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,...
Saturday, March 28, 2009
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...
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...
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 Moneyness2) 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...
