TraderGav (Gavin) posted an excellent resource regarding Risk/Reward and Accuracy. His post describes why it is essential to have an edge in trading, but of particular interest, he provides an Excel Sheet which allows you to input your risk/reward average and play around and see what accuracy rates net what results, given risk/reward. Download the…
Dr. Steenbarger recently issued a call for submission for readers to describe their personal methods for overcoming fears and performance anxiety in trading, and they responded with some wonderful responses. Dr. Brett has arranged these responses in two posts (so far): First Post on Reader Reviews on Performance Anxiety Second Post on Reader Reviews on…
How is it that a company reports higher profits, yet its stock price declines intraday? This phenomenon is quite common, where what a new investor expects (or even common sense expects) to happen does not materialize, and in fact, the opposite occurs. Consider two examples from Friday, April 20th, where the Dow set new highs…
Every day last week, we saw price advances in the Dow Jones Index, and we witnessed new intraday and closing highs in the Dow. I mentioned last week that if we broke resistance at 12,800 (likely), then we would see a hard rally off this point to the upside. After “scraping” it last week, we…
The Dow and S&P 500 just made new and impressive highs above the February swing high and seemingly continue unabated, despite temporary overbought oscillator conditions. In trending markets, oscillators are useless (RSI, Stochastic, etc) and people can get very whipsawed using them in positive feedback environments (where higher prices lead to short covering and new…
Rule Four of the Guiding Principles of Market Behavior states “Markets Alternate Between Expansion and Contraction”, meaning that there are a variety of trade ideas you can develop based on this principle. A weekly chart of Google (GOOG) illustrates this concept very nicely, with “Squeeze Plays” that could be entered with the volatility contraction easily…
My hat is off to the Bulls and Buyers – the Dow reached not only a new intraday high, but a new closing high. The psychological barrier of 12,800 is now breached (officially closed at 12,803). The psychology of investors and traders ranges on disbelief and relief. I’ve read a few accounts of traders using…
Dr. Brett Steenbarger posted an excellent article and breakdown of average volume (ES – S&P e-Mini) per 15 minutes each day. Not surprisingly, he found that the most active times of day (in terms of volume) were nearest the open and close (creating a data “smile”). He posts a volume chart which is helpful and…
The last two times the Dow Index has approached 12,800, it has failed. We had a failure today, as the number served as resistance, but the mere fact that we are testing resistance for a second time might indicate that it will be broken this time. Should the resistance zone (by price) be broken, there…
I recently read a few simple quotes on overcoming fear that I wanted to share: “I have not ceased being fearful, but I have ceased to let fear control me.” — Erica Jong “Your fears are not walls, but hurdles. Courage is not the absence of fear, but the conquering of it.” — Dan Millman…