Technical Analysis to Endure Unprecedented Times
Technical analysis is playing a bigger role than usual due to the effects of the pandemic and subsequent stimulus packages. Guidance and earnings estimates have been difficult to quantify making them unreliable. Yet of the Dow Jones 30 companies, 28 have beaten earnings estimates in Q3. Only American Express (AXP) did no,t and NKE had […]
Bull Call Spreads and Bull Put Spreads Explained
Option traders often ask me is there a way that you can take advantage of this bullish investing scenario while limiting risk? Certainly, there are a few option strategies that can accomplish this goal. One that may be an option (no pun intended) is a debit call spread, which is sometimes referred to as a […]
Learn to Identify Charting Patterns
There are numerous books and journals written on charting techniques and seemingly countless patterns. There is terminology that describes popular patterns using bar or candlestick charts. Some of the most well-known charting patterns include flags and pennants, trendlines, head and shoulders, gaps, island reversals, and ascending/descending triangles. Some of the basic patterns for candlesticks are […]
A Detailed Credit Spread Guide for Option Traders
What does an option trader do if he or she thinks that an underlying won’t most likely go higher but doesn’t feel confident that it will drop much or vice versa? Without using options, it is hard to profit from that scenario. Using options, a credit spread in particular, you absolutely can. A Brief Explanation […]
Start Each Trading Day With a Plan
Professionals in all walks of life are engaged day and night. My leisure passion is golf. I study the game and hone my craft through practice. I did the same as a baseball player during my college years. Through sports I learned hard work and diligence pay off. My dream to be a pro player, […]
If You Want to Succeed, Get Motivated
On the surface, it seems silly to think one is not motivated to make money option trading. But if you look deeper, lack of motivation is what holds back many traders. Having the proper attitude can go a long way in life including in your potential success as an option trader. So ask yourself right […]
Use VIX to Adapt in Extraordinary Times
There is a toxic cocktail that traders are forced to swallow. The pandemic, election, lockdowns, and divided House and Senate comprise a nasty drink. The current trading environment is extraordinary and challenging on normally reliable strategies. As traders we must adapt. When volatility is at lofty levels, regulating risk and profit targets requires adjustment. Setting […]
Put Your Profit Taking Orders in Immediately
The market has been a volatile beast and there are no signs of that slowing down especially with the election on the horizon. This post will not only be an eye-opener to some but will also remind others of something they should already be doing: Set up a profit taking order as soon as you […]
Having Anxiety About Your Long Stock?
If the market has not been volatile enough for you recently, add in quarterly earnings and you have even more potential volatility into the mix. If you own stock, you would love your stock to gap higher after the release. Unfortunately, that is not always the case. The way 2020 has progressed thus far, option […]
Use Daily Candles to Spot Changing Trends
To recognize change in trend we must understand “responsive activity.” As a market moves lower, we need to identify when buyers respond to the cheap prices. Conversely, as prices move higher, we have to note when sellers consider prices too rich. Daily candlesticks are a useful tool to determine when momentum has faded and the […]
Before You Enter That Trade…
I have a bunch of different sayings when it some to options trading, but this one might be my absolute favorite: “Know exactly what you will do no matter what happens.” What this really means is that I want traders to have a trade management plan in place before they enter a position. As we […]
The Essential Elements of Trade Analysis
Acronyms and mnemonic devices are learning techniques that aid in information retention. I use them to recall patterns in charts and when teaching a logical approach to trading. The acronym I use most often when creating trade strategy is VERTEX. Each letter in this acronym is an element I research for every trade. The V […]
Option Bid-Ask Spreads Can Hurt You
I have always wondered why there has to be a spread between what you can buy an option for and what you can sell it for. The simple answer is someone needs to make money and that someone is usually the market maker. All kidding aside, many option traders do not even think about the […]
Your Trading Plan of Attack
When scanning for trades I do it with purpose. When searching for directional or vertical trades, there are conditions that must be met. And the first one is that the market has come into a long-term support/resistance zone. Markets frequently reverse when revisiting previous extremes. When a market reaches such an area, the next requirement […]
What Triggered Today’s Stock Tumble?
Stocks had been trending steadily for a couple of weeks, but today they took a tumble, seemingly out of the blue. In the Wednesday MTM Daily Edge session, we prepared for a possible reversal or consolidation phase to begin. A day before the sharp decline there were subtle changes that are common before market turns. […]
How to Compete With Pro Traders
I have three sons who grew up in a unique era. Little league and soccer were their first social gatherings. Around that time electronic games were just taking hold. Baseball, football, soccer, hockey, water polo, lacrosse, boy scouts and music were options for youngsters, and my kids tried them all. They embraced competition and accepted […]
What You Should Know About Bollinger Bands
I have researched and tested many technical tools and indicators. My goal has always been to find the ideal combination of instruments without overloading my charts. When traders use too many tools, they often get conflicting signals making it difficult to execute trades confidently. I began testing new disciplines years ago and started a journal […]
Keep It Simple When Viewing Candles
Arguably daily candlesticks are the most widely used technical tool to analyze price action. The reason for this is because they are designed to track opens and closes, which are the most volatile and liquid times of the trading day. When a market closes above the opening price, it is thought to have positive momentum. […]
A Volatile Market Is an Excuse to Review Your Trades
With volatility picking up in the market once again, option traders can have an instant edge. But sometimes, because of market uncertainty or wider than normal bid-ask spreads, it may be hard to profit. As you hear me say plenty of times, no position is sometimes the best position. Traders need to consider sitting on […]
Volatility Apt to Remain High Amid Fed Uncertainty
On Wednesday afternoon the FOMC meeting culminated with no changes in monetary policy. The equity indexes rallied on the news that the Fed will continue to be accommodative and use all their tools to ensure Americans receive financial aid where needed. However, 30 minutes after this news was reported, Chairman Powell held a press conference. […]
Use RSI to Navigate Uncertain Markets
Technical indicators can be quite helpful when fundamentals are absent. Now more than ever traders need to interpret price action using charts because the stock market lacks guidance. Earnings estimates and guidance mainly drive stock prices. With much of the economy shut down and the uncertainty of when it will be running at full capacity […]