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26. How to Trade the Average Directional Index (ADX)
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4525-adx-how-trade-trends-using-adx.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses Link to the formulas behind the ADX: http://hubpages.com/hub/ADX Link to Additional Resources on Trading the ADX: http://www.informedtrades.com/4529-six-resources-help-you-trade-adx.html And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the ADX for traders of the stock, futures, and forex markets. In this lesson we are going to learn about the Average directional Index (ADX), an indicator which helps traders determine when the market is trending, when the market is ranging, when the market may be about to change from trending to ranging or vice versa, and to gauge the strength of the trend in the market. When plotted below the chart the ADX Line is normally accompanied by two other lines which are known as the +DI and --DI Lines. I am not going to go into the formulas for the Indicator here however you do need to know that: • The ADX line is composed of two other indicators which are known as the Positive Directional Index (+DI Line) and the Negative Directional Index (-DI Line). • The +DI Line is representative of how strong or weak the uptrend in the market is. • The --DI line is representative of how strong or weak the downtrend in the market is. • As the ADX line is comprised of both the +DI Line and the --DI Line, it does not indicate whether the trend is up or down, but simply the strength of the overall trend in the market. If you would like a deeper explanation of the computation of the indicator you can find it here: http://hubpages.com/hub/ADX As the ADX Line is Non Directional, it does not tell you whether the market is in an uptrend or a downtrend (you must look to price or the +DI/-DI Lines for this) but simply how strong or weak the trend in the financial instrument you are analyzing is. When the ADX line is above 40 and rising this is indicative of a strong trend, and when the ADX line is below 20 and falling this is indicative of a ranging market. So one of the first ways traders will use the ADX in their trading is as a confirmation of whether or not a financial instrument is trending, and to avoid choppy periods in the market where many find it harder to make money. In addition to a situation where the ADX line trending below 20, the developer of the indicator recommends not trading a trend based strategy when the ADX line is below both the +DI Line and the --DI Line. Another way that traders use this indicator is to identify the potential start of a new trend in the market. Very simply here they will look from below the 20 line to above the 20 line as a signal that the market may be beginning a new trend. The longer the market has been ranging, the greater the weight that most traders will give this signal Another way traders use the ADX is as a signal of trend reversals. When the ADX is trading above both the +DI line and the --DI line and then turns lower this is often a signal that the current trend in the market is reversing and traders will position themselves accordingly: The final example that I am going to cover on how traders use the ADX is to position to trade long when the +DI crosses above the --DI (as this is a sign that the buyers are winning out over the sellers) and to position to trade short when the +DI line crosses below the --DI (as this is a sign that the sellers are winning over the buyers). As with the other crossover strategies that we have covered used alone, the DI crossover is prone to many false signals. That completes our lesson for today. You should now have a good understanding of the ADX and several different ways that traders use this in their trading. In tomorrow's lesson we are going to look at a new indicator which is called the Parabolic SAR, which many traders use to set stops when trading trends in the market.
Views: 240660 InformedTrades
Specialist Trading (Steve Primo) Strategy #1: Donchian Channel Strategy
 
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Check out Steve Primo's other strategies: http://bit.ly/steveprimo Discuss this with us on InformedTrades: http://www.informedtrades.com/765472-specialist-trading-steve-primo-free-donchian-channel-strategy.html#post828250 The basics of this strategy are as follows: 1. Wait till price is above the 50 single moving average 2. Plot Donchian channels; wait till price touches top line 3. After plot touches top line, wait until there is a pullback involving a candle whose ENTIRE range is below the middle line 4. Place a stop entry order to enter if price goes one tick above the high of the candle whose entire range is below the middle line 5. Place your stop loss below the bottom of the trigger candle -- the candle whose entire range is below the middle line after a pullback 6. Exit when price reaches the top Donchian channel again
Views: 46288 InformedTrades
9. How to Trade the Head and Shoulders Pattern Part 1
 
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Remember that practice makes perfect! :) So be sure to register for a free practice trading account here: http://bit.ly/forex-demo1 The 3rd lesson in a series on charting patterns which looks at the head and shoulders pattern and how traders use this in the stock market, forex market, and futures market. For the full article with links, images, and discussion, click here: www.informedtrades.com/3047-head-shoulders-pattern.html VIDEO TRANSCRIPTION: As we have learned in previous lessons, double tops and double bottoms are forex, futures and stock chart patterns which show that the momentum needed to break a specific level of resistance for the double top and support for the double bottom is not there. When these patterns show up on a stock, futures or forex chart day traders will look for a reversal of the current trend. In this lesson we are going to look at a chart pattern which also shows that the momentum needed to break a support or resistance level is slowing which is known as the head and shoulders pattern and the reverse head and shoulders pattern. Once we have a sound understanding of how to spot these patterns we will then look at a specific strategy for trading these patterns when they appear on a chart. A Head and Shoulders pattern is defined by one peak, followed by a higher peak, which is then followed by a lower peak, and finally a break below the support level established by the two troughs formed by the pattern. The head and shoulders pattern is thus seen as a potential reversal pattern and day traders will pay special attention to this pattern when it occurs on an uptrend, and will look to trade a potential reversal of the uptrend should the pattern play out. For further confirmation that the potential for a reversal is high traders often give more credibility to a falling neckline than they do a rising neckline. The reverse head and shoulders is basically a mirror image of the head and shoulders pattern and is defined by one trough, followed by a second lower trough, which is then followed by a third higher trough, and then finally a break above the resistance level established by the two peaks formed by the pattern. the reverse head and shoulders is basically showing the sellers trying 3 times unsuccessfully to take the market lower before finally giving into the buyers who theoretically retain control after the 3rd failure. Like the Head and Shoulders Pattern, the Reverse Head and Shoulders is seen as a reversal pattern, and traders of the stock, futures and forex markets will pay special attention to this pattern when it occurs as part of a downtrend should the pattern play out. For further confirmation that the potential for a reversal is high, day traders will look for a rising neckline.
Views: 163217 InformedTrades
21. MACD Indicator: Trade it  Like a Pro (Part 2)
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/3925-macd-learn-trade-macd-indicator-part-2-a.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES In our last lesson we looked at the different components that make up the MACD indicator. In today's lesson we are going to look at how traders use the MACD to identify whether or not a market is trending, how strong that trend is, and where good potential entry and exit points are. As we learned in our last lesson the MACD indicator is used to identify trends in the market and the momentum of those trends. Because of this the MACD is an indicator that traders will look to trade when the market is trending and avoid when the market is range bound. In addition to being able to tell if the stock, futures contract, or currency you are analyzing is trending or not from simply looking at its price action on the chart, you can also use the MACD indicator. Very simply if the MACD line is at or close to the zero line, this indicates that the financial instrument you are analyzing is not exhibiting strong trending characteristics, and thus should not be traded using the MACD. Once it is determined that the financial instrument you are analyzing is exhibiting trending characteristics, there are three ways that you can trade the MACD. 1. Positive and Negative Divergence 2. The MACD/Signal Line Crossover 3. The zero line crossover Trading the MACD Divergence: Divergence occurs when the direction of the MACD is not moving in the same direction of the financial instrument you are analyzing. This can be seen as an indication that the upward or downward momentum in the market is failing. Traders will thus look to trade the reversal of the trend and consider this signal particularly strong when the market is making a new high or low and the MACD is not. Trading the MACD Crossover This is the simplest way to trade the MACD as it involves simply watching the MACD line and going long when the MACD line crosses above the signal line and going short when the MACD line crosses below the signal line. As this strategy generates the most signals, it also generates the most false signals, and the potential to get into a bad trade using just this method is high. For this reason traders will confirm the signals with other methods such as the chart patterns we have learned so far, volume etc. The MACD Zero Line Crossover: The MACD zero line cross over occurs when the MACD crosses above or below the line plotted at point zero on the indicator. When this occurs it is an indication that market momentum has reversed direction. The strength of the move that can be expected as a result of this depends on what has been happening in the market, and what has been happening with the indicator. If the market and the MACD are both coming off of recent new highs then this could be considered a strong signal. If the market is simply trading in a weak trend or range and the MACD has simply crossed from just above to just below the zero line, then this would be considered a weak signal. As with all of the indicators that we are learning about in this series it is normally better to trade the MACD along with other confirming signals such some of the things we have learned so far like trend lines, chart patterns, and breaks of significant support resistance levels.
Views: 255043 InformedTrades
10. How to Trade the Head and Shoulders Pattern Part 2
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 Check out other videos in our free beginner course here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com/register.php The 4th lesson in a series on charting patterns which looks at how to trade the head and shoulders pattern and the reverse had and shoulders pattern for daytraders in the stock market, futures market, and forex market. To view this lesson with text, links, images, and discussion, see our thread on InformedTrades here: http://www.informedtrades.com/2916-double-bottom-double-top-trading-strategies.html VIDEO TRANSCRIPTION In our last lesson we learned how to spot a head and shoulders pattern and a reverse head and shoulders pattern in the forex, futures, and stock markets. In this lesson we are going to look at a specific strategy that many traders use to trade these patterns. Upon the break of the neckline support level the chart pattern is said to be in place so this is where traders will commonly look to enter a short position. Their target will be calculated by measuring the distance from the head of the pattern down to the neckline and then projecting that distance downward from the breakpoint of the neckline. The stop will then be placed just above the right hand shoulder of the pattern which is considered resistance. The idea here is that once the neckline support has been broken sellers will theoretically remain in control but if this does not happen then you are protected with a stop loss just above the nearest resistance level. For the reverse head and shoulders the strategy is a mirror image of the above. Upon the break of the neckline resistance the pattern is said to be in place so traders will commonly look to buy at this level. Just as with the head and shoulders their target will be calculated by measuring the distance between the head and the neckline but in this case the target is projected upward from the break point of the neckline. The stop will then be placed just above the right had shoulder of the pattern which is in this case considered the nearest support level. For confirmation, traders will commonly look for a downward sloping neckline before entering a trade on the break of a head and shoulders pattern and an upward sloping neckline before entering a trade on the reverse head and shoulders, as this is further indication that the trend is reversing. Secondly traders like to see the volume on the second peak (trough with a reverse head and shoulders) be lower than the volume on the first, and the volume on the third peak (trough in a reverse head and shoulders) be lower than the volume on the second peak as this is further confirmation that the trend is ready to reverse. Lastly they will look for increasing volume on the break of the neckline to show that the break is real. That's our lesson for today. You should now have a good understanding of the head and shoulders pattern and the reverse head and shoulders pattern as well as a trading strategy for each of them. In our next lesson we are going to finish up on reversal patterns by looking at the rising wedge and falling wedge patterns and then we will move onto continuation patterns after that.
Views: 131566 InformedTrades
Covered Calls Explained
 
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View Tek's whole beginner options course: http://www.informedtrades.com/f115/ Practice options trading with a free practice trading account: http://bit.ly/apextrader VIDEO NOTES This is the first video in a short series that explains covered calls. Understanding the content of this video requires at least a basic understanding of Call Options. If needed, before watching this video, you may want to watch the first video in my basic options series titled 'What is a stock option?.' While there are different ways to approach covered calls that have different goals, most covered call strategies are income producing strategies. A covered call is a combination of two positions. The first is a long position on a stock or ETF. The 2nd is a short position on a Call Option. When one buys a Call Option, they are locking in a pre-set buy price for an asset. When one sells a Call Option, they are selling their commitment to later sell an asset for a pre-set sell price. Therefore, placing a covered call means that the trader is buying a stock or ETF, and then selling an option contract that locks in the right for the option buyer to buy that stock or ETF from the trader for a pre-set price. Let's look at a hypothetical example to explain. Let's say stock XYZ is currently trading for $10 a share. To place a covered call, the trader buys 100 shares of the stock for $10 a share. He also sells a Call Option contract with an $11 Strike Price that expires in a month. He is paid 25 cents a share up front for selling the option. The trader has bought XYZ for $10 a share. He also sold the right for someone else to buy XYZ from him for $11 a share, and he was paid 25 cents a share for that right. If the price of XYZ is above $11 a share when the Call Option he sold expires, the trader is obligated to sell his shares of XYZ for $11 a share. He bought XYZ for $10 a share, and he sells it for $11, so his makes $1 a share on the stock. Plus, he was paid 25 cents a share selling the option, so his total profit is $1.25 a share. If the price of XYZ does not rise above $11 a share before the option the trader sold expires, the option expires worthless. This means that the trader keeps his stock, plus he keeps the 25 cents that he was paid up front for selling the option as profit. The next month, he can sell another option and repeat the process The risk for a covered call trader is that the price of the underlying stock makes a large move downward. The premium that the covered call trader collects somewhat helps protect the trader against a downward movement of the underlying stock. When placing a covered call, a trader must choose which stock or ETF to buy, and which Option to sell on that stock or ETF, There is there is a trade-off between potential profit versus downside risk. For each Option the trader could sell, the trader must consider the cost of the Option, in other words the amount he would collect up front, the price at which the option is exercised, in other words, the Option's Strike Price, the amount of downside protection that the Option provides, and the break-even point. Therefore, the selection of which stock or ETF to use for Covered Calls, and which Call Option to sell on that stock or ETF depends on the strategy and goals of the trader. In the next video, we will look at examples of covered calls. I hope that you enjoyed this video. Thanks for watching
Views: 36169 InformedTrades
22.How to Trade the Relative Strength Index (RSI) Like a Pro
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/apextrader For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/3946-relative-strength-index-rsi-trading.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the RSI for traders and investors using technical analysis in the stock market, futures market and forex market. In our last lesson we looked at 3 different ways that the MACD indicator can be traded. In today's lesson we are going to look at a class of indicators which are known as Oscillators with a look at how to trade one of the more popular Oscillators the Relative Strength Index (RSI). An oscillator is a leading technical indicator which fluctuates above and below a center line and normally has upper and lower bands which indicate overbought and oversold conditions in the market (an exception to this would be the MACD which is an Oscillator as well). One of the most popular Oscillators outside of the MACD which we have already gone over is the Relative Strength Index (RSI) which is where we will start our discussion. The RSI is best described as an indicator which represents the momentum in a particular financial instrument as well as when it is reaching extreme levels to the upside (referred to as overbought) or downside (referred to as oversold) and is therefore due for a reversal. The indicator accomplishes this through a formula which compares the size of recent gains for a particular financial instrument to the size of recent losses, the results of which are plotted as a line which fluctuates between 0 and 100. Bands are then placed at 70 which is considered an extreme level to the upside, and 30 which is considered an extreme level to the downside. Example of the RSI The first and most popular way that traders use the RSI is to identify and potentially trade overbought and oversold areas in the market. Because of the way the RSI is constructed a reading of 100 would indicate zero losses in the dataset that you are analyzing, and a reading of zero would indicate zero gains, both of which would be a very rare occurrence. As such James Wilder who developed the indicator chose the levels of 70 to identify overbought conditions and 30 to identify oversold conditions. When the RSI line trades above the 70 line this is seen by traders as a sign the market is becoming overextended to the upside. Conversely when the market trades below the 30 line this is seen by traders as a sign that the market is becoming over extended to the downside. As such traders will look for opportunities to go long when the RSI is below 30 and opportunities to go short when it is above 70. As with all indicators however this is best done when other parts of a trader's analysis line up with the indicator. Example of RSI Showing Overbought and Oversold: A second way that traders look to use the RSI is to look for divergences between the RSI and the financial instrument that they are analyzing, particularly when these divergences occur after overbought or oversold conditions in the market. These divergences can act as a sign that a move is loosing momentum and often occur before reversals in the market. As such traders will watch for divergences as a potential opportunity to trade a reversal in the stock, futures or forex markets or to enter in the direction of a trend on a pullback. Example of RSI Divergence: The third way that traders look to use the RSI is to identify bullish and bearish changes in the market by watching the RSI line for when it crosses above or below the center line. Although traders will not normally look to trade the crossover it can be used as confirmation for trades based on other methods. Example of the RSI Centerline Crossover: That's our lesson for today. You should now have a good understanding of the RSI and how traders use this indicator in their trading. In tomorrows lesson we will look at another Oscillator which is known as the Stochastic Oscillator so we hope to see you in that lesson. As always if you have any questions please feel free to leave them in the comments section below, and have a great day!
Views: 460484 InformedTrades
36. Two Trading Mistakes Which Will Destroy Your Account
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/apextrader For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/5168-destroy-your-trading-account-these-two-mistakes.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on two of the most common mistakes that traders make when trading the stock, futures and forex markets. One of the most common mistakes is sticking in a trade where you know you are right in your analysis, but the market continues to move against you. As the famous economist John Maynard Keynes once said: "The markets can remain irrational longer than you can remain solvent" Perhaps one of the best examples of this are those who shorted the NASDAQ into the runup in 1999 and early 2000. At the time it was pretty obvious that from a value standpoint NASDAQ stocks were way overvalued and that people's expectations for growth that they were buying on were way out of line with reality. There were many great traders at the time who recognized this and began shorting the NASDAQ starting in late 99. As you can see from the below chart and the huge sell off that ensued after the peak in 2000, these traders were right in their analysis. Unfortunately for many of them however stocks continued to run up dramatically from already overvalued points in late 99 wiping out many of these traders who would eventually be proved correct. So as we learned about in last lesson, people's strong desire to be right will often times keep them in trades that they should have moved on from even though the market may eventually prove them correct. For those traders who are able to initially move on from trades where they feel they are correct but the market moves against them, another common theme which arises is for a trader to initially stick to his plan, but after being proved correct and missing out on gains he becomes frustrated and deviates from his plan so that he will not miss out on another profitable opportunity. One place of many where I have seen this time and time again is when watching traders who trade reversals at support or resistance levels. Many times when the market touches a support or resistance level it will have a brief spike upwards or downwards which hits the stops of a trader looking to profit from the reversal, taking him out of the market just as it turns in his favor. Because many traders think a like, often times the level at which the trader is taken out of the market is right at his stop level as well. After this happens once or twice to a trader he will then stop placing hard stops in the market and instead convince himself that he will manage the trade if it moves against him. This may work a few times for the trader giving him more confidence in the strategy until the market does finally break. As we have learned about in previous lessons often times when the market breaks significant support or resistance levels it will break violently to the point where the trader in the above situation is quickly down a large amount on his trade. Typically what will happen at this point is instead of taking the big loss, learning his lesson, and moving on the trader will remain in the position or worse add to it with the hopes that the market will turn back in his favor. If the trader gets lucky and the market does turn back in his favor this only goes to support this bad habit which will eventually knock him out of the market. Successful traders realize that situations such as the above occur constantly in the market and that one of the main things that separates successful traders from unsuccessful ones is their ability to accept this, stick to their strategy, accept that loosing trades are a part of trading, and move onto the next trade when the market does not move in their favor. That's our lesson for today. In our next lesson we are going to look at another major part of trading psychology which is related to not wanting to take losses which is people's desire to follow the crowd. As always if you have any questions or comments please post them in the comments section below so we can all learn to trade together, and good luck with your trading!
Views: 373429 InformedTrades
29. How to Trade Spinning Tops and Doji Candlestick Patterns
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4612-spinning-top-doji-candlestick-patterns.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES In our last lesson we learned how different candlestick formations can tell us different things about whether the buyers or the sellers won out in a particular time period. In today's lesson we are going to look at some of the basic candlestick patterns and what they mean when looked at in the context of recent price action in the market. The Spinning Top Add A picture When a candlestick with a short body in the middle of two long wicks forms in the market this is indicative of a situation where neither the buyers nor the sellers have won for that time period as the market has closed relatively unchanged from where it opened. The upper and lower long wicks however tell us that both the buyers and the sellers had the upper hand at some point during the time period the candle represents. When you see this type of candlestick form after a runup or run down in the market it can be an indication of a pending reversal as the indescision in the market is representative of the buyers loosing momentum when this occurs after an uptrend and the sellers loosing momentum after a downtrend. The Doji Like the Spinning Top the Doji Represents indecision in the market but is normally considered a stronger signal because unlike the spinning top the open and the close that form the Doji Candle are at the same level. If a Doji forms in sideways market action this is not significant as the sideways market action is already indicative of indecision in the market. If the Doji forms in an uptrend or downtrend this is normally seen as significant as this is a signal that the buyers are loosing conviction when formed in an uptrend and a signal that sellers are loosing conviction if seen in a downtrend. Most traders will place greater significance on the Doji when it forms in a market that is in overbought or oversold territory. The Bullish Engulfing Pattern The Bullish Engulfing pattern is another candlestick formation which represents a potential reversal in the market when seen in a downtrend. The pattern is made up of a white and black candle where the latest candle (the white candle) opens lower than the previous candle's (the black candle) close and closes higher than the previous candle's open. When this happens the current period's white candle completely engulfs the previous period's black candle. When thinking about this from a buyer/seller perspective, you can understand that the long body of the current candle engulfing completely the body of the previous candle to the upside is representative that the buyers have not only taken control but have taken control with force. When this white engulfing candle occurs after a small black candle the formation is given even more significance as the small black candle is already indicative of a trend that is running low on steam. The Bullish Engulfing Pattern The same things apply when the pattern forms in an uptrend simply in reverse as shown in the image above. That completes our lesson for today. In our next lesson we are going to look at several more candlestick formation and how traders use these in their trading so we hope to see you in that lesson. As always if you have any questions or comments please feel free to leave them in the comments section below, and have a great day!
Views: 115367 InformedTrades
Why Bond Prices and Yields are Inversely Related
 
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Help us make better videos: http://www.informedtrades.com/donate Trade stocks and bonds with Scottrade, the broker Simit uses: http://bit.ly/scottrade-IT (see our review: http://bit.ly/scottrade-IT2) KEY POINTS 1. Bond prices and bond yields move in opposite directions. When bond prices go up, that means yields are going down; when bond prices go down, this means yields are going up. Mathematically, this is because yield is equal to: annual coupon payments/price paid for bond A decrease in price is thus a decrease in the denominator of the equation, which in turn results in a larger number. 2. Conceptually, the reason for why a decrease in bond price results in an increase bond yields can be understood through an example. a. Suppose a corporation issues a bond to a bondholder for $100, and with a promise of $5 in coupon payments per year. This bond thus has a yield of 5%. ($5/$100 = 5%) b. Suppose the same corporation then issues additional bonds, also for $100 but this time promising $6 in coupon payments for year -- and thus yielding 6%. No rational investor would choose the old bond; instead, they would all purchase the new bond, because it yielded more and was at the same price. As a result, if a holder of the old bonds needed to sell them, he/she would need to do so at a lower price. For instance, if holder of the old bonds was willing to sell it at $83.33, than any prospective buyer would get a bond that earned $5 in coupon payments on an $83.33 payment -- effectively an annual yield of 6% (5/83.33). The yield to maturity could be even higher, since the bond would give the bondholder $100 upon reaching maturity. 3. The longer the duration of the bonds, the more sensitivity there is to interest rate moves. For instance, if interest rates rise in year 3 of a 30 year bond (meaning there are 27 years left until maturity) the price of the bond would fall more than if interest rates rise in year 3 of a 5 year bond. This is because an interest in interest rates reduces the relative appeal of existing coupon payments, and the more coupon payments that are remaining, the more interest rate fluctuations will impact the price of the bond. 4. Lastly, a small note on jargon: when investors or commentators say, "bonds are up," (or down) they are referring to bond prices. "Bonds are up" thus means bond prices are up and yields are down; conversely, "bonds are down" means bond prices are down and yields are up.
Views: 65395 InformedTrades
8. How to Trade Double Tops Like a Pro
 
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Remember that practice makes perfect! :) So be sure to register for a free practice trading account here: http://bit.ly/forex-demo1 The 2nd lesson in a series on charting patterns for traders and investors in which goes into specific strategies which can be used to trade double tops and double bottoms in the forex market, stock market, and futures market. See the full lesson with images, links, and discussion here: http://www.informedtrades.com/2916-double-bottom-double-top-trading-strategies.html VIDEO TRANSCRIPTION In our last lesson we learned about the double top and double bottom and how to spot these setups on a stock chart. In this lesson we are going to learn about a common trading strategy that traders use to trade these setups in the futures, forex, and stock markets. As the double top and double bottom are signs that a financial instrument has failed to break through a certain level (resistance for a double top and support for a double bottom) these chart patterns are considered reversal patterns. As this is the case, traders will commonly look to trade the double top when it occurs at the top of a trend as a sign that the uptrend is reversing, and to trade the double bottom at the bottom of the trend as a sign the downtrend is reversing. First lets look at the a common trading strategy for the double top. For confirmation that a double top has actually formed and that a reversal in the uptrend is at hand, a common strategy is to look for declining volume going into the second peak and rising volume on a break below the bottom of the trough which has formed between the two peaks (support). Once these things line up a common trading strategy is to enter the trade on the break of support with a target which is equal to the distance between the bottom of the trough and the top of the two peaks projected downward from the bottom of the trough. The stop order is then placed just above the last peak. For double bottoms the process is a mirror image of the above explanation. The strategy here is to look for declining volume going into the second trough and rising volume on the break of the peak which has formed between the two troughs (resistance). Once you spot the double bottom the trade is entered on the break of resistance with a target which is equal to the distance between the top of the peak and the bottom of the two troughs projected upward. The stop order is then placed just above the last trough. We should now have a good understanding of a common strategy used to trade double tops and double bottoms. In or next lessons we are going to look at another common chart pattern which is known as the head and shoulders pattern and a common trading strategy which is used to trade this chart pattern.
Views: 132378 InformedTrades
101. How Rollover Works in Forex Trading
 
06:15
Check out the rest of our intro to forex course: http://www.informedtrades.com/f112 Practice forex trading with a free demo account: http://bit.ly/IT-forex-demo3 A lesson on what rollover is and how it works for traders of the forex market who hold trading positions overnight.
Views: 22158 InformedTrades
7. Introduction to the Double Top and Double Bottom Charting Pattern
 
03:58
The first lesson in a series on chart patterns for traders and investors in the stock market, futures market, and forex market. To view the full lesson with charts, go here: http://www.informedtrades.com/2587-double-top-double-bottom-chart-pattern.html Remember that practice makes perfect! :) So be sure to register for a free practice trading account here: http://bit.ly/forex-demo1 VIDEO TRANSCRIPTION A double top is a reversal chart pattern which is defined by a chart where a financial instrument makes a run up to a particular level, then drops back from that level, then makes a second run at that level, and then finally drops back off again. In its most basic sense what the double top pattern is saying about supply and demand forces is that demand is out pacing supply (buyers are winning) up to the first top causing prices to rise, and then the equation flips and demand is no longer out pacing supply (sellers are winning) causing prices to fall. After then falling back the buyers make another run at the same price and then after failing to break that level for a second time, sellers take control and keep the upper hand causing prices to sell of even more dramatically after the second top than they did after the first. For double bottoms the reverse is true. A double bottom is also a reversal pattern in the futures, forex, or stock markets which is the exact opposite of a double top. To form a double bottom a financial instrument makes a run down to a particular level, then trades up from that level then makes a second run down to at or near the same level as the first bottom, and then finally trades back up again.
Views: 144449 InformedTrades
33. How to Trade the Inverted Hammer/Shooting Star Patterns
 
05:08
Practice these concepts with a free practice charting and trading account here: http://bit.ly/IT-forex-demo3 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4920-how-trade-inverted-hammer-shooting-star-candlestick-patterns.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the Inverted Hammer and Shooting Star Candlestick Chart Patterns for active traders and investors using technical analysis in the stock, futures, and forex markets. In our last lesson we learned about the Morning and Evening Star Candlestick Patterns. In today's lesson we are going to wrap up our series on candlestick patterns with a look at the Inverted Hammer and the Shooting Star candlestick patterns. The Inverted Hammer As its name implies, the inverted Hammer looks like an upside down version of the Hammer pattern which we learned about several lessons ago. Like the Hammer Pattern, the Inverted Hammer is comprised of one candle and when found in a downtrend is considered a potential reversal pattern. The pattern is made up of a candle with a small lower body and a long upper wick which is at least two times as large as the short lower body. The body of the candle should be at the low end of the trading range and there should be little or no lower wick in the candle. What the pattern is basically telling us is that although sellers ended up driving price down to close near to where it opened, buyers had significant control of the market at some point during the period which formed the long upper wick. This buying pressure during the downtrend calls the trend into question which is why the candle is considered a potential reversal pattern. Like the other one candle patterns we have learned about however, most traders will wait for a higher open on the next trading period before taking any action based on the pattern. Most traders will also look at a longer wick as a sign of a greater potential reversal and like to see an increase in volume on the day the Inverted Hammer Forms. The Shooting Star pic The Shooting Star looks exactly the same as the Inverted Hammer, but instead of being found in a downtrend it is found in an uptrend and thus has different implications. Like the Inverted Hammer it is made up of a candle with a small lower body, little or no lower wick, and a long upper wick that is at least two times the size of the lower body. The long upper wick of the pattern indicates that the buyers drove prices up at some point during the period in which the candle was formed but encountered selling pressure which drove prices back down for the period to close near to where they opened. As this occurred in an uptrend the selling pressure is seen as a potential reversal sign. When encountering this pattern traders will look for a lower open on the next period before considering the pattern valid. As with the Inverted Hammer most traders will see a longer wick as a sign of a greater potential reversal and like to see an increase in volume on the day the Shooting Star forms. Chart That completes this lesson and wraps up our series on candlestick chart patterns. In our next lesson we are going to start a new series with a look at Money Management and how this applies to profitable trading so we hope to see you in that lesson.
Views: 79660 InformedTrades
23. How to Trade Stochastics Like the Pro's Do
 
06:50
Practice these concepts with a free practice charting and trading account here: http://bit.ly/apextrader For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4036-stochastic-oscillator.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the stochastic oscillator for active day traders and investors using technical analysis in the stock market, forex market. and futures market. In our last lesson we learned about the RSI indicator and some of the different ways traders of the stock, futures, and forex markets use this in their trading. In today's lesson we are going to look at another momentum oscillator which is similar to the RSI and is called the Stochastic. Let me start by saying that there are 3 different types of stochastic oscillators: the fast, slow, and full stochastic. All of them operate in a similar manner however when most traders refer to trading using the stochastic indicator they are referring to the slow stochastic which is going to be the focus of this lesson. The basic premise of the stochastic is that prices tend to close in the upper end of their trading range when the financial instrument you are analyzing is in an uptrend and in the lower end of their trading range when the financial instrument that you are analyzing is in a downtrend. When prices close in the upper end of their range in an uptrend this is a sign that the momentum of the trend is strong and vice versa for a downtrend. The Stochastic Oscillator contains two lines which are plotted below the price chart and are known as the %K and %D lines. Like the RSI, the Stochastic is a banded oscillator so the %K and %D lines fluctuate between zero and 100, and has lines plotted at 20 and 80 which represent the high and low ends of the range. Whatever charting package you use will calculate the lines for you automatically but you should know that the data points which form the %K line are basically a representation of where the market has closed for each period in relation to the trading range for the 14 periods used in the indicator. In simple terms it is a measure of momentum in the market. The %D line is very simply a 5 period simple moving average of the %K line. Lastly you should know that you can change the inputs for the indicator and use for example a 3 period moving average of the %K line to get faster signals, however as this is an introduction to the indicator and because most traders I know do not change the standard inputs, I do not recommend changing them at this point. Like the RSI the first way that traders use the stochastic oscillator is to identify overbought and oversold levels in the market. When the lines that make up the indicator are above 80 this represents a market that is potentially overbought and when they are below 20 this represents a market that is potentially oversold. The developer of the indicator George Lane recommended waiting for the %K line to trade back below or above the 80 or 20 line as this gives a better signal that the momentum in the market is reversing. The second way that traders use this indicator to generate signals is by watching for a crossover of the %K line and the %D line. When the faster %K line crosses the slower %D line this is a sign that the market may be heading up and when the %K line crosses below the %D line this is a sign that the market may be heading down. As with the RSI however this strategy results in many false signals so most traders will use this strategy only in conjunction with others for confirmation. The third way that traders will use this indicator is to watch for divergences where the Stochastic trends in the opposite direction of price. As with the RSI this is an indication that the momentum in the market is waning and a reversal may be in the making. For further confirmation many traders will wait for the cross below the 80 or above the 20 line before entering a trade on divergence. As the RSI and Stochastic are similar in nature many traders will use them in conjunction with one another to confirm signals. That's our lesson for today. You should now have a good understanding of the Stochastic Oscillator and some of the different ways that traders use this in their trading. In tomorrow's lesson we are going to look at an indicator which allows us to gauge the volatility of a financial instrument over a given time called Bollinger Bands.
Views: 486786 InformedTrades
75. How to Keep a Trading Journal
 
05:07
Practice trading with a free demo trading account: http://bit.ly/IT-forex-demo3 In our last lesson we finished up our discussion the different styles of trading with a look at the longer term style of position trading. In today's lesson we are going to start a new discussion on one of the trader's most powerful tools, the trading journal. As I think most people who are successful at anything will tell you, a major factor that separates the successful from the unsuccessful is those who are successful look at each experience as a chance to learn and grow where those who are not move from one experience to another without learning much at all. With this in mind one of the major things that separates the profitable trader from the unprofitable trader is an openness to learning from each trade, and a willingness to put in the effort it takes to document and periodically review each trade that is made. Traders who document their trades do so in trading journals. This can be as simple as writing down certain details of your trades in a notebook or in a word document, however those who know a bit about excel normally find this a much more powerful option Below are 10 things that in my opinion it is important to document about each trade. : 1. The general market conditions for that specific trading day. For example is there a lot of volatility in the market, is the market trading lower or higher, ranging or trending? 2. Why you entered the trade, the time you entered the trade, and the price you entered the trade. 3. Why you exited the trade, the time you exited the trade, and the price you excited the trade. 4. Whether the trade was a long or short trade. 5. What happened with the market from the time you opened the trade to the time that you closed the trade. 6. The money management parameters you used in the trade and which we covered in our previous lessons on the subject. 7. Many traders will also attach a chart with their analysis on it to help them remember the trade when they review their trading journal. 8. Where you were weak that particular day and what you are going to do to address those weaknesses. 9. Where you were strong that day and what you are going to do to address those strengths. 10. Any other thoughts that you had that day which should be noted. http://www.informedtrades.com/20418-10-components-successful-trading-journal.html That's our lesson for today. In tomorrow's lesson we will look at the next and equally important step of how to go about reviewing your trading journal periodically in order to make sure that you leverage your journal to improve your trading.
Views: 37161 InformedTrades
157. How to Use a Trailing Stop When Day Trading Stocks
 
07:54
http://www.informedtrades.com/ Open an account to test drive the ThinkOrSwim platform: http://bit.ly/td-ameritrade The next lesson in my free video course on the basics of stock trading which covers how to place a trailing stop order on the ThinkorSwim stock trading platform.
Views: 137309 InformedTrades
14. How to Trade the Flag/Pennant  Patterns Like a Pro Part 2
 
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The second lesson in a two part series on trading strategies for trading the flag and pennant chart patterns using technical analysis for day traders and investors in the stock market, futures market, and foreign exchange market. For the full lesson with text, images, links, and discussion, go here: http://www.informedtrades.com/3485-strategies-trading-flag-pennant-chart-patterns.html See the full course for free at http://www.informedtrades.com/trades.php?page=freetradingcourses While watching the videos, be sure to free the concepts presented using a free practice trading account here: http://bit.ly/IT-forex-demo3 Don't forget to check out our huge (and growing!) collection of organized material to help traders learn. Visit, register as a member, and participate in our learning community at http://www.informedtrades.com. VIDEO NOTES In our last lesson we learned about the flag and pennant chart patterns, how to identify them on a chart, and when the pattern is a bullish or bearish sign. In this lesson we are going to learn how to identify entry and exit points for potential trades after spotting these patterns on a chart. As we learned in our last lesson when you spot a flag pattern in an uptrend this is a bullish sign as the market consolidation which forms the flag is seen as a pause before a resumption of the original uptrend. As this is the case when traders spot these patterns on a chart they will commonly look to enter a buy position. The entry point which they will commonly use to enter the long position is the breakpoint of the upper line of the flag which is resistance. The target for the trade is then calculated by measuring the distance between the start of the up move and the highest point on the flag and then projecting that upwards. The stop is then placed just below the bottom support line of the flag. The strategy is exactly the same for the bull pennant, with one exception. When trading the bull pennant the stop loss is placed just below the bottom trend line, in line with the closest trough. When you spot a flag pattern in a downtrend it is a bearish sign as the market consolidation which forms the pattern is seen as a pause before a continuation of the original downtrend. As this is the case when traders spot this pattern on a chart they will commonly look to enter a short position. The entry point that is normally used when trading this strategy is to sell on a break below the bottom support line. The target is then calculated by measuring the distance between the start of the down move and the lowest point on the flag and then projecting that downwards. The stop is then placed just above the upper resistance line of the flag. So that completes this lesson. You should now have a good understanding of the strategies used to trade flag and pennant patterns as well as how to identify these patterns on a chart. In our next lesson we are going to look at the triangle chart pattern and how to spot this on a chart so we can look at ways to trade that continuation pattern. So we hope to see you in that lesson.
Views: 82938 InformedTrades
25. How to Trade Bollinger Bands - Stocks, Futures, Forex
 
07:37
Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4206-bollinger-bands.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com A Lesson on Bollinger Bands for active traders and investors using technical analysis in the forex, futures, and stock markets. The link that I refer to on Standard Deviation is here: http://en.wikipedia.org/wiki/Standard_deviation The link that I refer to with more resources on Bollinger Bands is here: http://www.informedtrades.com/tags/index.php/bollinger%20bands/ In our last lesson we learned about the Stochastic Oscillator and how traders use this in their trading. In today's lesson we are going to learn about an indicator which helps traders gauge the volatility and how current prices compare to past prices. Bollinger Bands are comprised of three bands which are referred to as the upper band, the lower band, and the center band. The middle band is a simple moving average which is normally set at 20 periods, and the upper band and lower band represent chart points that are two standard deviations away from that moving average. Example of Bollinger Bands: Bollinger bands are designed to give traders a feel for what the volatility is in the market and how high or low prices are relative to the recent past. The basic premise of Bollinger bands is that price should normally fall within two standard deviations (represented by the upper and lower band) of the mean which is the center line moving average. If you are unfamiliar with what a standard deviation is you can read about it here http://en.wikipedia.org/wiki/Standard_deviation. As this is the case trend reversals often occur near the upper and lower bands. As the center line is a moving average which represents the trend in the market, it will also frequently act as support or resistance. The first way that traders use the indicator is to identify potential overbought and oversold places in the market. Although some traders will take a close outside the upper or lower bands as buy and sell signals, John Bollinger who developed the indicator recommends that this method should only be traded with the confirmation of other indicators. Outside of the fact that most traders would recommend confirming signals with more than one method, with Bollinger bands prices which stay outside or remain close to the upper or lower band can indicate a strong trend, a situation that you do not want to be trading reversals in. For this reason selling at the upper band and buying at the lower is a technique that is best served in range bound markets. Example of Buying and Selling at the Upper and Lower Band: Large breakouts often occur after periods of low volatility when the bands contract. As this is the case traders will often position for a trend trade on a break of the upper or lower Bollinger band after a period of contraction or low volatility. Be careful when using this strategy as the first move is often a fake out. Example As Bollinger bands paint a good picture directly on the price chart of how high or low price is relative to historical prices, this is a good indicator to use in conjunction with other methods such as some of the chart patterns that we have learned so far and some of the candlestick patterns which we will learn in future lessons. Below is one such example: As Bollinger Bands are one of the most popular indicators around I have created a special page on InformedTrades.com which lists multiple resources for those looking for more information on trading Bollinger Bands. That's our lesson for today. You should now have a good understanding of Bollinger bands and how traders use these in their trading. In our next lesson we are going to go over the Average Directional Index or ADX, which helps traders identify the strength or weakness of a trend so we hope to see you in that lesson. As always if you have any questions or comments please feel free to have them in the comments section below, and have a great day!
Views: 271331 InformedTrades
27. How to Trade the Parabolic SAR
 
04:35
Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4559-parabolic-sar.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the Parabolic Stop and Reversal (SAR) indicator for traders of the forex, futures, and stock markets. In our last lesson we learned about the Average Directional Index (ADX) an indicator which helps traders determine the strength of trends in the market. In today's lesson we are going to look at another indicator called the Parabolic Stop and Reversal (Parabolic SAR), which helps traders enter and manage positions when trading those trends. The Parabolic SAR is an indicator that, like Bollinger bands is plotted on price, the general idea of which is to buy into up trends when the indicator is below price, and sell into downtrends when the indicator is above price. Once traders are in positions the indicator also assists in managing the position by providing guidance as to how one should trail their stop. While this is an indicator that works very well in trending markets, as you can see from the below chart simply following the basic be long when the indicator is below price and be short when the indicator is above price will lead to many whipsaws in range bound markets. To combat this problem the developer of the indicator J. Welles Wilder (who also developed the RSI and ADX) recommended establishing the strength and direction of the trend first through the use of things such as the ADX, and then using the Parabolic SAR to trade that trend. As mentioned above although the Parabolic SAR is used for both entering and managing positions, it is used far more to set stops once in a position. As with the other indicators we have covered in past lessons it is recommended to use this indicator in conjunction with other methods of analysis for confirmation not only on trade entry but also on trade exit. That's our lesson for today. While my lessons are by no means exhaustive on the subject this also concludes my series on technical indicators. If you are interested in learning more about the indicators that we have studies as well as some of the other indicators that traders use, I encourage you to visit the technical indicators section of informedtrades.com. In our next lesson we will finish up our series on technical analysis by taking a deeper look at candlestick chart patterns and how one can use these in their trading. As always I encourage you to participate in the community by posting your comments and questions below, and have a great day!
Views: 161660 InformedTrades
Subprime US Banking Financial Crisis Explained Part 3
 
07:17
Practice trading with a free demo account: http://bit.ly/IT-forex-demo3 Continue your trading and investing education: http://www.informedtrades.com/ The 3rd and final lesson in a series on the subprime mortgage US Banking financial crisis explained.
Views: 32935 InformedTrades
Understanding Standard Deviation in Trading
 
04:28
Join us in the discussion on InformedTrades: http://www.informedtrades.com/806114-standard-deviation-overview.html
Views: 39046 InformedTrades
159. How to Trade Stocks -  Initial and Maintence Margin
 
04:56
http://www.informedtrades.com/ The second of two lessons on trading stocks on margin which covers the basic rules surrounding trading the stock market on margin.
Views: 12878 InformedTrades
155. How to Close Stock Trades Using Stop and Limit Orders
 
06:40
http://www.informedtrades.com/ Open an account to test drive the ThinkOrSwim platform: http://bit.ly/td-ameritrade The next lesson in our course on how to trade stocks which covers how to close open stock positions using market, stop, and limit orders.
Views: 26111 InformedTrades
Subprime US Banking Financial Crisis Explained Part 1
 
06:36
Practice trading with a free demo account: http://bit.ly/IT-forex-demo3 Continue your investing and trading education for free: http://www.informedtrades.com A 3 lesson series on the background of the subprime US Banking Financial Crisis market and how the problems we are experiencing today arose. Relevant to traders and investors of the stock market, futures market, and forex market.
Views: 74696 InformedTrades
20. How to Trade the MACD Indicator Like a Pro Part 1
 
04:54
Practice these concepts with a free practice charting and trading account here: http://bit.ly/apextrader For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/3865-macd-learn-trade-using-macd-part-i.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES In our last lesson we learned about the different ways people trade with moving averages. In this lesson we are going to learn about the Moving Average Convergence Divergence (MACD) an indicator that is built using moving averages, but is set up to give a good indication of the momentum of a particular financial instrument as well as its trend. The indicator, which was developed by Gerald Appel, is constructed by taking a 12 period exponential moving average of a financial instrument and subtracting its 26 period exponential moving average. The resulting line is then plotted below the price chart and fluctuates above and below a center line which is placed at value zero. A 9 period EMA of the MACD line is normally plotted along with the MACD line and used as a signal of potential trading opportunities. When the MACD line is above zero this tells the trader that the 12 period exponential moving average is trading above the 26 period exponential moving averages. When the MACD line is below zero this tells the trader that the 12 period exponential moving average is below the 26 period exponential moving average. Traders will watch the MACD line as when it is above zero and rising this is a sign that the positive gap between the 12 and 26 EMA's is widening, a sign of increasing bullish momentum in the financial instrument they are analyzing. Conversely when the MACD line is below zero and falling this represents a widening in the negative gap between the 12 and 26 day EMA's, a sign of increasing bearish momentum in the financial instrument they are analyzing. The purpose of the 9 period exponential moving average line is to further confirm bullish changes in momentum when the MACD crosses above this line and bearish changes in momentum when the MACD crosses below this line. Lastly many traders and charting packages will plot a histogram along with the MACD which is representative of the distance between the MACD and its signal line. When the MACD histogram is above zero (the MACD line is above the signal line) this is an indication that positive momentum is increasing. Conversely when the MACD histogram is below zero this is an indication that negative momentum is increasing. When the MACD histogram is above zero (the MACD line is above the signal line) this is an indication that positive momentum is increasing. Conversely when the MACD histogram is below zero this is an indication that negative momentum is increasing. The higher or lower the histogram goes above or below zero the greater the momentum of the trend is thought to be.
Views: 495173 InformedTrades
6: Selling a Put Option to Buy Stocks
 
04:46
This is the sixth video in our series on trading options, in which we explore using the tactic of selling put options as a way to effectively buy stocks. Be sure to check out our previous videos on this subject to continue your education. Practice these concepts in a demo account: http://bit.ly/td-ameritrade Join us in the discussion on InformedTrades: http://www.informedtrades.com/1344440-selling-put-option-buy-stock-basic-options-6-a.html
Views: 6340 InformedTrades
Understanding Volume and Supply and Demand Zones
 
05:46
Video by http://www.macrosentiment.com See our free, full course on volume spread analysis and supply and demand zones here: http://www.informedtrades.com/f302/
Views: 12751 InformedTrades
108. How Interest Rates Move the Forex Market Part 1
 
04:21
http://www.informedtrades.com/25425-how-interest-rates-move-forex-market-part-1-a.html Like current and future earnings prospects are the most important factors to consider when trying to forecast the long term direction of a stock, current and future interest rate prospects are the most important factors to consider when trying to forecast the long term direction of a currency. Because of this fact, currencies are highly sensitive to any economic news that can affect the country's interest rates, an important factor for traders of all time frames to understand. As we learned in module 8 of our free basics of trading course located in the free course section of InformedTrades.com, when the central bank of a country raises interest rates this not only affects the short term rate that they target, but the interest rates for all types of debt instruments. If the central bank of a country raises interest rates then debt instruments of all types are going to become more attractive to investors, all else being equal. This not only means that foreign investors are more likely to invest in the debt of that country, but also that domestic investors are less likely to look outside the country for higher yield, creating more demand for the debt of that country and driving the value of the currency up, all else being equal. Conversely, when a central bank lowers interest rates, then interest rates on all types of debt instruments for that country are going to be less attractive to investors, all else being equal. This not only means that both foreign and domestic investors are less likely to invest in the debt of that country, but that they are also more likely to pull money out to seek higher returns in other countries, creating less demand for, and a greater market supply of that currency, and driving its value down, all else being equal. Once this is understood, it is next important to understand that foreign investors are exposed to not only the potential profit or loss from interest rate changes on the debt instrument they are investing in, but also to profits and losses which result from fluctuations in the value of that country's currency. This is an important concept to understand, as it generally will work to increase the profits for investors when interest rates increase, as the increase in the value of the currency is realized when they sell the investment and convert back into their home country's currency. This gives the foreign investor that much extra return on their investment, and that much extra incentive to invest when interest rates rise, driving the value of the currency up further all else being equal. Conversely when interest rates decrease, there will be less demand for the debt instruments of a country not only because of the lower yield to investors, but also because of the decrease in the value of the currency that normally comes with a decrease in interest rates. The additional whammy of a loss to the foreign investor from the currency conversion that results as part of the investment, further incitivizes them to put their money elsewhere, decreasing the value of the currency further, all else being equal.
Views: 31640 InformedTrades
15. How to Trade Triangle Chart Patterns Like a Pro Part 1
 
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While watching the videos, be sure to free the concepts presented using a free practice trading account here: http://bit.ly/IT-forex-demo3 The first lesson in a two part series on how to identify and trade the ascending, descending, and symmetrical triangle chart patterns using technical analysis in the futures market, forex market and stock market for day traders and investors. For the full lesson with text, images, links, and discussion, go here: http://www.informedtrades.com/3557-learn-trade-triangle-chart-patterns-part-1-a.html See the full course for free at http://www.informedtrades.com/index.php?page=freetradingcourses Don't forget to check out our huge (and growing!) collection of organized material to help traders learn. Visit, register as a member, and participate in our learning community at http://www.informedtrades.com. VIDEO NOTES In our last lesson we learned strategies for trading the flag and pennant chart patterns. In this lesson we are going to look at a pattern which is similar in nature to the flag and pennant pattern which is called the triangle pattern. Triangle Patterns can be broken down into three categories: The ascending triangle, the descending triangle, and the symmetrical triangle. While the shape of the triangle is significant of more importance is the direction that the market moves when it breaks out of the triangle. Lastly, while triangles can sometimes be reversal patterns they are normally seen as continuation patterns. The Ascending Triangle: The ascending triangle is formed when the market makes higher lows and the same level highs. These patterns are normally seen in an uptrend and viewed as a continuation pattern as the bulls gain more and more control running up to the top resistance line of the pattern. While you normally will see this pattern form in an uptrend if you do see it in a downtrend it should be paid attention to as it can act as a powerful reversal signal. The Descending Triangle: The descending triangle is formed when the market makes lower highs and the same level lows. These patterns are normally seen in a downtrend and viewed as a continuation pattern as the bears gain more and more control running down to the bottom support line of the pattern. While you normally will see this pattern form in a downtrend, if you do see it in an uptrend it should be paid attention to as it can act as a powerful reversal signal. The Symmetrical Triangle: The symmetrical triangle is formed when the market makes lower highs and higher lows and is commonly associated with directionless markets as the contraction of the market range indicates that neither the bulls nor the bears are in control. If this pattern forms in an uptrend then it is considered a continuation pattern if the market breaks out to the upside and a reversal pattern if the market breaks to the downside. Similarly if the pattern forms in a downtrend it is considered a continuation pattern if the market breaks out to the downside and a reversal pattern if the market breaks to the upside. So that completes this lesson. You should now have a good understanding of the different types of patterns patterns and what each signifies. In our next lesson we are going to go over strategies for trading triangle chart patterns of these patterns complete with entry and exit points so we hope to see you in that lesson.
Views: 100746 InformedTrades
30. How to Trade the Bullish/Bearish Engulfing Candlesticks
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/IT-forex-demo3 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4642-how-trade-bullish-bearish-engulfing-candlestick-chart-patterns.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES In our last lesson we looked at two candlestick patterns which represent an indecisive moment in the market and can also represent a potential trend reversal when seen during an uptrend or downtrend in the market and are known as the spinning top and doji candlestick patterns. In today's lesson we are going to look at two more candlestick patterns which also can represent potential reversals which are known as the Bullish and Bearish Engulfing Patterns. The Bullish Engulfing Pattern The Bullish Engulfing pattern is another candlestick formation which represents a potential reversal in the market when seen in a downtrend. The pattern is made up of a white and black candle where the latest candle (the white candle) opens lower than the previous candle's (the black candle) close and closes higher than the previous candle's open. When this happens the current period's white candle completely engulfs the body previous period's black candle. Unlike the Spinning Top and the Doji we learned about in the last lesson, the Bullish Engulfing Pattern represents not indecision in the market, but a situation where the control has shifted from sellers to buyers. The long body of the current candle completely engulfing the body of the previous candle to the upside is representative that the buyers have not only taken control, but have taken control with force. As such, when this pattern is seen during a downtrend in the market it is seen as a potential sign that the trend may be reversing. There are several instances where traders will normally see greater potential for a reversal which are: The longer the white candle and the smaller the black candle which precedes it the greater the potential for reversal When the white candle completely engulfs the black candle that precedes it When there is large volume during the period in which the white candle forms The Bearish Engulfing Pattern The Bearish Engulfing Pattern is a Mirror Image of the Bullish Engulfing Pattern so the same rules apply, just in reverse. The Bearish Engulfing pattern when seen in an uptrend is representative of a potential reversal of that trend. The pattern is made up of a white and black candle where the latest candle (the black candle) opens higher than the previous candle's (the white candle) close and closes lower than the previous candle's open. When this happens the current period's black candle completely engulfs the body of the previous period's white candle. There are several instances where traders will normally see greater potential for a reversal which are: The longer the black candle and the smaller the white candle which precedes it the greater the potential for reversal When the black candle completely engulfs the white candle that precedes it When there is large volume during the period in which the white candle forms
Views: 99804 InformedTrades
Dow Theory - An Introduction
 
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This is the second video in our free introductory course on technical analysis. See our http://www.informedtrades.com/trades.php?page=freetradingcourses Get started with a free practice account here: http://bit.ly/forex-demo1 An overview of the first three tenets of Dow Theory. The second in a series on technical analysis for active traders of the stock, futures and forex markets. Don't forget to check out our huge (and growing!) collection of organized material to help traders learn. Visit, register as a member, and participate in our learning community at http://www.informedtrades.com. VIDEO TRANSCRIPTION (to see this transcription with links, and images of charts, go here: http://www.informedtrades.com/1964-dow-theory.html) In the last lesson on technical analysis we talked a bit about the different ways that traders analyze the markets. In this lesson we will look at the history of technical analysis and something known as Dow Theory. Most consider the father of technical analysis to be Charles Dow, the founder of Dow Jones and Company which publishes the Wall Street Journal. Around 1900 he wrote a series of papers which looked at the way prices of the Dow Jones Industrial Average and the Dow Jones Transportation Index moved. After analyzing the Indexes he outlined his belief that markets tend to move in similar ways over time. These papers, which were expanded on by other traders in the years that followed, became known as "Dow Theory". Although Dow Theory was written over 100 years ago most of its points are still relevant today. Dow focused on stock indexes in his writings but the basic principles are relevant to any market. Dow Theory is broken down into 6 basic tenets. In this lesson we are going to take a look at the first 3 and then finish up our conversation of Dow Theory in the next lesson by looking at the last three. The first tenet of Dow Theory is that The Markets Have 3 Trends. • Up Trends which are defined as a time when successive rallies in a security price close at levels higher than those achieved in previous rallies and when lows occur at levels higher than previous lows. • Down Trends which are defined as when the market makes successive lower lows and lower highs. • Corrections which are defined as a move after the market makes a move sharply in one direction where the market recedes in the opposite direction before continuing in its original direction. The second tenet of Dow Theory is that Trends Have 3 Phases: • The accumulation phase which is when the "expert" traders are actively taking positions which are against the majority of people in the market. Price does not change much during this phase as the "experts" are in the minority so they are not a large enough group to move the market. • The public participation phase which is when the public at large catches on to what the "experts" know and begin to trade in the same direction. Rapid price change can occur during this phase as everyone piles onto one side of a trade. • The Excess Phase where rampant speculation occurs and the "smart money" starts to exit their positions. Here you can start to see how the psychology of investors and traders comes into play an important concept which we will delver deeper into in later lessons. The third tenet of Dow Theory is that The Markets Discount All News, meaning that once news is released it is quickly reflected in the price of an asset. On this point Dow Theory is in line with the efficient market hypothesis which states that: "the efficient market hypothesis (EMH) asserts that financial markets are "informationally efficient", or that prices on traded assets, e.g., stocks, bonds, or property, already reflect all known information and therefore are unbiased in the sense that they reflect the collective beliefs of all investors about future prospects." Source: Wikipedia This concept that the markets discount all news is one that is sited in arguments in favor of using technical analysis as a tool to profit from the markets as if it is true that markets already discount all fundamental factors then the only way to beat the market would be through technical analysis. So now you should have a good understanding of the first three tenets of Dow Theory including the different types of trends, the different phases of trends, and Dow's concept that the price of an asset already reflects all known news. In our next lesson on Dow theory we are going to look at the second three tenents.
Views: 211026 InformedTrades
37. Herd Mentality is the Psychology That Leads to Big Trading Losses
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/IT-forex-demo3 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/5356-crowd-psychology-following-sheep-slaughter.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on crowd psychology and how it relates to trading the stock, futures, and forex markets. The best summary that I have seen on this subject, as well as a great book on trading in general is Dr. Alexander Elder's book Trading for a living. As the Trader and Psychologist points out in his book, people think differently when acting as part of a crowd than they do when acting alone. Dr Elder points out that "People change when they join crowds. They become more credulous, impulsive, anxiously search for a leader, and react to emotions instead of using their intellect." In his book Dr. Elder gives several examples of academic studies which have been done which show that people have trouble doing simple tasks such as choosing which line is longer than the other when put in a situation with other people who were instructed to give the wrong answer. Perhaps no where is the strange effect is the psychology of crowds seen than in the financial markets. One of the more recent examples as I have spoken about in my other lessons of the effect that the psychology of crowds can have on the markets is the run-up of the NASDAQ into 2000. As you will find by pulling out the history books however, this is not an isolated incident as financial history is littered with similar price bubbles created and then destroyed in the same way as the NASDAQ bubble was. So why does history continue to repeat itself? As Dr. Elder points out in his book, from a primitive standpoint chances of survival are often much higher as part of a group than they are alone. Similarly war's are often one by militaries with the strongest leaders. It is thus only natural to think that human's desire to survive would breed a desire to be part of a group with a strong leader into the human psyche. So how does this relate to trading? Well as we learned in our lessons on Dow Theory, the price is representative of the crowd and the trend is representative of the leader of that crowd. With this in mind think about how difficult it would have been to short the NASDAQ at the high's in 2000, just at the height of the frenzy when everyone else was buying. In hindsight you would have ended up with a very profitable trade but, had the trade not worked out, people would have asked how could you have been so dumb to sell when everyone else knew the market was going up? Now think about all the people who held on to their positions and lost tons of money after the bubble burst in 2000. As they had lots of company there were probably not a whole lot of people who were laughing at them. Yes they were wrong but how could they have known when so many others were wrong too? By looking at this same example, you can also see how panic selling often ensues after sharp trends in the market as this is representative to a crowd whose leader has abandoned them. In order to trade successfully people need a trading plan which is designed before entering a trade and becoming part of the crowd so they can fall back on their plan when the emotions which are associated with being part of a crowd inevitably arise. Successful traders must also realize that there is a time to run with the crowd and a time to leave the crowd, a decision which must be made by a well thought out trading plan designed before entering a trade. That completes our lesson for today and our lessons on the psychology of money management. In tomorrow's lesson we are going to begin looking at different strategies which can be used to manage a trade once you have entered, which many traders also use to help remove some of the negative emotional effects of trading as part of a crowd. As always if you have any questions or comments please leave them in the comments section below so we can all learn to trade together, and good luck with your trading!
Views: 83388 InformedTrades
32.How to Trade the Morning/Evening Star Candlestick Pattern
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/IT-forex-demo3 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4710-morning-evening-star-candlesticks.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the morning and evening star candlestick chart patterns for active traders and investors using technical analysis in the stock, futures, and forex markets. In our last lesson we looked at the Hammer and Hanging Man Candlestick Chart Patterns. In today's lesson we are going to look at two more reversal candlestick patterns which are known as the Morning and Evening Star. The Morning Star Pic The Morning Start Candlestick Pattern is made up of 3 candles normally a long black candle, followed by a short white or black candle, which is then followed by a long white candle. In order to have a valid Morning Start formation most traders will look for a close of the third candle that is at least half way up the body of the first candle in the pattern. When found in a downtrend, this pattern can be a powerful reversal pattern. What this represents from a supply demand situation is a lot of selling into the downtrend in the period which forms the first black candle, then a period of lower trading but with a reduced range which forms the second period and then a period of trading indicating that indecision in the market, which is then followed by a large up candle representing buyers taking control of the market. Unlike the Hammer and Hanging Man which we learned about in our last lesson, as the Morning Star is a 3 candle pattern traders often times will not wait for confirmation from the 4th candle before entering the trade. Like those patterns however traders will look to volume on the third day for confirmation. In addition traders will look to the size of the size of the candles for indication on how big the reversal potential is. The larger the white and black candle and the further that the white candle moves up into the black candle the larger the reversal potential. Chart The Evening Star The Evening Star Candlestick Pattern is a mirror image of the Morning Star, and is a reversal pattern when seen as part of an uptrend. The pattern is made up of three candles the first being a long white candle representing buyers driving the prices up, then a short white or black second candle representing indecision in the market, which is followed by a third black candle down which represents sellers taking control of the market. The close of the third candle needs to be at least half way down the body of the first candle and as with the Morning Star most traders will not wait for confirmation from the 4th period's candle to consider the pattern valid. Traders will look for increased volume on the third period's candle for confirmation, the larger the black and white candles are and the further the black candle moves down the body of the white candle the more powerful the reversal is expected to be. Chart Example That's our lesson for today. In our next lesson we are going to finish up our series on Candlestick patterns with a look at the Shooting Star and Inverted Hammer Candlestick Patterns.
Views: 102240 InformedTrades
161. The Pattern DayTrader Rule
 
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Continue learning: http://www.informedtrades.com/ Practice trading with a demo account: http://bit.ly/IT-forex-demo3 The next lesson in my free video stock trading course which covers the implications of the pattern day trader rule and why you need $25,000 to daytrade stocks.
Views: 17791 InformedTrades
How to Use Option Open Interest and Implied Volatility to Find Trades
 
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View Tek’s whole beginner options course: http://www.informedtrades.com/f115/ Practice options trading with a free practice trading account: http://bit.ly/apextrader Hello and welcome In this video, we will look at using Option Open Interest along with Implied Volatility to measure market sentiment. Option Open Interest is one of the key sentiment indicators that traders look at to help gauge the next step for price. If you remember from my overview video, Option Open Interest is the number of outstanding option contracts or positions in the market. Let's look at using open interest if the price of the stock or ETF is in an up or down trend. If Open Interest is increasing and Implied Volatility is increasing, it implies that the current trend will continue. An increase in Open Interest means that there is an increase in contracts for that particular stock or ETF, which means that there is more money flowing into that market. An increase in implied Volatility means that the market is stating that there is an increased chance that price will move further from its current location. If Open Interest is increasing and Implied Volatility is decreasing, it implies that the current trend may level off. An increase in Open Interest means that there is still an increase in contracts for that particular stock or ETF, which means that there is more money flowing into the market. However, the decrease in implied Volatility means that the market is stating that there the chance of price moving further is decreasing. If Open Interest is decreasing and Implied Volatility is decreasing, it implies that the current trend may halt or reverse. The decrease in Open Interest means that the number of outstanding contracts is going down from traders closing out of their positions, and the decrease in implied Volatility means that the market is stating that the chance of price moving further is decreasing. Let's look at using open interest if the price of the stock or ETF is in a range. As price moves toward the edge of the range, if Open Interest is increasing and Implied Volatility is increasing, it implies that price may break out of the range. An increase in Open Interest means that there is an increase in contracts for that particular stock or ETF, which means that there is more money flowing into the market. An increase in implied Volatility means that the market is stating that there is an increased chance that price will move further from its current location. If price is nearing the top or the bottom part of the range, and Open Interest is starting to decrease, it suggests that price may bounce off the wall of the range and reverse as this shows that traders are closing out of their current positions. If Implied Volatility is also decreasing, this helps confirm the possibility that price will bounce off the walls of the range and reverse. So that is using Option Open Interest and Implied Volatility as sentiment indicators. I hope that you enjoyed this video. Thanks for watching.
Views: 11887 InformedTrades
Subprime Crisis: The Role of Off Balance Sheet Entities
 
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http://www.informedtrades.com The first lesson in a three part mini course on intermediate topics relating to the subprime financial crisis. In this lesson we cover the basics of what are off balance sheet entities?
Views: 9478 InformedTrades
107. Fundamentals that Move Currencies - Balance of Payments
 
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View Full Lesson: http://www.informedtrades.com/25278-balance-payments-forex-traders.html Practice trading on a demo trading account: http://bit.ly/IT-forex-demo3 As we discussed briefly in our last lesson it is the interaction of flows of money relating to international trade and investment that ultimately determines the value of a currency over the long term. When demand strengthens for the exports of a particular country and/or investments by foreigners into that country increase, then, all else being equal a currency should strengthen. Conversely, when demand weakens for the exports of a particular country and/or investment by foreigners in that country falls, then, all else being equal a currency should weaken. It is the interaction of the current account and the capital account that measures this, and when combined these make up a country's balance of payments. The balance of payments is very simply the total transactions by a country with all other countries in the world, or in other words the combination of both trade flows and capital flows into one report. By following a country's balance of payments and its related indicators, an FX trader can gain great insight into the potential future direction of a country's currency. To help understand this better lets look at the example of the US Dollar. As we've discussed in previous lessons, the United States has run a very large current account deficit for quite some time, meaning that the country has imported many more goods and services than it has exported. As this chart of the US Dollar Index shows however, for a number of years the US Dollar continued to strengthen, despite this large current account deficit. [CENTER][IMG]http://www.informedtrades.com/images/created/balanceofpayments.jpg[/IMG][/CENTER] As you can see here going up into 2000 although the US ran a persistent current account deficit, the currency overall continued to strengthen before starting to sell off from late 2000 forward. Now I am making some pretty significant generalizations here for simplicities sake, but there are two major reasons that fundamental traders will point to as reasons for this: 1. Although this is starting to change somewhat, there has for many years been a strong demand for US Dollars because the US Dollar is the currency of choice for many major central banks to hold as their reserve currency, with Japan and China being the countries you will hear most about in this regard. This creates a demand for dollars on the capital flows side of the equation that helped to offset the persistent current account deficit going into 2000. 2. As most of you will remember the NASDAQ top which happened in March of 2000 was preceded by a major bull market in the United States, one in which foreign investors were active participants. As we learned about in our lesson on capital flows this also created a large demand for dollars, further helping to offset the large current account deficit. After the sell off of the NASDAQ however, foreign investors fled the US Stock market along with a lot of other traders and investors. As there was no longer as much foreign capital flowing in to offset the large current account deficit, the US Dollar began to weaken. As the dollar began to weaken this created a chain reaction with the central banks who began to diversify into the EURO and other currencies, further exacerbating the dollar's sell off. This created a situation where the current account deficit in the United States remained large (creating a market surplus of US Dollars from an international trade standpoint) and the inflows of capital into the US stock and bond markets began to fall, lowering the demand for dollars which was offsetting the current account deficit. While it is not important to understand all the intricate details at this point, what you do need to understand is that in order to have a feel for the long term fundamentals of a currency, it is important to have a general understanding of what is happening from both a trade flows and a capital flows standpoint, and how these two things interact with one another. As we will learn in coming lessons all fundamentals with currencies can be related back to these two basic concepts, so for your homework assignment for this lesson I encourage you to consider the following question: As the value of the US Dollar falls what effect if any should this have on the large current account deficit in the United States and why? If you would like to post your answer in the comments section of this lesson on InformedTrades.com for discussion this is something that I always encourage.
Views: 23278 InformedTrades
79. The Difference Between Over the Counter (OTC) and Exchange-Based Markets
 
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Practice trading with a free demo account: http://bit.ly/IT-forex-demo3 View full article: http://www.informedtrades.com/20797-difference-between-exchange-traded-over-counter-markets.html When trading stocks or futures you normally do so via a centralized exchange such as the New York Stock Exchange or the Chicago Mercantile Exchange. In addition to providing a centralized place where all trades are conducted, exchanges such as these also play the key role of acting as the counterparty to all trades. What this means is that while you may be buying for example 100 shares of Google stock at the same time someone else is selling those shares, you do not buy those shares directly from the seller but instead from the exchange. The fact that the exchange stands on the other side of all trades in exchange traded markets is one of their key advantages as this removes counterparty risk, or the chance that the person who you are trading with will default on their obligations relating to the trade. A second key advantage of exchange traded markets is that as all trades flow through one central place, the price that is quoted for a particular instrument is always the same regardless of the size or sophistication of the person or entity making the trade. This in theory should create a more level playing field which can be an advantage to the smaller and less sophisticated trader. Lastly, because all firms that offer exchange traded products must be members and register with the exchange, there is greater regulatory oversight which can make exchange traded markets a much safer place for individuals to trade. The downside that is often cited about exchange traded markets is cost. As the firms who offer exchange traded products must meet high regulatory requirements to do so, this makes it more costly for them to offer these products, a cost that is inevitably passed along to the end user. Secondly, as all trades in exchange traded products must flow through the exchange this gives these for profit entities immense power when setting things such as exchange fees which can also increase transaction costs for the end user. Unlike the stock market and the futures market which trade on centralized exchanges, the spot forex market and many debt markets trade in what's known as the over the counter market. What this means is that there is no centralized place where trades are made, instead the market is made up of all the participants in the market trading among themselves. The biggest advantage to over the counter markets is that because there is no centralized exchange and little regulation, you have heavy competition between different providers to attract the most traders and trading volume to their firm. This being the case transaction costs are normally lower in over the counter markets when compared to similar products that trade on an exchange. As there is no centralized exchange the firms that make prices in the instrument that is trading over the counter can make whatever price they want, and the quality of execution varies from firm to firm for the same instrument. While this is less of a problem in liquid markets such as FX where there are multiple price reference sources, it can be a problem in less highly traded instruments. While the lack of regulation can be seen as an advantage in the above sense it can also be seen as a disadvantage, as the low barriers to entry and lack of heavy oversight also make it easier for firms offering trading to operate in a dishonest or fraudulent way. Lastly, as there is no centralized exchange the firm that you trade with when you trade in an over the counter market like forex is the counterparty to your trade, so if something happens to that firm you are in danger of loosing not only the trades you have with that firm but also your account balance. It is for these reasons that there is so much focus among forex traders as to which firm to trade with, with special attention being paid to the financial stability of the firm and the execution that they provide. As we proceed through this forex trading course we will continue to gain a better understanding of the structure of the market and traders should be well prepared after going through those lessons to make an informed decision for themselves on this issue.
Views: 67000 InformedTrades
31. How to Trade the Hammer Hanging Man Candlesticks
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4696-how-trade-hammer-hanging-man-candlestick-patterns.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on how to trade the Hammer and Hanging Man Candlestick Chart Patterns for active traders and investors in the forex, futures, and stock markets. Like the Spinning Top and Doji which we have studied in previous lessons, the Hammer candlestick pattern is made up of one candle. The candle looks like a hammer as it has a long lower wick and a short body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid hammer most traders say the lower wick must be two times greater than the size of the body potion of the candle, and the body of the candle must be at the upper end of the trading range. When you see the Hammer form in a downtrend this is a sign of a potential reversal in the market as the long lower wick represents a period of trading where the sellers were initially in control but the buyers were able to reverse that control and drive prices back up to close near the high for the day, thus the short body at the top of the candle. After seeing this pattern form in the market most traders will wait for the next period to open higher than the close of the previous period to confirm that the buyers are actually in control. Two additional things that traders will look for to place more significance on the pattern are a long lower wick and an increase in volume for the time period that formed the hammer. Chart Example The Hanging Man Picture The Hanging Man is basically the same thing as Hammer formation but instead of being found in a downtrend it is found in an uptrend. Like the Hammer pattern, the Hanging man has a small body near the top of the trading range, little or no upper wick, and a lower wick that is at least two times as big as the body of the candle. Unlike the Hammer however the selling pressure that forms the lower wick in the Hanging Man is seen as a potential sign of more selling pressure to come, even though the candle closed in the upper end of its range. While the lower wick of the Hammer represents selling pressure as well, this is to be expected in a downtrend. When seen in an uptrend however selling pressure is a warning sign of potential more selling pressure to come and thus the categorization of the Hanging Man as a bearish reversal pattern. As with the Hammer and as with most one candle patterns most traders will wait for confirmation that selling pressure has in fact taken hold by watching for a lower open on the next candle. Traders will also place additional significance on the pattern when there is an increase in volume during the period the Hanging Man forms as well as when there is a longer wick. Chart Example That completes our lesson for today. In our next lesson we will look at two additional reversal patterns which are known as the Inverted Hammer and The Shooting Start Candlestick Patterns so we hope to see you in that lesson. As always if you have any questions or comments please leave them in the comments section below, and good luck with your trading!
Views: 125824 InformedTrades
What Happened To Bear Stearns Explained Simply Part 1
 
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http://www.informedtrades.com/trades.php?page=course3 The first lesson in a 5 part video series on what happened to Bear Stearns, the role that the federal reserve has played, and Bear Stearns deal with JP Morgan.
Views: 19689 InformedTrades
45. Stop Your Mind From Causing You to Take Profits Too Soon
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/IT-forex-demo3 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/6605-how-stop-your-mind-making-you-take-profits-too-soon.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES A lesson on psychology of trading and how it relates to people's inability to let their profits run when trading the stock, futures, or forex markets. In yesterday's lesson we looked at how many traders use technical indicators as an additional factor they consider when deciding when to exit a trade. In today's lesson we are going to begin to move into the next phase of our series on money management, with a look at how traders go about taking profits once a position moves in their favo,r and some of the difficulties that are associated with this. Before getting into the details of what a trailing stop is and how many traders use them, it is first important to understand the psychology behind taking profits. Develop From the last several lessons you should not have a good understanding of some of the psychological difficulties people have in taking losses, and some of the different money management strategies that can be put into place to help overcome these difficulties that are the downfall of so many traders. What may come as a surprise to many of you is that just as many traders have problems letting their profits run as they do in cutting their losses. To help illustrate this I am going to give a quote from one of my favorite books on money management strategies Trade Your Way to Financial Freedom by Dr. Van K. Tharp. When explaining this concept in his book he gives the example below: When given a chance for "1. a sure $9000 gain or 2. a 95% chance of a $10,000 gain plus a 5% chance of no gain at all....which would you choose?" A study which was done on this showed that 80% of the population chose the sure thing even though the second opportunity represents a $500 larger gain on average. Similar to the way that human's are raised in a way that does not allow them to accept losses our environment also teaches us to seize opportunities quickly, or "that a bird in the hand is worth two in the bush", a rule that goes against the second half of the most important rule of trading: "Cut Your Losses and Let Your Profits Run" With this in mind we can now move into the next phase of our series of money management with a look at some of the different ways that traders go about managing their position once it begins to move in their favor starting with a look at trailing stops. Once a position has begun to move in a traders favor, many traders will implement a trailing stop which is basically a strategy for moving the stop they have implemented on their position up when they are long or down when they are short to lesson the loss or increase the amount of profit they will take should the market reverse and begin to move in the opposite direction of their position. As you may realize from watching my previous lessons we have already gone over one precise method which many traders use for setting trailing stops, the Parabolic SAR. In tomorrow's lesson we are going to go over several other methods, so we hope to see you in that lesson. As always if you have any questions or comments please feel free to leave them in the comments section below so we can all learn to trade together, and good luck with your trading!
Views: 61410 InformedTrades
5. How to Trade Support and Resistance
 
04:35
Practice trading support and resistance with a demo trading account here: http://bit.ly/forex-demo1 This is the fifth video in our free introductory course on the basics of trading and technical analysis. The video covers support and resistance -- arguably the most fundamental and important concepts in technical analysis. See the full course for free at http://www.informedtrades.com/trades.php?page=freetradingcourses If you enjoyed this video, you may also appreciate our section on on price action trading -- http://www.informedtrades.com/f386/ -- and our page dedicated to support and resistance: http://www.informedtrades.com/f427/ While watching the videos, be sure to free the concepts presented using a free practice trading account here: http://bit.ly/IT-forex-demo And of course, don't forget to check out our huge (and growing!) collection of organized material to help traders learn. Visit, register as a member, and participate in our learning community at http://www.informedtrades.com. VIDEO TRANSCRIPTION (to see this transcription with links, and images of charts, go here: http://www.informedtrades.com/2325-support-resistance.html) Just as anything where market forces are at play, the price of a financial instrument in the stock, futures or forex markets is ultimately determined by supply and demand. Very simply, if demand is increasing in relation to supply then price will rise, and if demand is decreasing in relation to supply then price will fall. As we have learned in previous lessons, what you are basically looking at when you see an uptrend on a chart is an extended period of time where demand has continued to increase in relation to supply. Similarly when looking at a downtrend you are seeing an extended period of time where demand has decreased in relation to supply for an extended period of time, causing price to fall. Similarly, in a downtrend, demand is continuously falling in relation to supply which causes the price of an instrument in the stock, futures or forex market to fall. In this lesson we are going to look at something known as support and resistance which are price levels where the supply demand equation is expected to change, and price is then expected to stop moving in the direction it was moving previously, or reverse direction.
Views: 207962 InformedTrades
105. The Current Account: How Forex Traders Can Use it to Identify Opportunities
 
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http://www.informedtrades.com/24555-current-account-measuring-trade-flows-move-currencies.html While the concept that we are going to be covering here is fairly involved, I am covering this not because I feel we need to know all the details, but because having a general understanding of how the flows of money in and out of a country are measured, is important to help understand how the value of currency is affected by those flows. Now that we have an understanding of both trade and capital flows we are going to learn how each is measured starting with the current account. The basic formula for calculating the current account for a country, is exports - imports of goods and services (also referred to as the balance of trade) + Net Factor Income from Abroad (basically interest and dividends) + net transfer payments (like aid given to foreign countries). In general for the countries whose currencies we are focused on, the balance of trade portion of the formula is the main component we are concerned with and very little if anything will ever be heard about the other two components. When thinking about a countries imports and exports (balance of trade), you will often hear a country described as having either a current account surplus or a current account deficit. A current account surplus basically means that a country is exporting more than they are importing which, as we learned in our lesson on trade flows, should strengthen the value of the currency all else being equal. A current account deficit basically means that a country is importing more than it is exporting which should weaken the value of its currency all else being equal. If you remember from our lesson on trade flows I gave the example there of a US company needing to import 1 Million Dollars worth of steel from a Canadian steel producer. Just to give a simple example lets say for a second that this was the only transaction that both the United States and Canada did with foreign countries. If this were the case then the United states would have a current account deficit of 1 Million Dollars and Canada would have a current account surplus of 1 Million dollars. Now obviously there are millions of transactions just like this one which go on between countries all over the world. The current account measures these transactions so we as traders can have an idea of whether the value of a countries currency should be increasing or decreasing based on the trade flows of that country, all else being equal. As of this lesson China has the largest current account surplus at $363 Billion and the United States had the largest current account deficit at $747 Billion. It is because of this that many argue China's currency is too weak and the US Dollar is too strong, two imbalances which have started to right themselves over the last year. Here is a graph of the current accounts of some of the major countries whose currencies we are focused on, so you can have an idea of whether those countries are more import or export oriented. As we will learn this is something which is going to be important when analyzing economic data relating to those currencies. Japan: A Surplus of $201 Billion Germany: A Surplus of $185 Billion Switzerland: A Surplus of $67 Billion Canada: A Surplus of $28 Billion New Zealand: A deficit of $10 Billion France: A deficit of $35 Billion Australia: A Deficit of $50 Billion Italy: A Deficit of $58 Billion United Kingdom: A Deficit of $111 Billion
Views: 15372 InformedTrades
80. Who Really Controls the Forex Market?
 
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View the entire lesson: http://www.informedtrades.com/20991-who-really-controls-forex-market.html Register for a free forex demo trading account: http://bit.ly/IT-forex-demo3 As we discussed in our last lesson the forex market is an over the counter market meaning that there is no centralized exchange where all trades are made. Because of this, the price that someone receives when trading forex has traditionally differed depending on the size of the transaction and the sophistication of the person or entity that is making that transaction. At the center or first level of the market is something known as the Interbank market. While technically any bank is part of the Interbank market, when an FX Trader speaks of the interbank market he or she is really talking about the 10 or so largest banks that make markets in FX. These institutions make up over 75% of the over $3 Trillion dollars in FX Traded on any given day. There are two primary factors which separate institutions with direct interbank access from everyone else which are: 1. Access to the tightest prices. We will learn more about transaction costs in later lessons however for now simply understand that for every 1 Million in currency traded those who have direct access to the Interbank market save approximately $100 per trade or more over the next level of participants. 2. Access to the best liquidity. As with any other market there is a certain amount of liquidity or amount that can be traded at any one price. If more than what is available at the current price is traded, then the price adjusts until additional liquidity enters the market. As the forex market is over the counter, liquidity is spread out among different providers, with the banks comprising the interbank market having access to the greatest amount of liquidity and then declining levels of liquidity available at different levels moving away from the Interbank market. In contrast to individuals who make a deposit into their account to trade, institutions trading in the interbank market trade via credit lines. In order to get a credit line from a top bank to trade foreign exchange you must be a very large and very financially stable institution, as bankruptcy would mean the firm that gave you the credit line gets stuck with your trades. The next level of participants are the hedge funds, brokerage firms, and smaller banks who are not quite large enough to have direct access to the Interbank market. As we just discussed the difference here is that the transaction costs for the trade are a bit higher and the liquidity available is a bit lower than at the Interbank level. The next level of participants has traditionally been corporations and smaller financial institutions who do make foreign exchange trades, but not enough to warrant the better pricing As you can see here, traditionally as the market participant got smaller and less sophisticated the transaction costs they paid to trade became larger and the liquidity that was available to them got smaller and smaller. In a lot of cases this is still true today, as anyone who has ever exchanged currencies at the airport when traveling knows. To give you an idea of just how large a difference there is between participants in the Interbank market and an individual trading currencies for travel, Interbank market participants pay approximately $.0001 to exchange Euros for Dollars where Individuals in the airport can pay $.05 or more. This may not seem like much of a difference but think about it this way: On $10,000 that is $1 that the Interbank participant pays and $500 that the individual pays. The landscape for the individual trader has changed drastically since the internet has gone mainstream however, in many ways leveling the playing field and putting the individual trader along side large financial institutions in terms of access to pricing and liquidity. This will be the topic of our next lesson.
Views: 58407 InformedTrades
16. How to Trade Triangle Chart Patterns Like a Pro Part 2
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/IT-forex-demo3 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/3557-learn-trade-triangle-chart-patterns-part-1-a.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES The second lesson on how to identify and trade triangle chart patterns in the stock market, forex market, and futures market using technical analysis. In our last lesson we learned how to spot the three different types of triangles on a chart, the ascending triangle, the descending triangle, and the symmetrical triangle. In this lesson we are going to look at the strategies for trading these patterns complete with entry and exit points. As we learned in the last lesson, the direction in which the market breaks out of the triangle, and whether the market is in an uptrend or downtrend determines whether the pattern is a continuation or a reversal pattern and therefore whether traders look to go long or short. As with the other patterns we have recently learned about, when traders spot an ascending triangle, they will look to trade the break of the upper resistance line. The target is then derived by measuring the distance between the starting high point of the ascending triangle with the starting low point of the triangle, which is then projected upward from the breakpoint. The stop is then placed just below the most recent trough of the pattern. The descending triangle is the mirror image of the ascending triangle and normally seen in downtrends. When traders see this pattern they will look to trade the break of the lower support line. The target is then calculated the same way as with the ascending triangle, by measuring the distance between the high and low points at the start of the pattern and then projecting that distance downward from the break. The stop is then placed just above the nearest peak. The symmetrical triangle can be seen and traded in either up trends, down trends, or sideways markets. When traders find this pattern on a chart they will look to trade in the direction of the breakout, as this is a sign that one direction either the bulls or the bears have won out over the other. Like ascending and descending triangles, traders will look to trade the break of the pattern, calculating their target by measuring the distance between the high and low at the start of the pattern. The stop will then be placed just outside of the nearest peak if the market breaks to the downside or the nearest trough if the market breaks to the upside. For confirmation on all three strategies, traders will look for declining volume as the pattern matures and then increasing volume on the break. That completes our last lesson in our series on chart patterns. You should now have a good understanding of many of the most common chart patterns as well as common strategies for trading those patterns. In our next lesson we are going to start our series on learning technical indicators by looking how these tools are used in trading and how they can be used to compliment the concepts and strategies we have learned in our chart patterns lessons. As always if you have any questions or comments please leave them in the comments section below so we can all learn to trade together, and good luck with your trading!
Views: 80239 InformedTrades
90. How to Place Your First Forex Trade
 
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Free Forex Course on InformedTrades: http://www.informedtrades.com/f112/ The platform featured in the video is the FX Trading Station. Click here to try a register for a free practice account on the FX Trading Station: http://bit.ly/IT-forex-demo3 A lesson on how to place your first forex trade for traders who are new to the forex market.
Views: 73554 InformedTrades
28. How to Trade Candlestick Chart Formations Part 1
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 For the full lesson with images, text, links, and discussion, go here: http://www.informedtrades.com/4563-introduction-trading-candlestick-chart-patterns.html For our full beginner course in technical analysis and trading, go here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com VIDEO NOTES In our last lesson we finished up our series on technical indicators with a look at the Parabolic SAR. In today's lesson we are going to start a new series on Candlestick chart formations by looking at some of the most common candlestick patterns in the market. As you should remember from our lesson on the basics of trading charts, candlestick charts display the open, high, low, and close of an instrument and shade the "candle" portion white if the close of the period is greater than the open of the period, and black if the close for the period is less than the open. The high and the low of the period are then connected by a thin line which is referred to as the wick. At their most basic candlestick charts give us a picture of how volatile a particular period was and whether buyers or sellers won the trading period the candlestick represents. If a candle is long and white, this tells us that the period started with buyers in control and remained that way as they drove prices higher throughout the period. If a candle is long and black this is an indication of a volatile period where sellers won out over buyers. The less of a wick there is on a long candle the greater the control of either the buyers or the sellers depending on the color of the candle. Candlesticks which have long wicks and short bodies indicate periods where there was a lot of action pushing the market either higher or lower but where it ended up closing right near the open. If there is a long part of the wick on the upper part of the candle means that buyers initially ran the market up against the sellers but then the sellers pushed the market back against the buyers to close the period right where it opened. Conversely if the long part of the wick is below the candle this means that sellers initially pushed the market against the buyers but buyers then pushed back successfully against the sellers to close the period near its opening. Short candlesticks represent periods in the market where the market closed near its open for the period and can represent either periods of little market activity or periods of activity where neither buyers nor sellers gained much ground. That concludes our lesson on the basics of candlesticks. In our next lesson we are going to look at two candlestick patterns called The Doji and The Spinning Top and what they can tell us about the supply demand situation in the market so we hope to see you in that lesson.
Views: 124226 InformedTrades
11. How to Trade the Wedge Chart Pattern Like a Pro Part 1
 
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Practice these concepts with a free practice charting and trading account here: http://bit.ly/forex-demo1 Check out other videos in our free beginner course here: http://www.informedtrades.com/index.php?page=freetradingcourses And of course, don't forget to jump start your learning as a trader by registering as a member of our learning community: http://www.informedtrades.com/register.php VIDEO TRANSCRIPTION In our last lesson we looked at specific strategies for trading the Head and Shoulders Pattern and the Reverse Head and Shoulders Pattern, two chart patterns which we view as reversal patterns when they show up in the stock, futures, or forex markets. In this lesson we are going to look at a pattern called the wedge pattern, which is unique in the sense that it can be viewed as either a reversal pattern or a continuation pattern, depending on the shape of the pattern and whether it is located in an uptrend or a downtrend. The Falling Wedge: The falling wedge pattern is characterized by a chart pattern which forms when the market makes lower lows and lower highs with a contracting range. When you find this pattern in a downtrend it is considered a reversal pattern as the contraction of the range indicates the downtrend is loosing steam. When you find this pattern in an uptrend it is considered a bullish pattern as the market range becomes narrower into the correction indicating that it is running out of steam and the resumption of the uptrend is in the making. The Rising Wedge: The rising wedge pattern is characterized by a chart pattern which forms when the market makes higher highs and higher lows with a contracting range. When you find this pattern in an uptrend it is considered a reversal pattern as the contraction of the range indicates that the uptrend is loosing steam. When you find this pattern in a downtrend it is considered a bullish pattern as the market range becomes narrower into the correction indicating that it is running out of steam and the resumption of the downtrend is in the making. That's our lesson for today. You should now have a good understanding of the falling and rising wedge pattern and situations where they are considered a reversal pattern and situations where they are considered a continuation pattern. In our next lesson we are going to go over a strategy for trading rising and falling wedge patterns complete with entry and exit points and how to determine each.
Views: 134881 InformedTrades
Intro to Martin Armstrong's Trading Cycles
 
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http://www.informedtrades.com/516866-martin-armstrong-king-cycles.html This video discusses Martin Armstrong -- http://www.armstrongeconomics.com -- and his approach to trading. The video's key points are: 1. Armstrong operates from the premise that markets are cyclical; that there is a business cycle of sorts. 2. The business cycle holds that panics or concentrations of capital portending significant pivots occur every 8.6 years, with minor intervals on a 2.15 year basis, and larger events on a 51.6 year basis. 3. If we map out dates at which a cycle may be due, we can get an idea of what to look for in terms when the market may be ready to pivot. If a market is at an extreme at a 8.6 year interval, we may be at a major top or bottom. The video offers some examples, such as the 2009 lows in the US stock market as well as the 1989 high in the Nikkei.
Views: 16462 InformedTrades

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