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“John – a fantastic person to work with for consulting and coaching, splendid motivator and an excellent resource for my day trading business.”      Faisal Habib

Technical Analysis – Day Trade – The basics:

This video give you a sense of old-school day tradingmental vs. intuitive trade execution.

 Now, bear in mind that contributors and their well intended information and guidance, that the various giant information sites, like Wikipedia, Investopedia, and many others, were developed by thousands of contributors  of differing trading perspectives, disciplines, and opinions.

Few are real money “winners”; most big money “loser”.

Listening to the noise, you can readily end up with a soup of random opinions and information – some good, some bad, some totally obsolete, that if engaged/relied upon,with real money, can send you to the poor house. And for most day traders, they get you killed both financially (big money losses) + emotionally (suffering and, worst case, depression) – like I did about 10 years back.

Like all information and opinions from serious yet wayward contributors and scholars and extremely successful practitioners – be your own guide. How does the saying go, buyer (observer/reader) beware. Some writers are so darn smart, mathematically, no matter how much I read, I feel lost trying to digest and understand what the hell they are talking about.

This is NOT the way to learn how to day trade online for big money results – in my experience. You need to learn how to day tradeNEW SCHOOL. For that opportunity, I do NOT recommend it without a coach – just like world-class athletes who get to the top and remaining at the top their game, never without a coach.

Who cares about all that genius generated financial stuff that jumps from my and your head. The point , in my opinion, playing word-class, big money generating trading is exactly like playing world-class sports – like golf or tennis – it’s all about Winningnot being distracted by the money, not the purse.

Traders need the Best Stock Trading (Day Trading Room), plus the Best Day Trading Coach – settle for nothing less

Think about that for a moment – you can get the meaning, to keep you free of trading trouble and long delays in learning and the results you seek.

Be an observer,  like watching a movie, and remember anything in writing – a book, a newspaper, a post on the internet – time passes from the idea, to generating the text, and more time before you get to read it. All writing, even my writing has a certain bias, whether you agree or not – thus all can soon be found to be obsolete, not really useful for your day trading career and business success.

Learning how to trade stocks like a pro is an ever changing game – another reason for having a day trading coach.

 

Technical Analysis

 

From Wikipedia, the free encyclopedia

“In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume.”
“The principles of technical analysis are derived from hundreds of years of financial markets data.”

General description:

“While fundamental analysts examine earnings, dividends, new products, research and the like, stock technical analysts examine what investors fear or think about those developments and whether or not investors have the wherewithal to back up their opinions; these two concepts are called psych (psychology) and supply/demand.
Technicians employ many techniques, one of which is the use of charts.”
Using charts, stock technical analysts seek to identify price patterns and market trends in financial markets and attempt to exploit those patterns.”
“Technicians use various methods and tools, the study of price charts is but one.”
“Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top/bottom reversal patterns, study technical indicators, moving averages, and look for forms such as lines of support, resistance, channels, and more obscure formations such as flags, pennants, balance days and cup and handle patterns.”
“Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation.”
“Technicians also look for relationships between price/volume indices and market indicators.”
“Examples include the relative strength index, and MACD. Other avenues of study include correlations between changes in options (implied volatility) and put/call ratios with price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc.”
“There are many techniques in technical analysis. Adherents of different techniques (for example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other approaches, yet many day traders combine elements from more than one technique.”
“Fundamental indicators are subject to the same limitations, naturally. Some day traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.”

“Principles

“A fundamental principle of technical analysis is that a market’s price reflects all relevant information, so their analysis looks at the history of a security’s trading pattern rather than external drivers such as economic, fundamental and news events.”

“Price action also tends to repeat itself because investors collectively tend toward patterned behavior – hence technicians’ focus on identifiable trends and conditions to day trade.”

“Charting terms and indicators”

“Concepts

  • Resistance — a price level that may prompt a net increase of selling activity
  • Support — a price level that may prompt a net increase of buying activity
  • Breakout — the concept whereby prices forcefully penetrate an area of prior support or resistance, usually, but not always, accompanied by an increase in volume.
  • Trending — the phenomenon by which price movement tends to persist in one direction for an extended period of time
  • Average true range — averaged daily trading range, adjusted for price gaps
  • Chart pattern — distinctive pattern created by the movement of security prices on a chart
  • Dead cat bounce — the phenomenon whereby a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement
  • Elliott wave principle and the golden ratio to calculate successive price movements and retracements
  • Fibonacci ratios — used as a guide to determine support and resistance
  • Momentum — the rate of price change
  • Point and figure analysis — A priced-based analytical approach employing numerical filters which may incorporate time references, though ignores time entirely in its construction.
  • Cycles — time targets for potential change in price action (price only moves up, down, or sideways)
  • Market Condition — the state of price movement as being in a state of range expansion or a range contraction.”

“Types of charts

  • Open-high-low-close chart — OHLC charts, also known as bar charts, plot the span between the high and low prices of a trading period as a vertical line segment at the trading time, and the open and close prices with horizontal tick marks on the range line, usually a tick to the left for the open price and a tick to the right for the closing price,
  • Candlestick chart — Of Japanese origin and similar to OHLC, candlesticks widen and fill the interval between the open and close prices to emphasize the open/close relationship. In the West, often black or red candle bodies represent a close lower than the open, while white, green or blue candles represent a close higher than the open price,
  • Line chart — Connects the closing price values with line segments,
  • Point and figure chart — a chart type employing numerical filters with only passing references to time, and which ignores time entirely in its construction.”

My Comments:

All day traders immerse themselves in charts – indicators, price inflection points where stock prices can continue in direction, reverse, or stall (consolidate – in a price battle state caused by indecision, or a lack of interest) until key price points are reached, or prior price points are broken – support/resistance).
Traders and investors have nearly a lifetime of being really smart and very financially successful. For decades the markets have made them wealthy.
Not any more.
Seasoned traders and investors are now throwing their hands in the air in frustration trying, yet failing to make a decent living these days.
Most are quitting, or standing on the sidelines for endless reasons,  the most important reason being – not regulation, not technology – it’s big money trickery and the resulting big money loses that have taken them out of the game.

Trickery:

Look, her’s what big-money traders are up to – they hire smart software guys to design programs to account (take advantage of) of all that day traders know (book, courses, the news, particularly the technical analysis rules most rely on). Then with a few clever trades trick trick the crowd, then strip them of their wealth by simply attacking their ingrained trader arrogance, beliefs, and ingrained habits).
Most traders don’t want to change their beliefs – so they not only get killed, and can’t figure out, or won’t figure out why – with outside support – they just continue to get their “assed kicked”. Sound familiar.
So, continued to read this stuff I garnered from the internet and think it’s real. When you’ve had enough, I’here to help you shift from big money losing to big money winning – that’s my purpos, passion, and meaning in my life right now – for you to benefit.

“Overlays

Overlays are generally superimposed over the main price chart.

  • Resistance — a price level that may act as a ceiling above price
  • Support — a price level that may act as a floor below price
  • Trend line — a sloping line described by at least two peaks or two troughs
  • Channel — a pair of parallel trend lines
  • Moving average — the last n-bars of price divided by “n” — where “n” is the number of bars specified by the length of the average. A moving average can be thought of as a kind of dynamic trend-line.
  • Bollinger bands — a range of price volatility
  • Parabolic SAR — Wilder’s trailing stop based on prices tending to stay within a parabolic curve during a strong trend
  • Pivot point — derived by calculating the numerical average of a particular currency’s or stock’s high, low and closing prices”

“These indicators are generally shown below or above the main price chart.

  • Average Directional Index — a widely used indicator of trend strength
  • Commodity Channel Index — identifies cyclical trends
  • MACD — moving average convergence/divergence
  • Momentum — the rate of price change
  • Relative Strength Index (RSI) — oscillator showing price strength
  • Stochastic oscillator — close position within recent trading range”
“Volume-based indicators
  • Accumulation/distribution index — based on the close within the day’s range
  • Money Flow — the amount of stock traded on days the price went up
  • On-balance volume — the momentum of buying and selling stocks”

Technical Analysis – Investopedia

By Cory  Janssen, Chad Langager and Casey  Murphy
What is Technical Analysis?

“Just as there are many investment  styles on the fundamental side, there are also many different types of technical  traders. Some rely on chart patterns, others use technical indicators  and oscillators, and most use some  combination of the two.”

“In any case, technical analysts’ exclusive use of  historical price  and volume data is what separates them from their fundamental counterparts.  Unlike fundamental analysts, technical analysts don’t care whether a stock is undervalued – the only thing that matters is  a security’s past trading  data and what information this data can provide about where the security might  move in the future.”

“Fundamental analysis involves analyzing the characteristics of a company in  order to estimate its value. Technical analysis  takes a completely different approach; it doesn’t care one bit about the “value”  of a company or a commodity. Technicians (sometimes called chartists)  are only interested in the price movements in the market.”

“Stock technical analysis really just studies supply  and demand in a market in an attempt to  determine what direction, or trend, will  continue in the future.”

“Technical analysis is based on three assumptions:

1. “The Market Discounts Everything A major criticism of  technical analysis is that it only considers price movement, ignoring the  fundamental factors of the company. However, technical analysis assumes that, at  any given time, a stock’s price reflects everything that has or could affect the  company – including fundamental factors.  Technical analysts believe that the company’s fundamentals, along with broader  economic factors and market  psychology, are all priced into the stock, removing the need to actually  consider these factors separately. This only leaves the analysis of price  movement, which technical theory views as a product of the supply and demand for  a particular stock in the market.”

2. “Price Moves in Trends In  technical analysis, price movements are believed to follow trends. This means  that after a trend has been established, the future price movement is more  likely to be in the same direction as the trend than to be against it. Most  technical trading strategies  are based on this assumption.”

3. “History Tends To Repeat Itself Another important idea in technical analysis is that history tends to  repeat itself, mainly in terms of price movement. The repetitive nature of price  movements is attributed to market psychology; in other words, market  participants tend to provide a consistent reaction to similar market stimuli  over time. Technical analysis uses chart patterns to analyze market movements  and understand trends.”

“Although many of these charts have been used for more  than 100 years, they are still believed to be relevant because they illustrate  patterns in price movements that often repeat themselves.”

My thoughts:

These guys are absolutely right.

Do they make big money – I doubt it.

Read more: Technical Analysis

 

Much of what you read above is not what you need to know to make big money day trading stocks.

With ongoing software innovation, designed to trick those who continue to rely on these old school technical analysis techniques, it is rare for amateur and professional traders alike these days to make serious money.

I’ve discovered over the years that the few tricksters, who control markets and stock price movement, use all this tired technical analysis against the average trader and investor exactly when they least expect is, when they have their arrogance on the line, their ego on the line.

Being right is more about being broke in due time.

So what’s the solution to this gap in performance most traders find themselves caught up in with at best average to worse results than they ever imagined when they began their career/day trading business.

It’s frustrating trading this way. Like me years back, you get angry a lot, losing your composure, yet you continue on anyway thinking things have got to change – prices action will eventually come my way – and they rarely do. 

The solution is to stop falling for their traps, stop trading with old school technical analysis.

Then what?

You then need to learn to trade with the big money winners with this coach – and for this, you will need to completely change your perspective and your day trading game.

For that you need a master day trading coach, much like a so-so athlete, or a losing athlete needs a coach to bridge the performance gaps, or leave the game for some other work. 

High Frequency Trading

A Bump at Speed Trading Hearing Wall Street Journal

“Wall Street Journal. A Bump at Speed Trading Hearing. Wall Street Journal.”

“Conflict erupted among some of Wall Street’s heaviest hitters over a proposed definition of high-frequency trading showing rifts that divide big investment firms US Regulator may cast wide net in high-speed trading reform Reuters. Broad Definition of High-Frequency Trading Urged by CFTC Panel Bloomberg.”

“High-Frequency Trading Registration Studied by US Regulator Businessweek. MNI News Financial Times.”

My comments:

What do I think about high speed traders, actually high speed trading software systems?

I’ts all noise that, most times, is recognizable and to be ignored by those in the know – new school traders.

You and I will never have the software or want the software to compete at the micro level – for pennies. Let the high speed systems do their thing; liquidity is the benefit.

[hftrading]

Duncan Niederaur, chief executive – NYSE

Duncan Niederauer, chief executive of NYSE Euronext, NYX +0.64%   argued this transformation has given an unfair edge to sophisticated financial firms and alienated both individual investors and stock-issuing companies.”
Comment:
Nonsense, just learn to trade around the high speed trading noise. 

“The public has never been more disconnected [and] has never had less confidence in the underlying mechanism,” Mr. Niederauer said at a hearing convened by a subcommittee of the House Financial Services Committee. “What used to be an investors’ market is now thought of as a traders’ market.”

Comment:

Exactly, it’s a traders market, a NEW SCHOOL traders market – old-school trading and investing has been rendered obsolete, yes much or Technical Analysis had been rendered obsolete  by software innovation, by the few trickster traders around the world.

“Mr. Niederauer blamed a blurring line between the functions of brokers and exchanges for helping encourage share-trading to flow away from exchanges and into private markets run by financial firms. That reduces the amount of buying and selling that is done in a way the public can see.”

Comment:

More nonsense about investing and trading systems and strategies, that are now dead ended.

If you want to win big? Change – don’t blame anyone. Get in the new game with your day trading coach.

.

More Information – using Technical Analysis in our

Day Trading Room:

Other Related Day Trading Pages:

Day Trade, Learn How to Day Trade Online, day trading room logs

Day Trade 1, Learn How to Day Trade, more day trading logs – 2012

Day Trade 2, Best Online Stock Trading, more day trading logs, 2011

Day Trade 31, Best Stock Trading, more day trading logs,2010.

Day Trade 4, How to Trade Stocks – 2009.

Also:

Technical Analysis – ChartSchool – StockCharts.com

stockcharts.com/education/TAindex.html

John is truly a day trader of the highest caliber whom not only guided me into a world of big money opportunity, but coached me on the trading practices of winners.“       Billy Jack

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