facebook  youtube  blogger

Trading Educators Blog

#1 Trading Blog Site

Practical Teaching Derived from over 60 Years of Trading Experience and over 30 Years of Mentoring .  Click here to learn about private mentoring with Master Trader Joe Ross.

Oct
22

Relative Strength Index

The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset. Traditional interpretation and usage of the RSI is that RSI values of 70 or above indicate that a security is becoming overbought or overv...

Continue reading
  1427 Hits
Oct
14

The Squeeze

The Squeeze is the central concept of Bollinger Bands. When the bands come close together, constricting the moving average, it is called a squeeze. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities. Conversely, the wider apart the bands move, the more likely the chance of a decrease in ...

Continue reading
  1447 Hits
Oct
08

Trade the Trend

Trend Trading is a trading strategy that attempts to capture gains through an analysis of the momentum of prices in a particular direction. Trend traders enter into a long position when a security is trending upward (e.g. successively higher highs) and/or enter a short position when a security is trending lower (e.g. successively lower highs). Higher highs and lower lows is about as basic a defini...

Continue reading
  1464 Hits
Sep
30

Volume: A Basic Technical Analysis Items

Volume is the number of contracts or shares bought and sold each day in any given financial, commodity, index or currency instrument. High volume suggests that there is a heightened interest in the financial instrument, and if it is combined with a move higher in share price, then it is often used as a signal of strong upward momentum. Keeping an eye on volume will ensure that you are on the right...

Continue reading
  1190 Hits
Sep
24

Reader Question

"Hey Joe! I'm pretty new at this. Can you tell me the rules for buy and sell stops?" When the market trades above a buy stop price order, it becomes a market order. The first down tick after the market order price is activated determines the highest price at which the buy stop order may be filled. The rule to remember placing stops is this, "Buy above and sell below." Buy stops are placed above th...

Continue reading
  1223 Hits
Sep
17

Dow Industrial Average relative to legal holidays

Question from a subscriber: "Hey Joe, I just want to be prepared for the next legal holiday. I've been basically a Dow investor for years and now I've begun trading the Dow futures. Do you have any information about the Dow Industrial Average relative to legal holidays in the U.S?" Thanks to Yale Hirsch's excellent "Stock Traders Almanac" for the following: "The Dow closes higher before one day ho...

Continue reading
  1165 Hits
Sep
10

Can you really make it as a trader?

You alone determine whether you will succeed or fail at trading. You alone are in control; take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens, it is what you do with what happens that makes the difference between profit and loss. You cannot marry a market or a single trading style. You have to look. Look at a var...

Continue reading
  1333 Hits
Sep
02

Losses

Sometimes I write an article that elicits a good response from our readers. One of those articles is written below in blue italics. I blended together the gist of what some of you wrote back to me, and many thanks to those of you who did. "Why are losses such a big deal? I can tell you why. In your book Trading is a Business , you said that once we enter the market, we are the market. And you also...

Continue reading
  1628 Hits
Aug
27

Six Steps to Becoming a Successful Trader

1. Focus on trading vehicles, strategies, and time horizons that suit your personality. 2. Identify non-random price behavior. 3. Absolutely prove to yourself that what you have found is statistically valid. 4. Set up trading rules. 5. Follow the rules. 6. Don't be afraid to abandon a rule that is no longer working. In a nutshell, it all comes down to: do your own thing (independence); trade what ...

Continue reading
  1461 Hits
Aug
21

Volatility

Historical Volatility Also referred to as statistical volatility. Historical volatility gauges the fluctuations of underlying securities by measuring price changes over predetermined periods of time. This calculation may be based on intraday changes but most often measures movements based on the change from one closing price to the next. Not everyone agrees on how to calculate historical volatilit...

Continue reading
  1280 Hits
Aug
13

Bullish Divergence

Mr. Ross can you tell me exactly what is meant by "Bullish Divergence?" It's really very simple. A Bullish Divergence occurs when prices fall to a new low while a technical indicator fails to reach a new low. This situation demonstrates that bears are losing power, and that bulls are ready to control the market again—often, but not always, a bullish divergence marks the end of a downtrend. The tec...

Continue reading
  1399 Hits
Aug
05

Dollar Value on "Success"

One of the great lies that all traders tell themselves, is that we need to make a lot of money in order to consider ourselves successful. That there's a dollar value on "success." That is absolutely false. The goal isn't to double your account or trade for a living. The goal is to be profitable. At Trading Educators, we hear from many successful traders — traders we ourselves helped in their train...

Continue reading
  1256 Hits
Jul
30

Indicators

Hey Joe! Which indicators work for real trading tactics? Have you ever noticed that my entries and exits are based on price levels—actual price bars? I use actual price data to determine most of my entries and exits. There is no better technical indicator than price itself. Think about it for a minute. You are making a mistake if you use indicators for entries and exits because every indicator is ...

Continue reading
  1352 Hits
Jul
23

Information Overload

Have you ever felt as if the more you know, the less you know, and the more you become confused? Why is this? People have the tendency to believe that the accuracy of their forecasts increases with more information. This is the illusion of knowledge - that more information increases your knowledge about something and improves your decisions. However, this is not always the case - increased levels ...

Continue reading
  1375 Hits
Jul
15

Day Trading or Swing Trading?

Hey Joe! Which is more profitable day trading or swing trading? Wow! What a loaded question. Many traders who are just starting out, want to know which type of trading they should focus on. Some traders prefer day trading while other traders prefer swing trading, and quite often traders like to mix it up a bit and trade both styles simultaneously. The most important thing to keep in mind before ma...

Continue reading
  1344 Hits
Jul
09

Getting Rid of Ego

Have you ever wondered how to get your ego out of your trading? Have you wanted to be market-centered, but find yourself consistently being self-centered? One thing I know for sure: your self-concept has to be separate from your trading. You began as an individual long before you ever thought of trading. And you exist as an individual beyond the time you spend trading. When personal self-worth get...

Continue reading
  1536 Hits
Jul
02

ATR Indicator

How does the ATR indicator work? The ATR indicator stands for Average True Range, it was one of the handful of indicators that were developed by J. Welles Wilder, and featured in his 1978 book, New Concepts in Technical Trading Systems. Although the book was written and published before the computer age, surprisingly it has withstood the test of time and several indicators that were featured in th...

Continue reading
  1863 Hits
Jun
24

The Close

Why is it with futures that we see the Close at one price, and then a half-hour later it has moved to another price? Why isn't the Close the same as "Last," and what is the "Consolidated Price?" "Last" is the last price at which an underlying stock or futures is traded. It could also be the "Close." The Close that you see within minutes or seconds after trading has ceased may not be the final pric...

Continue reading
  1560 Hits
Jun
18

Can seasonal transitions help a commodity trader?

Yes! Seasonal transitions create workable Spread strategies. I'll let my Andy Jordan, an expert in seasonal fundamentals, answer. Andy! You have the floor: "Change gives birth to risk – but also creates opportunity. Seasonal transitions create workable spread strategies because markets have to struggle to maintain equilibrium between supply and demand as conditions undergo dynamic change through t...

Continue reading
  1221 Hits
Jun
11

Break Out from a Trading Range

Here are two ways to know when prices are getting ready to break out from a trading range.  When prices are in a trading range, count the number of closes above or below a specific price near the vertical mid-level of the trading range. If 70% of the closes are above the mid-level price, and the market cannot rally and close above reaction highs, a severe correction may be imminent. If a mark...

Continue reading
  1594 Hits

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.