Trading Quotes

Trends and patterns are usually much more reliable on longer-term charts like daily and higher. [2009] - James Chen

Knowing the trend at any given time is absolutely essential to analyzing charts effectively. A potential method that can be used for dealing with trends and timeframes is to concentrate on the trend indicated by a timeframe 4–6 times longer than the one traded. Although there are certainly a substantial number of successful counter trend technical traders, there are arguably more successful traders that are of the trend-following persuasion. [2009] - James Chen

Ideally, an uptrend is characterized by progressively higher lows and higher highs in price. An ideal downtrend, conversely, is characterized by progressively lower highs and lower lows. A low is considered a point of reversal between a downmove and an up move. A high is considered a point of reversal between an upmove and a downmove. Much more frequently, traders and analysts find on their charts uptrends that are only required to hit higher lows, and downtrends that are only required to hit lower highs. [2009] - James Chen

Systems using three different moving averages usually produce signals when the shortest period moving average crosses both longer moving averages, or when the shortest moving average crosses the middle one and then the middle one subsequently crosses the longest. Although crossover signals can often be exceptionally profitable, those traders that use them must be prepared for frequent losses resulting from common whipsaw action. The whipsaw is simply an unavoidable fact of trading with moving averages. [2009] - James Chen

The idea behind moving average trading methods, therefore, centers on the goal of gaining large profits during trending periods when crossovers are few and far between—-while at the same time withstanding the inevitable small losses during sideways whipsaw periods when crossovers are abundant. The greatest challenge with this type of trading lies in the ability of the trader to let the winning trades run while immediately closing losing trades. Only in this way can a trader using moving averages profit enough during trends to offset the many losses incurred during horizontal price activity. [2009] - James Chen

ADX is an important indicator that can help a trader determine whether to use trend-trading techniques or range-trading techniques. [2009] - James Chen

Many traders use MACD as their sole confirming oscillator. Some traders also take trading signals exclusively from MACD. [2009] - James Chen

RSI is a classic oscillator that excels at giving overbought and oversold signals in ranging markets. Its usefulness, like most other oscillators, tends to diminish considerably during trending markets.  [2009] - James Chen

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 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