USEFUL TIPS

There is a series of free trading lessons, which consists of 10 topics that traders, both beginners and experienced traders, should find them very useful.

The 10 Free Trading Lessons will cover the following topics:

(1) The importance of psychology in price movement.
(2) How to spot mega trends.
(3) Understanding of technical price objectives.
(4) How to picture price objectives.
(5) How to trade with moving averages.
(6) How to use point and figure trading techniques.
(7) How to use the RSI indicator.
(8) How to correctly use stochastics in your trading.
(9) How to use the ADX indicator to capture trends.
(10) How to capitalize on natural market cycles.

On top of the above, you will learn all about Fibonacci retracements, MACD, Bollinger Bands, and much more.

These 10 free trading lessons will be sent via email.

In order to get this, just fill out the form here. Then you should be able to get it started right away. Hope this info can be useful to you.

Saturday, March 28, 2009

Trading Video: What If Market Moves Beyond 62% Fibonacci Retracement Level?

From the previous videos (See “Related Topic” below), we have learnt a few tips of using Fibonacci Retracement in the real examples.

As learnt from the videos, markets tend to make price retracement / pull back at the level of 38%, 50% or 62%.
Generally, market will make retracement to level 38% or 50%, while retracement to a level of 62% tends to be an extreme move. Very seldom market will make beyond 62% retracement.

How about when market has moved beyond 62% retracement?
This video shows a real example in the current S&P 500 market.

Recently, the S&P 500 market is in a rally.
Is the rally in the S&P 500 market for real, or just a rally in a bigger bear market?
Watch the video to find out.

PS:
Did you notice the "Talking Chart" in the video?
Pretty cool, huh? :)

Related Topics:
* Trading Videos: Fibonacci Retracement Rules
* Trading Video: Using Fibonacci Retracement To Determine Stop Loss & Estimated Price Target
* Trading Video: Fibonacci Retracement & Support/Resistance
* FREE Trading Educational Videos You Should Not Miss
* Learning Candlestick Charts
* Learning Charts Patterns

Sunday, March 22, 2009

Limit-If-Touched (LIT) Order

Limit-If-Touched (LIT) is an order to buy / sell a security when the market reaches / touches a predetermined price level (i.e. Trigger Price) that is lower than current price for buy order, or higher than current price for sell order. This order is held in the system until the Trigger Price is touched. Once Trigger Price is touched, the order will be submitted as a Limit Order to buy / sell at the specified Limit Price or better.
The same advantage & disadvantage of Limit Order apply to LIT Order as well.

There are 2 types of LIT Order:
a) Buy Limit-If-Touched (Buy LIT) order is an order to buy a security at Limit Price or better (i.e. at Limit Price or lower for a buy order) if the market price of the security goes down to the Trigger Price, which is lower than current market price of the security.
Once the Trigger Price is touched, the order will turn to a Limit Buy Order, to buy at the predetermined Limit Price or lower.
The Limit Price should be set at least the same as or lower than the Trigger Price.

b) Sell Limit-If-Touched (Sell LIT) order is an order to sell a security at Limit Price or better (i.e. at Limit Price or higher for a sell order) if the market price of the security goes up to the Trigger Price, which is higher than current market price of the security.
Once the Trigger Price is touched, the order will turn to a Limit Sell Order, to sell at the predetermined Limit Price or higher.
The Limit Price should be set at least the same as or higher than the Trigger Price.

Example:
A trader identifies an ascending triangle pattern in Stock ABC. He believes that if the price rises and breaks a certain price benchmark (i.e. the breakout level of the ascending triangle pattern), it will continue to increase further. However, he also expects that the stock will make pullback first to the breakout level before continuing its upward movement.

Suppose that the breakout price is $80. The stock has already broken out that level, and is currently trading at $82. The trader wants to enter into a long position to buy only if the price makes a pullback to the breakout level. However, he also wants to enter at a slightly better price than that, and also does not want to carry a risk of entering at uncertain price.
He then submits a Buy LIT order with a Trigger Price at $80 (lower than current price of $82) and Limit Price at $79.90. His order will remain in the system until the Trigger Price is touched. If the stock does make a pullback and touches $80, the order will then be submitted as a Limit Order to buy the stock at $79.90 or lower. If the market price never goes down to $79.90 or lower, his order will not be executed.

For the list of other types of order, go to: Types of Orders in Trading.

Related Topics:
* A Chance to Learn from World Class Trading Experts For FREE You Should Not Miss
* Options Trading Basic – Part 1
* Options Trading Basic – Part 2
* Learning Candlestick Charts
* Learning Charts Patterns

Sunday, March 15, 2009

Trading Video: Fibonacci Retracement & Support/Resistance

I believe many people have benefited & learnt something from the video I shared few weeks ago where we learnt some trading tips.

That video has given us an example on how to use Fibonacci tools to predict market retracement.
Fibonacci Retracement is indeed a very useful tool in technical analysis, which I personally like and always use when analyzing a stock and preparing a trading plan.

However, when using Fibonacci Retracement to predict market retracement or to estimate price target, we should also consider the previous support / resistance level.
The new video here gives us some real examples about this.
Do watch carefully and learn something from it. Enjoy! :)

Related Topics:
* FREE Trading Educational Videos You Should Not Miss
* Short Trading Videos: Fibonacci Retracement Rules
* Learning Candlestick Charts
* Learning Charts Patterns

Wednesday, March 11, 2009

Option’s TIME VALUE – Putting It Together – Part 3: Main Factors – Implied Volatility & Time to Expiration

Go back to Part 2: Main Factors – 1) Degree of Options Moneyness

2) Implied Volatility (IV)
The higher the IV, the higher the option’s time value.

Why is it so?
Because higher IV reflects a greater expected fluctuation (in either direction) of the underlying stock price (e.g. due to earnings announcement is nearing, pending for FDA approvals, or some other important event / news, which is expected to move the stock price drastically).
Therefore, when IV is higher, the options would be more uncertain as to whether or not the options can finish ITM. This explains the higher time value.

3) Time Remaining to Expiration
The longer the time remaining to expiration, the higher the option’s time value.
Hence, all other things being equal, an option with more days to expiration will have more time value than an option with fewer days to expiration.

Why is it so?
Because the longer the time remaining to expiration, the underlying stock price would have more time to fluctuate, resulting in more uncertainty as to whether or not the options can finish ITM, and therefore the higher the time value.

As the option is approaching expiration, assuming all other things constant, the level of uncertainty will decrease, because the underlying stock price will have lesser time to move. Hence, the time value will decrease as the time to expiration gets shorter.

In general, for both Calls & Puts, as expiration is nearing, the Time Value component of an option price decreases or “erodes”. This is often called “Time Decay”.

Continue to Part 4: Behavior of Time Value

Related Topics:
* FREE Trading Educational Videos You Should NOT Miss
* Options Trading Basic – Part 1
* Options Trading Basic – Part 2
* Understanding Implied Volatility (IV)
* Option Greeks