Entries Tagged 'Technical Analysis' ↓

Here is a great free gift from Top Dog Trading, they have just finished creating a new course that gives you the most important things that turned Barry Burns own trading.

At first they were going to charge for it … but they have decided to start
the New Year by giving it away to all of their students, subscribers and readers.

Ot is just their way of saying “thank you” for your friendship, and to help you make this your best trading year.

There are no strings attached and you don’t have to “opt-in” to anything. Simply go to the site, download the PDF outline and then follow along with it as you watch the 3 videos (there is about one hour of training in all).

It’s there for you at the Top Dog Trading Blog

To access the course, just go to the front page of the blog and you’ll see the most recent post at the top of the page gives a quick introduction and then gives you the link to the course.

The post is entitled: “Top 20 Daytrader Secrets for Day Trading Stocks, Emini Day Trading, Forex and Other Markets.”

Just go to  Top Dog Trading Blog

Best ETF Trading System – Part 1

There are many misconceptions about money management, most think it means trading with stops, but that is only a small part of it.

Below is a short part of the complimentary report you can download instantly called How to Safely Double Your Profits in 2009 Trading ETFs.

Get the full details here >> Best ETF Trading System

This little tip alone could save your trading account.

Why use risk controls?

Every trader and investor must guard himself against drawdown’s, which refers to the percentage drop in his account size after one losing trade or consecutive losing trades. For example, imagine that after losing a few trades in a row, your $20,000 account is reduced to $12,000, that would be a drawdown of 8,000/20,000 = 40%. 

That is a big loss!. If I were to ask some new traders, “In order to be back up to $20,000, what percentage return do you need to generate?”,  the correct answer may surprise you.

Many would answer, “Since I lost 40%, I have to make back 40%!” This couldn’t be more wrong! Note that after losing 40%, the trader now starts with a lower base, i.e. to undo the $8,000 loss, the return he needs to generate is 8,000/12,000 = 66.6%! That is why these free training videos are so important to help dispel some of the myths of trading.

The more severe the drawdown, the harder it becomes to undo the damage, as shown in the numbers below.

Drawdown %         % Required to get back to break even

10%                         11.1%  (This is easy to make up in one good trend)
20%                         25%  (This is also fairly easy to make up)
30%                         42.8%
40%                         66.6%
50%                         100%
60%                         150%
70%                         233.3%
80%                         400%
90%                         900%

That is why all professional money managers only risk 1-2% per trade. It’s because no matter how good your trading system is at some point it is a statistical fact you could have 10 losers in a row. Based on risking only 1-2% per trade this is only a 10-20% drawdown and easily recovered.

99% of the hype trading and investing courses in existence don’t say or do this. They say risk 5-10% per trade. It is wrong and will cause you serious financial pain if you follow their advice.

Many of them also use arbitrary stop loss advice. For example, they say, “Place your stop at $100.10 because that is on the other side of a major support or resistance, trend line, MA, etc.”

This makes your risk based on the size of the stop. That is also wrong because the risk can be too large and it’s not the same risk on each trade.

Others reverse this and say risk only 2% total period and let that determine your stop. This is also wrong and will hurt you because it is important to have the correct technical stop.

The answer is to do both. Use a percentage and technical stop together. It works like this. Let’s say the technical stop is $100.10, but based on your entry price that is a 3% risk.

Since your plan calls for a 2% risk you simply lower the number of shares you are trading. This lets you stay within your 2% risk and have the correct technical stop. This is exactly what most professional money mangers do.

Some say that this will lower their profits because of trading fewer shares. So what! Study the numbers above again. You know the old quote, “More risk equals more reward.” Well it’s not always true.

Sometimes more risk equals more risk! If you lose your money you have no chance to make a profit. Even losing 50% is disastrous because you would then need to make 100% to get back to even.

Like Warren Buffet says, there are only two rules in investing. Rule #1: Don’t lose money. Rule #2: Don’t forget rule #1.

I’d like to add a third rule. Correct money management and position sizing must be mastered to insure your long term success.

The good news is that it is easy to have correct money management and position sizing. I just explained how to use a combo of a % stop and a technical stop.

If you want more of an explanation please watch this set of free trading videos, visit my free video area on the homepage and click on the “Why have risk controls” video.

The system of entries, stops and profits taking is only half of your key to success. The other half is money management. If you get this part wrong you will lose your account every time regardless of how good your system is.

If you are interested in learning how to safely average 6% per month trading Exchange Traded Funds then click on the lick below:

Best ETF Trading System

Please note, in order to access the full set of free ETF trading videos you must first opt in for the complimentary report.

Technical analysis of the stock market, or any other market such as Forex, Bonds, Futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.

You only have to think back to major stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quarterly reports they release gives you a very limited insight into the real health of the company. Whereas the technical charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.

So what is the secret to technical analysis?, I’m about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings don’t mess with them.

The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying much the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

Top Dog Trading Review

After a spectacular rally from the lows seen last month, the S&P appears to be running into overhead resistance.

Is this the pause that refreshes, or is this the pause that reverses the market back towards the lows?

I have said for some time that I was not that confident that this rally would continue as our long-term “Trade Triangle” remained in a negative mode. In my new video I outline the key areas that I believe will shape this market in the coming weeks and months.

The video features our “Trade Triangle” technology as well as our Fibonacci tools. I will also remind you of a concept that has been around for a while, but one that you might not be aware of.

No matter what happens, you are going to see some extraordinary markets and some wonderful opportunities to make money in the next 6-9 months.

Some investors may be hoping for the best, but be prepared as we might see another dive.
I highly recommend students of the market to take a few minutes and watch my latest video. Even if you’re a seasoned pro you may find what you see interesting and therefore profitable.

As always, my video come is complimentary with no strings attached, watch this s&p 500 technical analysis