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Stock Trading Advice

The amount of stock trading advice available to investors over the internet is overwhelming. You can find advice on all types of trading whether dealing with options, foreign currencies, commodities, or stocks. Some of the best advice you may come across however doesn’t have to deal with specifics related to the stock market. This stock trading advice deals with the psychology of trading and how this greatly determines your level of success as a trader.  

While it is important to have thorough knowledge of the markets as well as the trading strategies that you will use, you must also understand the stock market and how emotions play a major role. Our emotions can either help us or hinder us but the important thing to understand first is that our trading emotions greatly effect how we trade stocks.

The idea is to learn first how our emotions affect our trading individually, and then learn how to control those emotions in a way that positively affects stock trading. Emotions such as greed and fear can determine how we trade if we are not careful. Once traders have an understanding of their own personal emotions and how it affects their trading, it is then that he or she can implement strategies as part of their trading plan to address those emotions that may be negatively impacting their trading.

Investors will use tools such as a trading journal to do this. A trading journal is kept by the most successful investors and it allows these investors to document each and every trade, along with the emotions they experience. This helps traders to keep a close eye on how they are experiencing emotions while they trade in the stock market so that they can channel those emotions into something useful and avoid the common pitfalls associated with those emotions.

Investors must realize the important of understanding the psychology of investing and the associated concepts in order to experience their fullest potential when trading stocks or other financial securities. 

We are pleased to have Adrienne Toghraie presenting a free webinar on Thursday, October 29th, 2009. Topic; 'Evolution of a Master Trader' and what it takes to get there. Ms Toghraie is an internationally recognized authority in the field of human development. She is the noted Author of "The Winning Edge 2" and "Traders' Secrets". Information to join this open session, (or to listen to the archived recording after the 29th).

Market Direction:

Today's positive trading did not incorporate any wild oscillations. The initial bullish trading on the open was followed by a very minor pullbacks. The rest of the day involved a steady solid upward trend. Is this a bounce in a downtrend? There are a couple of key points to evaluate to understand whether this is a bullish reversal or a bounce. The stochastics, in both the Dow and the NASDAQ, had gotten to the oversold level just barely. A reversal of a downtrend requires two elements. A candlestick buy signal and a close above the tee line. Today's trading reveals both of those elements.

The past few days have produced good profits by being in the short funds. How would one know if today was a day to cover those positions? That is a tough assessment unless an investor can utilize the information built into candlestick's during all timeframes. If a downtrend is in progress, where would be a critical level to watch that would indicate the Bulls may be taking back control? The halfway point of the previous days body! This would require a close above that level to confirm the Bulls might be taking control. However, what analysis can be done to keep from holding short positions well beyond the halfway point?


As illustrated in today's trading, good economic numbers started the market out bullish from the open. It immediately moved to approximately the halfway point of yesterday's candle. If the downtrend was going to persist, what would be anticipated after the strong initial bounce? In a downtrend, usually the  morning buying is followed by weakness, continuing the downtrend. Today's trading did not show any weakness. This made being short, by being in the leveraged short funds, a volatile place to be. Once the Dow came back up to the halfway point of the previous days candle, any continued buying from that point would be giving back a good portion of the profits.

Analyzing the intraday charts can help clarify what investor sentiment is doing that day. Analyzing the 10 minute chart would have revealed the tee line, as well as 50 moving average, were acting as support. This is not what would wanted to be seen if short the market. What would a potential Jay hook pattern be revealing? The bullish trend could be continuing higher. This becomes a good reason to start taking profits of any short positions or short funds. That does not necessarily mean the market was going to finish as strong as it did today, but why take the risk. If more strength was be ing  demonstrated at the halfway point of the previous days candle, close out positions on the shortside. If the market did go higher and then turn around, positions can always be re-shorted.

DOW ten minute chart

Candlestick analysis works on all timeframes. Whether swing trading or long-term investing or day trading commodities, stocks, or the Forex, candlestick signals illustrate exactly what is occurring in investor sentiment during any time frame. Each individual can create the time combinations that work most effectively for their trading.

Chat session tonight at 8 p.m. ET - guest speaker is Adrienne Toghraie. Join us tonight as Adrienne describes the thought processes that help in the evolution of a master trader. Click here for instructions.

Good investing,

The Candlestick Forum Team

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