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Attitudes that Sabotage Market Success
During the early part of my adult life, I counseled individuals and married couples. I saw people with various problems and tried to help them embrace a more healthy and productive existence. In the process, however, I also noted that some people seemed forever stuck in the mud. Their inability to move forward in life was rooted in three particular attitudes—the same ones that keep traders from achieving long-term success.
Selling the Rips
When stock prices fall temporarily, many people speak of “buying the dips.” This phrase is trader slang for purchasing stocks on sale. Market participants attempt to lower the risk of stock acquisition by choosing moments when stocks are likely to rise after purchase occurs.
A critical component of dip-buying is often overlooked, however. What is it? Dips occur in upward-moving markets. In other words, uptrends are the things that give dips their power. After purchases are made, price movement carries stocks higher into profitability.
So, what do profitable traders do in downward-moving markets? They “sell the rips.” This phrase refers to selling stocks after short-term retracements (price rises) occur. In contrast with dip-buying where general market movement is upward, rip selling takes place in downtrends.
Straight Talk about the Role of Money
In daily life, money is something that we earn, save, and spend. No surprise there. Did you know, however, that the flow of money through the economy significantly impacts the cost of goods and services, interest rates, and market performance? Before your eyes glaze over with the thought that this stuff is for economists only, I invite you to take a few moments and read on. Here, I offer a very simple explanation of how money works, how it impacts us where we live, and how to limit losses in a market downtrend.
Why the Yield Curve Matters Upated!
Many people view interest rates as avenues for making or losing money. They think of the amount of money that they will receive from a financial institution for sitting on their cash. Or, they ponder the amount that they will pay to a lender for securing a loan. Seldom do they realize that these same rates are a powerful indicator of future economic conditions that will impact their lives in a much larger way.
Benefits of Volatility
Market commentators often convey the message that volatility is a bad thing. At best, it is portrayed as a condition that resembles a common cold—something that is quite annoying, but temporary in duration. At worst, it is a type of flu that can have disastrous consequences if it persists over long periods of time. But are these characterizations really true? How can traders benefit from volatility even when others claim that it is undesirable?
S&P 500 Video Forecast
May 1, 2023
S&P 500 Index
The S&P 500 Index ($SPX) contains 500 of the most prominent publicly-traded companies in the United States. It was formed on March 4, 1957 with S&P 500 Stock Composite Index as the original name. It is widely considered to be an important measure of stock performance in general and most representative of economic direction in the country. For many long-term investors, some portion of their retirement money tracks the $SPX.
How can you determine the direction of the market, the economy, and your retirement money? Learn to read the $SPX chart. To assist you with this effort, we provide a forecast in our monthly video series. At the very least, you will not be surprised by index activity. You may even be able to increase profitability, if you learn to make the right moves.
Determining Market Breadth with the New High-New Low Index New!
A physician may check blood pressure, pulse, respiration rate, and body temperature to assess the general health of a patient. In the same way, traders can examine internal aspects of the market to determine whether market direction is strong and healthy.
Market internals tell us whether the average stock is performing the same way as a major market index. They also tell us if index direction is simply the result of large moves made by a handful of stocks. Several measures of internal market strength (breadth) are available to traders. On the daily chart that follows, we look at a popular measure known as the New High-New Low Index ($USHL) and apply it to recent activity in the S&P 500 Index ($SPX).
E-Mini Dow Day Trading
Why I Day Trade the E-mini Dow
Among those who day trade stock index futures, the E-mini Dow futures market is one of the best kept secrets on Wall Street. Many E-mini participants trade the S&P 500 (ES), Nasdaq-100 (NQ) or Russell 2000 (RTY). For various reasons, these markets are not as easy to trade. Continued…
How Long Does it Take to Learn?
Traders may be classified as professionals or nonprofessionals. The first group is largely comprised of individuals who trade for financial firms, manage other people’s portfolios, and otherwise make their living from trading. Employers often train their own people and impose their own rules on performance. For these reasons and others, I usually prefer to work with nonprofessionals. Continued…
The Ultimate Guide for Day Trading. No kidding.
Available only through us
Making Sense of Net Change in Day Trading
Data providers routinely include “net change” among their price quotations. Net change is based upon the difference between a closing price from the previous day and the current market price. In futures trading, the closing price is not as obvious as one might expect because it can appear in two forms: last price or settlement price.
The last price is the price at which the market traded when it closed on the previous day. It is a straightforward quote and appears on intraday charts. The settlement price is more complicated. This price is the fair market value of the contract traded as determined by a number of factors selected by the exchange. It is displayed as the official price for the end of the day and appears on daily and higher time-frame charts, but not intraday charts.
Because the last price and settlement price are often different from one another, the net change values based upon these prices are also different. As a day trader of E-mini Dow futures, you may notice a difference between the net change provided as a quote and the distance between yesterday’s closing price and the current market price on your intraday charts. When that happens, your data provider is likely using the settlement price in calculating net change rather than the last price.
Stock Trader’s Almanac 2023
For several decades, Stock Trader’s Almanac (STA) has endeavored to provide “the necessary tools and data to invest and trade successfully (Hirsch & Mistal, 2023, p. 7).” It was originally created by Yale Hirsch (1923-1921) and reflects his lifelong interest in market history, cycles, and price patterns. His son, Jeffrey, joined Hirsch Holdings, Inc. in 1990 and eventually became editor-in-chief with a desire to improve the content and application of the almanac. Continued…
Reminiscences of a Stock Operator
by Edwin Lefèvre (annotations by Jon D. Markman)
This book is a favorite among traders. It recounts the life and times of renowned speculator Jesse Livermore (1877-1940). Told in the first person by a fictional character named Larry Livingston (Livermore), the story describes one trader’s rise from amateur to professional. Though written as a historical novel, the vast majority of people and events in the book are real. Here, annotator Jon D. Markman enlightens us with photos, information, and commentary that provide a meaningful context for understanding Livermore’s journey.
Perhaps the most interesting aspect of the book is that it shows how Livermore evolved as a trader through careful observation of markets and detailed evaluation of his trading behavior. While participating in both stock and commodity markets, he developed a stable set of trading procedures that shaped his career and may be employed in modern markets. Continued…
Ensign Charting Software
Since 1981, company founder Howard Arrington and his team have sought to create versatile products through unusual responsiveness to customer input. As a result, Ensign charting software is updated with great frequency (several times each month) and contains a large number of useful features that are difficult to find elsewhere. The price for leasing the software is attractive. Rather than increasing prices every year, Ensign maintains a reasonable and stable price structure while offering a high-quality product.
The New Era of the Booming 1920s and Its Aftermath
The Biography of Visionary Financial Writer Richard W. Schabacker
by George A. Schade, Jr.
In this day and age, history is often viewed as a collection of facts and figures rather than what it really is — a rearview look at real people who struggled to make sense of their times and offer contributions to the world.
George Schade’s journey through the brief but meaningful life of Richard W. Schabacker (1899-1935) offers readers a rare look at the evolution of financial markets in the early part of the twentieth century. During his employment at Forbes magazine (1925-1935), Schabacker became financial editor and wrote numerous articles that educated subscribers. As Schade points out, Schabacker’s keen insights and obvious writing ability enabled him to spread the word about the importance of technical trading.
A lesser-known fact about Schabacker is that he published a correspondence course in 1932 that covered chart formations and trading tactics. After his death, brother-in-law Robert Edwards collaborated with Albert Kimball to present much of the course in book form. This 1937 text later served as the basis for Part I of Technical Analysis of Stock Trends published by Edwards and McGee in 1948. Today, Edwards and McGee is widely regarded as the early Bible of technical analysis. Historically, though, it is clear that a substantial portion of this Bible came from Schabacker.
Schade’s book is detailed and well-researched. It is a must read for market participants who desire to trace the roots of technical analysis and trading.
StockCharts.com offers numerous features designed to assist market participants with making sound decisions. It combines technical tools, education, and commentary in a massive website. Charts and scanners are particularly useful for active traders. They enable easy identification and analysis of trades. The user may develop code for scans and use it to locate trades based upon personal preference. Several free features are available. Many more desirable features are provided for a modest fee.