How to Beat Wall Street – Everything You Need to Make Money in the Markets Plus! 20 Trading System Ideas by Marwood JB

Author:Marwood, JB [Marwood, JB]
Language: eng
Format: epub, pdf
Publisher: The New Minimalist
Published: 2013-12-28T05:00:00+00:00

SOME MORE TRADING SECRETS

I hope by now you are getting a feel for what it takes to be successful in the markets. Whatever anyone says, the world of finance can be an immensely difficult place to make a living, even for those who are not new to the game, so it is important to be able to access the real truth in order to succeed.

But the learning is not over yet and there are some more secrets I’d like to share with you.

These are all things that I have learned by studying practically every trading book under the sun, not to mention the valuable experience I have gained through thousands of hours of live trading.

Volume often shows direction

Volume, or the number of shares traded on a given day, is often used by traders to ascertain the real strength of a stock’s price movement.

Smart traders know that if a stock jumps up on very light volume, the move is likely to be weak and could just be a technical reaction or the result of a relatively small number of players buying into the stock. Conversely, if a stock jumps up on heavy volume, it is a sure sign that the upward move has a real chance of carrying on the upward trend.

Typically, to be classed as a strong signal, volume must be at least twice as large as the recent average. So a good idea is to set up a moving average over your volume indicator on a chart. That way, you can easily see when volume has spiked over the recent norm.

Also, be aware that at certain times of the year volume drops off which can affect how markets trade. July and August are always quiet months for stock markets as many traders go on holiday, so these are generally not good months to look for big moves in the markets. In fact, some days in August you can see markets tick up for no apparent reason other than the fact that most of the big traders are not at their desks.

Other seasonal variations

A quiet August market is not the only seasonal variation that can be found in the stock market. To the untrained observer, it would seem foolish to base investment decisions on the turnings of the seasons, but there are some real patterns that professional traders use to their advantage.

‘Sell in May and go away,’ is one such pattern that has worked handsomely on stocks over the past few years. Since a lot of hedge funds and banks know about this pattern, it tends to pan out more than you would expect.

December is another good month for markets with the period over Christmas being especially good. So much so, that traders refer to the period between December 23 and January 1 as the Santa Claus Rally. Markets tend to tick upwards at the end of December as a result of quiet volume and investors anticipating the shifting of positions in the new year.

Indeed, early January tends to be good for markets too.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.