Elliott wave counts can get complicated, but it doesn’t have to. Here’s a simplified look at how to study Elliott wave theory. In the late 1920s, Ralph Nelson Elliott came to the conclusion that the movement of the stock market could be predicted by identifying a repetitive pattern of waves. He theorized that movement in the market was the result of investors’ reaction to outside influences.
Over my years as a trader and investor in the stock market, I came to realize that the outside influences that Ralph Elliott believed moved the market was nothing other than emotion. In my 50 years as a pharmacist, I found that emotion played a tremendous part in the physical and mental health of a patient. I also found that health and emotion occurred in cycles more obvious in women than in men. Eventually, I determined that the gravitational attraction by the moon plays a real part in how a trader trades. After all, the gravitational pull creates the tides in the ocean. More than 80% of the human body consists of water. So even by a small degree, that same lunar gravitation must influence the movement of water, chemicals, and proteins within the human body, and in this way influence the emotions of a person, especially of a trader who lives high on the knife edge of emotion.
Continue reading Elliott Wave Theory Simplified By Koos Van Der Merwe
If we had to choose just one indicator to tradethe financial markets, it would be J. Welles Wilder’s RSI. It does everything you expect from an indicator. It’s an overbought/oversold alert system, a convergence/divergence detector, and a momentum indicator, but it can do even more. The old saying amid radical technicians, that “the price chart has everything you need,” is not just a slogan. The information that we can extract from price vs. time data is amazing and I am not sure what this reflects, human intelligence or the harmony existing in the universe. By reading a price chart we must develop mathematical functions of price. These are tools to help us interpret the raw price data or extract hidden information such as momentum or market pace.
Continue reading The RSI Miracle By Hadi Seyedinajad
Here’s a short-term trading strategy to trade exchange traded funds. A famous trader once remarked that he could publish the secrets to his winning trading strategy in the newspapers and no one would follow them. The key, this famous trader explained, was consistency and discipline. In our opinion, when it comes to trading and trading strategies, one of the things that makes consistency easier and discipline a bit less daunting is simplicity. With few exceptions, all the trading strategies we have developed over the years have had simplicity as their hallmarks.
What we’ve developed in this latest trading strategy is short-term trading at its simplest. Instead of stocks, we focus on the smaller universe of market index exchange-traded funds (ETFs). We also created the system as long-only — no need to worry about borrowing shares of ETFs. And last but not least, we limited the strategy to three simple rules.
Continue reading Three Rules, One Easy Way To Trade ETFs By Larry Connors and David Penn
Before I get started, I want to bring to your attention that in this series of articles, I will be discussing the cash and equity markets characterized by a relatively stable free float (that is, the number of existing shares in a market available for transactions) and semi zero-sum effects (semi, because of trading costs). I won’t consider option and futures markets here, since the number of contracts or open interest, as it is often called, is far from steady, and time plays a bigger part.
Here in part 1 of this series, I’ll focus on price gravitation. It’s one of the most important drivers of market dynamics, and this force accounts for asymmetric volatility, market cycles, and lots more. Another major force in equity markets is a capacitive force on emotions, which links stock price movement to emotions.
Continue reading The Laws Of Momentum By Dirk Vandycke
When something is trading at or close to its all-time highs, you need to know whether to sell it or continue holding it. Viewing the markets in terms of supply & demand areas is one way to do it. Volume analysis is a form of technical analysis that attempts to look at price action and how it relates to volume. It is similar to Market Profile in that it identifies the price level at which supply & demand are in equilibrium and where it is in imbalance. In this article, I will use the concept of volume analysis to identify relevant supply & demand areas on a chart and use them as my entry or exit points.
As you can see in Figure 1, there are three different types of volume area. These are based on volume traded.
Continue reading Volume Analysis With the SPY By Domenico D’Errico
Here’s a momentum volume oscillator that’s similar to the relative strength index (RSI), but there’s a difference. Let’s take a look at how this indicator works. The slow volume strength index (SVSI) is a momentum volume oscillator that measures the change in buying and selling pressure relative to a price exponential moving average (EMA). I use J. Welles Wilder’s relative strength index (RSI) formula to calculate the SVSI. Similar to the RSI, the SVSI oscillates between zero and 100. SVSI is considered overbought when above 80 and oversold when below 20. The SVSI can also generate signals by looking for divergences and centerline crossovers. SVSI can be used to confirm the slow relative strength index (SRSI) on the same graph. I discussed the SRSI in my article “The Slow Relative Strength Index”.
Continue reading The Slow Volume Strength Index (SVSI) By Vitali Apirine
Do you want your trading results to improve? Incorporating positive expectancy into your trading strategy may just be the ticket. Capitalizing on effective supply & demand zones is one way traders can play the markets victoriously. Incorporating positive expectancy into a trading strategy that capitalizes on supply & demand zones adds even more value. In this article I’ll explain a simple and effective way of doing this.
The Speculation Method
When price breaches a demand zone to the downside, that demand zone becomes a supply zone. The new supply zone will be an area of resistance to any future rallies since downward movement is now favored. When price breaches a supply zone to the upside, that supply zone becomes a demand zone. The new demand zone would try to resist any ensuing pullback since it favors upward movement.
Continue reading A Simple Positive Expectancy Strategy By Azeez Mustapha
The relative strength index (RSI) is well known among technical analysts. As with all indicators, it tends to work better on some stocks or at certain times. Can it be modified to give better results? We’ll find out.
The relative strength index (RSI) is a popular technical indicator designed to measure the rate of change in price movements. All RSI values fall between zero and 100. One of the common interpretations of RSI is that the stock is oversold when the RSI falls below 30 and overbought when the RSI rises above 70. The initial impression of its application is that you buy when the stock is oversold and sell when the stock is overbought, or go short when the stock is overbought and cover when it is oversold.
Continue reading The Rsi & Price Trends By Kevin Luo
An evidence-based model argues that the price movement of a chart is fully explained by cycles, support & resistance, and news-driven price impulses. We can use a cognitive psychology–based hypothesis to explain why and how cycles arise.
Traders would like to have a credible explanation of why the market moves the way it does. You have unsatisfying descriptions such as fear & greed or the battle of bulls & bears that give you no hint of what to do or how to trade. Explanations like profit-taking simply tell us after the fact that prices went down because people sold. I believe that these ways of thinking about the market hinder rather than help us. They explain everything but help you understand or predict nothing in particular. What is needed is an evidence-based model that explains market phenomena.
Continue reading Understanding Causes Of Market Movements By Melvin E. Dickover
Do you spend as much time deciding to sell as deciding to buy? Here are 10 tips to make deciding when to sell easier. The stock of Ferro Corporation (FOE) has flatlined like a dead animal since November 2013. It is now 2015, and I have more than doubled my money. Should I sell?
Every trader or investor must answer that type of question for their own investments. In this article, I’ll discuss 10 selling tips to help you find your answer.
Continue reading 10 Selling Tips By Thomas Bulkowski