Friday, November 26, 2010

Stock Market - What's in a Trading Edge - readbud

Stock Market - What's in a Trading Edge - readbud

Stock Market - What's in a Trading Edge

Unless you are able to develop a considerable trading edge over the other traders, you will end up losing your money, even if you are disciplined and organized. In this article, I discuss some elements that I use in my trading edge.

Fundamental Analysis

Fundamental analysis is the process of evaluating the financial condition of a company using financial reports, price/earning ratios, revenues, market share, sales and growth, etc. This type of analysis can be time consuming so instead of going through pages of financial reports, I simply look at IBD ratings.

I like to use Investor's Business Daily (IBD found at to get a quick overview of a stock. The IBD rating covers:

1 - Earnings Per Share (EPS) rating: tells me a stock's average short term (recent quarters) and long term (last three years) earning growth rate. The number I see is how the company compares to all other companies. The scale runs from 1 to 99, 99 being the best.

2 - Relative Price Strength (RS) Rating: Measures a stock's relative price change in the last 12 months in comparison to all other equities. The scale runs from 1 to 99, 99 being the best.

3 - Industry Relative Price Rating: Compares a stock's industry price action in the last 6 months to the other 196 industries in IBD's industry list. The scale is from A to E, A being the best.

4 - Sales + Profit Margins + ROE (Return on Equity) Rating: Crunches a firm's sales growth rate during the last 3 quarters, before and after profit margins and return on equity into one letter. The scale is from A to E, A being the best.

5 - Accumulation/Distribution rating: Applies a formula of price and volume changes in the last 13 weeks to determine if it is being accumulated or distributed. A = heavy buying, C = Neutral, E = heavy selling.

If you like the idea of including fundamental analysis into your trading plan, consider trading only stocks that meet some minimum requirements - for example A or B, > 70, etc.

I like to use fundamental ratings for longer term trades such as the ones I plan on weekly charts. It is not really useful if you trade intraday.

Technical Analysis

Fundamental analysis is great to build a list of strong stocks, or as a way to filter out weak stocks, but that's about it. It does not provide you with an objective method to enter and exit trades. All my trading decisions (entry, exit, and stops) are based on technical analysis.

Technical analysis is the study of prices. The price action draws patterns on charts and because human behavior can be repetitive, the price patterns can also be repetitive.

You can choose from a variety of chart types. The Japanese candlestick charts are by far the best and it is the only form you need. There are entire books dedicated to the study of candlestick patterns - if you are serious about studying candlestick charts, look at books written by Steve Nison and and Gregory L. Morris.<

- Support and Resistance: The most important concept in technical analysis is Support and Resistance. It forms the foundation for every trading decision and could cover many pages but I will limit myself to simplified definitions and a couple examples:

Support level: A price level that a declining market or stock failed to penetrate
Example: the low of the previous day forms an area of support and is often used as a stop loss.

Resistance level: A price level that a rising market or stock failed to break through
Example: a prior high in an uptrend forms an area of resistance and can be used as a minimum objective to take some profits.

Some technical indicators may also provide some support and resistance, for example moving averages, in part maybe because so many traders expect it.

- Oscillators

An oscillator is a technical indicator that tells you at a glance whether a market or a stock currently trades in an "overbought" or "oversold" condition. Some traders use oscillators to forecast a change of direction. Some examples include the RSI, Stochastic Oscillator, and MACD.

There are hundreds of oscillators and technical indicators. I personally look at them to filter out some stocks if I have too many good ones to choose from. I never use them as a signal to open or close a trade.

- Public Sentiment

I look for support and resistance on the VIX (Volatility Index) daily chart to anticipate reversals.

I look at the Put/Call Ratio (5 MA and 10 MA) on the daily chart to see if traders are too bearish (MAs > 0.8) or too bullish (MAs < 0.5).

(MA = Moving Average)

- Market internals to see if the market is overbought or oversold

I look at the TRIN (5 MA and 10 MA) on the daily chart - overbought (MAs < 0.8) or oversold (MAs > 1.2).

I look at the McClellan Oscillator – the market is overbought if it rises above +70 and oversold if drops below -70. A buy signal is generated if it falls into the oversold area (-70 to -100) and then turns up - a sell signal is generated if it rises into the overbought area (+70 to +100) and then turns down. If it goes beyond the -100/+100 levels then it may be a sign of continuation of the current trend.

- Market and Industries

I like to buy stocks from industries in a strong uptrend and short stocks from industries in a downtrend. I also consider the direction of the industry for the day (positive or negative).

Putting it all together

This article is not about teaching you how to develop an edge but hopefully it shows you that there are many different tools that can be used to improve your odds. It takes time to find a combination that fits your personality. It takes time to find what works for you.

in Stock Market

 A New Way For Adult Webmasters To Start There Own Site

Welcome to Ultimate-tgp Dynamic Tgp Affiliate Program!

Ultimate-tgp offers you a powerful Dynamic Tgp affiliate site with FREE HOSTING, Trade script , one click Sponsor adding ,Premade Templates, and 195758 Galleries And 338 Sponsors. and growing

We pay to every webmaster 70% of his/her subscriptions and re-bills. Webmasters who have more than 50 subscriptions per month, get 80% of their subscriptions and re-bills.
Join Ultimate-Tgp!
There is absolutely no cost to join! Just fill out the signup form and login to the members area using your member login and password provided on the registration page. We do review every application by hand to maintain the quality of our program and to assure our sponsors that we admit only serious adult webmasters. For this reason, there may be a short delay in processing your application.

Forward Your Domain To Your Member Address Using The Mask Or Hide Url Option.

Choose Your Template And Layout.
Log in and go to AffiliateTools Edit template Select a template of your choice and email us your logo (On New Templates We will Do The Logo).

Add Your Sponsors In The Members Area.
All new Ultimate-Tgp customers must promote our Sponsors with our approved Affiliate code(s), which represent the best of the best in the adult industry. Once you have finished the sign up process select as many sponsors as you can to get best results. You will gain access to our expanded database of over 200 affiliate programs to choose from. Of course, we only make our money if you are successful in promoting your site. Each sponsor has a different payout structure, But we payout on a weekly basis.

We Setup And Enter Your New Ultimate Sponsor Codes In Your Members Area Upon Activation.

Once you select your Sponsor(s) by clicking the appropriate link on the Affiliate Tools Page of the Member's Area, we do the rest.

Make Money!
We don't make money unless you make money! So we are truly your partner! We're here to help you be more successful. Take advantage of the Ultimate-Tgp community...Many of our users depend solely on Ultimate-Tgp to make a living. We challenge you to find a host, paid or otherwise, who offers as much as Ultimate-Tgp! It costs nothing to create an account...join us today!

Please note all free member accounts Affiliate url's are selected randomly But you do have to option to upgrade.
NOTE: you must be over 18 to join our program.

in Sexuality


Post a Comment

Subscribe to Post Comments [Atom]

<< Home