Market Math
Yesterday, I discussed some reasons why traders might want to consider looking at, or trading, the relative performance between markets. Today, let's look at a simple way to display that relative performance, and consider some things that can go wrong. Tracking relative performance simply means we want to
Spreads
Today I begin a short series of posts looking at the tools and techniques of relative value trading. For some traders, this is intuitive; currencies are always valued relative to another currency, and many futures traders focus on spread relationships between different commodities or months of the same commodities, and
Trading tools
One of the complaints leveled against technical analysis is that tools are primarily visual and subjective, rather than being true analytical tools. There certainly is some truth to these complaints (and I have often been a critic of traditional technical analysis), but the best technicians work toward consistency and logic
Trading tools
Trendlines are useful. For the uninitiated, it may seem odd to draw lines on charts and to expect them to work, but what we are actually doing here is to create a shortcut (a heuristic, if you prefer.) A properly drawn trendline will reflect both the trend and the volatility
Individual Traders
This could, perhaps, be the shortest blog post ever. I could simply answer the question with: follow your rules. Get out. But let's dig a little deeper. Before we really begin, it's important to remind ourselves that there are many ways to trade and invest successfully.
Individual Traders
The marketplace is constantly evolving. One of the biggest changes over the past decade is the proliferation of Exchange Traded Products (ETPs) that allow stock traders to trade commodities (and other financial instruments) in a stock account. Much of the traded universe of financial products is now available just by
Climax
Continuing from yesterday's post, I wanted to dig a little bit deeper into the idea of what happens when markets go too far, too fast and snap back. This concept is called overbought/oversold in the traditional technical literature, and it is one of the most important elements
Individual Traders
I f you read much of my work, you will begin to see that applying technical tools takes work; it takes a lot of time and experience to know how to apply them correctly, even if we are using relatively simple tools with a statistical edge. (Beware: most technical tools
Pullback
A look at the technical justification and support for a long trade in the Russell 2000 index, or other US indexes.
Pullback
I'm starting a short series of posts here on pattern recognition, focusing on simple patterns that I have found useful in actual trading. Some of my readers may have questions as to whether it is possible to trade profitably based on simple patterns, given that so much modern
Market Math
Ok, so I'll warn you up front: this one's going to be a little bit difficult. The response to my post on the 200 day moving average in the DJIA and the S&P 500 was very positive, and I received many thought-provoking questions and
Chart of the Day
I thought this was a good time to take a look at current market conditions in US stocks. This is certainly a time when risk, emotions, and volatility are elevated, but it is also a market that is still within "normal parameters". Probabilities favor a snapback, but there