TradingDay.com - Day Trading - After Hours Trading Home   After Hours Trading
Enter Ticker
Symbol
Symbol
Lookup
 

Topics

Swing Trading

Bilateral Trade Setups

Exploring Market Physics

Pattern Cycles:
Declines
Reversals
Tops
Highs
Trends
Breakouts
Bottoms

Scanning Tips and Techniques

The Profitable Trader

Trading Execution Zone

Trading with Stage Analysis

20 Golden Rules for Traders

20 Rules for Effective Trade Execution

20 Rules to Stop Losing Money

Bottoms & Tops

Adam & Eve & Adam

Adam & Eve Tops

Hell's Triangle

Lowdown on Bottoms

The Big W

Corrections

Anticipating a Selloff

5 Wave Declines

Selling Declines

Surviving Bear Markets

Common Pitfalls of Selling Short

Indicators

Bollinger Bands Tactics

Five Fibonacci Tricks

Fun with Fibonacci

Moving Average Crossovers

Overbought/Oversold Overload

Time Trading

Voodoo Trading

Market Dynamics

Clear Air

Cutting Losses

Effective Market Timing

Exit Strategies

Greed and Fear

Measuring Reward:Risk

Pattern Failure

Playing Failed Failures

Breakouts

Breakout Trading

Catch The Dow and Elliott Waves

False Breakouts and Whipsaws

Morning Gap Strategies

The Gap Primer

Trend, Direction and Timing

Trend Waves

Triangle Trading

Day Trading

3-D Trade Execution

Bid-Ask

Pullback Day Trading

Tale of the Tape

Tape Reading

New Highs

Mastering The Momentum Trade

Momentum Cycles

Uncharted Territory

TradingDay Domain
for Sale




 
TradingDay.com > Technical Analysis Tutorial

T e c h n i c a l   A n a l y s i s   T u t o r i a l
by Alan Farley

20 Golden Rules for Traders

Want to trade successfully? Just choose the good positions and avoid the bad ones. Poor trade selection takes a heavy toll as it bleeds your confidence and wallet. You face many crossroads during each market day. Without a system of discipline for your decision-making, impulse and emotion will undermine skills as you chase the wrong stocks at the worst times.

Many short-term players view trading as a form of gambling. Without planning or discipline, they throw money at the market. The occasional big score reinforces this easy money attitude but sets them up for ultimate failure. Without defensive rules, insiders easily feed off these losers and send them off to other hobbies.

Technical Analysis teaches traders to execute positions based on numbers, time and volume. This discipline forces traders to distance themselves from reckless gambling behavior. Through detached execution and solid risk management, short-term trading finally "works".

Markets echo similar patterns over and over again. The science of trend allows you to build systematic rules to play these repeating formations and avoid the chase:

1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming.

2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat.

3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool.

4. Short rallies not selloffs. When markets drop, shorts finally turn a profit and get ready to cover.

5. Don't buy up into a major moving average or sell down into one. See #3.

6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble.

7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can.

8. Trends test the point of last support/resistance. Enter here even if it hurts.

9. Trade with the TICK not against it. Don't be a hero. Go with the money flow.

10. If you have to look, it isn't there. Forget your college degree and trust your instincts.

11. Sell the second high, buy the second low. After sharp pullsbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try.

12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel.

13. Avoid the open. They see YOU coming sucker

14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom.

15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it.

16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.

17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action.

18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.

19. Bottoms take longer to form than tops. Greed acts more quickly than fear and causes stocks to drop from their own weight.

20. Beat the crowd in and out the door. You have to take their money before they take yours, period.

Momentum Cycles
Reversals at the first test of a new high or low are common. Investors jump out at double tops after missing the first exit while value players buy double bottoms. Skilled traders also use this known reversal tendency to enter counter-trend positions.
 
Momentum Cycles
Markets invariably return to test prior support or resistance unless a natural barrier (such as a continuation gap) stands in the way. Besides price and pattern, common moving averages also provide classic swing reversal points.
 


Content provided by The Hard Right Edge




Enter Ticker
Symbol
Symbol
Lookup

TradingDay.com

Home   After Hours Trading   Rügen Ferienwohnungen  

Copyright © 2005 TradingDay.com All rights reserved.