The global equity return for 2008 so far is quite bleak. Let’s look at this chart to see some of the major financial markets’ rate of return since January: Global markets are correlated, and global equities are enduring a correction that is taking them near bear market territory (generally a decline of 20% or more)….
In my previous post entitled “Gambler’s Fallacy” I mentioned that you should not radically alter your position size (or trading frequency) based on the outcome of the last handful of trades. But when is it appropriate to adjust your position size? Recall that the Gambler’s Fallacy occurs based on emotions, whether positive or negative. If…
Adam Hewison, President of INO.com, recently released #5 in his Trader’s Educational Whiteboard series. These brief videos address a specific topic in trading, and are designed for you to learn the topic quickly. The most recent lesson is entitled “A Trader’s Key: The Game Plan.” In the video, Adam describes what you need to know…
What is the “Gambler’s Fallacy” and how might it describe why you may not be achieving the trading results you’ve been expecting? According to The Skeptic’s Dictionary, the Gambler’s Fallacy is the incorrect notion that the odds for something with a fixed probability increase or decrease upon observing the most recent occurrences. The classic fallacy…
Let’s take a quick look at where we stand and were we may be heading on the US Stock Market chart, using the Dow Jones Index as our proxy. I don’t normally draw so many lines on the chart, but there are a variety of support and resistance levels, many of which I have not…
Today’s action in the stock market was marked by a lengthy consolidation channel, with a mini-breakout into the close, leading to lower prices. Let’s take a quick look not only what happened from a technical picture on the intraday chart, but let’s learn a lesson about channels. This is a textbook example of a consolidation…
Today’s educational video lesson from Adam Hewison at INO is entitled “How to Avoid the Most Common Mistake Traders Make Everyday” which deals with determining and placing stops. How many times have you – like me – placed a well-devised stop-loss on a trade and then had the market nip that price and hit your…
You’ve probably heard that commodity prices are rising, but have you looked at individual commodities and what that might mean for you or the market? Let’s peek at a few selected commodities and see exactly what magnitude these commodities have been making new lifetime highs. Soybean prices (above) have virtually doubled since October 2007 and…
Tuesday’s action provided a plethora of key set-ups and high probability trades on the short time frame intraday charts on the US Indexes. Let’s check out the Dow Jones “Diamonds” ETF (DIA): The first trade when there’s an overnight gap is to fade the gap for at least a 50% retracement and a potential full…
Ben at The Financial Ninja blog posted examples of “Really Scary Federal Reserve Charts,” in which he discusses some alarming facts straight from the Federal Reserve. Ben makes good use of the Federal Reserve website of St. Louis, which I had highlighted in a previous post about the coolness of the data available to you…