For those of us without a Bloomberg terminal New Frontiers in Technical Analysis: Effective Tools and Strategies for Trading and Investing by Paul Ciana (Bloomberg/Wiley, 2011) is an idea book, not a plug and play manual. But even though some of the software tools described in Ciana’s book are not available on run-of-the-mill trading platforms (and where they are, they are available by subscription only) clever programmers may get inspired. Moreover, even without access to proprietary software the imaginative reader can add some new arrows to his quiver.
The six chapters in this book are written by six different authors: “Evidence of the Most Popular Technical Indicators” (Paul Ciana), “Everything Is Relative Strength Is Everything” (Julius de Kempenaer), “Applying Seasonality and Erlanger Studies” (Philip B. Erlanger), “Kase StatWare and Studies” (Cynthia A. Kase), “Rules-Based Trading and Market Analysis Using Simplified Market Profile” (Andrew Kezeli), and “Advanced Trading Methods” (Rick Knox).
Ciana provides some fascinating data about the preferences of those who use the Bloomberg Professional Service. For instance, Europe opts for log charts 47% of the time and Asia only 9% of the time. Asia prefers candlestick charts, the Americas bar charts. Worldwide the most popular technical indicators (excluding moving averages) are RSI, MACD, Bollinger bands (BOLL), stochastics (STO), directional movement index (DMI), Ichimoku (GOC), and volume at time (VAT). RSI is the clear winner, with a 44.4% worldwide preference; MACD comes in second at 22%. Some indicators have geographical ties. GOC has a 10.8% popularity rating in Asia as opposed to 2.5% in the Americas and 2.8% in Europe. VAT has a 5.3% rating in the Americas and only 1.8% in Europe and 1.6% in Asia. (more…)
Archives of “candlestick charts” tag
rssWhy Trading Is A Performance Sport
Learn about various trading software
Learn how to interpret candlestick charts and patterns
Learn Fib extensions and retracements
Try-out various time frames
Learn trade executions
Learn how to manage trades
Learn about emotional control and psychology
Learn about risk control
Devise a precise trading method
Learn about money management
Backtest set-up for several months
Internalize set-ups by paper trading
Have to be adequately capitalized
Specialize in gap trading
Learn about creating a daily watch list
Learn how to prioritize a daily hit list
Set up blog for recording daily diary of ideas and thoughts
Devise a system to analyze trading results – daily and monthly
Develop a daily precise routine
Common Mistakes to Avoid while Trading:
- Failure to cut losses: Pride, ego, or stubbornness prevents the trader from selling.
- Not knowing “how much” to trade on each position: Overtrading positions can kill your account and take you out for good (risk of ruin).
- Average down in price: Placing good money after bad is a loser’s game.
- Listening to rumors: Forget the talking heads, rumors and tips as they are nothing but garbage and a sure way to substantial losses
- Lack of patience: It takes years to master trading as an advanced skill; even then, you are never done learning or adapting
- Not knowing when to sell: Determine your price objectives and risk-to-reward ratios prior to entering the trade; never allow emotions to make this decision. (more…)
Trading Mistakes: Avoid at all Costs
Common Mistakes to Avoid while Trading:
- Failure to cut losses: Pride, ego, or stubbornness prevents the trader from selling.
- Not knowing “how much” to trade on each position: Overtrading positions can kill your account and take you out for good (risk of ruin). (Learn to position size)
- Average down in price: Placing good money after bad is a loser’s game.
- Listening to rumors: Forget the talking heads, rumors and tips as they are nothing but garbage and a sure way to substantial losses
- Lack of patience: It takes years to master trading as an advanced skill; even then, you are never done learning or adapting
- Not knowing when to sell: Determine your price objectives and risk-to-reward ratios prior to entering the trade; never allow emotions to make this decision.
- Buying 52-week lows: Don’t be afraid to buy stocks making new highs. The garbage sits at the bottom along with weakness and downward momentum. Buy strength and the momentum moving higher.
- Pure Fundamentalist: Technical analysis is a must! Use candlestick charts that show the price, volume and major moving averages – this is all you need, don’t complicate the process.
- Making trading decisions based on taxes: Never buy or sell based on taxes alone.
- Buying based on dividends: Don’t buy based solely on dividends; most growth stocks will never give out dividends
- Buying familiar names: Yesterday’s leaders are not likely to be tomorrow’s stars. Look for solid new companies with great earnings, sales and a product in demand. Don’t buy a stock based on a popular household name.
- Lack of action: Be able to move on a dime. Time is money, don’t procrastinate or hope for something that may never happen.
- Lack of Consistency: Develop a method suited to your personality; stick to it and don’t trade blindly.
7 Major Candlestick Reversal Pattern Pairs
Candlestick reversal patterns can be a boon to any trader’s repertoire. Combining them with support/resistance lines and other indicators can increase a trader’s edge substantially. Each set below contains both the bearish and bullish counterparts. These are ideal setups that require directional movement (i.e. nothing range bound). The more volume at the given point, the more strength each of these patterns portend.
Realize that a candlestick pattern is simply a means of reading data on the chart. Whether you trade forex, stocks, options or futures it is a superior tool for technical analysis.
Once you become familliar with the basic candlestick patterns you will quickly assimilate their meaning and easily interpret them.
The patterns are basically intuitive and the learning curve is small.
There comes a point where you will recognize market sentiment without even identifying a specific candlestick pattern.
No matter what system style or technique you may implement the fact is you will be that much more effective by making candlestick charts your tool of choice.
The alternatives or archaic to say the least, and downright ugly once you get used to using Japanese candlesticks.
Candlestick charts are the most widely used for of charting for good reason. With a little practice and help, it is actually the most intuitive process for understanding current and future price action.
Bearish and Bullish Harami –
Identified by a long bar followed by a very short one. Harami signal a loss of momentum and a possible reversal.
Dark Cloud Cover and Bullish Piercing Pattern – The dark cloud cover and bullish piercing patterns reveal weakness in the current trend and emerging strength in the opposition. (more…)
