TradingMoney Management- The 2% Rule
Don't risk a large percentage of your capital on a single trade. Follow the 2% Rule. - Is 2% Right for Me?
Not all traders face the same success rate. Short-term traders usually achieve higher success rates, while long-term traders achieve for higher risk-reward ratios. - Does 2% Protect From Drawdowns?
The 2 Percent Rule assumes that stocks move independently of each other but when stocks fall, they tend to fall together.
Stop Loss Orders- Stop Loss Orders
Stop loss orders are limits set by traders at which they will automatically enter or exit trades. - Setting Stop Loss Orders
Base your stops on technical levels otherwise they will cost you money. Arbitrary levels are liable to be breached by the normal cycle. - Adjusting Stop Loss Orders
Lock in your profits and ride the trend, avoiding shake-outs by minor corrections. - Maximum Acceptable Loss
An objective formula used to assess the risk associated with each trade. - Trailing Stop Loss Orders
A powerful formula for limiting losses, protecting profits and avoiding false signals. - Trailing Percentage Stops
Trailing Percentage Stops work with a ratchet effect, trailing price movements by a set percentage. - Stop Loss Traps
For a market specialist, making money out of stop loss orders is as difficult as hunting dairy cows with a high-powered rifle and telescopic sights.....
Trading Traps- Trading Traps: The Shakeout
Tricks of the Trade: A market professional may want to accumulate a large position in a stock that is trending strongly... - The Fakeout
Tricks of the Trade: If a market professional sits with a large sell order and the stock is consolidating.... - Pump and Dump
Tricks of the Trade: Also referred to as ramping, this is an old trick often perpetrated by sly old hands who prey on newcomers. - Stop Loss Traps
For a market specialist, making money out of stop loss orders is as difficult as hunting dairy cows with a high-powered rifle and telescopic sights..... - Bull & Bear Traps
One of the most reliable Point and Figure chart patterns, Bull Traps occur when an upward breakout retreats back below the new support level. - CFD Opportunities & Pitfalls
Opportunities and pitfalls of trading contracts for difference.
Trading Psychology- Trading Psychology
Your biggest enemy, when trading, is within yourself. Success will only come when you learn to control your emotions. - Know Your Trading Style
What personality style are you? And how does this suit becoming a trader? - Searching for the Holy Grail
Most traders are on the lookout for ways to improve their trading, but some dedicate their lives to searching for the holy grail. - Trading With Emotions
Before you can manage your emotions it helps to understand what causes them. Our brains and endocrine system are a veritable narcotics factory... - Investors Logic
Investors often use distorted logic when buying stocks: what goes up must come down? Stocks that rise steeply in price and make new highs are viewed as expensive ... - Gamblers Logic
If I toss a coin and heads turns up five times in a row. Which side is more likely to turn up the next time? Heads or tails?
Trading Education- Finding the Right Trading Course
Finding the Right Trading Course (and avoiding the obvious pitfalls): If you had to enrol on a one-week trading course, you may learn some good basic trading skills. - Becoming an Expert Trader
Becoming an Expert Trader (and the value of trading courses): It may take 3 to 5 years to become a good trader. Becoming an expert could take even longer ...
Trading Basics- Trading Basics
The secret of successful trading: adjust your trading system to prevailing market conditions... - Market Leaders
Market leaders deliver superior returns compared to laggards, offering more consistent growth... - Market Direction
The market exerts a powerful influence on the performance of individual stocks. Study the big picture first before looking at any shares in isolation. - Trend Direction
The key to successful trend trading. - Entry Signals
Perfect timing: use momentum oscillators to signal entry points in the trend. - Stop Loss Protection
Stop-loss orders are a critical element in any trading system, to protect your capital and to lock in profits. - Exit Signals
Increase profits: use trend indicators to time your exit from trends. Adjust the Indicator Time Frame to suit the cycle being traded.
Trading EducationTechnical Analysis Foundation- Technical Analysis
What is Technical Analysis? Foundations of Technical Analysis and does it really work? - Support/Resistance
Support and resistance are the foundation stone of all technical analysis. - Chart Basics
The key to analysing bar charts: control, commitment, OHLC, whipsaws, long and short positions... - Time Frames
Expose hidden trends: markets trend in more than one direction at the same time...
Trend Analysis- MA Systems
Crossovers of fast and slow moving averages are particularly useful for identifying trends and make an effective trading system when combined with stop losses. - Directional Movement - Trends
An often-discussed system for tracking trends is the Directional Movement System set for weekly, rather than daily, directional movement. We compare performance to Stan Weinstein's breakout model. - Short-Term Trends
Never trade against the trend - a fundamental principle in technical analysis. That's easy enough to follow, but how do you determine the trend? - Trend Strength
Three main indicators of the strength of a trend. - Trend Lines
The trend line is a powerful momentum indicator, alerting you to any acceleration or deceleration of the trend. - Forex Trend Channels
Trend channels are one of the best available tools for identifying changes in trend momentum. - Standard Deviation Channels
Standard deviation channels, plotted at a set number of standard deviations around a linear regression line, provide useful entry and exit signals for trading trends.
Stock Market Cycles- Reading The Stock Market
The behavior of the market is the most powerful influence on the performance of every stock. - Cycles
The change in prices on any day is influenced by a number of cycles in different time frames... - Coppock Indicator
Edwin Coppock designed this oscillator with one sole purpose: to identify the commencement of bull markets. - Bullish Percent Index
Developed by Chartcraft, the index combines bull signals from individual stocks to identify market trends. - Market Tops & Bottoms
William J. O'Neill identifies these signals in 24 Essential Lessons for Investment Success. - Interest Rates and the Economy
Interest rates have a big influence on stock markets because of three factors.
Select a Chart Type- Chart Types
Candlesticks, bar charts, equivolume, candlevolume and point and figure - Bar/OHLC Charts
How to identify trends, control, commitment, uncertainty, inside and outside days. - Equivolume Charts
The greatest advance in the last decade, equivolume exposes price and volume interaction. - Candlestick & OHLC Colors
Candlesticks are colored according to opening and closing price, OHLC by comparing closing price to the previous close. - Point & Figure Charting Guide
Suggests suitable Point & Figure settings: log or normal scale; box size and reversal amounts; and pricing method. - Point & Figure Setup
Create custom Point and Figure chart s from the Indicator Panel.
Long-Term Patterns- Chart Patterns
Chart Patterns are formed by support and resistance levels and by trend lines. - Cup and Handle
The cup and handle is a longer term continuation pattern, similar to an ascending triangle. - Double Tops
Double tops are useful reversal patterns in an up-trend, identified by two peaks of similar height, followed by a break below the intervening trough. - Head & Shoulders
A powerful reversal signal, the head and shoulders pattern is completed by a lower peak followed by a break below the neckline. - Support/Resistance
Support and resistance are the foundation stone of all technical analysis. - Trading Ranges
Trading Ranges are formed by support and resistance lines in close proximity. Price fluctuates in a narrow band with no clear trend. - Triangles & Wedges
Triangles and wedges can be powerful continuation or reversal patterns, depending on their shape. - Triple Tops
Triple tops are similar to double tops and comprise three peaks of similar height.
Short-Term Patterns- Short-Term Support & Resistance
Support, resistance and trading ranges. - Flags & Pennants
Flags and pennants are short-term congestion patterns that form in trends and are reliable continuation signals. - Rectangles
Rectangles are narrow consolidations in a trend. - Rectangle Signals
Rectangles are of the most reliable chart patterns when they appear in close proximity to support or resistance during an up-trend. - Volume Patterns
Volume activity provides powerful confirmation of price signals and often gives advance warning.
Daily Patterns- Bar/OHLC Charts
How to identify trends, control, commitment, uncertainty, inside and outside days. - Gaps
Gaps are often found at breakouts or during a strong trend. - Wide Ranging Days
A powerful signal, especially after big volume changes or a strong trend. - Spikes
A spike is identified by a high sharply above the days on either side, a close near the day's low, and a strong preceding trend. - Volume Spikes/Dips
There are two times where daily volume will highlight unusual trading activity: a spike above the normal range or a dip below normal activity levels.
Reversal Days- Reversal Days
Every trend change is signaled by a reversal day. The secret is to identify their potency. - Closing Price Reversal
A powerful reversal signal, especially with a large spike after a strong advance... - Hook Reversal
An inside day that signals a fairly weak reversal... - Island Reversal
Island reversals are powerful signals, identified by gaps between the signal day and the days on either side... - Key Reversal
Key reversal signals do not occur very often but are definitely worth the wait... - Open-Close Reversal
Open-Close reversals are potent reversal signals when they follow a strong trend. - Pivot Point Reversal
Pivot point reversals are the simplest and most commonly encountered of all reversal signals.
Point & Figure- Point & Figure Charts
Point and Figure charts are used to identify support levels, resistance and chart patterns. Point and Figure ignores the time factor and concentrate solely on movements in price. - Point & Figure Charting Guide
Suitable Point & Figure settings: log or normal scale; box size and reversal amounts; and pricing method. - Point & Figure Setup
Create custom Point and Figure chart s from the Indicator Panel.
Point & Figure Patterns- Basic Point & Figure Patterns
Basic Point and Figure chart patterns: Support and resistance, trendlines, breakouts, bullish and bearish signals. - Bull & Bear Traps
One of the most reliable Point and Figure chart patterns, Bull Traps occur when an upward breakout retreats back below the new support level. - Cup & Handle
Identify the cup and handle pattern on Point and Figure charts. Popularized by William J O'Neill (How To Make Money In Stocks). - False Breaks
Similar to Point and Figure bull and bear traps, false (or marginal) breaks occur at minor support levels (from a previous low) or minor resistance. - Bull & Bear Traps - Primary Index
Upward breakouts in a primary down-trend are notoriously unreliable. - Retracements
Retracements (or corrections), during a Point and Figure trend, tell us about the strength of the trend. - Spikes
An upward Point and Figure spike is where a rally exceeds the previous column of Xs by at least 10 boxes. - Trend Reversals
After a Point and Figure up-trend, marginal new highs (especially where accompanied by equal or lower lows) indicate a loss of momentum. - Triangles
For a valid Point and Figure triangle there must be at least two retracements counter to the prevailing trend.
Indicator Basics- Using Indicators
When using indicators, it pays to understand their strengths and weaknesses. - Favorite Indicators
My favorite indicators. - Indicator Signals
Explains basic indicator and trend concepts: respect, whipsaws, divergence, and failure swings. - Indicator Time Frames
A key principle when using indicators: set the time frame to reflect the cycle being traded... - Fibonacci Numbers
Fibonacci numbers are named after Leonardo Fibonacci, a twelfth century Italian mathematician who discovered the Golden ratio. - Linear Regression
Linear regression fits a straight line to the selected data using a method called the Sum Of Least Squares.
Relative Strength & Overlays- Compare Prices
Compare stock and/or index prices. Overlays can be plotted unadjusted, or to intercept on a selected date. - Price Comparison
Price Comparison plots the performance of a stock against an index or a related stock. - Price Differential
Similar to Price Comaprison, you can compare bond yields or interest rates that share the same price axis. - Price Ratio
A powerful tool for stock selection, Price Ratio is also referred to as Relative Strength and compares the performance of a stock relative to an index or a related stock. - Relative Strength (Compare)
Relative Strength calculates the strength of one stock/index compared to a second stock/index, either with/without a specified intercept date.
Moving Average Types- Moving Average
The Moving Average smooths price data to create a powerful measure of trend direction. Simple, weighted and exponential moving averages are most popular. - Simple Moving Average
Simple moving averages are easy to construct, but prone to distortion: they tend to "bark twice". - Exponential Moving Average
Exponential moving averages are more sophisticated than simple moving averages and do not suffer from the same distortions. - Weighted Moving Average
Weighted moving averages eliminate the distortion common to simple moving averages, but are more difficult to construct than exponential moving averages. - Wilder Moving Average
Wilder moving averages are used mainly in indicators developed by J. Welles Wilder. Essentially the same as an exponential moving average, they use different weightings, for which users need to make allowance. - Hull Moving Average
Alan Hull developed Hull Moving Average in 2005 in his quest to create a moving average that is "responsive to current price activity while maintaining curve smoothness". Hull claims that his moving average "almost eliminates lag altogether and manages to improve smoothing at the same time". - Displaced Moving Average
Displaced Moving Averages are useful for trend-following purposes, reducing the number of whipsaws compared to an equivalent Exponential or Simple Moving Average. - Moving Average Filters
Filters are employed to reduce the number of whipsaws when using moving average systems. - Moving Average High/Low/Open
Calculates moving averages using daily, weekly or monthly Highs/Lows/Opens. - How To Select A Long-Term MA
How to select a long-term moving average to track the primary trend.
Moving Average Systems- Two Moving Averages
Fast and slow moving averages provide a powerful measure of trend strength and direction. - Three Moving Averages
A more sophisticated MA system that uses a third moving average to identify ranging markets. - Multiple Moving Averages
Daryl Guppy introduced multiple moving averages to measure trends and identify likely reversals. The indicator compares multiple short-term and long-term exponential moving averages. - Rainbow 3D Moving Averages
Ivan Ballin's colorful variation of Daryl Guppy's Multiple Moving Averages. - Price Envelope
Sometimes referred to as Percentage Bands, Price Envelopes are plotted at a set percentage above and below a moving average. - Keltner Channels
Linda Bradford Raschke popularized Keltner bands, plotted at an ATR multiple around an exponential MA, to filter trend entries. - Ichimoku Cloud
Ichimoku Cloud is a complete trend trading system, combining leading and lagging averages with traditional candlestick charts.
MACD- MACD Indicator
The problem with oscillators is that they often whipsaw. Trading MACD large swings and divergences provides more reliable signals. - MACD Histogram
The MACD Histogram (Moving Average Convergence Divergence Histogram) provides far earlier and more responsive signals than the original MACD, but is also more volatile. - Weekly MACD Histogram
The MACD Histogram (Moving Average Convergence Divergence Histogram) provides a highly responsive measure of market direction but is more suited to traders than investors.
Moving Average Oscillators- Commodity Channel Index
Donald Lambert's Commodity Channel Index (CCI) highlights overbought and oversold markets and likely turning points. - Detrended Price Oscillator
The Detrended Price Oscillator isolates the short cycle, providing powerful trend signals on divergences. - MA Oscillator
The Moving Average Oscillator simply compares closing price to the moving average. - MACD Indicator
The problem with oscillators is that they often whipsaw. Trading MACD large swings and divergences provides more reliable signals. - MACD Histogram
The MACD Histogram (Moving Average Convergence Divergence Histogram) provides far earlier and more responsive signals than the original MACD, but is also more volatile. - MACD Percentage
MACD Percentage Price Oscillator is a variation of theMACD indicator. The major difference is the percentage scale which enables comparison between stocks.
Trend Indicators- Aroon Oscillator
The Aroon Oscillator was developed by Tushar Chande to identify the start of a new trend and measure trend strength. - Coppock Indicator
Edwin Coppock designed this oscillator with one sole purpose: to identify the commencement of bull markets. - Directional Movement
Welles Wilder's Directional Movement is one of few indicators that not only provides trend signals but indicates whether a trend is suitable to trade. - Donchian Channels
Richard Donchian's Channels are used in a number of trading systems to identify entry and exit points in trends. - Ichimoku Cloud
Ichimoku Cloud is a complete trend trading system, combining leading and lagging averages with traditional candlestick charts. - KST Indicator
Martin Pring's KST Indicator identifies major trend changes when KST crosses its signal line. - Linear Regression Indicator
The Linear Regression Indicator is used for trend identification and trend following in a similar fashion to moving averages, but reacts faster than an MA to trend changes. - Moving Average
The Moving Average smooths price data to create a powerful measure of trend direction. Simple, weighted and exponential moving averages are most popular. - Multiple Moving Averages
Daryl Guppy introduced multiple moving averages to measure trends and identify likely reversals. The indicator compares multiple short-term and long-term exponential moving averages. - Parabolic SAR
Developed by J. Welles Wilder, the Parabolic SAR indicator provides excellent short/medium-term entry and exit points in trending markets. - Rainbow 3D Moving Averages
Ivan Ballin's colorful variation of Daryl Guppy's Multiple Moving Averages. - Bollinger %b
Bollinger %b is used to signal subtle entry and exit opportunities that may be overlooked in a trend.
Momentum Oscillators- ADX
ADX is part of the Directional Movement System developed by J. Welles Wilder. It is used to warn of trend changes and to identify whether a stock is trending or ranging. - Elder Ray Index
Developed by Dr Alexander Elder, the Elder-Ray indicator measures buying and selling pressure in the market and is often used as part of the Triple Screen trading system. - Ichimoku Cloud
Ichimoku Cloud is a complete trend trading system, combining leading and lagging averages with traditional candlestick charts. - Mass Index
Donald Dorsey's Mass Index predicts trend reversals by comparing trading range over a 9 day period. - Momentum
Momentum measures trend strength and identifies likely reversal points: on divergences or when Momentum crosses the overbought/oversold line. - Negative Volume
Norman Fosback uses Negative Volume Index (NVI) with Positive Volume Index (PVI) to identify bull markets. - Positive Volume
Introduced by Norman Fosback, Positive Volume Index identifies bull and bear markets by measuring activity on days when volume is higher. - Rate Of Change (Price)
A refinement of Momentum, Rate of Change is designed to fluctuate as a percentage around the zero line. - Relative Strength Index (RSI)
Developed by Welles Wilder, RSI (Relative Strength Index) is a popular momentum oscillator that compares upward and downward movements in closing price. - Slow Stochastic
The Slow Stochastic Oscillator provides more reliable signals than the original indicator, applying further smoothing to reduce volatility and improve accuracy. - Smoothed Rate of Change (SROC)
Smoothed Rate of Change (SROC), introduced by Fred G Schutzman in 1991, gives slower but more accurate signals than other momentum oscillators. - Stochastic Oscillator
The Stochastic Oscillator tracks market momentum and provides excellent entry and exit signals from crossover of %K and %D lines or overbought/oversold levels. - TRIX Indicator
Designed for trading trends, TRIX uses a triple-smoothed moving average to eliminate cycles shorter than the indicator period. - Twiggs® Momentum Oscillator
Twiggs Momentum Oscillator is a smoothed version of the Rate Of Change oscillator. Its primary purpose is to identify fast trending stocks. - Vertical Horizontal Filter (VHF)
Adam White's Vertical Horizontal Filter (VHF) identifies trending and ranging markets. - Williams %R
Williams %R is similar to Stochastic %K. Entry signals are taken on divergences, failure swings or crossover of the overbought/oversold level. - Williams Accumulate Distribute
Larry Williams highlights accumulation and distribution by comparing daily trading ranges. Signals are taken on divergences. - Twiggs® Smoothed Momentum
Twiggs Smoothed Momentum is a smoothed version of the proprietary Twiggs Momentum oscillator. Its purpose is to provide a slower, less erratic signal for following long-term trends. - Chande Momentum Oscillator
Chande Momentum Oscillator uses Overbought and Oversold levels, as well as Divergences, to identify reversals. - Ultimate Oscillator
Larry Williams' Ultimate Oscillator uses three time frames in order to minimize false signals. - Stochastic RSI
Stochastic RSI was designed by Tushar Chande and Stanley Kroll to generate more Overbought and Oversold signals than Welles Wilder's original Relative Strength oscillator. - Bollinger Bands®
Bollinger Band filters are calculated using exponential moving averages. Values are compared to Bollinger Bands at 1.0 standard deviation above and below the selected moving average. - Bollinger Bands®
Bollinger Bands are powerful signals. Here are two great strategies, for Bollinger Band Squeezes and Bollinger Band Trends. - MACD Indicator
The problem with oscillators is that they often whipsaw. Trading MACD large swings and divergences provides more reliable signals. - MACD Percentage
MACD Percentage Price Oscillator is a variation of theMACD indicator. The major difference is the percentage scale which enables comparison between stocks.
Money Flow- Accumulation Distribution
Accumulation Distribution tracks the relationship between price and volume and acts as a leading indicator of price movements. The strongest signals are divergences. - Chaikin Money Flow
Developed by Marc Chaikin, the Chaikin Money Flow indicator often warns of breakouts and provides useful trend confirmation. - Chaikin Oscillator
Marc Chaikin's oscillator monitors the flow of money in and out of the market. - Ease of Movement
Richard W Arms' powerful Ease of Movement indicator highlights the relationship between volume and price changes; useful for assessing the strength of a trend. - Equivolume Charts
The greatest advance in the last decade, equivolume exposes price and volume interaction. - Force Index
Developed by Dr Alexander Elder, the Force index combines price movements and volume to measure the strength of bulls and bears in the market. - Money Flow Index
Money Flow Index measures trend strength and warns of likely reversal points. - On Balance Volume
Developed by Joseph Granville, OBV provides a powerful measure of accumulation and distribution by comparing volume to price movements. - Price Volume Trend
The Price Volume Trend indicator measures the strength of trends and warns of reversals. - Twiggs® Money Flow
Colin Twiggs' Money Flow is a derivation of the Chaikin Money Flow indicator. Position above/below the zero line gives advance indication of breakouts, while divergences warn of reversals. - Williams Accumulation Distribution
Williams Accumulation Distribution is traded on divergences. When price makes a new high and the indicator fails to exceed its previous high, distribution is taking place.
Volume- Volume
Volume highlights unusual trading activity and provide powerful confirmation of price signals. - Rate of Change (Volume)
The Rate of Change formula can also be applied to volume, where it highlights changes in volume activity. - Volume Oscillator
Volume Oscillator is an easy to use indicator that highlights changes in volume activity. - Volume
Volume highlights unusual trading activity and provide powerful confirmation of price signals. - Rate of Change (Volume)
The Rate of Change formula can also be applied to volume, where it highlights changes in volume activity. - Volume Oscillator
Volume Oscillator is an easy to use indicator that highlights changes in volume activity.
Trailing Stops- ATR Bands
Average True Range (ATR) Bands are used to signal exits in a similar fashion to ATR Trailing stops, but without the stop-and-reverse (SAR) of trailing stops. - ATR Trailing Stops
ATR Trailing Stops are primarily used to protect capital and lock in profits on individual trades but they can also be used, in conjunction with a trend filter, to signal entries. - Chandelier Exits
Chuck LeBeau's Chandelier Exits are primarily used as a stop loss mechanism to time exits from a trending market. - Ichimoku Cloud
Ichimoku Cloud is a complete trend trading system, combining leading and lagging averages with traditional candlestick charts. - Parabolic SAR
Developed by J. Welles Wilder, the Parabolic SAR indicator provides excellent short/medium-term entry and exit points in trending markets. - Percentage Trailing Stops
Percentage Trailing Stops are a simple but effective method for locking in profits - Safezone Indicator
Alexander Elder's Safezone Stops use Directional Movement to signal exits from a trend. - Volatility Stops
Welles Wilder's original Volatility Stops uses Average True Range in a trend-following system.
Volatility Indicators- Average True Range
Average True Range are used to measure commitment. Expanding ranges signal increased eagerness and contracting ranges, a loss of enthusiasm. - Bollinger Bands®
Bollinger Bands are powerful signals. Here are two great strategies, for Bollinger Band Squeezes and Bollinger Band Trends. - Chaikin Volatility
Developed by Marc Chaikin. Look for sharp increases in volatility prior to market tops and bottoms, followed by low volatility as the market loses interest. - True Range
Welles Wilder's True Range adjusts the normal High - Low daily range when there is an opening gap. - Volatility
Volatility is a statistical measure of risk called the coefficient of variation. - Volatility Ratio
Jack Schwager, in his book Schwager on Futures, uses the Volatility Ratio to identify wide-ranging days. - Twiggs® Volatility
Twiggs Volatility is a proprietary volatility indicator used to flag elevated market risk. - Choppiness Index
The Choppiness Index is a volatility indicator developed by Australian commodity trader Bill Dreiss to indicate whether a market is trending or ranging. - Bollinger Band® Width
Bollinger's Bandwidth Indicator is used to warn of changes in volatility. A squeeze, where the bands converge into a narrow neck, often precedes a sharp price rise or fall.
Trading Styles- Breakout Model
Stan Weinstein's powerful system for trading long-term trends: the model combines a number of proven techniques to identify breakouts. - Trading Trends
If you are going to trade trends, no matter what the time frame, you are likely to encounter three major problems: false starts, early shakeouts and ... - Blind Freddy Trends
A swing trading technique using moving averages and short-term chart patterns. - Momentum Trading
In its simplest terms, momentum refers to buying stocks which exhibit past over-performance. Eugene Fama, the father of the efficient market hypothesis, refers to momentum as "the premier unexplained anomaly". - Momentum Trading II
Dr Bruce Vanstone shows how to create Momentum simulations using the ASX 200 as an example - Momentum Trading III
Dr Bruce Vanstone summarizes the key characteristics of investing using momentum based approaches and discusses some approaches to managing risk in momentum models and the benefits investors can expect when investing with rules-based funds.
Money Management- The 2% Rule
Don't risk a large percentage of your capital on a single trade. Follow the 2% Rule. - Is 2% Right for Me?
Not all traders face the same success rate. Short-term traders usually achieve higher success rates, while long-term traders achieve for higher risk-reward ratios. - Does 2% Protect From Drawdowns?
The 2 Percent Rule assumes that stocks move independently of each other but when stocks fall, they tend to fall together.
Stop Loss Orders- Stop Loss Orders
Stop loss orders are limits set by traders at which they will automatically enter or exit trades. - Setting Stop Loss Orders
Base your stops on technical levels otherwise they will cost you money. Arbitrary levels are liable to be breached by the normal cycle. - Adjusting Stop Loss Orders
Lock in your profits and ride the trend, avoiding shake-outs by minor corrections. - Maximum Acceptable Loss
An objective formula used to assess the risk associated with each trade. - Trailing Stop Loss Orders
A powerful formula for limiting losses, protecting profits and avoiding false signals. - Trailing Percentage Stops
Trailing Percentage Stops work with a ratchet effect, trailing price movements by a set percentage. - Stop Loss Traps
For a market specialist, making money out of stop loss orders is as difficult as hunting dairy cows with a high-powered rifle and telescopic sights.....
Trading Traps- Trading Traps: The Shakeout
Tricks of the Trade: A market professional may want to accumulate a large position in a stock that is trending strongly... - The Fakeout
Tricks of the Trade: If a market professional sits with a large sell order and the stock is consolidating.... - Pump and Dump
Tricks of the Trade: Also referred to as ramping, this is an old trick often perpetrated by sly old hands who prey on newcomers. - Stop Loss Traps
For a market specialist, making money out of stop loss orders is as difficult as hunting dairy cows with a high-powered rifle and telescopic sights..... - Bull & Bear Traps
One of the most reliable Point and Figure chart patterns, Bull Traps occur when an upward breakout retreats back below the new support level. - CFD Opportunities & Pitfalls
Opportunities and pitfalls of trading contracts for difference.
Trading Psychology- Trading Psychology
Your biggest enemy, when trading, is within yourself. Success will only come when you learn to control your emotions. - Know Your Trading Style
What personality style are you? And how does this suit becoming a trader? - Searching for the Holy Grail
Most traders are on the lookout for ways to improve their trading, but some dedicate their lives to searching for the holy grail. - Trading With Emotions
Before you can manage your emotions it helps to understand what causes them. Our brains and endocrine system are a veritable narcotics factory... - Investors Logic
Investors often use distorted logic when buying stocks: what goes up must come down? Stocks that rise steeply in price and make new highs are viewed as expensive ... - Gamblers Logic
If I toss a coin and heads turns up five times in a row. Which side is more likely to turn up the next time? Heads or tails?
Stock Screener- Stock Screener
Identify trending, ranging or potential breakout stocks with the Stock Screener: Moving averages, MACD, Bollinger bands, Twiggs Money Flow, Directional Movement, RSI, Stochastic, Twiggs Momentum...... - Save Screen
How to save a stock screen. - Saved Screens
How to view your saved stock screens. - Schedule Screen
How to schedule a stock screen. - Share Screens
Share your saved stock screens with other users. - Find Shared Screen
How to find a shared stock screen. - Stock Screen Return
Results of a Stock Screen Search are presented in spreadsheet format.
Screening For Patterns- Scan for Breakouts
A simplified scan that reliably returns breakouts from a long-term base. - Breakouts from a Base
To find stocks that are breaking out from a long-term base, we need to screen for stocks that are trending up but ... - Consolidations
To find stocks that are consolidating within a narrow range, we apply the following filter: Directional Movement ADX Value Filter; Minimum 2; Maximum 10 ... - Exhaustion Gaps
To find exhaustion gaps, we need to apply two filters: (1) Gaps; and (2) A filter to identify extended trends.
Price Filters- Price Filter
The price filter can be used to filter out stocks above or below selected limits. The Minimum and Maximum fields are measured in cents. - % Price Move
Percentage Price Move can be used to filter stocks that have increased/decreased by more than a specified percentage. - % Of Price High
Percentage Of Price High compares the current closing price to the previous high.
Stock Screen Filters- Bollinger Bands®
Bollinger Band filters are calculated using exponential moving averages. Values are compared to Bollinger Bands at 1.0 standard deviation above and below the selected moving average. - Directional Movement
When DI crosses above DI-, this signals an up-trend. When DI- crosses to above DI , this signals a down-trend. - Gaps
Gaps occur when the lowest price traded is above the high of the previous day. - Moving Average
Moving Average Crossovers are calculated using exponential moving averages. See Two Moving Averages for further details. - MACD Stock Screen
MACD Bull Signals when MACD crosses to above the signal line.... - Relative Strength Index (RSI)
Relative Strength Index is calculated using the Wilder moving average formula. - Slow Stochastic
Slow Stochastic crossovers are calculated using %K from the Slow Stochastic formula. This is equal to %D from the fast Stochastic. - Twiggs® Momentum
Twiggs Momentum is particularly useful in identifying well-established trends. - Twiggs® Money Flow
Twiggs Money Flow has proved invaluable in identifying buying pressure for a stock. - Volatility
Volatility is used to filter out stocks above or below specified levels of risk: The Minimum and Maximum fields are measured as percentages. - Volatility Ratio
The Volatility Ratio identifies days with exceptionally wide trading ranges (the distance between High and Low) and is used to signal likely reversal days. Details ... - Volume Filter
The volume filter is used to filter out stocks which show insufficient activity (ie. stocks with low liquidity): The Minimum field represents volume (in number of ... - Volume MA
Volume Moving Average crossovers are calculated using exponential moving averages. See Volume Oscillator for further details. - Volume Spikes
Volume spikes are days on which there is unusually high volume activity, measured by comparing daily volume to a 50-day exponential moving average (of volume).
Banks & Interest- Interest Rates and the Economy
Interest rates have a big influence on stock markets because of three factors. - Central Banks
Central banks and interest rates: There is an intrinsic interest rate in any market that matches demand for credit with savings. - How Banks Create Money
How Banks Create Money out of Thin Air: Most money in the economy is held in the form of deposits with banks rather than in the form ... - Future Banking Panics
To protect ourselves from future banking panics we need to understand the underlying causes. Panics are normally precipitated by an insolvency crisis, which then escalates into a liquidity crisis as depositors rush to withdraw their funds. - The Fed's Failed Monetary Policy
Ben Bernanke and I have little in common, but we share the view that any form of recovery is dependent on confidence. Where we differ is in how to restore confidence. - Big Picture 2011
An excellent CNBC interview with Jeremy Grantham where he explains the game the Fed is playing: over-pricing bonds so that investors are forced back into stocks, even when dangerously over-valued. - Wright's Model
Negative yield curves have proved to be reliable predictors of economic recession over the past 50 years. Research by Jonathan Wright, a research economist at the Federal Reserve, questioned whether this relationship still held. But his questions were answered by the GFC in 2007/2008.
Economic Threats- Balance Sheet Recession
Richard Koo, Chief Economist %u2013 Nomura Research, explains why quantitative easing (QE) will not work in the GFC. Japan experienced this over the last two decades; the current crisis is merely a re-run. - Debt to GDP
The real danger posed by debt is once debt becomes a significant fraction of GDP, and its growth rate substantially exceeds that of GDP, the economy will suffer a recession even if the debt to GDP ratio merely stabilizes. By Associate Professor Steve Keen, University of Western Sydney. - Cause for Concern
Serious imbalances in the US economy: Paul Volcker, former chairman of the Federal Reserve (1979 - 1987), in his February 2005 address to the Stanford Institute for ... - The Impact of Inflation
Inflation is the most commonly used economic term in the popular media. A Nexis search in 1996 found 872,000 news stories over the past twenty years that used the word inflation. - What's Behind the Interest Rate Conundrum
INTEREST RATES, RECESSION OR DEPRESSION? Reproduced with kind permission from Aubie Baltin. Before we can even begin to discuss interest rates intelligently, we must first define what it is that we are actually talking about ... - How Socialism Works
A simple illustration of how socialism reduces incentives to work.
Gold- Gold-Oil Ratio
The Link Between Gold and Oil. Gold and crude oil prices tend to rise and fall in sympathy with one another. There are two reasons for this ... - Gold and the Dollar
Gold is generally quoted in US dollars per ounce of gold; so any fluctuations in the strength of the dollar are likely to be reflected in the dollar priceof gold.
Economic Indicators- The Yield Curve
Negative yield curves have proved reliable predictors of economic recession. However, recent experience in the United Kingdom and Australia raises questions... - Debt Growth
Debt growth is important because it reveals the level of inflationary pressure in the economy; and inflationary pressure indicates future interest rate policy.
Stock Market Investing- Active Investing
Active investors combine fundamental and technical analysis, moving in and out of the market in accordance with the phases of the business cycle. - Fundamental Analysis
What is Fundamental Analysis? Fundamental analysis attempts to determine the present value of a stock based on its expected future cash flows. - Value Investing
The critical questions in value investing are: At what rate will earnings (and dividends) grow over the investment period? What is the (investments) risk? Can management be trusted... - PEG Ratio
The PEG ratio is a powerful formula which compares earnings growth and the Price Earnings Ratio: Divide the current Price Earnings Ratio by the expected long-term growth rate (in earnings per share) ... - Focus on Dividends
How to calculate the value of future cash flows to you and assess your margin of safety.
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