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Chart patterns show the emotions of traders. Technical analysts combine the price action seen on charts with indicators designed to measure momentum and other characteristics of the market. Combined, these techniques can provide a trading strategy. To begin the development of a trading strategy, traders can look at a price chart of a broad stock market index such as the S&P 500 or the Dow Jones Industrial Average. Price trends in indexes are highly correlated with each other so traders can benefit from an analysis of any major index. The Chart Shows a Down Trend The S&P 500 Index is shown below. At the ...
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Most options investors screw it up. They may just buy a call option and hope a stock will rally further, leading to huge profits. Or they buy a put and hope a company immediately starts filing for Chapter 11. The fact of the matter is, stocks fluctuate. They may eventually go way up or way down, but it won’t be in a straight line. And knowing how to profit from more modest moves in a stock—the more typical daily moves you’re going to see over most of your investment life—is crucial for any options investor. That’s where options spreads come in. This ...
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Some traders look at charts and see actionable information. Warren Buffett is not a member of that group. Buffett has admitted that he tried to use technical analysis, the broad field of investment analysis that includes charts. He reportedly joked in a speech that, "I realized that technical analysis didn't work when I turned the chart upside down and didn't get a different answer.” Another skeptic is Burton G. Malkiel, a well respected economics professor at Princeton University and the author of A Random Walk Down Wall Street. Malkiel tested the usefulness of charts by providing students with a “given hypothetical stock ...
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If there's one thing I love about options trading, it's the ability to make money just about anytime. One powerful strategy involves making what I call "gas money" trades, where I can make a small amount of money, but safely and often thanks to the options market. In this video, I'll share with you how that's done and walk you through two examples ...
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Elections are important to the markets. After all, the Presidential election seems to lie at the heart of the Presidential cycle, a four year pattern technical analysts identified years ago that continues to provide useful insights to this day. But, as Warren Buffett notes, “If you mix politics and investing, you’re making a big mistake.” It’s important for investors to forget how they feel about politics and look at the market data to make decisions. The facts related to the election are now bullish. This is only one factor that investors should consider when making trading decisions but the election is important ...
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Want to do better than the market? Buy once it’s hit correction territory. In this video, I’ll show you not just one, but TWO investment plays to benefit from a market that’s now down 10 percent from recent highs ...
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It might be a bear market. But, that does not mean prices will go straight down for the next few months. Even in bear markets, there are times when prices move higher. This is true in even the worst bear market. The chart below shows what might be the worst bear market in U. S. history. It’s the Dow Jones Industrials Average from 1929 to 1932. The index fell about 90% over that time. At the bottom of the chart is a zig zag indicator. This indicator reverses direction whenever prices move at least 10% from a high or low. From the ...
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It’s the first ever in our new weekly series of weekly training tips that we’ll do here at Trading Tips to show you winning strategies and to help you become a better trader. It’s absolutely free to watch, so simply click on the video link above to get started learning how to identify the best stocks is ANY market. When it comes to “predicting” the stock market, many people think of just two options: It’ll go up, or it’ll go down. This is a common mistake when buying stocks because the overall direction of the market doesn’t necessarily indicate whether you’ll win or ...
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