Trading Profits

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	INTRODUCTION

If you have been surfing the net looking for a system that will make your trading profitable you will have found how time consuming it is. The vast number of web pages offering advice and systems will take you a long time to absorb and understand. During that time you will probably spend at least $500 on subscriptions and systems if not more. Trading Profits has identified the minimum basic information you need to know to avoid information overload.


	We believe that interpretation of charts should be kept simple and uncluttered, to interpret market movements knowledge of stochastic tools is necessary and you will be able to learn about these. You will be able to use links to established web sites which can answer questions you need to ask to start your trading. These links will save you endless hours of surfing.

By following trends in the market’s movements you can take a view of the direction of the market. The share price of a stock going up can inform you that buyers are outweighing sellers. From that information you devise a strategy of buying on the dips by using Fibonacci retracement dips. You can also set your stop loss on the last medium bottom or on a moving average. If the converse is true and you become bearish you can keep your available cash secure until there is a major turn in the markets. Or alternatively sell on margin or through spread bets etc.

A concentration of useful information is offered here to help you acquire a quick understanding of investment strategy.

PERSONAL ATTITUDE

Your attitude should be impersonal, emotions of fear and greed must be erased and a computer like, objective and logical attitude should be applied in decision-making. Any personal ideas you may have are probably in the price. If you have read it in the media you are probably too late.

The price movement is conveying a message to you showing the battle between buyers and sellers and indicating which group is gaining the upper hand. Use that information only and act accordingly.

STOP LOSSES

Protection should be established by stop losses. The old adage of first loss is the smallest loss holds true.

INSTANT ACTION

For a quick immersion click on the country of your choice and see how the cross over of the fast average with the slow average gives you a change of direction (up, down, or sideways) which will show you the 10 day (in this case) trend. Change time period and intervals for a different picture on a time basis, which provides information for short, medium, and long term trading, depending on your own personal requirements.


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WHAT ARE STOCHASTICS?

Market data is processed through several formulae to identify trend reversal proximity to produce timing signals.

Links for more information to help you understand the use of stochastics are dolefin incrediblecharts investopedia (Type name of stochastics in dictionary e.g. Bollinger Bands).

KEEP A WATCH LIST FOR FAVOURITES AND TRADES

You can look up symbols and watch list by registering to track stocks on the top right hand side of the of page Click Here


	THE ELLIOT WAVE


	Shares move in a bull market in 5 waves The FIRST WAVE (Up) is made of increased volume and breadth. In this first wave there are short sellers convinced that the overall trend is still down, these waves are dynamic. The SECOND WAVE (Down) retraces the rise as investors feel the bear market is returning, underlying trend is down but does not carry to a new low. At this point investors are thoroughly convinced the bear market is back to stay. The THIRD WAVE (Up) generates the greatest volume and price movement involving breakouts and continuation gaps, favourable fundamentals create confidence in investors. The FOURTH WAVE (Down) tends to trend sideways without too much depth as profit taking sets in. The FIFTH WAVE (Up) is less dynamic as the market is mature with unusually high optimism resulting in buying climaxes and blow offs are usual. Emotionally fifth waves are attended by false euphoria.

		Shares also move in 5 waves in bear markets The FIRST WAVE (Down) is felt to be one of profit taking and regarded purely as a pull back in a bull market. The SECOND wave (Up) is a bull trap and buying is made into heavy bear selling no new tops ae made. The THIRD wave (Down) has a devastating decline, that makes cash king. The FOURTH wave (Up) is maily of bear closing. The FIFTH wave (down) is accompanied by distressed selling and a feeling of Armageddon and utmost depression of an irrational nature.

USING THE ELLIOT WAVE FOR TIMING

Human emotions of fear and panic are reflected in fibonnaci ratios. An understanding can provide you with a focus on how waves undulate. The article "Know How Far To Backtrack" will give you all the tools for using the ratios for market timing and enhance your understanding of the measurement of undulations in waves.

The 2 charts below are probably more useful for long-term interpretation. Dependant on your interpretation you can make a personal judgement on what percentage your portfolio should be in cash and/or equities.

S&P500 Bullish Percent index
This chart provides the floor and ceiling of U.S markets, which generally speaking leads most other western exchanges. Low shows an oversold market and high shows an overbought market.

Volatility Index
This shows the floor and ceiling of the US market and is the converse of the indices. The general rule on the Vix is when high buy, when low go "


	INVESTMENT SIMULATOR Test your new found skills with fantasy trading.

RECOMMENDED BOOKS

"How I made $2,000,000 in the Stock Market "by Nicholas Darvas (roller coaster ride with a successful investor.

A good read). For reference are Technical Analysis of Stock Trends By Robert D Edwards and John Magee (covers Dow Theory, stochastics, technical analysis, Dow Jones industrial average, rising wedge etc.)

Elliott Wave Principle by Frost and Prechter (Covers Fibonnaci Ratios).

Point and Figure Charting by Thomas J Dorsey. Point & Figure and candlestick charts are viewable by clicking. here

Japanese Candlestick Charting Techniques by Steve Nison (see Chapter 16 for use of candlestick, forecasting waves and relating to fibonnaci retracements)


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