CANSLIM Trading Style Broken Down

CANSLIM Trading Style Broken Down

CANSLIM Trading CANSLIM is Investor Business Daily’s (IBD) acronym for the seven common characteristics all great performing stocks have before they make their biggest gains. My trading foundation is rooted in CANSLIM although I use it differently than most beginners now that I have evolved into other styles and methods. CANSLIM Letter Breakdown Let’s start by understanding what each letter represents in the CANSLIM acronym as described by investors.com: C= Current earnings per share should be up 25% or more and in many cases accelerating in recent quarters. Quarterly sales should also…

Forex trading mistakes and traps

Forex trading mistakes and traps

Common Forex trading mistakes and traps There are common mistakes and ‘traps’ that give nearly all traders trouble at some point in their trading careers. So, let’s cover the most common mistakes that traders make which keep them from making money in the markets: • Analysis-paralysis There is a virtually unlimited amount of Forex news variables that can distract a trader, as well as tons and tons of trading systems and trading software. You’ll need to sift through all of these variables and forge a trading strategy that is simple…

Heikin-Ashi Candlestick Chart

Heikin-Ashi Candlestick Chart

Heikin-Ashi Heikin-Ashi Candlesticks are an offshoot from Japanese candlesticks. Heikin-Ashi Candlesticks use the open-close data from the prior period and the open-high-low-close data from the current period to create a combo candlestick. The resulting candlestick filters out some noise in an effort to better capture the trend. In Japanese, Heikin means “average” and “ashi” means “pace” (EUDict.com). Taken together, Heikin-Ashi represents the average-pace of prices. Heikin-Ashi Candlesticks are not used like normal candlesticks. Dozens of bullish or bearish reversal patterns consisting of 1-3 candlesticks are not to be found. Instead,…

OPEN INTEREST AND MARKET DIRECTION

OPEN INTEREST AND MARKET DIRECTION

ALL YOU NEED TO KNOW ABOUT OPEN INTEREST AND MARKET DIRECTION “There’s a sucker born every minute!” You are likely familiar with this phrase which has been attributed to the late P.T. Barnum.  It means that there are a lot of gullible people in the world.  Wall Street is counting on investor vulnerability in order to line their own pockets. Business television helps to perpetuate this.  Most of the time, when you tune in you are bombarded with “news” of the hottest stocks; the ones that have already increased in…

Bump and Run Reversal

Bump and Run Reversal

Bump and Run Reversal Chart Pattern As the name implies, the Bump and Run Reversal (BARR) is a reversal pattern that forms after excessive speculation drives prices up too far, too fast. Developed by Thomas Bulkowski, the pattern was introduced in the June-97 issue of Technical Analysis of Stocks and Commodities and also included in his recently published book, the Encyclopedia of Chart Patterns. The pattern was originally named the Bump and Run Formation, or BARF. Bulkowski decided that Wall Street was not ready for such an acronym and changed…

Stop-Loss or Stop-Limit Orders

Stop-Loss or Stop-Limit Orders

Which Order to Use? Stop-Loss or Stop-Limit Order Traders and investors who seek to limit potential losses can use several types of orders that can get them into and out of the market at times when they may not be able to place an order manually. Stop-loss and stop-limit orders are two such order types that can accomplish this. But it is critical to understand the difference. Stop Loss Orders There are two types of stop-loss orders: 1) Sell-stop orders protect long positions by triggering a market sell order if the price falls below a certain level….

Chart Patterns (2) – The Double Top Reversal

Chart Patterns (2) – The Double Top Reversal

The Double Top Reversal Pattern The Double Top Reversal is a bearish reversal pattern typically found on bar charts, line charts and candlestick charts. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between. Note that a Double Top Reversal on a bar or line chart is completely different from Double Top Breakout on a P&F chart. Namely, Double Top Breakouts on P&F charts are bullish patterns that mark an upside resistance breakout. Although there can be variations, the classic…

INCOME AND TAXATION

INCOME AND TAXATION

RETIREMENT INCOME AND TAXATION When you retire, you will need income to finance your normal living expenses. You should consider what the sources of that income will be, and how that income will be taxed. Knowing the general outlines of the taxation of different forms of income may influence your decisions about investing your savings. What do you need to know about income and taxation? Below are some of the typical types of retirement income and a description of how they are taxed. Although this list does include many common…

Chart Patterns (1)

Chart Patterns (1)

Introduction to Chart Patterns There are hundreds of thousands of market participants buying and selling securities for a wide variety of reasons: hope of gain, fear of loss, tax consequences, short-covering, hedging, stop-loss triggers, price target triggers, fundamental analysis, technical analysis, broker recommendations and a few dozen more. Trying to figure out why participants are buying and selling can be a daunting process. Chart patterns put all buying and selling into perspective by consolidating the forces of supply and demand into a concise picture. As a complete pictorial record of…

CCI Correction

CCI Correction

Introduction – what is the CCI? Developed by Donald Lambert, the Commodity Channel Index (CCI) is a momentum oscillator that can be used to identify a new trend or warn of extreme conditions. This strategy uses weekly CCI to dictate the trading bias when it surges above +100 or plunges below -100, which are key levels noted by Lambert. Once the trading bias is set, daily CCI is used to generate trading signals when it reaches its extremes. Strategy Lambert’s trading guidelines for the Commodity Channel Index focused on movements…