the envelope that we are particularly interested in. The earliest reference to trading bands I have come across in technical literature is in The Profit Magic of Stock Transaction Timing; author J.M. Hurst's approach involved the drawing of smoothed envelopes around price to aid in cycle identification.

Figure 1 shows an example of this technique: Note in particular the use of different envelopes for cycles of differing lengths.

The next major development in the idea of trading bands came in the mid to late 1970s, as the concept of shifting a moving average up and down by a certain number of points or a fixed percentage to obtain an envelope around price gained popularity, an approach that is still employed by many. A good example appears in Figure 2, where an envelope has been constructed around the Dow Jones Industrial Average (DJIA). The average used is a 21-day simple moving average. The bands are shifted up and down by 4%.

FIGURE 2:

The procedure to create such a chart is straightforward. First, calculate and plot the desired average. Then calculate the upper band by multiplying the average by 1 plus the chosen percent (1 + 0.04 = 1.04). Next, calculate the lower band by multiplying the average by the difference between 1 and the chosen percent (1 - 0.04 = 0.96). Finally, plot the two bands. For the DJIA, the two most popular averages are the 20- and 21-day averages and the most popular percentages are in the 3.5 to 4.0 range.

The next major innovation came from Marc Chaikin of Bomar Securities who, in attempting to find some way to have the market set the band widths rather than the intuitive or random-choice approach used before, suggested that the bands be constructed to contain a fixed percentage of the data over the past year. Figure 3 depicts this powerful and still very useful approach. He stuck with the 21-day average and suggested that the bands ought to contain 85% of the data. Thus, the bands are shifted up 3% and down by 2%. Bomar bands were the result. The width of the bands is different for the upper and lower bands. In a sustained bull move, the upper band width will expand and the lower band width will contract. The opposite holds true in a bear market. Not only does the total band width change across time, the displacement around the average changes as well.

FIGURE 3:

Asking the market what is happening is always a better approach than telling the market what to do. In the late 1970s, while trading warrants and options and in the early 1980s, when index option trading started, I focused on volatility as the key variable. To volatility, then, I turned again to create my own approach to trading bands. I tested any number of volatility measures before selecting standard deviation as the method by which to set band width. I became especially interested in standard deviation because of its sensitivity to extreme deviations. As a result, Bollinger Bands are extremely quick to react to large moves in the market.

In Figure 5, Bollinger Bands are plotted two standard deviations above and below a 20-day simple moving average. The data used to calculate the standard deviation are the same data as those used for the simple moving average. In essence, you are using moving standard deviations to plot bands around a moving average. The time frame for the calculations is such that it is descriptive of the intermediate-term trend.

Note that many reversals occur near the bands and that the average provides support and resistance in many cases.

There is great value in considering different measures of price. The typical price, (high + low + close)/3, is one such measure that I have found to be useful. The weighted close, (high + low + close + close)/4, is another. To maintain clarity, I will confine my discussion of trading bands to the use of closing prices for the construction of bands. My primary focus is on the intermediate term, but short- and long-term applications work just as well. Focusing on the intermediate trend gives one recourse to the short- and long-term arenas for reference, an invaluable concept

For the stock market and individual stocks. a 20-day period is optimal for calculating Bollinger Bands. It is descriptive of the intermediate-term trend and has achieved wide acceptance. The short-term trend seems well served by the 10-day calculations and the long-term trend by 50-day calculations.

The average that is selected should be descriptive of the chosen time frame. This is almost always a different average length than the one that proves most useful for crossover buys and sells. The easiest way to identify the proper average is to choose one that provides support to the correction of the first move up off a bottom. If the average is penetrated by the correction, then the average is too short. If, in turn, the correction falls short of the average, then the average is too long. An average that is correctly chosen will provide support far more often than it is broken. (See Figure 6.)

Bollinger Bands can be applied to virtually any market or security. For all markets and issues, I would use a 20-day calculation period as a starting point and only stray from it when the circumstances compel me to do so. As you lengthen the number of periods involved, you need to increase the number of standard deviations employed. At 50 periods, two and a half standard deviations are a good selection, while at 10 periods one and a half do the job quite well.

50 periods with 2.5 standard deviation	10 periods with 1.5 standard deviation
Upper Band = 50-day SMA + 2.5(s) Middle Band = 50-day SMA Lower Band = 50-day SMA - 2.5(s)	Upper Band = 10-day SMA + 1.5(s) Middle Band = 10-day SMA Lower Band = 10-day SMA - 1.5(s)

In most cases, the nature of the periods is immaterial; all seem to respond to correctly specified Bollinger Bands. I have used them on monthly and quarterly data, and I know many traders apply them on an intraday basis.

2006-07-14T22:50:00.000-07:00

Relative strength index

The Relative Strength Index (RSI) is a tecnical analysis oscillator showing price strength by comparing upward and downward close-to-close movements.

The RSI is popular because it is relatively easy to interpret. It was developed by J. Welles Wilder and published in Commodities magazine (now called Futures magazine) in June 1978, and in his New Concepts in Technical Trading Systems the same year.

Note that the term relative strength also refers to the strength of a security in relation to the overall market or to its sector. For instance XYZ might rise 2% when the rest of the market rises 1%.This is sometimes called relative strength comparative to avoid confusion. It's unrelated to the Relative Strength Index described here.

Calculation

For each day an upward change U or downward change D amount is calculated. On an up day, ie. today's close higher than yesterday's,

U = c l o s e t o d a y - c l o s e y e s t e r d a y

D = 0

Or conversely on a down day (notice D is a positive number),

U = 0

D = c l o s e y e s t e r d a y - c l o s e t o d a y

If today's close is the same as yesterday's, both U and D are zero. An average U is calculated with an exponential moving average using a given N-days smoothing factor, and likewise for D. The ratio of those averages is the Relative Strength,

This is converted to a Relative Strength Index between 0 and 100,

This can be rewritten as follows to emphasise the way RSI expresses the up as a proportion of the total up and down (averages in each case),

The EMA in theory uses an infinite amount of past data It's necessary either to go back far enough, or alternately at the start of data begin with a simple average of N days instead,

and then continue from there with the usual EMA formula,

(Similarly with D.)

Interpretation

Wilder recommended a smoothing period of N=14. This is by his reckoning of EMA smoothing ie. α=1/14.

Wilder considered a security overbought if it reached the 70 level, meaning that the speculator should consider selling. Or conversely oversold at the 30 level. The principle is that when there's a high proportion of daily movement in one direction it suggests an extreme, and prices are likely to reverse. Levels 80 and 20 are also used, or may be varied according to market conditions (eg. a bull market may have an upward bias).

Large surges and drops in securities will affect RSI, but it could just be a false buy or sell. The RSI is best used as a complement with other technical analysis indicators.

2006-07-14T09:38:00.000-07:00

Exponential moving average

EMA weights N=15

An exponential moving average (EMA), sometimes also called an exponentially weighted moving average (EWMA), applies weighting factors which decrease exponentially. The weighting for each day decreases by a factor, or percentage, on the one before it. The graph at right shows an example of the decrease.

There are two ways to express the decrease, both result in a smoothing factor α. Firstly as a percentage so 10% is α=0.1. Or alternately as N periods where , so for instance N=19 is equivalent to the 10%. In either case the formula for calculating successive days is

Which can also be rewritten as follows, showing how the EMA steps towards the latest price, but only by a proportion of the difference (each time),

Expanding out $E M A y e s t e r d a y$ each time results in the following power series, showing how the weighting factor on each price $p 1$ , $p 2$ , etc, decrease exponentially,

In theory this is an infinite sum, but because 1-α is less than 1, the terms become smaller and smaller, and can be ignored once small enough. The denominator approaches 1/α, and that value can be used instead of adding up the powers, provided one is using enough terms that the omitted portion is negligible.

The N periods in an N-day EMA only specifies the α factor. It isn't a stopping point for the calculation in the way N is in an SMA or WMA. The first N days in an EMA do represent about 86% of the total weight in the calculation though.

The power formula above gives a starting value for a particular day, after which the successive days formula shown first can be applied.

The question of how far back to go for an initial value depends, in the worst case, on the data. If there are huge p price values in old data then they'll have an effect on the total even if their weighting is very small. If one assumes prices don't vary too wildly then just the weighting can be considered, and work out how much weight is omitted by stopping after say k terms. This is , which is , ie. a fraction $(1 - α) k$ out of the total weight.

Thus if the aim was to have 99.9% of the weight then many terms should be used. And what's more it can be shown approaches as N increases, so this simplifies to (roughly) for this example 99.9% weight.

J. Welles Wilder

Noted technical analyst J. Welles Wilder uses a different form for specifying the period of an EMA. For say 14 days he writes

So α=1/N rather than α=2/(N+1) as described above. The calculation and properties are all the same, it's just a different reckoning of the rate of smoothing. Clearly care must be taken with which is intended. A conversion can be easily made, for instance 14-days from Wilder is equivalent to 27-days in the above (conversion 2N-1).

2006-07-14T09:34:00.000-07:00

Weighted moving average

A weighted average is any average that has multiplying factors to give different weights to different data points. But in technical analysis a weighted moving average (WMA) has the specific meaning of weights which decrease arithmetically. In an n-day WMA the latest day has weight n, the second latest n-1, etc, down to zero.

When calculating the WMA across successive values, it can be noted an amount $p 2$ to $p n + 1$ drops out of the numerator each day. The WMA can thus be calculated starting with the above formula but then stepping successively with just additions and subtractions, not a full set of multiplications,

T o t a l t o d a y = T o t a l y e s t e r d a y + p 1 - p n + 1

N u m e r a t o r t o d a y = N u m e r a t o r y e s t e r d a y + n p 1 - T o t a l y e s t e r d a y

WMA weights N=15

The denominator, incidentally, is a triangle number, and equals

The graph at the right shows how the weights decrease, from highest weight for the most recent days, down to zero. It can be compared to the weights in the exponential moving average which follows

2006-06-27T17:37:00.000-07:00

Simple moving average

A simple moving average (SMA) is the unweighted mean of the previous n data points. For example, a 10-day simple moving average of closing price is the mean of the previous 10 days' closing prices. If those prices are $p 1$ to $p n$ then the formula is

When calculating successive values, a new value comes into the sum and an old value drops out, meaning a full summation each time is unnecessary,

In technical analysis there are various popular values for n, like 10 days, 40 days, or 200 days. The period selected depends on the kind of movement one is concentrating on, such as short, intermediate, or long term. In any case moving average levels are interpreted as support in a rising market, or resistance in a falling market.

In all cases a moving average lags behind the latest price action, simply from the nature of its smoothing. An SMA can lag to an undesirable extent, and can be influenced too much by old prices dropping out of the average. This is addressed by giving extra weight to recent prices, as in the WMA and EMA.

One charateristic of the SMA is that if the data has a periodic fluctuation, then applying an SMA of that period will eliminate that variation (the average always containing one complete cycle). But a perfectly regular cycle is rarely encountered in economics or finance.

Moving Average

2006-06-27T17:32:00.000-07:00

A moving average, in finance and especially in technical analysis, is one of a family of similar statistical techniques used to analyze time series data.

A moving average series can be calculated for any time series, but is most often applied to stock prices, returns or trading volumes. Moving averages are used to smooth out short-term fluctuations, thus highlighting longer-term trends or cycles. The threshold between short-term and long-term depends on the application, and the parameters of the moving average will be set accordingly.

Mathematically, each of these moving averages is an example of a convolution. These averages are also similar to the low-pass filters used in signal processing.

TA Basics: Q&A with the Professor

2006-06-27T02:33:00.000-07:00

TA Basics: Q&A with the Professor

New to Charting and Technical Analysis? Get answers to commonly asked questions from the one of the industry's foremost authorities on technical analysis.

Q: What is Technical Analysis?

A: Technical Analysis is the study and analysis of "hard" data produced by the financial markets - price and volume mainly. The primary tools of Technical Analysis are a chart (of price and volume) and a ruler.

The chart not only shows where the price has been but gives some idea of where it will go. The ruler is used to determine entry and exit points. Prophet charts may easily be substituted for the physical tools.

Q: How is it different from Fundamental Analysis?

A: First let's discriminate between "technical" and "fundamental" data. Technical data is data which is generated by the action of the market under study. It is "hard" data. "Soft" data, or data which can be manipulated by its producers, such as sales, earnings, expenses, etc. is the subject of Fundamental Analysis, the other main school of analyzing financial markets. Fundamentalists are often disdainful of technical analysts. And vice versa.

According to Bob Prechter, a well known analyst most renowned for his writing and practice with the Elliott Wave Theory, "The main problem with fundamental analysis is that its indicators are removed from the market itself. The analyst assumes causality between external events and market movements, a concept which is almost certainly false. But, just as important, and less recognized, is that fundamental analysis almost always requires a forecast of the fundamental data itself before conclusions about the market are drawn. The analyst is then forced to take a second step in coming to a conclusion about how those forecasted events will affect the markets! Technicians only have one step to take, which gives them an edge right off the bat. Their main advantage is that they don't have to forecast their indicators."

Technicians largely ignore fundamental data, considering it to be misleading. (See Robert Prechter's talk in Introduction to the Magee System of Technical Analysis, page 175.) They concentrate on the hard data, usually presenting it in the form of bar charts.

This does not mean they ignore fundamental questions. On the contrary, good traders pay attention to any input which might be price influencing. But they do not allow any other inputs -news, fundamentals, opinions - to overrule their analysis of an instrument's chart.

Q: Why does Technical Analysis work?

A: Certain patterns tend to be repeated year after year in all publicly traded financial instruments, such as head and shoulders tops, or double tops, or rounding bottoms, or triangles. The recognition of these patterns, and of trends and support and resistance is a qualitative, or judgmental process, but the existence of trends is undisputable. Many recurring patterns have been identified and comprehensively described by Edwards and Magee, the best known practitioners of the craft.

On the quite philosophical side, technical analysis works because it is a tautological method, meaning self-fulfilling. For example, no bull market in history ever became a bear market without breaking its long term trendlines.

Q: Trendlines? Mathematical studies? Are there different schools of technical analysis?

A: There are various schools of technical analysis: Classical, or Chart Analysts, P&F, Elliott Wave, Wyckoff, and Statistical, or Number Driven Analysis. I am primarily a chart analyst and I also pay attention to number driven analysis - and anything else including the phases of the moon! - which I think will aid in properly analyzing the market.

Chart Analysts work on the price and volume chart of an instrument to find support and resistance and trends. In this process they identify patterns of price behavior which by past experience have marked support and resistance and trading and trending action. Trend lines are drawn on a chart to indicate trading ranges and trends and consolidation and continuation patterns.

Statistical or Number Driven Technical Analysts use mathematical algorithms (moving averages, oscillators, and other indicators) to identify support and resistance and trends. Their preferred method is to create mechanical and objective systems which eliminate emotionalism and judgment from the trading process.

There is a huge variety of mathematical indicators; Some are used to find overbought or oversold securities. Some measure the strength of stock's momentum in a certain direction; changes in the price direction.

2006-06-22T01:32:00.000-07:00

Choosing a Broker

There are many forex brokers to choose from, just as in any other market. Here are some things to look for:

Low Spreads - The spread, calculated in "pips", is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time. Forex brokers don't charge a commission, so this difference is how they make money. In comparing brokers, you will find that the difference in spreads in forex is as great as the difference in commissions in the stock arena.
Bottom line: Lower spreads save you money!
Quality Institution - Unlike equity brokers, forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required (leverage they need to provide). Also, forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). You can find this and other financial information and statistics about a forex brokerage on its website or on the website of its parent company.
Bottom line: Make sure your broker is backed by a reliable institution!
Extensive Tools and Research - Forex brokers offer many different trading platforms for their clients - just like brokers in other markets. These trading platforms often feature real-time charts, technical analysis tools, real-time news and data, and even support for trading systems. Before committing to any broker, be sure to request free trials to test different trading platforms. Brokers usually also provide technical and fundamental commentaries, economic calendars and other research.
Bottom line: Find a broker who will give you what you need to succeed!
Wide Range of Leverage Options - Leverage is necessary in forex because the price deviations (the sources of profit) are merely fractions of a cent. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading. For example, a ratio of 100:1 means your broker would lend you $100 for every $1 of actual capital. Many brokerages offer as much as 250:1. Remember, lower leverage means lower risk of a margin call, but also lower bang for your buck (and vice-versa).
Bottom line: If you have limited capital, make sure your broker offers high leverage. If capital is not a problem, any broker with a wide variety of leverage options should do. A variety of options lets you vary the amount of risk you are willing to take. For example, less leverage (and therefore less risk) may be preferable for highly volatile (exotic) currency pairs.
Account Types - Many brokers offer two or more types of accounts. The smallest account is known as a mini account and requires you to trade with a minimum of, say, $250, offering a high amount of leverage (which you need in order to make money with so little initial capital). The standard account lets you trade at a variety of different leverages, but it requires a minimum initial capital of $2,000. Finally, premium accounts, which often require significant amounts of capital, let you use different amounts of leverage and often offer additional tools and services.
Bottom line: Make sure the broker you choose has the right leverage, tools, and services relative to your amount of capital.

Forex 101

2006-06-12T03:03:00.000-07:00

Currency Pair

A currency pair is a representation of one currency against another. For example one currency pair is the EUR/USD, or the Euro to the US Dollar. If the EUR/USD is listed at 1.2150, you read this as 1 Euro will but 1.2150 US dollars.

Pip

Learn to love this word, because this is what you will be seeking for the rest of your forex career. A pip is the smallest denominator of a particular currency pair, so for the above example, if the EUR/USD moves from 1.2150 to 1.2155 then it has moved up 5 pips.

Leverage

Leverage is a simple concept. If you have $10,000 to trade with, your forex broker will let you borrow money from him so that you can trade in larger quantities. They will let you borrow as much as 400 times (400:1) what you put up in a trade. Most brokers allow between 50:1 and 100:1 margin. So, if you put up $1,000, and your broker allows 100:1 margin, then you'll be trading $100,000 worth of currency (instead of $1,000).

That's important, because every pip equals a certain dollar amount. When you trade $10,000, each pip movement equals $1. The chart below shows how it goes from there. If you trade 10,000 worth of currency, each movement would be equal to $1. So if you bought at 1.1445 and sold at 1.1545, you would make 100 x $1, or $100. If you trade $100,000, each pip movement would equal $10 and so on.

Going Long and Short

Now there is two different ways you can trade on the forex market, and many beginner traders are surprised to learn that you can actually make just as much money when a currencies price moves down as you can when it moves up. Let's start with the most logical movement, when the price moves up.

Most people are very familiar with the concept of buying something at a low price and selling it when the price increases. So the concept of buying the EUR/USD at 1.2150 and selling it at 1.2160 for a 10 pip gain should seem logical. This process is called going long.

However, you can also do this in reverse! If you think you know that a currencies price is going to go down rather than up, the you can go short. This is just the opposite of the above transaction, selling it first and buying it back later in the hope that the price will go down for you to make a profit.

This can be somewhat strange for those hearing this for the first time, but the concept remains the same either way, that being, that you always want to buy something at a low price, and sell it at a higher price than you bought it at. Which order you do it in doesn't matter, just that for a transaction to complete you must both buy and sell, as long as you sell at a higher price than you buy then you make profit.

ok that all for today : )

What is Forex Trading

2006-06-11T05:14:00.000-07:00

Forex or Foreign Exchange is the simultaneous buying of one currency and selling of the another
Currencies are traded in pairs

The forex market has more buyers and sellers and daily volume than any other market in the world and take place in major financial institutions across the globe. The forex market is open 24 hours a day five days a week ( saturday and sunday is holiday)

Develop A Home Based Business That Works!

2006-06-09T08:04:00.000-07:00

Internet and home based businesses have virtually exploded since the 1980’s. To have an Internet presence these days for most companies is not just a desire, but a requirement for any company serious about attracting new customers and retaining existing ones. Even home based businesses have benefited from the Internet revolution. Today, payments can be made online and a person may never have to see, or even talk to, a real person. What a change from the old days, when one had to either speak with someone on the phone or live in a particular city to buy a product or make a sale! These days, anyone can have a home business and be successful, if they have the right systems and support in place.

Now, even small home businesses can put the power of the Internet to work for them. And you, as a savvy Internet Marketer and someone with a home based business, can and should put it to work for you. The days of having a home business with a “tangible” product and maintaining inventory (which is riskier), are just about over. That is the old way of developing a successful home based business. Now, you no longer have to spend thousands on advertising, and you don’t even have to consider print, radio or TV ads. The Internet has changed all that. What you do have to do is market your home based business wisely online.

The Internet is open 24/7. That means that anyone, anywhere in the world can visit your website or buy your products at any time. Your home business is your livelihood. This means that you need to be smart about how you manage your limited time and resources. As far as your home based business is concerned, this means having your sales and advertising systems on autopilot so they don’t require any driving from you. It also means separating the customers that are serious about buying your products from the “tire kickers”.

There are really only a few systems on the market for home based businesses that can save you valuable time and money by doing the advertising and sales work for you. Even fewer will send you real, targeted, qualified customers. But you don’t just need a computer system for your home based business, you need someone who will take you by the hand and show you the ropes. Many companies will sell you an Internet home business system. Not many will actually show you how to make it work for you. You need to find the one that will, because the success of your home based business depends on it.

Copyright 2006 www.eliasg.com

HYIP Program

2006-05-21T18:08:00.000-07:00

HYIP stands for High Yield Investment Program. HYIPs are purported investment programs normally offered via the Internet. HYIPs typically accept investments of $100 or less while promising high returns. The introduction of e-currencies such as e-gold and stormpay (although almost all HYIPs do not use StormPay as of February 2006, see StormPay article for why) has made it easy for HYIPs to operate across international boundaries, and to accept large numbers of small investments.

No HYIP has, as yet, survived for very long without turning out to be a scam. Scam HYIPs are Ponzi schemes, in which new investors (usually unwittingly) provide the cash to pay a profit to existing investors, which they could then withdraw leaving nothing to pay the new investor. This approach allows the scam to continue as long as new investors are found and/or old investors leave their money in the scheme, known as compounding (because even higher profits are promised).

HYIPs are frequently advertised in spam emails, forums or mailing lists, since people are typically given a commission (for example, 9% of invested funds) when they provide a referral of a new customer.

HYIPs typically are not based in the United States, Europe, or Japan - countries that have strong laws against unregistered investment programs. HYIPs disclose little or no detail about the principals, management, location, or other aspects of whom is getting the money to be invested, and relatively little information (other than asserting that they do various types of trading on various stock and other exchanges) on how their investment programs actually work.

The largest hyip scam that ever existed is PIPS (People in Profit System or Pure Investors). The investment scheme was started by an engineer Bryan Marsden in 2003 and spanned more than 20 countries in the world. PIPS is now being investigated by Bank Negara Malaysia

According to a website HYIP Scam Search that maintains a comprehensive database of HYIP scams daily, as at May of 2006, the total number of HYIP scams was approximately 3500. This is the total number of scams occurred from 2004 to 2006 and excluding scams not reported. About 5 new scams are reported every day. 89% of the scams preferred e-gold as their online payment processors than others

Autosurf Program

2006-05-19T13:21:00.000-07:00

An autosurf is a type of online advertising program. Autosurfs are basically traffic exchanges automatically rotate advertised website in one's Internet browser. They are capable of bringing a huge amount of traffic to the advertised websites. Members (ad viewers) earn credits for each site that they view, and these credits can then be spent to advertise the members' sites by adding them to the autosurf rotation. Sites may additionally be added by external advertisers who pay the autosurf operators.

Autosurfs differ from manual traffic exchanges in that the site rotation is automatic; an ad viewer need not respond or even view the sites. Many autosurfs also pay their viewers a percentage or hourly commission to view the advertised sites. On the web as of 2005/6, a large number of autosurfs are investment autosurfs: members pay an "investment" fee and are promised a certain "return" on their fee. The "investment" is claimed to be (usually disguised as) a membership or upgraded membership fee and the "return", a per-site commission. There is a strong possibility that most investment autosurfs are Ponzi schemes, and thus breaking the law and/or deceiving their users

Focus On Program

2006-05-18T10:00:00.000-07:00

I believe all of you already finish look and think about chart in " general review"

That is very important to know for all of you before you can begin make online money
Basically that is the approach or way how to make online money :)

In this blog i will focus in program

Adsense

A contextual ad network that gives publishers the opportunity to serve adverts on their website in return for commissions on a CPC basis.

Affiliate

The publisher/salesperson in an affiliate marketing relationship.

Forex

Short for "foreign exchange market", an over-the-counter market where currencies are traded

Many more

I will discuss later : )

General review

2006-05-16T23:57:00.000-07:00

Look and think about this chart .... : )

Congratulation : )

2006-05-16T19:01:00.000-07:00

Hello still visit my blog....congratulation... : )

i had started my blog with four article

1) Career Change Advise
2) Start an Online Business
3) Looking for a Real Internet Business? Read On!
4) Do You Want To Make Money Online?

from all article, hope all of you get motivation.. : D yeah....

i believe many of us still blur..blur ..and got many question in mind about online business....

keep reading my blog i will show you... : )

Do You Want To Make Money Online?

2006-05-16T09:29:00.000-07:00

by: Jon Viney

There are actually many different ways to make money online. Some of them are obviously more lucrative than others, however. Also, there are many scams for supposedly making money online that don't really work, and you end up losing money.

As a general rule, if the online money making opportunity asks for money, it is probably not a good thing. Legitimate ways to make money online will not ask you for money to get the job. The only exception to this is for home businesses. Many home businesses require an upfront investment from you. If you decide that a home business is the best way to go for making money online, then you will probably have to spend some money to get started. However, many people have been very successful with home businesses.

One way that people are making money online is by having several different income streams. This means that you do a bunch of things online that make a little bit of money, which turns out to be a reasonable amount of money when you add them all up. For instance, some people fill out surveys, do some writing, read emails, sell things on Ebay or even do affiliate marketing. These are all ways to have multiple streams of income making money online.

There are actual jobs available online. However, there is a lot of competition for them. Telecommuting from home is one of the best ways for making money online. You need to have an excellent resume and to do a lot of research to find the companies that are hiring people with your skills.

As with any way to make money, the best way of making money online is to follow your passions. First find something you love to do, then find a way to use it for making money online.

You also need to consider your time commitment. Find a way to make money online that won't take up all of your spare time if you are already working a full time job.

Once you have determined how you plan to make money online, spend the time you need. Many people start an online business but lose interest and quit. Find a business that you love so you want to stay with it. Finding a way to do what you love is the best way to make money online.

About The Author

Jon Viney – Webmaster:
Income for Life - Work at Home
Work 2-4 hrs daily Earn $50-$75 Hr
www.work-at-home-directory.org

Looking for a Real Internet Business? Read On!

2006-05-16T03:42:00.000-07:00

Everyone dreams of working from home. Nowadays, with the booming popularity of the Internet and computers, it's become a little easier to realize that dream. Opportunities abound to make real money without leaving the shelter of your own house. What's more, many work-from-home jobs require a minimum of effort on your part. But the situation is definitely "Worker Beware."

The truth is, many Internet businesses don't deliver what they promise. While they're not exactly scams, what they don't tell you is the multiple steps involved in actually making income. Often, the money has to travel through several levels of a pyramid before it reaches you- and if it gets there at all, it's certainly not the thousands that you were promised.

At other times, you may be able to make a lot of money working from home-but the position requires lots of exhausting phone calls and self-promotion. You may have to sell a certain amount of product or information before you can even begin turning a profit. And in the meantime, you're investing money in something that you may not even complete. Many people get involved in work-from-home situations only to find they don't have the time to follow through, and they lose everything they've invested, making the whole situation a waste of time.

Believe it or not, it IS possible to make money and stay at home. It's possible to do so without giving up your life and your free time. And it IS possible to have a computer business that really does produce an income.

Internet marketing is an entire field that has grown up quickly over the past few years. With the onset of search engines, more and more businesses are going online, and fighting for the top spots in search returns. In order to achieve results, these businesses must focus on keywords that get them to the top of the list. That's the best way to get noticed by the average person searching online.

What exactly is a keyword, you might ask? Every day, millions of people all over the world go to an Internet search engine and type in words or phrases that they want to find. Many of these people are online shoppers. If there's a website out there that sells daybeds, for example, that site want to be the first to pop up when someone searches for the word "daybed."

Therefore, that website will make sure to plant the word "daybed" on their website as many times as possible. The Internet search engine will recognize their site as relevant to the search, and put it near the top of the list. And if the site is well designed and has a good selection, that searcher will click into it and maybe even make a purchase.

The more clicks and purchases, the more effectively the keyword is working. And the higher rated that daybed site becomes.

You might be wondering how this affects you and your dream of working at home. Well, what if you could have an Internet business that was based on the concept of keyword marketing? What if you could make money off of the searches performed by millions of online shoppers every day?

Now, you can. And the process is simple. The entire business is automated and self-promoting, resulting in little work for you aside from checking your stats once a week. A few minutes of commitment on your part can lead to lifelong income... and we're talking real income, not a few pennies here and there.

Think about it: The most money can be found in up-and-coming situations that show no signs of slowing down. The Internet and online retail are speeding up and promise to be around for several years to come. And online retail is run almost entirely by keywords.

Basing your income off of keyword automated Internet marketing can result in big payoffs. And there's no risk and no loss involved for you. You won't be making phone calls or trying to get sales. The Internet will do all of that for you. The program itself will close the deals for you. And you'll be making easy money before you know it.

What are you waiting for? Get started today... the world of home business income awaits!

Chris Robertson is an author of Majon International, one of the worlds MOST popular internet marketing companies on the web. Learn more about Work from Home without the Work or Majon's Business and Entrepreneurs directory.

Article Source: http://EzineArticles.com/?expert=Chris_Robertson

Start an Online Business

2006-05-15T22:53:00.000-07:00

You can start an online business without much start up cash. With an idea, and a plan, you can start an online business. Yes, you have seen this statement in many pages over the Internet but in using your business sense, your spare time, and a good idea to back you – your online business will succeed. Often times you will find that ideas are being recycled, exploited, and pushed at you with every click of your mouse. What will make the real difference in starting your own online business is using creative, different and new ideas.

There are many reasons why you may choose to start a business online. You need to look at the myths and realities of what you believe in. Think about why you want to start an online business, and then think about the pros and cons of the situation you are faced with. Before purchasing any product or reselling any product for any other business also online, investigate and learn as much as you can about the product. Search the product, the company and the services offered, by that company, so you are sure you have the same morals and ideals as the company you promote, if you choose to go this route.

Online businesses are going to make money no matter what. This is a myth. If you are not dedicated to your online business, if you are not adding, changing and offering more to your customers than someone else, you may not make as much money as you would like. The reality of the online business is this: most businesses that are successful online are successful because of the dedication and the ongoing hard work that is put into the business by the owner. Many online businesses are operating by those who are not working in another capacity and by those who are unable to work for someone else. Don’t get me wrong; we are talking about the small businesses online, not the large retail outlets that are online.

Start an online business based on a hobby, or a topic that you have a real interest in. The small business online that is successful is most often one that specializes in one niche area. Sure you can have more than one niche or hobby, but focus on one business, build it, create the site, generate a flow of traffic, and then change your focus to include a second site or another type of business.

To start an online business you need to write down ten tops ideas, things you want to sell, topics that you know about, and then you can set your focus on what your business could sell, service, offer or how you can generate sales from that point. Starting a business from scratch online could involve manufacturing products, selling products based on a niche (such as pets, crafts, computers, books, clothing, sports etc.).

The basics of a business online is going to create a market awareness of what you have to offer, and this could be anywhere or anyone in the world. Create a business plan, one that will set out in writing what you want to accomplish step by step, and how you will achieve this. You can advertise online and offline the products or services that you offer. The online business you build will require some type of name, branding and logo that will create a buzz about your web page. The online name, and logo is going to create awareness for a buyer. This awareness will lead them back to your site, to purchase from your business again and again, as they learn to trust you.

David Gass is President of Business Credit Services, Inc. His company publishes a weekly e-newsletter on Starting and Growing a Small Business at http://www.smallbusinessconsulting.com You can sign up for their free newsletter by visiting http://www.smallbusinessconsulting.com

Article Source: http://EzineArticles.com/?expert=David_Gass

Career Change Advise

2006-05-15T21:40:00.000-07:00

Are you struggling in your current job? Have you looked for career change advice in all the traditional places – career counselors, business magazines, trade journals and are still stuck in a job you hate? Below is an easy process to get you moving forward.

How Unhappy are You on a Scale of 1-10?

Most people need to encounter significant dissatisfaction and pain in order to step outside of their comfort zone and make changes. What is your level of satisfaction? On a scale of 1-10 with 1 being "I can barely get out of bed in the morning" and 10 being "I would do this work for free", what is your level of satisfaction with your current work situation?

Do I Hate the Work Itself?

If you are doing your right work, you will get energy from your work. Helping people break free from the corporate world gives me energy. I get off our Fearless Action Group calls with more energy than when I started the call. I know I have found my right work.

To choose work that is aligned with your true nature and calling, you must know who you are. This includes an honest evaluation of your skills and aptitude. What work do you perform naturally and effortlessly? Also, you must know what you value and what your life purpose is.

If your work is in alignment with your natural abilities, values, and purpose but you are still not happy, then you need to look at your work environment.

Do I Hate the Corporate World?

Many of my clients are unhappy in their current jobs because they don’t fit into the corporate world. Every company has a unique corporate culture. You may enjoy your work and find it gives you lots of energy, but you are not thriving in your current company.

I help my clients to diagnose their company culture and determine whether or not they fit into this culture. Corporate culture is a powerful and invisible force. The more that you understand how culture influences you and those around you, the better you will be at making informed decisions about your career.

Are you better suited to work on your own or to build a company with an un-corporate culture?

If your current level of dissatisfaction is high and you hate the work you do, then start paying attention to what you enjoy doing. Don’t think, “I could never make money doing this.” You’ll be surprised to learn what is possible with the right intentions. If you love your work but hate the corporate world, then put together a plan to build your own business.

Solid Career Change Advice

The best career change advice that you can get will show you how to look inside for your own answers. You know what your perfect career is, you just need to discover the answer inside of you. Skills assessments, resume writing, interview coaching, and the like will not lead you down a path to happiness. Changing careers takes courage, inspiration, and a solid plan. Life is too short to waste it doing work you hate.

Find out how to break free from the corporate world. Debra Thorsen is a happy corporate escapee who helps individuals create real wealth and happiness without 9 to 5 jobs. Visit http://fearlessguides.com for free tips on career change, wealth building, and living without fear.

Article Source: http://EzineArticles.com/?expert=Debra_Thorsen

Technical Analysis

Candlesticks And The J-Hook

Stay In The Market With Stop-And-Reverse

USING SAR

CALCULATING SAR

SOME EXAMPLES

SUGGESTED READING

Trendlines And Consolidations

A DOWNTRENDING EQUITY

CONSOLIDATIONS

NOW ON THE NASDAQ

SIDEBAR ANDREWS PITCHFORK

SUGGESTED READING

The Shark Attack Strategy And Fibonacci Levels

FIBONACCI RETRACEMENTS

CONFLUENCE OF FIBONACCI LEVELS

SHARK ATTACK

SUGGESTED READING

Continuation Triangles With Fibonacci Targets

Entry rules

Exit rules

Forex Risk Management

Forex Risk Management

Anatomy Of A Candlestick

Anatomy Of A Candlestick

THE HAMMER

SUPPORT AND RESISTANCE

Candlestick Corner - The Engulfing Pattern

Candlestick Corner - The Engulfing Pattern

DEFINITION

ADDITIONAL VERIFICATION

IDENTIFYING A TREND REVERSAL

MSFT ENGULFED

ADDITIONAL TESTING

CONCLUSION

SUGGESTED READING

Continuation Patterns

Continuation Patterns

CANDLE BASICS REVISITED

THE THREE METHODS

THE RISING THREE

THE FALLING THREE

CONTINUING CANDLESTICKS

SUGGESTED READING

Pure: Support and Resistance (part 2)

Some result

Pure: Support and Resistance

Camarilla Pivot Calculator

Linear Regression Channel

lesson 2 : Pivot Point

Lesson One : Trendline

How To Become A Successful Forex Trader

Bonus Part 4

Bonus part 3

What type of trader are you?

Bonus part 2

Screenshot

answer for the email :)

Math Murray Lines

Bonus Part 1

technorati

Alligator

Ichimoku

Relative Strength Index (RSI)

Calculation

Parabolic SAR (2)

ADX

Calculation

Calculation

Envelopes

BollingerBand

Relative strength index

Calculation

Interpretation

Exponential moving average

J. Welles Wilder

Weighted moving average

Simple moving average

Moving Average

TA Basics: Q&A with the Professor

SIDEBAR
ANDREWS PITCHFORK