Archives for August 2019

Trading tactics can make the difference between success and failure in trading stocks, commodities and Forex. Whether you are trading directly or trading options or futures, good trading tactics can increase your profit and bad trading tactics can lead to substantial losses. Simple and effective trading tactics include always setting your trading stops when you are trading online. Likewise for short term trading and short term investing using trading limits is wise. Always work to understand the basic fundamentals of each stock or commodity in which you invest or trade. Much of fundamental analysis gets incorporated into stock price and commodity price as soon as it is known so we might think fundamentals are not important. However, knowing the fundamentals of a stock gives us a clear idea of the limits of stock price for it is, in the end, the fundamentals that govern stock prices. Always, always, always follow price patterns with technical analysis tools such as Candlestick pattern formations.

Because Candlestick analysis signals are clear and easy to read they tend to reduce the possibility of misunderstanding. This is, unfortunately, too often the case with how technical analysis results are displayed. The results and predictions with other technical analysis tools may well be the same as those of Candlestick analysis. However, Candlestick analysis distills all of the information into easy to read Candlestick signals allowing traders to proceed to the business of stock trading or commodity trading while others are still puzzling over just what their online trading software is trying to tell them.

General trading tactics include buying on the rumor and selling on the news. A more accurate description of how this works is that the trader sees an emerging pattern in his Candlestick stock charts. He may have been alerted to this stock by reading the stock market news. But, it is by careful examination of stock prices and their patterns that the trader using Candlesticks sets up his trade. He will buy stock, sell stock, sell short, or buy or execute options contracts when the time is right according to Candlestick chart analysis. He will then check the stock market news to confirm that a piece of news has hit the streets causing everyone else to enter the trade, often too late for good profits.

When you are in a losing position, don’t keeping adding money to the trade. This is better put in a very old saying, “Don’t throw good money after bad.” This is a matter of discipline. Trading is not gambling. We use solid tools such as Candlestick patterns in order to guide our investing and trading decisions. Letting the psychology of trading take over in a moment of difficulty is letting the twin demons of greed and fear run the show. They virtually never make you a profit and can often leave you bankrupt! The best of trading tactics is to follow your Candlestick signals, trust them, and act on them.

In regard to acting on Candlestick chart analysis there are times when not to trade. The beauty of Candlestick signals is in their clarity. Trying to force trades is one of the bad trading tactics that deplete your margin account. Sometimes the best of trading tactics is not to trade at all. Satchel Page, the famous 20th century baseball pitcher once said that if he just held on to the ball the batter could not hit it. Likewise, not forcing bad trades keeps the market demons away and saves you money. Use your Candlesticks, trust them, and when they say not to trade, don’t!

Market Direction

Was there a way to take advantage of the big gap-down selling today? Not really! The nature of the market trading for the past few weeks has been very schizophrenic, up big one day and down big two days later. Both the Dow and the NASDAQ opened to the downside very quickly today. Most stocks gapped down, not giving the opportunity to short them. Was candlestick analysis a benefit to investors in predicting a gap down? No, but candlestick analysis should have had the portfolio positioned correctly.

For the past two weeks, the wild fluctuations in the markets have revealed the Bulls and the Bears did not have control of the market direction. When there is no evidence of a viable trend, this has obvious consequences for an investor. The major benefit of candlestick analysis is that it allows an investor to evaluate a direction of a price/trend with reasonably accurate results. The purpose of investing is to put funds to work with the probabilities being in your favor. When the market conditions demonstrate there is no beneficial probabilities, the investor has investment decisions that can be made from that information.

DOW

NASDAQ

As the Dow chart and the NASDAQ chart reveals, a sideways trend channel had been in progress for the past two or three weeks. These conditions did not produce any favorable probabilities for either to be long or short. In most cases, the proper investment strategy would have been to sit on the sidelines until a trend direction could be detected. This is the logical strategy for the majority of traders. However, candlestick analysis provides one more opportunity. It allows an investor to pinpoint the few stocks that are showing good strength and the few stocks that are showing great weakness. This allows for a portfolio mixed with long and short positions that will benefit from the sideways market.

There will always be opportunities to make money in all market conditions. The simplicity of candlestick scans allows for identifying the positions that are moving, even with the market in a relatively flat mode. Take advantage of the information built into the signals and patterns. This information will allow for highly accurate trend of valuation and the ability to make profits when others are sitting on the sidelines. Candlestick analysis provides a trading platform consisting of reoccurring price movements based upon investor sentiment.

Understanding the psychology that is built into the signals is a major factor for understanding why prices move as they do. Recognizing pattern setups allows an investor to take advantage of big price moves prior to their movement. As illustrated in the TCK chart, the slow curve showing failure at the T-line was an indication the bears were starting to take control. These are trading areas that can be executed prior to a major move to the downside. The inherent pressures of price movements makes it feasible to take advantage of prices going in the direction of the market indexes while also being positioned in trades that were anticipating the opposite direction. Those trades, although producing small losses when the market moves big in one direction, would be much more than offset by the positions that were oriented toward the actual market move.

TCK

EW
 
Chat session tonight at 8 PM ET.

The new book – Candlestick Profits, Eliminating Emotions with Candlestick Analysis, is in delivery from the printers. They should be in Houston on Tuesday, March 15. If you have not yet ordered your book, please do so this week. Once the books are sent out, you will have lost the opportunity of finding that crisp $100 Bill to be placed in one of the premarket release books. Hurry to order the new book Candlestick Profits – Eliminating Emotions with Candlestick Analysis before the special end!

Good Investing,
The Candlestick Forum Team

Commodity swing trading is usually considered high risk investing. That is not necessarily so when utilizing candlestick signals. A major advantage that commodity swing trading has over stock swing trading is the consistency of a trend move. Commodity trends usually work in a more consistent fashion. The reason is very simple. There are less outside influences on a commodity price than there is on a stock price. Most commodities are affected by merely supply and demand. This makes commodity swing trading a little easier to implement than stock trading. Whereas a swing trade in stocks may be a 2 to 10 day trading period, commodity swing trading might experience holds of 5 to 20 trading days.

Stock prices have many more influences with which to contend. The market move in general, interest rates, crude oil prices, the US dollar, and a multitude of other influences that may change the trend of a stock price. Candlestick reversal signals provide excellent points to be buying in stocks. The reversal signals work that much better with commodity prices. Commodity swing trading gains the benefit of seeing where a reversal will occur and then knowing the new trend should provide a steady move from that reversal.

Keep in mind, Japanese candlesticks signals were developed with the most basic of commodities, Rice. Learning how to utilize the 12 major candlestick signals is the first step for putting investment funds into high probability trades. Commodity swing trading has the advantage of steady price moves as well as price patterns. The same patterns that are utilized in stock trading, such as the Jay-hook pattern, the scoop pattern, the cradle pattern, etc. work equally well with commodities. Learn the 12 major signals and you will understand where the high probability buy and sell points will be. Once you have become familiar with the signals, then move on to learning price patterns. Price patterns while incorporating candlestick signals dramatically improve the probabilities of being in high profit trades. Click here for the 12 major signals training CD special.

The profits that can be produced in commodity swing trading are extremely large. The risk of trading high leveraged trading entities becomes minimized when knowing what the candlestick signals are revealing. They produce a confidence to buy at the bottom and sell at the top. They also clearly demonstrate where a stop loss points should be placed. Having this knowledge allows an investor to take advantage of any trading market. Participating in the right direction at the right time is very critical in commodity swing trading. As illustrated in the soybean buy signal, the Bullish Engulfing signal, late last week created the opportunity to be in to a very profitable trade.

July Soybeans

Market Direction

Both the Dow and the NASDAQ failed their major moving averages. The Dow was going to come back up and tests the 50-day moving average once more but showed a Doji on Friday followed by strong selling on Monday. The first indication early last week of coming down to test the 200-day moving average is now back in the a valuation. This coincided with a failure of the NASDAQ at the 200 day moving average. Both now have their stochastics turning back down. Keep in mind; this is the evaluation of investor sentiment at important technical levels. As of now, all indications are that prices are going to move down to the next important technical levels.

DOW

Learning commodity trading signals will open the door to profits in trading commodity futures. Commodity and Futures Training using Candlestick chart patterns allows traders to learn what Japanese rice traders knew centuries ago. The market can tell you what the market will do if you learn how to read the commodity trading signals. There are a dozen Candlestick patterns that traders should commit to memory and another 28 that can reliably predict market behavior. Candlestick charting techniques have a long and successful history of predicting commodity market movement. Candlestick trading tactics are like most tactics derived from technical analysis. Candlestick basics predict market activity and the trader either buys or sells commodities based on the insight derived.
Successful commodities traders start with a solid foundation of fundamental analysis of the commodity or commodities that they trade. There are reasonable limits to prices on a commodities exchange. Knowing where these limits are will help guide successful commodities trading. Within the extremes technical analysis tools can give solid commodity trading signals. Major Candlestick signals include the Doji, Bullish Engulfing, and Bearish Engulfing signals. Candlestick chart analysis can also be done with time honored commodity trading signals such as the Tri Star Pattern, the Three Black Crows, the Three Identical Crows, and the Two Crows patterns. All of these are secondary patterns typically indicating market reversals. A Commodity and Futures Training class will help the beginner learn both the fundamental and technical aspects of the commodities markets.

Commodity trading signals can be useful to both the companies buying commodities or the producers in hedging investment risk. Trading signals may be more useful to traders who routinely buy and sell commodities or who trade options on commodity futures. Although those hedging risk in the commodities markets may buy and sell once or twice a year the trader can and will watch the market throughout the year and throughout the day looking for commodity trading signals that will lead to profit. The addition of traders speculating on commodity prices adds volume and liquidity to the market leading to more traders trading and increasing volume. It is with high trading volume and liquidity that commodity trading signals work the best and are most profitable when followed.

Technical trading works best when applied through a trading strategy. The trader will learn with time which trading signals can be used to make the most profit. With experience the trader can learn more and more efficient execution of the trading strategy. The trader will learn which commodities he or she trades most effectively and which trading signals derived from Candlestick charts are most predictive of market changes for the commodity in question. With competent instruction the trader can learn effective use trading signals coupled with the use of techniques such as Candlestick trading tactics to make consistent profits. At the same time proper reading of market signals will help reduce risk while enhancing return on investment. For those interested in trading options on commodity futures a good choice is to take options training with Stephen Bigalow.

Market Direction

Investor sentiment is the force that moves prices/markets. Candlestick signals reveal the nature of investor sentiment. The signals work extremely well on their own. However, an investor can glean an immense amount of information utilizing candlestick signals and the other obvious information a chart is revealing. Today, the markets experienced a severe selloff on the open. This made for further confirmation of the possible reversal in the trend if you include the Evening Star signal that formed in the Dow last week. How does one know whether it is time to close out long positions when the market opens lower like it did today? They don’t! But they have to take a look at what was affecting the trend to this point. The tee line has acted as support for this uptrend for the past two months. That fact has to be put into the evaluation.

The longer a trend remains in existence, the more severe the reversal signal needs to be. Recently the markets have been reacting to positive or negative earnings reports on a daily basis. The overall trend has remained consistently above the tee line. The severe selling on today’s open was scary. However, up to this point, the trend had been fairly solid. It is prudent to not react until the daily signal confirms there has been a change of investor sentiment. As was witnessed today, the buying came back into the markets after about one hour of languishing near the lows. The intraday charts should have been utilized to see what the trend was doing. If the five-minute chart demonstrated a lengthy flat trading range, there is extreme hurry to close out the positions. They are probably already trading off after the selloff. If the markets appeared as if they were going to close at the low end of the trading range by the end of the day, then you could be selling those positions, probably at approximately the same level as were they were trading one hour after the open.

DOW

If the Bulls step back in, as they have done for the last two months, and close the markets above the tee line, a very simple assumption can be made. The uptrend is in progress as long as they cannot close it below the tee line.
Waiting to see what investor sentiment is doing after any price opens becomes a very prudent entry and exit strategy. As seen in the TLEO chart, it opened positive. It also started selling off immediately from that level. What should be witnessed after a candlestick buy signal? Continued buying! In the case of TLEO, there is nothing wrong with waiting one or two minutes to see if the buyers are still participating after the price opens positive following day candlestick buy signal.

TLEO

@How the markets closed today would be very important for indicating what was occurring an investor sentiment. Obviously a close at the lower end of today’s trading range would reveal the tee line had not acted as support. You do not have to buy at the absolute bottom or sell at the absolute top. Your entry and exit strategies should include practices that improve the probabilities for profiting from that trade.

No Chat Session Tonight due to Traveling

Good Investing,
The Candlestick Forum Team

Hot penny stocks are those stocks that trade from .001 of a penny to $5.00. They are extremely risky yet they have remarkable reward potential. Penny stocks are referred to as over the counter stocks because they are listed on the Over the Counter Bulletin Board.

To qualify as a penny stock, the stock must meet four criteria.

1. The stock must be priced below five dollars.
2. The stock is not traded on a national stock exchange or on the NASDAQ.
3. The stock may be listed on the “pink sheets” the NASD or the OTC Bulletin Board as explained above.
4. Lastly, the company that issues the stock must have less that $5 million in tangible assets and must only have been in business less than three years.

Many investors buy penny stocks considered “hot penny stocks” because it does not take a large investment to get started. They give the average investor the opportunity to obtain a significant number of shares without having to invest a large chunk of their hard earned money. In other words it provides the successful trader the ability to turn a relatively small investment into a large fortune. This is precisely why hot penny stocks are so popular. The downside of course is that the volatility of shares and the lack of corporate transparency that can quickly make a penny stocks worthless.

It is important to note that the true value of a company and the price of their hot penny stocks are not always necessarily indicative of each other. In fact, most penny stocks are at the developmental stages and have been overlooked by the investment community for reasons unknown. While this has given penny stock investing a bad reputation, there are those penny stocks that truly represent a legitimate investment opportunity. Those are the best penny stocks that you need to find! There are actually studies that show that many companies have standards that they must meet before they are allowed to be traded OTC. The ones that you must watch out for are the companies that are unethically managed. These are the so called hot penny stocks that that are promoted and then quickly sold off to make a profit. By the time naive investors have bought them, the hype has worn off and they cannot sell them. Watch out for these schemes!

There are also those situations when companies are well established and are still considered to have hot penny stocks. These are companies that are truly trying to grow so that they go above the penny stock status and can potentially be traded on the NYSE or another major exchange. These businesses truly opt to increase their customer’s value in the stock market.

Hot penny stocks contain an element of risk just like any other type of investment. The point is that you must build your list of penny stocks very carefully. Do as much research as you can, and think twice before investing in a hyped up penny stock. There are penny stocks worth investing in, but it is up to you, the investor to find them.