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The Secret To Technical Analysis

Technical analysis of the stock market, or any other market such as Forex, Bonds, Futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.

You only have to think back to major stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.

So what are the secrets to technical analysis?, I’m about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings don’t mess with them.

The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

Top Dog Trading Review

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Written on 29 March 2010 by editor under Get out of debt with No Comments
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How to Pick Good Penny Stock and Steer Clear of Fraud

Cent stocks which qualify as good penny stocks alter each day. Anytime you find a static checklist of so-called good penny stocks in the newsletter, on a blog or inside a stock buying and selling forum, you should be quite skeptical.

In case you actually want a record of hot penny stocks, you need to produce your own list. Anything else is asking for being exploited.

The real challenge in penny stock trading is being familiar with that there is usually some worth in products like a penny stock newsletter or an application which anticipates breaking stocks or you can use service like microcap millionaires to help you find good penny stock pick. However, these have to only be utilized as hints and suggestions, not as your resource to your dealing choices.

In numerous cases, cent stock newsletters are section of a pump and dump plan or at least part of promoted stocks. This means they are attempting to artificially hype a stock to temporarily improve its value while they maintain it. As quickly as it truly is pumped, they dump it for any income. You might think it is possible to just join in within the enjoyable and dump it once it rises, as well. When you believe that, than you haven’t genuinely traded with cent stocks.

These micro cap stocks generally lack liquidity. That means Daily Market Advantage Scam is usually difficult to market. It isn’t just a matter of telling your broker to perform the sell and it just takes place. At times your penny stock will sit there totally unsold until you change the “ask” value to some thing more affordable. And inside the circumstance of your pump and dump, through the time you manage to perform the sell it is probably too late.

Even so, that doesn’t mean you shouldn’t try subsequent along with a penny stock newsletter’s suggestions whilst you analyze the industry and practice with paper trading (trading without money).

Hopefully the newsletter will supply some lessons outside of just picks (if they do not, be ultra skeptical). And more than time you might create 2stocktrading and an comprehending for why some picks profited while others didn’t.

So beware with the hype and beware on the fraud. Use these numerous tools to much better your know-how and inform your decisions. But it truly is vital that you simply develop your very own list of good penny stocks by performing your very own due diligence.

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Written on 21 March 2010 by editor under Get out of debt with No Comments
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Top Moving Average Secrets

One of the most popular technical analysis indicators is the simple moving average also known as SMA, if you learn how to use these correctly they can be a very useful tool to help you to make good trading decisions.

The 50 simple moving average, or 50 SMA, is simply the sum of the last 50 values for each period, divided by 50, this is a moving window, as time moves on so does the average. Notice that I used the word period because this indicator works on any time period in exactly the same way.

It can be used on monthly, weekly, daily, hourly, 30 minutes, 10 minute and on whatever time period you want to monitor and trade. Although the SMA is the most commonly used there is also the exponential moving average or EMA. This is a weighted version of the formula using the mathematical exponent function to give more weight to the more recent values, this has the effect of making it a much faster average that many traders like.

The truth is that it probably does not matter if you used the SMA or the EMA, what does matter however is that you use one or the other and then be very consistent with it. Do not switch between them, it is more important that you trust your chosen indicator then a slight difference in its value.

The simple moving average is primarily used to determine what the current trend of the stock is, depending on the value used it could be a short term, medium term or long term trend. An important point to note is that moving averages are really only useful when the stock is trending, if the moving average is flat, i.e. horizontal on your chart it can become very choppy, this is a good time to not trade.

The general rule is that if the chart price is above the SMA the trend is up, if below the trend is down. This is very important to understand because it forms the basics of trend trading and trading with the trend.

For the short term trend many traders like using a 5-8 SMA or EMA, here is a trading secret, never trade again the direction of the short term tend, this is really just common sense when you think about it.

Moving averages can often act as support or resistance, many traders use the 15, 21 or 30 SMA for this purpose.

There are a number of other very important moving averages that you need to know about, these are the 50, 100 and 200 SMA, and this mainly applies to the daily and weekly charts. A lot of big players in the markets, like the the mutual funds, investment banks etc use the 50 and 200 SMA as support and resistance, if they decide to buy or sell based on these you need to follow suite, the 100 to a lesser extent. These are very useful averages to watch if you trade EFT’s like an Oil ETF.

A useful tip is that when a stock breaks through one moving average it will often move all the way to the next, for example, if a stock breaks the 30 it may move to the 50 before finding some support or resistance.

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Written on 18 March 2010 by editor under Get out of debt with No Comments
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Top 5 Reasons For Selecting Forex

Forex and stock comparisons all over the net are going to show the benefits of selecting to trade in currency exchange. Of course if you’re looking for long term investment then that is another thing, except for speculative traders the currency exchange has many special features that make it particularly tasty. Here are the top five reasons for choosing forex trading over stock trading.  

1. Twenty-four Hour Market

One practical advantage of the foreign exchange market is that it is open for trading 24 hours a day Monday thru Fri.. This is as of the worldwide nature of the market and the proven fact that it is always business hours somewhere in the world, excluding weekends and holidays. So a forex trader can work a real job and trade in the evenings or early mornings.

2. Liquidity

Currency is liquid obviously, if liquidity measures the ease of converting an asset into money. More frequently it is taken as the quantity of money in a market. On this, too, currency scores very high.

Turnover in the forex market was nearly $4 trillion per day on average according to a survey by the Bank For global Settlements in December of 2007. It has probably exceeded that now.

This is significantly more than is traded on all of the stock exchanges in the world added together. In foreign exchange you aren’t restricted to trading in your own country or on your own country’s currency, so the benefit to this trader of being part of this huge market is clear. You have a much better possibility of getting the price that you see or the price that you want.

3. Openness

an additional benefit stemming from the sheer amount of cash in this market and its high trading volume, is the openness of the market. There’s very little opportunity for insider trading in a market which deals with the economic performance of whole countries and involves each major financial establishment in the world. This means that the retail trader isn’t off balance to the limit that might be true in the stock market and lends more weight to our forex stock discussion.

4. Leverage

Leverage is the trader’s most essential tool in that it permits a tiny fund to control a huge position size, resulting in a big proportional return on investment, assuming that you are lucrative. The leverage offered by forex brokers is higher than in stock trading.

In foreign exchange, one hundred times leverage is seen as standard or low, 2 hundred times is common and 400 is possible in some circumstances. Of course this makes forex trading extremely risky but for a successful trader it’s a serious advantage because it means more money can be made from less.

5. Trade Both Directions

When you trade foreign exchange, you’re frequently working with a currency pair, exchanging one currency for another. This means that you can trade in both directions. For example if you are trading EUR/USD, you can start by making an investment in either Euro Bucks or US greenbacks depending on which one you think will rise. So you can buy or sell the pair ( go long or go short ).

In a way this is like trading stock options or futures, but with more suppleness. The flexibleness comes from the indisputable fact that currency values are relative to each other. They cannot all fall at the same time, as stocks can. So this is another point for currency exchange in the currency exchange stock comparison.

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Written on 08 March 2010 by editor under Get out of debt with No Comments
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