Thursday, May 28, 2015

Chart of the day: GoPro

Today's stock chart of the day GoPro. GPRO is a recent IPO that is riding an earnings catalyst after bottoming out in early March. It is now breaking out and stalling at the newly formed 200 day moving average resistance level. A break of this level could set the stock up for a run to it's highs around $80.

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Tuesday, May 19, 2015

Market Speculator FAQ: What Indicators Do You Use?

Swing Trading Pattern Recognition
Beginning stock traders love indicators. They feel that the "secret sauce" is hidden in some combination of indicators and timing. For this reason, "What indicators do you use" is not only a common FAQ, it's the second most frequent (after "how much money can I make trading").

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Many are disappointed when I tell them I only look at moving averages and stochastics, while sometimes peaking at RSI to spot divergences. Last week I even had an e-mailer tell me I was hiding my strategy from them!

Here is the reason I use so few indicators, and even those are usually unnecessary.  Almost all indicators are measuring two things in some for or another: price action and volume.That's it!

Guess what? Your eyes can spot price action and volume. An advanced trader doesn't need the indicator. After studying thousands of charts on a daily basis for over a decade, the advanced trader doesn't need indicators. The eyes tell it all through pattern recognition.

So study charts. Religiously. On a daily basis. Thousand of them, over and over again. Pretty soon you'll spot patterns in seconds without needing confirmation from an indicator.


Friday, May 15, 2015

Chart of the day: CENX

Today's stock chart of the day is Aluminum stock CENX. The stock is forming a bottom pattern and has remounted the 50 dma.

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Tuesday, April 28, 2015

Chart of the day: IBB

Today's stock chart of the day is Biotechnology ETF IBB. The pulled back hard taking a number of hot biotech stocks down with it.

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The fact that IBB pulled back hard is a concern for the market since it has been leading the market.

However, the stock is sitting right at they key 50 day moving average level. This could lead to a small reflex bounce even if it does break the support level and start a downtrend. An entry here offers an easily manageable trade with low risk, high reward.

If taking a stab here, make sure to manage risk with a stop under the moving average and a target that gives you a 2:1 reward to risk ratio.

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Sunday, April 26, 2015

100 Trading Quotes To Put Into Action And Change Your Life: Paul Tudor Jones on Limiting Pain

Limit pain for smarter swing trades
The trading game is a painful experience for most traders. Base emotions like fear, greed and panic are amplified the second we put on a trade. 

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This is a major problem because trading is a decision makers game. Everything we do requires a well thought out decision. We are not mindless 9-5 cubicle drones. We constantly have to make good decisions in order to make money. 

Here is the problem. To make good decisions we must be at our best. However, trading with our own money on the line puts us at our worst. Fear and greed cause us to do things our logical minds know we should not do. 

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Ever taken yourself out of a great trade early for no reason other than the fear of losing your small profit? That's your brains emotional center limiting pain even when the logical you knows otherwise.

Legendary trader Paul Tudor Jones understood this:
"That cotton trade was almost a deal breaker for me. It was the point that I said, 'Mr. Stupid, why risk everything on one trade? Why not make your life pursuit of happiness rather than pain.'"
Everything Tudor Jones does is an effort to limit pain. By limiting pain, we make better decisions and put ourselves in the best possible position to win. 

Here, Mr. Jones describes how trading too big caused him pain. Many traders fall into this trap. They do not limit risk and position size, and trade too big for their accounts. This type of trading leads to bad decisions, along with sleepless nights.

Other pain causing trading leaks include, but are not limited to watching financial news mongers like CNBC, mindlessly following the Twitterati, chasing stocks, micro-managing positions and trading against the trend.

If you find yourself making bad decisions, do everything you can to limit pain in your trading. At the very least you'll sleep better.

Quote 1Nehru on Caution as Risk

Quote 2Bruce Lee on Creating Opportunity

Quote 3Machiavelli on Risk Management

Quote 4Michael Jordan on Limits and Trading Scared

Quote 5: Will Smith on the Past, Present and Future


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Friday, April 24, 2015

Chart of the day: Sketchers

Today's stock chart of the day is Sketchers. The stock broke out on huge volume after posting knock out earnings.

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There are a number of ways to play this earnings setup. The breakout pullback requires patience, waiting for the stock to form a trading range or pullback to the bottom of the breakout bar. A more aggressive strategy is to enter here with a loose stop. If employing this strategy, make sure to lighten position size and keep risk small.

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Wednesday, April 22, 2015

Chart of the day: ARAY

Today's chart of the day is medical devices maker ARAY. The stock has pulled back to the 50 dma after a strong uptrend and is now oversold. This setup offers great reward to risk with a target near $10, entry around $9 and a stop around $8.75.

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With a 4: reward to risk ratio, you only need a 25 percent win rate to break even.  All it takes is a 33% win rate to be profitable and if you are at 50 percent, you will kill it. This is my kind of trade.

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