A Stop Loss Can be Essential to Robust Risk Management
Creating a stop loss A solid trading strategy should always start with determining how much capital you are willing to risk on any given trade. To determine how much of a market swing you are they willing to accept against the direction of their position, the trader needs to decide where they should exit a [...]
When Managing Risk, the Worst Case Scenario is Your Largest Drawdown
A drawdown is measured from the time a retrenchment begins to when a new high is reached. This method is used because a valley can’t be measured until a new high occurs. Once the new high is reached, the percentage change from the old high to the smallest trough is recorded. Drawdown’s help determine an [...]
Trend lines Summarize Market Sentiment in a Picture Format
Trend lines Summarize Market Sentiment in a Picture Format Trend line represent the slope of the highs and lows of a financial instrument whether they are objective or subjective. The line generally is downward sloping for resistance and upward sloping for support. Lines can be created out of any specific high or low point as [...]
Volume Confirms Market Break Out and Break Downs
Many analysts and traders will use charts to examine the volume that is traded over a particular time frame (hour, day, week, etc.…). Volume charts are usually in a bar format and appear at the bottom of many charts as an additional study. Volume is an important indicator when looking at different patterns that occur [...]
Point and Figure Charts Help Gauge Market Turning Points
Point and Figure charts serve a trader well when an investor wants to eliminate time as a function and just wants to concentrate specifically on the actual price movement. Point and Figure charts are great for observing active market activity, and as such are very helpful in identifying support and resistance lines, buy and sell [...]
The Basics of How to Examine a Price Chart
When an investor decides to examine a financial instrument, one of the first things the investor will do is examine a chart. Prices, which are displayed on charts, can be shown in many different ways, and each trader examines the prices in a slightly different way. The goal of this article will be to explain [...]
The Head and Shoulders Patterns Signals the End of a Trend
The Head and Shoulder pattern is one of the most discussed patterns used by technical analysts to reflect the end of a trend and the reversal of a market movement. The pattern almost always comes at the end of a large up move, and signals a period were the market is consolidating. A head and [...]
Technical Triangles Reflect the Calm Before the Storm
Descending Triangle The descending triangle is also a variation of the symmetrical triangle. The pattern is a consolidation pattern which defines a period prior to a breakout. The descending triangle generally is a bearish as the consolidation leads to choppy trading which eventually breaks lower. In the descending triangle the bottom part of the triangle [...]
Technical Patterns such as Triangles are Subjective, but Very Useful
Technical analysis can be categorized as indicators, which include formulas that help predict future market direction, and patterns, that assist in describing the current market environment. Patterns describe supply and demand and allow traders to recognize situations that tend to lead to specific market follow-through. There are numerous types of patterns that can be used [...]
Trading Volatile Market Can be Risky, but the Reward can be Significant
When a financial instrument moves quickly in one direction, the markets are deemed to be volatile. Generally downward movements are associated with the word volatility, but upward movements can be just as unsettling and confusion. Volatile markets create trading opportunities, but they can also be very difficult to trade. Markets can also be volatile and [...]
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