Technical Investment Analysis - Trading

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How to Trade Mean Reversion

The phrase reversion to the mean refers to a statistical concept that high and low prices are temporary and a price will tend to go back to its average over time. To trade the concept of mean reversion [more…]

How to Classify Stock Market Indicators

A market indicator is a calculation that you put on a chart to identify chart events, chiefly whether the price is trending, the degree of trendedness, and whether a trend turning point is being reached [more…]

How to Choose Your Stock Trading Style

Generally, stock market traders tend to have one of two personal trading styles, and the style dictates the holding period. In a perfect world, as a stock trader, you first determine whether your security [more…]

How to Use Indicator Signals in Stock Trading

Market indicators are designed to give buy and sell signals, although in many instances, the signal is more like a warning and doesn’t have a black-and-white embedded decision rule. Indicators generate [more…]

How to Interpret Stock Trading Benchmark Levels

A new one-year high or low in the market has no analytical value to the technical trader — unless it’s also an historic high or low. An historic high or low is an absolute level that becomes a benchmark [more…]

How to Choose Stock Market Indicators

The good news is that every kind of stock market indicator works, at least some of the time. Moving average indicators, channel breakouts, trading in a three-to-five-day time frame with candlestick analysis [more…]

How to Optimize Your Stock Market Indicators

Optimization is the process of testing a hypothesis (in this case, a stock market indicator) on historical data to discover which indicator would’ve worked the best. Optimization is a necessary evil because [more…]

How to Build Stock Trading Rules

To plan and manage your trades, you need trading rules. A trading rule is the specific action you take when certain conditions are met. At the most basic, a trading rule instructs you to buy or sell a [more…]

Common Questions about Technical Trading

When you use technical trading in the stock market, you may have some questions about the best techniques and practices. Here are some of the most common queries about technical trading: [more…]

How to Establish a Stock Trading Profit Target

You need to establish a trading profit target so that you can answer these questions: How much is enough? How do you know when to take profits? The central issue in managing the trade is that you can have [more…]

How to Control Losses on the Stock Market

When you start trading on the stock market, you need to know how to control your losses. Your level of risk seeking or risk aversion is personal. Therefore, nobody can design loss-control rules for you [more…]

How to Use Trading Stop-Loss Orders

When trading, you use a stop-loss order to overcome the unreliability of indicators, as well as your own emotional response to losses. A stop-loss order [more…]

How to Adjust Trade Positions

You can adjust your trading position if new information suggests a stock market trade isn’t as strong as you originally thought. Often, when you’re using multiple trade indicators, you don’t get a clear-cut [more…]

How to Trade on Candlestick Price Bars Alone

To do a good job interpreting candlestick price bars and trading based on that information, you need to understand the dynamic and complex relationships of many patterns all at once, like juggling six [more…]

How to Use Trading Chart Channels to Make Profit and Avoid Loss

A trading chart channel is a pair of straight-line trendlines encasing a price series. You can use a channel to help you determine how to make profit and avoid loss in the market. A channel consists of [more…]

Filter Out Whipsaws from Your Trading Decisions

False signals on a trading chart usually reverse fairly quickly, putting you back in the trade in the right direction, but in the meanwhile, you take a small loss, called a [more…]

How to Apply Momentum to Trading Decisions

In investing and stock trading, the momentum rule is simple: Buy when the trading momentum indicator crosses above the zero line and sell when it crosses below the zero line. The [more…]

How to Use Setup Trading

Setup trading is a form of swing trading that’s very popular today. A setup is a particular configuration of trading price bars, usually with one or two other confirming conditions like a pattern or an [more…]

Using a Security Trading System

The term trading system has different meanings to different people in the realm of securities trading. Systematic trading can be as simple as a single indicator and a stop-loss rule. In fact, most folks [more…]

Find a Trading System That Works for You

You may see ads for security trading systems that promise huge returns, practically no risk, and 80-percent accuracy on trade recommendations. Never forget that if it sounds too good to be true, it’s not [more…]

How to Successfully Become a Technical Trader

You can trade technically in any number of equally valid ways. In fact, technical traders come in all stripes (and some are plaid). Whatever their styles, successful technical traders all have one thing [more…]

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