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Short term trading can be very lucrative, but it can also be risky. A short term trade can last for as little as a few minutes to as long as several days. To succeed at this strategy as a trader, you must understand the risks and rewards of each trade. You must not only know how to spot good short term opportunities but also how to protect yourself. In this article, we'll examine the basics of spotting good short term trades and how to profit from them. The Fundamentals of Short Term Trading Several basic concepts must be understood and mastered for successful short term trading. These fundamentals can mean the difference between a loss and a profitable trade. Recognizing Potential Candidates Recognizing the "right" trade will mean...

Most of us have wondered whether a decline in the price of a stock we're holding is long-term or a mere market hiccup. Some of us have sold our stock in such a situation, only to see it rise to new highs just days later. This is a frustrating and all too common scenario. Whilst it can't be totally avoided, if you know how to identify and trade retracements properly, you will start to see improvement in your performance. Retracements Versus Reversals Retracements are temporary price reversals that take place within a larger trend. The key here is that these price reversals are temporary and do not indicate a change in the larger trend. A reversal, on the other hand, is when the trend changes direction, meaning that the price is likely...

Although prices may appear to be random, they actually create repeating patterns and trends. One of the most basic repeating patterns is a fractal. Fractals are simple five-bar reversal patterns. This article will explain fractals and how you might apply them to your trading strategy. Introduction to Fractals When people hear the word "fractal," they often think about complex mathematics. That is not what we are talking about here. Fractals also refer to a recurring pattern that occurs amid larger more chaotic price movements. Fractals are composed of five or more bars. The rules for identifying fractals are as follows: A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on...

I have always found it very interesting, how many different ways people look at charts and all the different pieces of information people try to attain from a price chart. How could so many people look at the same chart and have so many different opinions? Fascinating. With all the different schools of thought on money, markets, charts and so on, what should we really be looking for on a price chart? I mean, conventional technical analysis books have hundreds of pages in them with information on so many indicators, oscillators, chart patterns and more. With all this, there must be some edge to be gathered, right? I speak with thousands of traders around the world and everyone is trying to make something “work”. This is where I see most...

Traders attempt to isolate and extract profit from trends. There are multiple ways to do this. No single indicator will punch your ticket to market riches, as trading involves other factors such as risk management and trading psychology as well. But certain indicators have stood the test of time and remain popular amongst trend traders. Here we provide general guidelines and prospective strategies are provided for each; use these or tweak them to create your own personal strategy. Moving Averages Moving averages "smooth" price data by creating a single flowing line. The line represents the average price over a period of time. Which moving average the trader decides to use is determined by the time frame on which he/she trades. For...

The most important thing in any type of trading is to have a solid set of rules and then to have the self control to follow those rules. Day traders especially need to have rules to follow as emotion can and will have you buying and selling at the wrong time. Day Trading Rules: Only enter trades when price is at a support (demand) or resistance (supply) level, no matter what time of day or night. Two types of entries: Breakouts and first pullbacks (see below). Each day, identify one demand and supply level in each market, using a larger intra-day time frame. Always know where the market is in the larger picture with regard to supply and demand. Only trade opportunities that offer at least a 3:1 profit zone to the first target...

A look at the key features to be considered when day-trading forex. Until recent years, the opportunity to put on a trade was governed by the cycle of day and night. But a unique characteristic of Forex trading is its round the clock sequence of trading. Starting Sunday when the sun rises in Asia, until Friday late afternoon, when the New York markets close, Forex trading is available. So the question arises, what is a Day trade in Forex, if technically Forex is a continuous week of trading? To answer that question we do not need to delve into the nature of human circadian biorhythms. One has to be arbitrary. We can effectively define a Forex day trade as a trade that is completed during the waking hours of a trader. A day trade might...

The author of A Complete Guide to Technical Trading Tactics: How to Profit Using Pivot Points, Candlesticks & Other Indicators, looks at a candlestick formation that can indicate reversal points when used with pivot points and support/resistance levels. There are many trading methods one can employ to actively trade including various mechanical trading systems and manual trading tactics. The constant changing of market conditions can require system traders to adapt and update the parameters for the trading decisions. I often prefer the hands on visual approach which is more of a manual method while employing mechanical risk management techniques. The visual approach is aided by the use of candle charts. The draw back is one must have a...

Jerry gives us another of his humourous, educated article on chart patterns using the CCI. We as traders have been looking for the "Holy Grail" for a lifetime. I doubt there is one folks. But all thru my 65 years on this planet I certainly have tried every known indicator, oscillator, etc to get to that Holy Grail. Well I can tell you all I think I found the Holy part of that statement in the momentum indicator the Commodity Channel Index, CCI for short. Many traders swear by the Macd, Stoch, Rsi, Obv and on and on. The CCI with a 20 moving average (20) is the best leading momentum indicator I have ever used in my trading life. I will include a series of charts depicting the way I use CCI in the exciting world of daytrading which I do...

There are many ways to trade, but I like combining some fundamental, knowledge or perhaps some news, an understanding of technical analysis, a grasp of how markets behave and the ability to read sentiment as demonstrated in price action, buy/sell pressures and the actual trades printing off - the deals being done. This may sound a little involved but is actually quite easy with a little knowledge, common sense and reading the market. On September 1st I made a list of those stocks that were already benefiting from buying interest, (or selling pressure like some insurers), in the wake of the devastating Hurricane Katrina. Building material stocks, alternative energy stocks, insurers, specialist manufacturers of rescue products were of...

Technical analysis can be defined as the study of past price behavior in an effort to determine patterns and trends that are believed to be predictable of the future. At the core of this school of thought is the assumption that human behavior is repetitive in nature. We all recognize that, although human behavior patterns may have recurrent tendencies, they do not normally express themselves in the same exact, mechanical manner each time. Even with this qualification in mind, technical analysis is capable of providing us with the ability to make price forecasts characterized with an improved probability of outcome. It can help us achieve the "edge" required in our pursuit of long-term consistent success. A wide array of technical...

In this streaming video, Phil provides the outline of a trading strategy he uses regularly for trading the forex market. In this example, he demonstrates a simple break-out strategy on the Eur/JPY pair using 15 minute charts, but his interpretation of the charts, using price action and candlestick analysis, can be applied to many other price patterns across the currency pairs. He details his precise method for identifying and trading this set-up, including: when the set-up is most likely to appear why you should avoid taking the trade on the first break-out where to place a stop-loss and why you should resist the temptation to move this to break-even at the first opportunity how candlestick analysis can be used to support the...

Today is Monday December 27th and the US is open. Many would say, "oh, what's the point, the action will be thin and the pickings, if any, hard." Well, in my experience, that approach is mistaken. 36 minutes before the market even opened today, I read this story: "Amazon.com, Inc. (AMZN) said Monday the 2004 Holiday season was its "best ever", with the online retailer setting a record of more than 2.8 million units ordered in a single-day, or 32 items per second worldwide. The Seattle-based company said consumer electronics sales was its largest sales category." Again many would say, "oh, the news will be in the price so it's pointless" This is also just plain wrong a lot of the time. I have traded AMZN three times today, all...

Introduction The strategy detailed in this article was written almost two years ago and has been available on the forums throughout that time. Since then, there have been many members of Trade2Win who have commented on how it has improved their trading. Even today, two years on, the rules devised are still valid. There have been new "discoveries"- the magic 32 and 64 to name but one, and yet there are still mysteries that have to be resolved. Even so, this document will probably stand the test of time, which is to help newbies get a feel for trading the Dow, and at the same time, stay in the game by way of capital preservation. It has given me great pleasure in receiving thanks from many members. Truly gratifying. This is just the...

1. Introduction A trading strategy is simply a pre-determined set of rules that a trader has developed to guide their trading. The advantages to the trader of developing a trading strategy are: However, developing a trading strategy that is effective can become a complex process. There are computer programs available (such as TradeStation and WealthLab) which aim to automate the process. Unfortunately the ease with which systems can be developed and optimised using these programs can mislead the unwary trader. Fundamentally a strategy must be built around some kind of statistical edge. It is this edge that will play out over time and create positive cashflow for the system and the trader. In this article, which will be published in...

Capturing Trend Days Trend days occur when there is an expansion in the daily trading range and the open and close are near opposite extremes. The first half-hour of trading often comprises less than 10% of the day's total range; there is usually very little intraday price retracement. Typically, price action picks up momentum going into the last hour -- and the trend accelerates. Classic Trend Day - A large opening gap created a vacuum on the buy side. The market opened at one extreme and closed on the other. Note how it made higher highs and higher lows all day. Also, volatility increased in the latter part of the day--another characteristic of trend days. A trend day can occur in either the same or the opposite direction to the...