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You will see this time and again as the markets are
full of traps that the unsuspecting new trader is prone to falling
prey to. The cycles will be more stable on longer term charts, but
knowing the cycle can assist you in your trading. If you see price
approaching a supply or demand level but the cycle is not indicating a
top or bottom, the level may have a higher probability of breaking.
But if the cycle top or bottom is near, the levels are more likely to
hold.
One of these traps is the idea that when prices trade above
or below normal price points, the particular stock is bullish or
bearish. These price points can be a variety of technical levels.
Some are what are commonly referred to as support or resistance.
Others can be a prior day’s high or low pivot points. Another the
overnight peaks and troughs known as the Globex are seen in this
light as well. Market turns will happen at price levels where Supply
and Demand is most out of balance. This is the most important dynamic
of understanding price movement and is the core feature of our rule
based strategy.
Once a trader understands how to recognize what this picture looks like
on a price chart, they can then form their trade plan and rules and
objectively analyze the forex or other markets for low risk, high
potential money making trades. The basic strategy can be applied to
stock markets and of course to the options, futures market as well,
but something traders do need to take into account before blindly
jumping into either market is that volume plays a key role in the
safety of placing the trade.
Traders entered a trade and immediately began to feel your
heart pound, noticed that you were breathing heavily, found that it
was difficult to maintain your concentration and on top of that felt a
strong wave of anxiety travel through your body? This is what you were
experiencing are the effects of stress and once they begin to affect
your body mind functioning you have gone over the threshold that is,
imaginary line beyond which abundance of physiological, emotional, and
mental issues start to pile up. Because the nature of trading is
performance oriented, which is extremely challenging as it relates to
maintaining self discipline while following through with plans and
rules, becoming stressed is a common occurrence. As you become more
advanced at trading these emotions will go away. A major advantage is
the elimination of emotional and psychological influences determining
what and when to trade in favor of a cold, logical approach to the
market.
Apple (AAPL), Google (GOOG), and and Amazon (AMZN)? Anytime a new
entrant absorbs five billion of equity capital there is massive
rebalancing by institutional investors, including ETFs, indices, and a
broad array of tech funds. Everyone of these traders will need to own
Facebook in their portfolio, and the bigger question will be where
they get the cash. If they need to sell some Google, Apple, or
Amazon, we can expect to see real pressure on those stocks as tech
holders need to build positions in Facebook in the coming weeks.
Can you imagine being the head of a tech fund who didn't participate? For
those of the traders who have been looking for an opportunity to add
to positions in Google, Amazon or Apple, the time may be ripe. Traders
should be looking very closely at what happens in the coming weeks to
those stocks to see if an opportunity can be realized to buy some
Google or Amazon on a dip.
Many investors establishing positions in commodity focused
products whether futures or options contracts, exchange traded funds
ETF , or some other type of stocks do so because they believe that
the spot price of that natural resource will rise. But it's important
to understand that the majority of commodity products do not offer
exposure to the spot price of the underlying resource that's only one
of the factors that ultimately contributes to bottom line returns.
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