Today’s intraday price action gave us a major lesson in price patterns, volatility, and clean high probability trade set-ups. Let’s see what we could have learned today in the SPY. First, the day began with an overnight gap, which led to a stop-loss if you tried to trade back into the gap. Often, when a…
With the month of May winding down, it’s now time to see how many days resulted in an overnight gap, and how many of those overnight gaps filled, giving us clues as to whether or not the “Gap Fade” strategy continues to work. Using Excel and daily data for the DIA (Dow Jones ETF), I…
What are the Five Components of Successful Trading? Adam Hewison details these five points in a recent, brief educational video. I’ll give you a hint – Adam’s #1 Rule, as is mine, is stated “Know Your Risk!” What are the other four components? Adam writes: In this edition of Traders Whiteboard, we will be looking…
Earlier, I discussed Win Rate as a factor of Fixed Stop-Loss and Fixed Profit Targets, and I showed how it was easily possible to achieve a 95% win rate… but now it’s time to see if these outcomes lead to net system profitability. Please refer to the earlier post for the full descriptions and parameters…
Popular stock Dry Ships Inc (DRYS) recently formed a major trend exhaustion (possible reversal) pattern that is worth further study. Let’s look at this pattern and what it may mean for the stock. Price rapidly increased from $20 to $130 throughout 2007, while collapsing at the end of the year, which brought us to the…
What is the larger relationship between your stop-loss strategy and your profit target method? I tested three strategies and evaluated the change in win rate – % Profitable Trades – across 400 tests per strategy and present the abbreviated results here. First, let’s define the methods: DIA Daily chart from Jan 1 1998 to May…
Yesterday, I examined the 10 Year Note, commenting that it had broken resistance. Now, let’s look at two bond funds to see how prices are being affected, and also view a strong correlation between the 10 Year Note Yield and the S&P 500 Index. First, the TIPS Bond Fund: iShares writes: The iShares Lehman U.S….
Today, the yield on the 10 Year Note sliced upwards through its declining 200 day moving average, signaling a potential reversal in trend and the possibility of higher rates yet to come. Daily Chart ($TNX): After forming a strange sort of double bottom, complete with a positive momentum divergence, the yield, now just under 4.1%,…
Let’s do a quick check on Wachovia Bank and the XLF Financial Index to see what interesting development has happened this week. First, Wachovia’s (WB) weekly structure chart: Price made a new intra-week low this week, testing just below $24 per share, but it did so on a developing positive momentum divergence (not drawn). The…
If you’re following the intraday charts, momentum seems to be diverging to the upside as selling pressure is waning and buying pressure seems to be picking up, as the shift from supply to demand is comfortably shifting. Let’s look at the 30-minute chart of the DIA: Although it’s clearly a short-term shift, we see at…