Animoto - The Once A Week Trader

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How To Use History To Create A Solid, Single Stock Trading System

Travel back in time to find the clues and build a successful single stock trading system.  I'll show you how --

Why You Should Use A Stock Trading System

Saw a great article.  It drove home the point of having a good trading system and not trying to trade by the seat of your pants.  Check it out here.

Top Software Analyzed New Trading Manual, "Once A Week Trader"

Received a note this morning that the trading manual, "Once A Week Trader"  was critiqued by Top Software Reviews.  Read it here . . .

Trading Tools

Investors Business Daily has a decent screening tool.  It's worth a look every once in awhile.  Here's a look at tonight's Young Guns . . .

It's Finished!

I listened when you asked me for advice.  Here it is . . .

Software Review -- How I Make Money With Telechart

Put up a video today about the bedrock software program I use, TeleChart.  Watch the video and see one way to find strong stocks to trade --

http://www.tradingsystemssite.com/stock-trading-tips/trading-tip-ways-telechart/

Trading Signals: The Price And Volume Relationship

In reality, volume is most appreciated as a filter.  Click the link and learn how to apply volume to your trading system, HERE

Try This Simple Trading System For Short Trades

Here's a quick, low risk, and profitable trading system for short entries --

The Myth Of The Outside Day

Have you seen an outside day, recently?  If so, did you trade it accordingly?  Find out more about the meaning of an outside bar and what you should do by reading this blog post.

Good Trading Systems For Bad Times

There's money to be made when doubt and pessimism prevail.  If you learn to take advantage of these opportunities and your profits can soar!

The Best Trading Systems -- Simple And Efficient

Some of the most profitable trading systems start by noting a pattern on a chart.  Here's an example of a quick and profitable trading strategy --

Currency Wars And New Pip-Crushing Software

Forex is not my area of expertise.  But I know who is good at trading forex and he's got a "by invitation only" look at a new piece of software.  I've linked it on the site -- NEW Forex Software Video Here

Trading Systems: Exploit The Power Of Key Reversal Bars

Explosive moves can be linked to key reversal bars.  Find out how we use them, HERE

Exits Make Money, Not Entries

Here's a quick and easy idea for setting trailing stops -- even if you hate math!  Simple addition and subtraction can save you a bundle by using this formula

Stock Trading Systems: The Most Important Trading Component

Entries are important, but not as important as you may think.  Find out what aspect of trading puts the money in the bank, HERE.

Stock Trading Systems: Find Your Focus

If you're building a stock trading system you need to be able to answer this question -- do you want to be right, or do you want to make money?  Read the solution, HERE.

Get An Edge, Beat The Crowd, Make Money

Money isn't made by following the herd. Here's an idea for how to separate yourself from the mob and maybe make a few bucks, too!

Short-Term Chart Patterns May Hold The Key

Just did a video post analyzing the averages and finding clues from inter-market analysis.  Watch it HERE.

Stock Trading Systems: Short-Term Strategy -- Channel Blaster

Here's one of my favorite strategies for trading channel breakouts.  The rules and examples explained, in detail,  HERE

How To Build Your Personal Stimulus Package -- Pt. I

You can enhance your personal economy -- here's how in this post.

Range Traders -- The Week Ahead -- September 13th, 2010

The market is in a high risk zone -- don't get caught unaware.  Just posted fresh data and insights, HERE.

Building Trading Systems

What do you want from a trading system?  My goal was to make as much money as possible, in the shortest amount of time, with the least expense -- see how I do it by reading more at the blog.

Trend Change Alert -- Sept 8

Tonight's market analysis flashed a new alert -- hop over and read how we plan to trade this trend change -- Enter Here

Trust Your Trading System

If you're a trader and you don't know how your trading system works that may be why success eludes you.  I posted some ideas on overcoming this stumbling block, HERE.

September 2010 Newsletter

Did you know that the stock systems site has a partner site? 

Every month we publish a newsletter.  It reveals the important price levels to watch on the major averages, gives you a peek at the stocks on our radar, and reports our trading performance from the prior month.  Sign in here and we'll send you a copy  --

September 2010 Newsletter

Trading Choppy Markets

This was a post from a month ago -- seems especially relevant given the ups and downs of the last few days:

 

When you have a market that trades like this one it's time to dust off the stock trading systems cabinet,  pull out the oscillators, and forget moving averages and other trend following indicators.

 

I like the Stochastics %K to trade a choppy market. . .

Read the entire article here, Trading Choppy Markets

Trading Choppy Markets

This was a post from a month ago -- seems especially relevant given the ups and downs of the last few days:

 

When you have a market that trades like this one it's time to dust off the stock trading systems cabinet,  pull out the oscillators, and forget moving averages and other trend following indicators.

 

I like the Stochastics %K to trade a choppy market. . .

Read the entire article here, Trading Choppy Markets

How To Evaluate Technical Analysis Software

Traders have options when it comes to technical analysis software: either use what the broker offers, or purchase a software package. One way to decide which choice may be best is to think about the features necessary to implement your trading system. Here are a few ideas --

Graphing price is the basic feature in most technical analysis packages. The software allows the user to plot charts in a variety of ways: candlesticks, bars, and lines. It should also allow you to draw trend lines and horizontal lines for support and resistance. It's a nice bonus if you can write on your charts -- it helps to keep a few notes about reasons for the entry, stop, etc.

Back testing is very useful to test the viability of your trading system. You'll need to understand the formula language the system uses in order to write the formula to test your trading system. Some formula language can be quite difficult. See if it's possible to download a manual from the vendor and read through the section on writing formula code. It's even a good idea to ask the sales person if technical support can help with this function.

Optimization isn't so important, but is usually a part of the package if the software offers back testing. Optimization is fine-tuning your trading system to find the peak settings for the strategy's rules. This could be an entire discussion by itself.

It seems to me that traders trade and formula writers code software. In other words, you don't need to worry about optimization. If you thoroughly back test your strategy it will become apparent if your strategy is sound, or not. Test over many years, during up and down years, and during sideways markets. If you can be honest with yourself you'll realize if you have a good system. Optimization can lead to curve-fitting that can lead to unrealistic expectations.

A scanner is a great component to have. It should allow the creation of many of scans that can be saved, retrieved and implemented with ease.

Alerts are helpful. A simple alert could be a buy or sell indication on the chart. More elaborate alerts are designed to go to an email account or a hand-held device. It just depends on the amount of “contact" you need or want if away from your computer for the day.

Indicators are something with which you don't need to concern yourself. Most software comes loaded with loads of indicators -- many more than you need or likely want. What is nice is the ability to customize indicators. For example, a custom indicator could be a weighted Relative Strength Index (RSI), or coloring rising price in one color and declining price, another.

Another feature, that is more common, is the power to overlay multiple indicators in the same pane. This is very useful if you have a system dependent on multiple indicator criteria. For instance, it's nice to display a 7 period, 14 period, and 40 period RSI in one pane. In addition, displaying the moving average of the RSI would be another example of a multiple indicator overlay.

A good, clean, timely, data feed is critical. You get what you pay for with data. Free data is often error-ridden, late, or unreliable. Buying data separate from the software program can be costly. Try and find a bundle of software and data. If it meets your needs it will save some serious coin!

Much of the software for sale, but not all, has a broker interface. This allows order entry directly from the program. It's not a necessity, but more of a personal preference.

Why ETFs Should Be Part Of Your Portfolio

The demand for exchange traded funds (ETF’s) grows each year. There are almost 1,000
ETFs available to trade covering almost any asset class imaginable. Some of the larger ETFs are offered by ProShares, IShares, and the SPDRs. There are many ways a sound stock trading systems could incorporate the benefits of ETFs.

There are many reasons for the increased popularity of exchange traded funds. The primary attraction may be that ETFs are considered less risky than individual equities. Because ETFs are a basket of underlying securities the business risk of single stock exposure is reduced. There’s no chance of corporate wrongdoing affecting an ETF like it would an individual stock.

Other benefits of investing with ETF’s are:

• The market can be traded on both the long and short side. This expands the opportunity for profits because an investor can gain from a rising and a declining market.

• Some ETF’s are leveraged. More aggressive traders like the idea of increased leverage. There are now ETF’s with not just double the added leverage, but also triple.

• The capability to trade multiple markets is possible. Oil, gold, silver are some of the possible commodity ETFs. World markets are accessible – country specific investments like: Brazil, China, Japan, etc.

• The currency market is available with many ETFs -- there is likely an ETF for all major world currencies.

• Option trading --just as with stocks the same option strategies can be applied to ETFs.

• Portfolio diversification is simple given the multitude of asset classes, sectors, countries, and currencies represented by exchange traded funds.

• ETFs are not only popular with the investing public, but also with hedge fund managers and day traders. One of the reasons, besides being great trading vehicles, is that they are useful as hedging vehicles.. Hedging with ETFs can protect the profits in a portfolio and it can be accomplished inexpensively.

As with single stocks, technical analysis strategies are suitable to ETFs. It’s possible to successfully use trend following indicators and oscillators. Charting the price movement is no different than graphing a stock. The major index ETFs move very smoothly and are great vehicles to trade. An active trader could make a good living trading only index ETFs.

One warning – note the volume on each individual exchange traded fund. Many like the SPY, QQQQ, DUG, and DIG have lots of volume. Some of the more obscure, like some sector ETFs are thinly traded and should be avoided.

Back Testing Trading Strategies

Back-testing trading strategies is something traders should do when building trading systems. A strategy usually starts with an impression that is coded into a formula. Back-testing that formula will demonstrate the viability of the initial idea. The goal for back-testing is to gauge the effectiveness of your idea. Here are a few tips about retrieving realistic results.

Stay away from over optimization. Optimizing data is manipulating the indicators within the strategy to gain the best results for the time period being tested. Optimizing could also be testing a specific strategy on specific equities .

Don’t kid yourself and test your long strategy on only a screaming bull market and then conclude that your method is the best ever invented. Be practical.

Test over many time frames. Try your strategy every year for the last 5 years and average the results. During that 5 year period is likely found a down market or a long period of consolidation — that will put a little realism into the results.

Back-test the strategy over a broad index of stocks — for example, the Russell 3000 contains 98% of the US equity market and is a good index to use for testing.

You don’t necessarily need a big winning percentage for success — watch the profit and loss ratio. I’ve seen some strategies have a 40% winning average and be extremely profitable. The reason — the losses are small compared to the gains.

Building and back-testing trading strategies isn’t for everyone. Often it’s easier to subscribe to a system that will provide nightly buy and sell signals. It all depends on how much time you want to devoteto trading.

For nerdy people like me it’s enjoyable to test an idea — usually something I’ve seen on a chart. Most of the time my brilliant ideas don’t produce, but how would I know if I didn’t back-test them?

Trending And Trading Markets – Discovering The Correct Indicators For Each

A trending market is one where prices move firmly in one direction, either up or down. The clearest way to visualize this price pattern is by drawing a line that follows the slope of the prices. Another stamp of a trending market is the steady move to new highs and higher lows. Conversely, in a down trending market prices would be making lower lows and lower highs.

Trading markets don’t make new highs. There is no noticeable, persistent, move in either direction. Prices tend to ping back and forth near old highs and then fall to prior lows. Tracing this type of price action would reveal a series of peaks and valleys.

Trending markets require lagging indicators. Moving averages (simple, weighted, exponential) are in this category as is the MACD (it also has a leading component, too). These indicators will manage you in a trend as long as the trend remains intact. Lagging indicators are useless in a trading market -- moving averages tend to flatten in a sideways market and offer no useful information.

There will always be periods of consolidation in the markets to frustrate traders. The Relative Strength Index (RSI), Stochastics Oscillator, and Williams %R are some of the common indicators found in most charting software. These indicators alternate between oversold and overbought and are usually restricted by an upper and lower range.

Trading markets can be problematic to trade. Despite the use of oscillators there will be an increased frequency of trading signals, both buys and sells. Many of the signals will be false and whipsaws are very likely.

One of the best ways to harness a trading market is to discover the support and resistance region on the chart. The odds for success can also be increased by taking only the most overbought and oversold signals.

Planning to participate in a trading market can be very frustrating. The more trading one does the more we find our comfort levels. There is nothing wrong with taking a little trading vacation and waiting for market conditions that mesh with your style.

I hope you’ve found a few ideas that will work for you. Good luck with your trading

Build Your Trading System By Spotting The Superior Instruments To Trade

The top stocks to trade have an average monthly volume of greater than or equal to 500,000 shares. The price should be greater or equal to $20 per share. This insures that you have some institutional interest. That is what moves the price.

Stocks with less volume are a hazard, in my opinion. You might get lucky, but you won't be consistently happy trading these issues.

Try and implement a trading system that looks for stocks with a monthly average volume >= 500,000 shares and a share price >= $20.

Your scan criteria should look something like this:

MA(Volume, 20) >= 500000

Use a simple moving average, MA. 20 is the number of trading days in a month: 5 days per week x 4 weeks = 20)

Close >= 20

This builds your universe of trading candidates.

Now that you have your universe of candidates you should weed out some of the choices.

Find the stocks that move fluidly in one direction. Avoid those that chop all over the screen. Flag the smooth movers and put the selections in a list by themselves. Give it a title that describes the contents of the list, for example, My Trading Candidates. Observe these stocks for potential entry points.

The selection process is critical to successfully making money in the markets. It's the first step in a successful stock trading system!

Good luck with your trading!