Before the take off of trading online stock in the 1990’s, big-time investors were able to double their incomes by investing thousands of dollars in the stock market. Most of America’s wealthiest Americans made a lot of their money by investing in stocks. With the advent of the internet however, the smaller investor can now get in on the fun. The stock market is even more open now and millions of Americans can now make money investing in stock. Those with limited funds can now invest in their company’s 401k accounts and can become shareholders in the company. The great thing about it also is that now people can do this from the comfort of their own home.
Getting Started Trading Online Stock
First you must have the minimum dollar amount necessary to open a trading account with the brokerage firm of your choice. The minimum dollar amount is usually about $500 but it can vary from firm to firm. Additionally, you will have to pay a membership fee with the firm which can range from about five dollars to twenty dollars. You will also need to become familiar with the trading system that the firm provides as well as the investment software you plan to use. Then you can begin to trade and manage your funds. You should be able to access the market in real time, examine trends quickly and efficiently, and you must be able to trade instantaneously. Lastly you must be sure that you make full use of your online brokerage firm’s research facilities in order to grow and maintain your investments.
Portfolio management is the key to successful investing. When trading online stock it is also wise to study the history and performance of all of the stocks in your portfolio. Whether you are investing in stocks using fundamental analysis or technical analysis, you must ensure that you have portfolio diversification. This will ensure that you don’t have all of your eggs in one basket.
If you want to practice short term stock trading and use the concepts associated with technical analysis you should research Japanese Candlesticks. Candlestick trading analysis does not require knowing intricate formulas or ratios for trading online stock. The stock investing basics of Japanese Candlesticks result in clear and easy to identify patterns that demonstrate highly accurate turns in investor sentiment. There are really only 12 major Candlestick patterns that need to be committed to memory. The Japanese Candlestick trading signals consist of approximately 40 reversal and continuation patterns. All have credible probabilities of indicating correct future direction of a price move. Continue to learn about other technical indicators and find out if Japanese Candlesticks are for you.
Why was there expected profit-taking today? Both the Dow and the NASDAQ had reached their prospective resistance levels. The Dow closed at the recent top on Tuesday. The NASDAQ closed at the 50 day moving average on Tuesday. Yesterday the markets demonstrated indecisive trading at those levels. That may seem like a fairly simple observation, but it becomes simple when using candlestick signals for your analysis. Trend analysis becomes much more accurate when knowing what each of the 12 major signals represent.
DOW
Indecisive trading is represented by Doji’s, Spinning Tops, Harami’s, Shooting Stars or Hanging Man signals. When an indecisive trading signal is occurring at a potential resistance level, trend evaluation becomes much easier. Was it time to take profits today? Knowing that investor sentiment was getting indecisive once the prices hit resistance levels, that should have made the anticipation of taking profits better clarified. The past few weeks have produced an extremely good profits from our recommendations. The shipping stocks and the mining stocks created some very good profits. DRYS was recommended in the $8.00 area on December 9, 2008. It gapped open today at $13.52, above the 50 day moving average. The gap up in the overbought area was an indication that some profit should be taken in the very near future. It closed back below the 50 day moving average. It is in the range of a 52% to 60% profit. The dark candle formation today becomes an indication that bearish sentiment may be starting.
DRYS
Many investors have a hard time taking profits. Emotions start stepping into the decision-making process. “What if we take profits at this level and the price continues for another 10 points higher?” This is the biggest fear most investors have to overcome. The strength in the price confirms to our own ego how smart we really must be. Not only did we invest in a stock position that was moving in the right direction, but our analysis put us into a position that has made big profits. Boy, we must be smart. So smart, the price trend might even move past our conservative expectations. When the mind gets into this euphoric state, rational analysis starts slipping away. There is a tendency to ignore what the signals are representing. This becomes a battle between rational analysis and the emotional expectations of what a price could do.
SSRI
Quite often, the fear of taking profits, because prices might go even higher, dramatically reduces profits. Most investors have the tendency to hold onto a positive price move way too long. Many of us have probably held a profitable trade all the way back down to where we bought it or below. Applying the proper technical analysis is as important as controlling for the correct decision making process. Candlestick signals allow for much better control of one’s emotions.
Mr. Bigalow also will be committing time to a private training session during the January and February time frame.
These training sessions are limited to a very small number of people. This provides individual attention for eliminating the past bad trading habits and applying the high probability candlestick analysis trading philosophy. If you are interested in attending one of these sessions, e-mail Steve at steve@candlestickforum.com to discuss more details.
Chat session tonight at 8 p.m. ET – everybody welcome. Click here for instructions; if you already have HotComm installed, click here to connect.
Good investing.
The Candlestick Forum Team
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