Posts Tagged ‘technical analysis course’
Trading in a Trend – Technical Analysis Explained
Thursday, April 1st, 2010A good trend is loved by traders . Everyone wants to have one, one that’s their own, and this is understandable, since a lot of money can be made in a good trend .
How should you trade a trend? There are a variety of tactics you can use . Some of the older traders believe trends happen to be easy because any plan is workable. Since prices are going in just one direction , even if you enter with a poor trade position , it doesn’t matter , since the trend will bail you out in the end . There is some truth in this old maxim , but many refinements can be brought into trend trading.
One of the first things all market analysts learn is that technical analysis explained how to recognize a trend as early in its existence as possible , and the trend as defined by Drummond Geometry , based on the relationship between the close and the Pldot , allows us to do this. More than likely you will recall that when three closes to one Pldot side is the definition of a trend . After the third close you are in a trend .
There is importance to this because a trend’s most lucrative and best part is often in the beginning , when it first gets going . After you recognize a trend you need to stick with it as long as it is there. If you are permitted by your trading situation, you will want to add pyramiding, so that as the trend develops your profits also grow more rapidly .
Surely getting aboard a trend and hanging on tight is one of most lucrative parts of trading. If your education has taught you nothing else, you should have knowedge that your style of technical analysis explained trend formation is one of the basic building blocks of any trading system .
All well and good, you say , but how is entry to a trend timed ? And how do you manage a trade in a trending market ?
Not every trend is alike, some are fast, some slow and some are young while others are old .
First let’s look at a fresh trend . The market has been in congestion for some time , perhaps for many days if you are a swing trader , or for day traders for quite a few hours. The parameters of the congestion are clear to you . Then the condition change suddenly, often being news driven. The market starts to move rapidly on one direction .
This is when you act fast. Get in the direction of the trend and stick with it. The exact point of entry is less critical than you getting in it . This move will last for days or hours so the sooner you get on board, the better off you’ll be! You can buy into this trend as it breaks the congestion parameters or as the bar goes back up to the trading band top. If this is a trend that is new and real , you won’t see any retracements deeper than that for quite a while !
This is a contrast to a trend that is mature and that has been around for some time. Is it possible to get on board? Yes, but if the energy of the trend is mature and losing punch, your entry techniques should be more cautious . If this occurs you should look out for a pause in this trend, a retracement of price to the midline at the very least . Ensure there is enough potential there by checking on the higher time period , enough to make it worth entering this no-longer-fresh trend .
If the guidelines are something you are unsure about some time spent examining a chart will surely bring your understanding to a higher level . Most traders will benefit from taking a closer look at technical analysis explained in a good training course , as they hone skills for exit and entry.
Our next topic will be entering as well as exciting congestions.
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Essential Maxims and More with Your Technical Analysis Course
Friday, March 19th, 2010A technical analysis course will teach you that there are sayings out there that can justify most things. There is always an equally plausible maxim that seems to take opposed actions and justify them . It doesn’t matter what the event happens to be a description can be provided by a maxim. Often traders decide to pick on that encourages their method of trading . It was stated by Orin Thevault that “selective perception” is what sociologists have called this . The most favored alibi comforts the trader when he deals with a smaller profit or even a loss .
The successful trader derides maxims as conventional wisdom , that don’t have any value and that are general and they are more for a random walk explanation rather than for a real plan for trading. He believes that success in trading requires more than than the right choice of a maxim.
“Nothing is so useless as a general maxim” .
– Thomas Babington
Lord – Macaulay – 1859
In theory , if a maxim was correct all the time it would be followed to such an extent as to eliminate its validity . Because of human nature, maxims are broken on a regular basis. If we have a great maxim , does it really mean much ? More than likley it won’t really be paid attention to. Everything can’t be remembered after all. Perhaps Lord Macaulay was really right. There are some of those maxims out there, which are applicable to good commodity trading . Some maxims are quite profound and should be remembered . You can make your own choice. Actually, I’d suggest you take maxims that work for you, make your own collection and repeatedly question and test them .
ESSENTIAL MAXIMS TO KEEP IN MIND
The top approach that will enable you to maximize your results is on a small scale playing a favorable game, but yet a chance of success is still reasonably provided, is playing a game that is favorable on a scale that is large avoiding ruin with enough early profits . Even an unfavorable game can give you results that are profitable if you bet heavy and seldom play . The only road that leads inevitably to disaster is constantly playing a game that is unfavorable . This can be learned by taking a technical analysis course.
Good sports die broke .
There is no such thing as a sure thing.
Traders sleep, markets don’t .
If enlightenment is the mutal goal, dialog is appropriate .
Accidental successes usually turn into accidental failures .
Positive and wnegative aspects are manifested in winning.
The many can’t accomplish what the few can do .
Take a position where there is little resistance .
Sell famine / buy glut .
Buy rumors – sell news .
A bull and bear can both make money – a hog can’t .
Don’t buy at the bottom and always sell too early .
Buy what will not go down in a bear market . Never buy something that won’t go up in a bull market .
Many a healthy reaction has proved fatal .
When market opinion leans to one side watch for a trend .
Patience is imporant . Wait for situations in which profit potentials seems unusually high .
Trade infrequently unless you’re trading plan reasonably requires you to take positions often .
Everyone can find fault with any maxim .
Use a safe deposit box to keep half of your profits.
It’s tougher to keep money than it is to make it.
The race doesn’t always go to the swift or the battle to the strong, but that’s the way to bet .
PESSIMIST MAXIMS
If anything can go wrong, it will
No matter what the result, there’s always someone to fake one better .
It doesn’t matter the results, someone will work to misinterpret it .
When you collect data , that figure that seems to be totally correct – is where a mistake will be .
It may be impossible to get a wrong number, but you can still find some way to do this.
The path that leads to failure is broad .
MAXIMS ON THE FUZZY SIDE
Let profits run and cut your lossings .
( this is like encouraging someone to be happy and stay healthy. )
On down days, only buy . Sell only on up days .
Only the school of hard knocks teaches better than a technical analysis course.
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Technical Analysis Explained: Congestion Entrance Examined
Saturday, February 27th, 2010This is a look at the Technical Analysis Explained series where we speak of congestion entrance, a type of trading .
We know that the market moves from trend to congestion and from congestion to trend , in a continuous cycle,repeating itself again and again and again forever . This has happened as long as there has been a market and as long as there are markets, it will continue to happen. The only times this cycle isn’t seen include times of regulation, constraint that is artificial, and intervention , such as market suspensions, price-fixing, price limits, market regulation and the like – and even then the disruption is temporary . But as long as supply and demand can vary , and as long as human beings come together in trade and act on their own perception of opportunity and value , there will continue to be congestions and trends .
Various names can be used for this. Often the idea of equilibrium and disequilibrium are discussed, some speak of vertical moves and horizontal moves describing chart movements, some speak of distribution as a movement upwards and development is referred to as the movement sideways. But it is all the same .
A trend is a movement that can take you in a particular direction ; congestions are market periods where the market oscillates between support and resistance and moves across the page in a horizontal manner .
We saw in earlier articles in our Technical Analysis Explained series that a trend has a clear definition – it includes on one side of the Pldot, three bars that show up consecutively. Because a congestion is exactly opposite of a trend , we expect our definition of a congestion to be simple as well , and it is . A market is in congestion when it does not close on one side of the PLdot for three consecutive periods . How could it be different ? We say the market is either in a trend or not , we already have the definition of a trend , so a congestion is basically everything else. Markets are either in congestion, or they are in a trend.
Now we break our discussion of congestion into three separate lessons , as we define three types of congestion – congestion entrance, congestion action, and congestion exit . Here is a simple look at these definitions .
Congestion entrance trading occurs after the market is in a trend with three consecutive closes on one side of the Pldot , and then the next close occurs on the other side of the Pldot . So that bar , closing on a different side of the Pldot than the other previous three, is the first bar of a congestion , and after the trend, it’s the first bar.
Congestion action trading occurs as the market swings back and forth , and closes on one side or another of the Pldot as it goes along bar by bar. In the next article we’ll discuss this more in the Technical Analysis Explained series.
Congestion exit trading occurs as a new trend is about to occur and the market is leaving congestion. That makes sense, does it not? And so if the market violates one of the confines of congestion , either the dotted line or the most recent block level , then the market is manifesting congestion exit trading . Of course, there’s a lot to be said about it , and the topic is interesting . However, this will be addressed later and we won’t deal with this further right now. Keep an eye open for articles on the topic later.
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