USEFUL TIPS

There are around 16 FREE trading educational videos from authors like: Darrell Jobman, Brad Matheny, Gary Wagner, Linda Raschke, Adam Hewison, Joe DiNapoli and more, which traders, both beginners and experienced traders, should find them very useful.

Some of the featured videos are as follows:

1) Trading 101: Starting Your Trading Program
By Sunny Harris
In this video, author and professional trader Sunny Harris boils trading system design and analysis down to its most essential rules. In just a little more than an hour, you will discover the elements that are necessary to create a winning system, and you'll find out how you can apply each of these elements to your own trading. In addition, you will learn the 6 trading rules that will give you an edge, the 6 money management rules that will improve any system and the 6 essential steps to test your trading methodology.

2) Advanced Trading Applications of Candlestick Charting (73:53)
By Brad Matheny/Gary Wagner
In this video workshop, you will discover the crucial chart patterns that candlesticks reveal, how to interpret them and how to use them to pinpoint market turns. You'll also learn how to use candlesticks in combination with familiar technical indicators like Stochastics, %R, Relative Strength Index and Moving Averages to create a dynamic, synergistic and extremely successful trading system.

3) Spotting breakouts that lead to trend reversals (50:47)
By Darrell Jobman
Putting indicator clues together to identify setups for a new trend. As breakouts can be quite subjective, this video shows how to use other indicators and predict highs, lows and adopt multi-contract positions to provide profit.

In order to get the free instant access to the videos, just fill out the form here.

Hope this info can be useful to you.

Saturday, June 27, 2009

DOUBLE BOTTOM PATTERN – Part 1: Formation

Double Bottom Pattern is a bullish reversal pattern that normally forms after an extended downtrend, which marks a shift in trend from bearish to bullish.
Sometimes, this pattern is called “W pattern” because it looks like one.

The Formation of Double Bottom Pattern



Double Bottom Pattern contains two consecutive, distinct bottoms at about the same price level, with a moderate peak between the bottoms.
This pattern forms when the price is in an existing downtrend. It occurs when the price increases to a support level (forming the 1st bottom), then increase (forming the peak), and then return to the support level again (forming the 2nd bottom) before subsequently the price increases further.

The bottoms can be either sharp & narrow or a bit rounded looking & wider.
Although the price bottoms do not necessarily need to be exactly the same, but it should appear near the same price level.

The pattern is completed and confirmed when the price increases and closes above the highest point of the peak in between the 2 bottoms, which serves as the key resistance level in this pattern. This highest point is called the “Confirmation Point”.

Double Bottom Deception
Although Double Bottom is viewed as a common pattern and quite easy to identify, it’s actually not the case. Many people have actually incorrectly identified patterns that look like “W” shape as Double Bottom, but in fact it is not a Double Bottom formation.
Actually, this pattern can be quite difficult to identify correctly. Even when a pattern follows the characteristics of a Double Bottom, the failure rate is still high particularly when one never waits for the breakout. However, one waits for the breakout through the Confirmation Point, the failure rate would be considerably lower.

Therefore, one should pay close attention & take proper steps to analyze the characteristics of Double Bottom in order to minimize / avoid deceptive Double Bottom.
Some important characteristics of a Double Bottom that need to be paid more attention are the duration / time taken to develop the formation, the height of the peak, the volume during the formation of the pattern, and the breakout from the Confirmation Point

All these characteristics will be discussed in more detail in the next post.

To be continued to Part 2: Important Characteristics of Double Bottom pattern.

To find out more about other Chart Patterns, please refer to:
Learning Charts Patterns

Analysis Tool:
Get Free Trend Analysis for your favorite symbols

Related Topics:
* Learning Candlestick Charts
* Options Trading Basic – Part 1
* Options Trading Basic – Part 2
* Option Greeks
* Understanding Implied Volatility (IV)
* Understanding Option’s Time Value

Thursday, June 18, 2009

Trading Video: Combining Various Technical Analysis Techniques

In analysing market using Technical Analysis, various techniques are often combined to complement and support one another.
This video of the current S&P 500 market analysis shows an example of that.

Some of the analyses mentioned in the video are as follow:
* 200 Moving Average & 50 Moving Average Crossover
* Doji candlestick
* MACD Indicator
* Trendline
* PSAR (Parabolic Stop and Reverse)
* Double Top reversal pattern
* Fibonacci Retracement

(In case you need more information about the above analysis, you can click the links above to the articles in this blog that discuss further about those topics)

Other than learning the tips how to make use & combine various technical techniques to complement and support certain analysis, from this video you can also get some useful tips for your trading.

Analysis Tool:
Get Free Trend Analysis for your favorite symbols

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

Saturday, June 13, 2009

Stop Limit Order

Stop Limit Order is an order (buy/sell) to close a position that only executes when the current market price of an option/stock hit or passes through a predetermined price (i.e. Stop Price).
Once the Stop Price is passed, the Stop Order becomes a Limit Order, and can only be executed at a specific price (i.e. Limit Price) or better.

As you may have noticed, Stop Limit Order is almost similar to Stop Order. The main difference is that in Stop Limit Order, when the Stop Price is passed, the order will be converted into a Limit Order, whereas for Stop Order, it’ll convert into a Market Order.

Depending on the position on the market you have (long or short), there are 2 types of Stop Limit Order:
a) Sell Stop Limit
This is the stop limit order when you have a long position on a security.
In this case, the Stop Price is placed below current market price of the security, and the Limit Price should be placed at least the same as or lower than the Stop Price.

b) Buy Stop Limit
This is the stop limit order when you have a short position on a security.
In this case, the Stop Price is placed above current market price of the security, and the Limit Price should be placed at least the same as or higher than the Stop Price.

Characteristic & Risk of Stop Limit Order:
Stop Limit Order will remain inactive until the Stop Price is passed. Once the Stop Price is passed, the order will be activated as a Limit Order to buy/sell at the specified Limit Price or better.
Therefore, the advantage of Stop Limit Order is that it provides control over the price at which the order will get filled (i.e. at the Limit Price or better).
However, the disadvantage is that a Stop Limit Order may never get filled if the market price is worse than the Limit Price. As a result, the position can continue falling with no more protection for the position. This makes a Stop Limit Order a very insecure stop loss method, particularly for the extremely volatile stocks that often experience a gap up or gap down in prices.
Due to this risk, using Stop Limit Order to protect a position is not advisable.

Example:
Suppose a Sell Stop Limit order were placed to protect a long position on an option with a Stop Price at $2/contract and Limit Price at $1.5. The current market price is $2.5/contract.
This order would remain inactive, unless the price reaches or drops below $2. When that happens, the order would then turn into a Limit Order.
As long as the order can be filled at $1.5 or higher, the order will be filled.
However, in case the market price gap down at $1 and then continue to fall, the order will not be filled.

The Difference between Stop Limit Order and LIT Order:
Stop Limit Order is actually quite similar to Limit-If-Touched (LIT) order.
The difference between Stop Limit Order and LIT order is basically on the placement of predetermined price that triggers its execution (i.e. “Stop Price” for Stop Limit Order and “Trigger Price” for LIT Order) and Limit Price relative to the current market price.

* For Sell order, the Stop Price & Limit Price for a Sell Stop Limit Order are placed below the current market price, whereas the Trigger Price & Limit Price for a Sell LIT Order are placed above the current market price.

* For Buy order, the Stop Price & Limit Price for a Buy Stop Limit Order are placed above the current market price, whereas the Trigger Price & Limit Price for a Buy LIT Order are placed below the current market price.

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

Related Topics:
* Free Trading Educational Video: Learn Technical Tips from Dan Gramza
* Options Trading Basic – Part 1
* Options Trading Basic – Part 2
* Understanding Implied Volatility (IV)
* Option Greek
* Understanding Option’s Time Value
* Learning Candlestick Charts
* Learning Charts Patterns
* Getting Started Trading

Monday, June 8, 2009

Market Analysis Video: Is S&P Losing Momentum on the Upside?

While the market still seems to be higher, it also appears that it is losing momentum on the upside.
This can be seen in the market’s second attempt to close above the 950 level.
In addition, some of the momentum indicators are also showing negative divergences.
This means that while the S&P 500 is making new highs for the move, the momentum indicators are not making new high, but instead showing lower high.
The appearance of negative divergences could often be the first indication of a potential market correction.
See the video for more detailed analysis.

Analysis Tool:
Get Free Trend Analysis for your favorite symbols

Related Topics:
* Trading Tips Video: Fibonacci Retracement, Support/Resistance, Stop Loss, Price Target
* Learning Candlestick Charts
* Learning Charts Patterns