Custom Search
|
|
Stock Option Trading - Part 2 Will The Trend Stop Or Will It Continue
The second kind of tool would be momentum tools . To make appropriate judgments you should use momentum tools and apply them to a timeframe that is smaller than the one you are trading ... essentially if you're trading on a daily chart, trying to pick either the low of the day or the high when trading, then for support for the intraday trading decisions you'd be looking at half hour or hourly charts . What are these types of tools ? A short-term moving average is one of the best ; three moving averages should be used within a channel system and you will have created a matrix against which you can measure the strength and robustness of a trend . There are many channel systems but one of the most effective is the Drummond Geometry system (you should have learned this in your stock option trading) which as the center line uses a moving average that is short term of the average of the high, low, and close of the last three completed bars , projected forward onto the future bar . Then two channel bands are added to this based on similarly managed averages of the last three pivot points . Judgments that are very effective of the strenght of the market can be made by monitoring where closes occur sequentially in relation to this system . You should also establish market "flow" by measuring using various aspects of price strength , such as how close the close of the bar is to the low or high, how far apart the open and close are , the measurement of the range of the bar , and how much progress the bar is making through your support and resistance matrix . Yet another tip to remember: Since there is a system or support and resistance for each time frame, watch the difficulty or ease of in a trend the lowest timeframe monitor breaks its own support or resistance. The more easily you see this happen , the more the underlying trend is probably going to be robust. Within an uptrend , support close to the low of the bar is going to hold , and near by resistance will more easily and more often break . Lower time-period support holding, and resistance breaking - this is a good sign that the trend is strong . These tips should help your stock trading strategy become a consistent winner as you learn how to distinguish between trends that are running out of steam and trends that can continue for many days or weeks or even months . A quality course on technical analysis training can save you a lot of time and money by giving you the tools you need to make these important distinctions . Article Directory: http://www.articledashboard.com Peter Markham is a Forex trader with 30 years practical experience in the markets. He received his education in Sydney and Los Angeles and has been a trading consultant worldwide. He has written widely on Technical Analysis Trading. Among the many choices Peter recommends this technical analysis trading for an original and productive trading approach. |
|