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The Trading Plan By Cory Mitchell

When creating a trading plan, you have to take into account all the possible contingencies. Here are the steps you should go through when designing your game plan. A trading plan is your carefully thoughtout and tested way of approaching and beating the market over the long term. It is the course of action for entering, exiting, and managing your trades so that all contingencies are considered before a trade ever takes place. With such a plan, emotions are left out of the trading equation, and only tangible criteria are used to make trades. Emotions can cause many problems in trading, including entering trades out of boredom, entering trades too early or not at all because of anxiety, staying in trades after profits should have been taken due to an emotional attachment to a tradable, or exiting too early and for a minuscule profit when it should have been left open longer.

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Dow Theory Direction By Tim W. Wood

Why do opinions on Dow theory so often vary, and why do Dow theory “signals” so often fail? Typically, there is one common denominator that becomes immediately apparent in most articles about Dow theory: too many of the authors of those articles have not studied the original writings of Charles H. Dow, William Peter Hamilton, or Robert Rhea. These original writings and particularly those of Robert Rhea are essential if we are to understand what has come to be known as Dow theory. The only other person I know who has studied the original writings by Dow, Hamilton, and Rhea is Richard Russell. As a result, Russell is the only other orthodox Dow theorist I know of, and he has fought misquotes, misunderstandings, and erroneously written articles about Dow theory his entire career.

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Profits, Pitfalls, Patience By Donald W. Pendergast

Plan your trade, trade your plan. Here’s what can happen when a trader plunges into a position without following a trading blueprint. If God really watches over children and fools, then I must have been among that special group of foolish, childlike traders who were “miraculously” bailed out of trades that tragically went wrong. Here’s what happened when a fundamentally sound, long-term position trade gathered steam, peaked, and then crashed before finally recovering, eventually regaining most of the profits, despite taking twice as long as planned to realize them.

The Trade Setup of a lifetime

In autumn 2001, I received an advertisement that extolled the value of silver, a commodity that was languishing in the cellar of a 20-year-old bear market, but which was now also giving evidence that a major bottom had formed (Figure 1). At $4.50 an ounce, it was hard to reconcile the advertisement’s ultrabullish prognostications with the dirtcheap asking price for the beaten-down commodity.

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Winning Percentage Of A Trading System By Oscar G. Cagigas

The winning percentage is a critical statistic that can influence the speed at which your capital grows. Find out how you can apply it to your trading system. When developing a trading system, the tendency is to select a particular approach that suits your personality. With this in mind, you can develop a system with a high percentage of winning trades or one with a lower winning percentage, depending on what works best for you. A typical example is a trend-following approach. These systems usually have a winning percentage of 40–50%. Given that it is a system with a good positive expectancy, it doesn’t matter whether this system has a high winning percentage.

Developing a system based on expectancy and opportunity is popular. However, the reality is that the winning percentage is a critical statistic that influences the speed at which your capital grows. In this article, I will demonstrate this with a couple of examples.

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Fibonacci Tools By Alexander Sabodin

Here’s a look at the numbers behind the Fibonacci sequence and how it can be applied to your charts. The sequence of the Fibonacci numbers is considered to have been discovered by Leonardo of Pisa, better known as “Fibonacci,” a 13th-century Italian mathematician.(“Fibonacci” is an abbreviation of filius Bonacci; filius is Latin for “son of.”) In the early 1200s, after traveling through parts of the Middle East and studying with Arab mathematicians, Fibonacci published his book Liber Abaci, or “Book of Calculation,” which introduced to the West something that is one of the greatest discoveries of all time: the decimal numeration system, including the position of zero as the first number in the number sequence. This system, known as the Hindu-Arabic numeral system, includes zero, 1, 2, 3, 4, 5, 6, 7, 8, and 9 and is commonly used today instead of Roman numerals.

Fibonacci became one ofthe best-known mathematicians of his time. He wrote three essential, ground-breaking books on mathematics: Liber Abaci, published in 1202 and updated in 1228; Practica Geometriae (“Practical Geometry,” a compendium on geometry and trigonometry), published in 1220; and Liber Quadratorum (“The Book of Squares”).

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Using The RSI By Danish Kapur

There are several misconceptions about the relative strength index. Let’s get rid of them. What I really like about the relative strength index (RSI) is its divergence characteristic, which warns a trader about an upcoming trend change. I would, first of all, like to put some light on the RSI before explaining how to use it.

The RSI is an indicator oscillating between zero and 100. Levels close to zero indicate that the stock is oversold and due for a bounce back, while levels close to 100 indicate that the stock is overbought and due for a reaction. However, it is possible for a stock to remain oversold or overbought for a relatively long period.

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Support & Resistance Axioms By David G. Ondercin

Here are seven axioms for the practical application of support and resistance levels to your trading. Support and resistance are of central importance to all traders and a necessary starting point for new traders. There are self-evident truths concerning support and resistance of financial markets, so let us examine some of these axioms for their practical application to trading.

AXIOM 1: The concept of support and resistance is important because traders believe it is important.

The belief is self-fulfilling. Traders are certain, for example, that the violation of an established high means that the security will likely go higher. Likewise, when a significant low has been penetrated, traders believe that the market in question will go lower. They hold these beliefs because it happens over and over again. Traders act on their beliefs about how the market moves. Therefore, when they see that the market is bouncing off support, others with the same belief will join in and buy that particular market. That sends the market in an upward direction.

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How I Stopped Holding And Learned To Love The Death Cross By Greg Gazurian

Check out this exit strategy, which may be what you need when a specific stock or market is weakening or bearish, compared to the (classic but not necessarily desirable) buy & hold strategy. Traditionally, buy & hold investors have sought to buy low and sell high to maximize returns. Although this sounds attractive, there are several problems in using only this approach in the stock market. One of the most common is the round trip, where the invetor buys the stock at a relatively low price, holds the stock as it goes up, continues to hold as the stock loses the gains, until it returns to the price at which it was bought.

Unfortunately, many investors have found themselves holding after the gains disappear and losses continue, hoping the stock will make a comeback. Some buy even more, regardless of the losses they are still holding, in a feeble attempt to offset the losses by buying when it’s inexpensive. This type of averaging down happens when emotions overtake logic, and it is usually for the worst.

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Entering Trades At Pullbacks By Candy Schaap

When opportunities knock, tell them to come in! Here’s how pullbacks in trends offer opportunity. A nybody who has ever bought an asset, whether it’s bonds, stocks, mutual funds, or real estate, knows that prices go up and down. Prices fluctuate between support and resistance most of the time. This is information that technical analysts use for trend trading and countertrend trades. A countertrend trade is also known as a scalp trade. As price moves back to support in an uptrend, or up to resistance in a downtrend, there is an opportunity to make money in the trend.

Let’s look at trend dynamics to understand how to make entries into a trend by entering at pullbacks.

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Elliott Wave Theory Simplified By Koos Van Der Merwe

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.

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