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Forget The Speed, Watch The Patterns

Forget The Speed, Watch The Patterns

Sometimes, it seems our brains move in slow motion as it relates to market action.  Perhaps it is the computers and High Frequency Traders (HFTs) that are just lapping us.  Maybe our hopes and expectations get in the way of sound judgment and free thinking. Maybe it is the angst we sometimes feel when the market is as volatile as it has been recently. I can't seem to put my finger on the reason why it this way, but, in any case, it doesn’t matter, as it is the patterns that truly matter. I...

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A Snippet Of Classroom Talk About Options

A Snippet Of Classroom Talk About Options

Reward to risk is not the be-all-end-all of risk management.  I talk about this concept all the time in my classroom. Recently, Macy's Department Store (M) was a topic of discussion regarding risk-reward is risk management. A student was looking for an opportunity to take a directional long in M, so we did some live analysis in the classroom.  There are no weekly options available for M, and our time horizon was longer than one day, so we were considering January expiration.  Using the...

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Better Stops Make Better Trades

Better Stops Make Better Trades

Over the last 10 days, the Average True Range (ATR) of a 60-minute bar in the NASDAQ futures has increased from around six points to 18 points. Why might this be important to know, even if you don’t trade that particular market? You may have heard the phrase “More is different.” It means that incremental changes can make a qualitative difference, not just an arithmetic difference. An example of this is when the temperature of water drops from 33 degrees to 31 degrees – liquid becomes...

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Buy The February E-Mini S&P 500

Buy The February E-Mini S&P 500

In the last FOMC meeting of the year, the Federal Reserve decided to leave in every observer’s favorite phrase “considerable time.” When the Fed says “considerable time,” it reminds me of being a kid, asking your parents for something and getting the reply, “maybe later.” Maybe later? What does that mean? Is it yes or no and when is later?  The Fedspeak translator 2014 still hasn’t told me what “considerable time” equates to on the calendar. What we do know from the Fed’s statement and...

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Janus Capital Is About To Breakout

Janus Capital Is About To Breakout

Shares of Janus Capital (JNS) are now poised to take out the Bill Gross hire level from September 26th. Less than a month after they hired the former PIMCO co-founder, the stock retested the $12.80 prior-resistance level turned support (also the 50-day exponential moving average) and has been putting in higher lows in the last two months. If JNS shares can close above the $12.80 resistance level, it would setup for a $3 measured move to the high $18 range next year. A stop loss on a long...

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Holiday Stress and Trading Pressure: How to S.T.O.P. the Torment

Holiday Stress and Trading Pressure: How to S.T.O.P. the Torment

The holiday season is here.  It’s time for celebrating and good cheer.  It’s also a time of heightened stress.  For many traders, who already feel lots of stress, the holidays can feel doubly difficult.  Trading and Holiday Stress We all know trading stress.  Recent losses and drawdowns can bring on stress.  So can managing a position, especially if it backs up on you.  Even profitable positions can be stressful.  We don’t normally think about profitable trades as stressful, but I have...

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RSI, Better Price Oscillator Than MACD

RSI, Better Price Oscillator Than MACD

Most traders are unaware there are three types of oscillators used for stock analysis. These are based on three different data streams – Price Oscillators that use price and time data, Volume Oscillators that use quantity and time, Hybrid Oscillators that use price, quantity, and time. There are innumerable price and time indicators and many are oscillators, but one stands out from all the rest – Relative Strength Index (RSI). It is not the most popular, but it is the best price oscillator...

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Trading Fears – Why We Have Them And What To Do About Them

Trading Fears – Why We Have Them And What To Do About Them

Trading fears are not the sole domain of new traders, actually far from it. Much misunderstood, fear can hit at any time. The real issue about trading fears has to do with bumping up against your thresholds, which can happen at any time. Growth and Development, Evolutionary Universal Laws You are growing and changing all the time, for the most part not noticing that it is happening. However, when an evolutionary impulse hits, and you are standing in the way, like most people are, it can...

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Planning For Retirement? Plan Again

Planning For Retirement? Plan Again

It's Christmas time. Everyone has been good little boys and girls, working diligently these past 40 years or more, marching toward America's promise, the golden years when one can lay down the work tools and enjoy the comforts of retirement. A False Promise The post-war generation – World War II – came back and raised families based on a simple promise –work hard, buy a house, save money, and when old enough, retire, as in stop working. Now, their children are ready to realize that promise...

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Estimated Tax Payments, A Primer For Traders

Estimated Tax Payments, A Primer For Traders

For the majority of Americans, income taxes are collected on a pay-as-you go basis through the automatic withholding on their wages through their employers. However, if you receive substantial income from dividends, interest, business income, and/or capital gains, you should check your estimated tax liability to verify if you need to make estimated tax payments. Failure to pay a required estimated tax installment will subject you to a penalty based on the prevailing IRS interest rate...

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Soybean Rally On January Crop Report

Soybean Rally On January Crop Report

Last Thursday’s weekly US export-sales report is a weekly gauge of demand telling us how much of each grain was sold last week for future shipment.  Index and trend following funds use these reports to determine whether the US is over-selling or under-selling grain in the current marketing year.  The marketing year for US corn and beans is September 1st to August 31st.  To date, 80% of the USDA forecasted export sales of beans have been sold, with nine months remaining in the current...

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How To Trade A Gap Up

How To Trade A Gap Up

On December 12, 2014, Adobe Systems (ADBE) gapped up on earnings to $74.17.  The stock closed the prior day at $69.74.  Now, the novice trader might think that the stock was moving up too much and therefore he or she should short it, while the experienced trader would want to look long for a bigger move. This is where experience pays off. Questions To Ask The first question I ask myself in reviewing premarket gaps is, “Why is it gapping?”  Once I have identified that it is gapping because...

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Market

Learn Why Technical Analysis is Important in Options Trading

Learn Why Technical Analysis is Important in Options Trading

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Stocks

Trade On The Side Of Institutional Money In Gaps

Trade On The Side Of Institutional Money In Gaps

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