Trading Psychology: A Checklist Approach

The S&P 500 made significant gains in the first days of 2011, yet many market analysts and traders are bearish. The reasons vary and include worries about earnings or the economy but many feel that the market is headed for a fall. These bearish pronouncements seem to be business as usual. Last summer many of … Read more

Testing Simple Strategies: MACD Works and Futures are Rewarding

Traders are fascinated by indicators. But just because something is interesting, logical or mystical does not mean it works in the market. Testing is needed to be sure the indicator adds value, and we will define value as improving profits. If an indicator beats a simple trend following strategy, it adds value. Over the years, … Read more

Indicators on Indicators: The Next Step in Analysis

Traders and analysts have been developing market indicators for decades. Many of these indicators are simply measuring the same idea in only a slightly different way since most indicators are based on the same limited amount of market information. For any given time frame, there are only four price data points – the open, close, … Read more

Seasonality: Do Stocks Really Go Up In January?

Many Wall Street pundits have been talking about the Santa Claus rally and the January Effect. In both cases, stocks are expected to go higher based upon a seasonal pattern. This is an appealing idea to trade because if there are reliable seasonal patterns then traders can boost their returns by taking more aggressive trades … Read more

Spotting Stock Market Winners

Traders like to shoot for big wins and are willing to accept small losses along the way. In the stock market, big winners unfold over years and could be a valuable core holding in a trading account. Stocks can be traded on margin and many brokers allow traders to margin stocks, futures and options in … Read more

Are Stocks and Bonds Really Different?

In the long-term, investors in stocks and bonds have different goals but the performance of the two investments has been about the same over the past thirty years. Given the similarity in long-term performance, it is worth looking at the question of whether or not stocks can be traded with the same strategies as bonds … Read more

Do Stops Work?

One of the first lessons that new traders are taught is that one of the keys to success is to cut losses and let winners run. This almost always leads traders to believe stop loss orders should be used to cut losses and are a valuable part of any trading strategy. Individual traders also seem … Read more

My Best Idea for Small Investors

Stocks are a wonderful investment but they will not be the right choice for small investors looking at trading for a living. A widely cited figure is that stocks return about 10 percent a year in the long run. If a successful trader can triple that, a 30 percent annual return will not amount to … Read more