Trading Quotes

Pivot points are a self-fulfilling prophecy. In other words, they work only because enough traders believe in them and trade off of them that there is bound to be some significant price activity at those levels. Fibonacci levels can be considered, to some extent, a self-fulfilling prophecy much like the pivot points. [2009] - James Chen

Although some detractors may deem Elliott Wave analysis as too subjective to be consistently effective, the fact that scores of successful traders have long abided by the tenets of this theory makes this a trading methodology that should not be ignored by traders. [2009] - James Chen

point & figure charting consists primarily of watching for price level breakouts. [2009] - James Chen

Swing traders generally ignore fundamental information and concentrate almost exclusively on the technicals. Some would say that the ideal swing trade should be held for two to five days, while others may say it should be one to four days. [2009] - James Chen

The best way to manage established trend positions is through the use of trailing stop losses. A manual trailing stop loss is often a more preferred method of managing a trend trade. A logical location for each move of the stop loss would be right below the last swing low (or dip). [2009] - James Chen

Scaling into position entails entering initially with a small, fractional trade size, and then adding onto the position as the trend develops further. Scaling out is just the opposite. Once a full position has matured, and there are indications of a possible waning of trend momentum, parts of the position may be closed in succession.  [2009] - James Chen

A trade exit may also be made when a profit target is hit. The profit target should ideally be set to several times the magnitude of the initial stop loss. [2009] - James Chen

There are three primary guidelines of a trend pattern in Elliott Wave, according to its founder. Within the context of the 5-wave trend cycle, Wave 2 never moves beyond the beginning of Wave 1, Wave 3 is never the shortest of the five waves, and Wave 4 never enters the price span of Wave 1. [2009] - James Chen

Well-defined price-oscillator divergences, especially on longer-term charts, can be surprisingly accurate in many instances. [2009] - James Chen

Trailing stops can automate the twin concepts of cutting losses and letting profi ts run. [2009] - James Chen

What exactly is positive expectancy? It simply means that the trading strategy should consistently produce a net gain in equity. This could mean either a higher average number of winning trades than losses, or a greater average profi t per winning trade than loss per losing trade (reward-to-risk), or any combination of the two. [2009] - James Chen

Greed and fear are the two most dangerous emotions to a trader. [2009] - James Chen

The vertical horizontal filter (VHF) indicator measures the strength of a market's trend by comparing the difference between the highest and lowest values during a given period (P) to the cumulative day-to-day change. A higher value indicates a stronger trend, and a lower value indicates a weaker trend. The indicator does not measure directions, but simply the strength of the trend, in whichever direction it is moving.  [2009] - James DiGeorgia

BFG Outlier Research Process (BFG) is used both by institutional and retail level investors. The retail version can be found within www.superstockinvestor.com and is called The Madison Letter. BFG was created to solve one of the toughest tasks for anyone involved in markets: the identification of intermediate tops and bottoms with a high degree of success. A sell occurs where the BFG Score is above 20, Trend Measure falls under 40, and volume wanes into the close. Buys occur where the BFG Score is below -20, Trend Measure falls under 40, and volume improves into the close. [2009] - James DiGeorgia

If a doji occurs after several up days, then many believe that a reversal is imminent. [2009] - James DiGeorgia

Buying when stochastics are in oversold territory and selling when they are in overbought territory is a strategy that is used quite often by range traders with a great deal of success, but once the market stops range trading and begins trending, then relying on stochastics could lead to a tremendous amount of losses. [2009] - Kathy Lien

One of the strongest momentum indicators is a perfect order in moving averages. A perfect order is when the moving averages line up perfectly; that is, for an uptrend, the 10-day SMA is greater than the 20-day SMA, which is greater than the 50-day SMA. The 100-day SMA and the 200-day SMA are below the shorter-term moving averages. In a downtrend, a perfect order would be when the shorter-term moving averages stack up below the longer-term moving averages. [2009] - Kathy Lien

Generally, the risk-reward ratio should be at least 1:2. A good habit of more successful traders is to employ the rule of moving your stop to break even as soon as your position has profited by the same amount that you initially risked through the stop order. At the same time, some traders may also choose to close a portion of their position. [2009] - Kathy Lien

Taking a few days off from watching the market to clear your mind can be the best remedy for a losing streak. [2009] - Kathy Lien

70 percent of a market’s moves occurs 20 percent of the time.  [2009] - Kathy Lien