The Benefits of Combining Fundamental and Technical Analysis

Over the last 22 years, I’ve heard countless arguments for and against fundamental and technical analysis. While neither is perfect, they both have strengths we can capitalize on.

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Why It’s Essential to Always Hedge for Volatility

In late November 2018, the Dow Jones skyrocketed 617 points in a day. The NASDAQ gained 204. The S&P 500 was up 61 points. All thanks to easing trade war concerns and bullish commentary from the Federal Reserve. 

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The Importance of Spotting Support and Resistance

The idea that drawing lines on a chart can make you money has been a matter of contention for years. But the fact remains that those lines are quite helpful.

You see, the key to the lines’ effectiveness lies entirely in its popularity among large audiences of traders. We’re talking about thousands, if not millions of traders looking for these very opportunities based on nothing more than support and resistance.

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The Top 3 Mistakes Options Traders Typically Make

Like most investors, one of your top goals has been to enjoy financial freedom at whatever age you choose. So, it stands to reason that your money should ideally generate above-market returns with below market risk. 

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Stock Spotlight: Why General Electric (GE) hit 10-Year Low

Over the last year, General Electric (GE) has become a slow-motion train-wreck.

In November 2018, its stock was just a shell of its former self.  And while there are those that would attempt to catch the falling knife, many be left cut and bloody. 

 

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Williams’ %R: One of the Most Essential Technical Indicators

One of the best ways to become a great trader is to try new things.

Unfortunately, there’s no such thing as a perfect strategy. But if you’re willing to trade outside of the box, you can become a better trader.

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Three of the Most Powerful Technical Pivot Indicators

When bungee jumpers plummet off a bridge, what happens?

They pop back up, right?

The very same thing happens with stocks when they become too overbought or oversold. And if we can position ourselves for the exact moment the “snap back” happens, we can make money. And it’s actually quite easy to spot.


 

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What Every Smart Investor Should Know about Market Pullbacks

Early October 2018 was quite painful for the average investor.

The major indices fell out of the sky. The tech-heavy NASDAQ fell from 8,100 to 7,300. The S&P 500 dropped from 2,925 to 2,725.

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Midterm Elections: What History Tells Us About Volatility

Months ahead of 2018 midterm elections, fear ran rampant of a changing of the guard.

If the Republicans retain leadership, we’re greatly optimistic we could see 35,000 on the Dow Jones Industrials, argued some. In fact, some argue that tax reform is likely to leave many Republicans relatively unscathed in 2018, and perhaps put them on solid ground by 2020, too.

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What to Do When Markets Plunge 500 Points

The sky is falling…. The sky is falling…

Quick everyone, sell everything. Sell first, ask questions later. 

That sounds about right.

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The Two-Step Process to Uncovering Value after a Pullback

“Why would I want to touch a stock that just plummeted?”

My answer, “Why not?”

What many traders don’t understand is that many pullbacks create opportunities, especially when it happens to a well-known stock. 

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How to Use the Chaikin Oscillator to Analyze Markets

Any time you use technical analysis, confirmation is essential.

If you’re not willing to confirm, you’re doing yourself a great disservice. In fact, at no time will I ever just use Bollinger Bands (2,20), MACD, relative strength, or Williams’ R% alone.

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Options 101: When to Buy a Call Option

Options are just another way to trade stocks. 

But instead of buying a stock, you’re buying what’s referred to as a contract. These give you the right – but not the obligation – to ever hold actual stock, sell or buy it. 

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How to Spot Potential Breakout Opportunities

Great traders will always go where the action is. 

Volatility, momentum, new highs, and liquidity are some of the key traits they’ll look for. Other times, there’s a fundamental reason for the break, including news, or event that’ll draw even more traders in.

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Three of the Best Biotech ETFs to Own Now

Some of the greatest investment opportunities have been found in biotech.

For proof, just look at these biotech-related ETFs.

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How to Know When a Trend Reversal Is Likely

We have all heard the phrase, "the trend is your friend" and as traders we also know just how amazing profitable it can be trading alongside it as well as how devastating it can be to out accounts when we trade against it. 

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How to Trade Parabolic Stop and Reverse (SAR)

The Parabolic Stop and Reverse (SAR), commonly known as Parabolic SAR is a trend following indicator that highlights current price direction.

It also provides entry and exit signals as well with dotted lines.

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A Strong Case for Small-Cap Stock Growth

No one has ever said investing was a walk in the park.

But you’d be surprised how many are making it near impossible to find success. 

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Why it Pays to Trade Seasonality

Seasonal trading theories are a dime a dozen.

While seasonality may sound like an oddball way to make money, it works.

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The Secrets of The Ichimoku Cloud

When it comes to technical analysis, admittedly there are some odd names.

The abandoned baby bottom, the doji cross, and even the hanging man are some of the oddest. But they’re also some of the most powerful indicators known to technical traders because of how often they’re used to make trading decisions.

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Marijuana IPO: Tilray’s Smoking Hot Debut

Legal weed won’t arrive in Canada until October 2018.

But in late July 2018, it appears investors caught the buzz a bit early with Tilray (TLRY).

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One of the Most Powerful Options Trading Tools

When traders panic, they become irrational.

Amid the panic all of that rational thought goes out the window.

“Oh no, my favorite stock is crashing. Everyone is selling. I have to sell too. Get out of my way. The sky is falling. I’m going to lose everything.”

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Engulfing Candlesticks: How to Spot Them and What They Mean

To the average trader, candlestick patterns are a bunch of crosses and odd shapes with bizarre names, like the three black crows, or the abandoned baby bottom. 

But as odd as they may sound, they can provide powerful insight into direction.

For example, one of the oddest ones is the doji cross. But if you spot one of these at top or bottom of trend, you may have uncovered an opportunity to trade a trend reversal.

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Three of the Best Technical Tools for Trading

When it comes to technical analysis, it’s very easy to become overwhelmed with the shear number of indicators. Everything from Bollinger Bands and MACD, to moving averages and accumulation/distribution lines can make even the most seasoned pros a bit cross-eyed and batty after awhile.

However, with practice, it’s becomes easier.

Here are three of the most popular indicators to be well aware of.

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An Easy Way to Spot Pivots in Stocks

One of the best ways to make money on the Street is by spotting excessive bouts of fear and greed. 

In fact, that’s how some of the most famous investors made their money.

In short, they were buying when others were scared, and selling when others got too greedy. They were exploiting the very psychology of herd mentality.

And we can do much of the same.

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Trading Strategy: The Best Time to Buy Excessive Fear

The best time to buy fear is when there’s too much of it.

But who in their right mind can tell when there’s just too much?

Honestly, any one can.

You just have to know what you’re looking for with over-extensions on the Volatility Index (VIX) along with its upper Bollinger Band (2,20) and Williams’ %R.

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Two Essential Technical Patterns to Follow at All Times

It is essential that you’re well aware of support and resistance points.

If not, you could be setting yourself up for abysmal failure.

Support represents the moment when buying begins to overwhelm selling and prices begin to bounce back. Resistance represents the moment when selling begins to overwhelm buying and prices begin to pivot.

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The Trump Effect: How Stocks were Affected by Tariff News

President Trump has proven himself to be quite a catalyst for stocks.

Defense, biotech, Amazon.com, retailers, infrastructure and cyber stocks – and now steel and aluminum stocks have been moved by mere mentions and tweets from the President.

For example, in late May 2018, the Trump Administration imposed tariffs on steel and aluminum exports from three of its closest trading allies – Canada, Mexico, and countries in the European Union. The tariffs — 25% on imports of steel and 10% on aluminum — were expected to lead to retaliation from European nations, says National Public Radio.

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Volatile Markets: The Key Things to Always Remember

Volatility has been severe in 2018.

After watching the Dow Jones Industrials explode from 24,809 to a high of 26,616, the bottom appeared to fall out starting February 2, 2018, as the Dow fell 665 points.

The Dow would fall another 1,175 points on February 5, and another 1,032 points on February 8, 2018. On March 1, 2018, the Dow would fall another 420 points.

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Gap Analysis with Candlestick Signals

The correct gap analysis for price movements can produce extremely large profits. One of the major advantages of candlestick signals is that it allows in investor to interpret the investor sentiment after a gap up in price. Being able to recognize strong buy patterns through gap analysis produces a very powerful trading format. Gap analysis includes gaps up in price after a major candlestick signal as well as evaluating a breakout candle. Being able to utilize the information conveyed from the candlestick formations allows an investor to exploit entry positions with maximum benefits.  Candlestick charts reveal these opportunities

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POTUS Effect: Why it Pays to Trade Trump

Apparently, Donald Trump has the Midas touch.

Shortly after President Trump announced his plan to lower U.S. prescription prices, it triggered a major rally in drug stocks, like Amgen (AMGN) and Merck (MRK) in May 2018.

Even the Health Care ETF (XLV) rallied higher on the day to $83.03.

While the President had long promised to take on big drug companies, potentially damaging profits in the pharmaceutical industry, once it became clear that wasn’t part of his plan, related stocks began to rocket higher, as he cooled fears.

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Volatile Markets: The Key Things to Always Remember

Volatility has been severe in 2018.

After watching the Dow Jones Industrials explode from 24,809 to a high of 26,616, the bottom appeared to fall out starting February 2, 2018, as the Dow fell 665 points.

The Dow would fall another 1,175 points on February 5, and another 1,032 points on February 8, 2018. On March 1, 2018, the Dow would fall another 420 points.

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Two Treacherous Technical Patterns on the S&P 500

In early May 2018, there was a good deal of talk of a descending triangle on the S&P 500, following a series of lower lows and lower highs.

And that’s a problem.

That’s because a descending triangle -- a consolidation price pattern composed of lower swing highs pushed lower by an established downtrend made up of a series of swing lows – can lead to a breakdown in the markets. In fact, about two-thirds of the time, a descending triangle pattern can lead to lower prices, and greater fear of a more sizable shift to lower lows in the market.   

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Mid-Term Elections: A History of Commotion

Granted, the economy is strong.

Unemployment is still at 4.1%.  There are high expectations for strong first quarter earnings. GDP numbers have been revised higher on consumer spending strength.

But there is an unknown that could rattle the markets.

Mid-term elections have a historical tendency to rattle markets.

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How to Read Candlestick Charts: The Doji Signal

The Doji is one of the most revealing signals in Candlestick trading. It clearly indicates that the Bulls and the Bears are at an equilibrium, a state of indecision. The Doji, appearing at the end of an extended trend, has significant implications. The trend may be ending. Just this fact alone creates a multitude of investment programs that can produce inordinate profits. What is the best method for making big trading profits? Knowing how to read the stock charts!  Knowing the direction of a trading entity and the strength of that move! Candlestick analysis perfects that trading strategy. Candlestick charts reveal high probability profitable reversals.  Hundreds of years of investing refinement have proven that point.

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Amazon under Pressure: Does This Signal a Buying Opportunity?

Apparently, Donald Trump and Amazon.com have some bad blood.

However, don’t let it scare you away from buying the stock. Instead, on Trump-tweeting induced weakness, it’s actually a solid opportunity.

In late February 2017, the President tweeted his concerns that Amazon does not pay enough taxes and its pays too little to the U.S. Postal Service to deliver. The President also argued that Amazon’s current tax deal “is closing stores all over the country.”

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Market Corrections Happen. How to Hedge Your Portfolio Today.

Markets hit all-time highs.

Optimism and confidence in markets soared to unbelievable heights.

There was nothing but euphoria. Nothing could stop the rally.

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5 Questions that Can Make You a Better Trader Right Now

Matt Choi is a Chartered Market Technician (CMT) with over 17 years of trading experience and the founder and chief strategist of Certus Trading, a company dedicated to teaching traders how to trade stocks, ETFs, options, currencies, commodities and financial futures.  Matt is a rule-based swing trader who applies the strategy of using proven rules and market patterns to inform his own trading and the education he provides at Certus Trading.  Matt derives these trading strategies through long-term testing and deep studying of the markets.

In this short article, Matt addresses 5 areas that traders need to master to ensure consistency.

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Solar Stocks: One of the Hottest Opportunities

When solar stocks were left for dead in 2017, thy were left greatly oversold, ignored because of lower gas prices, concerns about phasing out government subsidies, and far too much debt.

But as it turned out, at the time, most of that fear was already priced into the stocks.

And pullbacks in related stocks were greatly overdone.

In fact, we could clearly see that with technical analysis.

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Portfolio Protection: Why It Is Important to Hedge in 2018

In early 2018, the reins of the Federal Reserve were handed to Jerome Powell.

With it, came concerns the central bank could raise interest rates. 

Of course, it had many on Wall Street terrified of a potential market downturn like we saw at the start of February 2018 and again in March 2018.

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The Best Way to Earn a Living on Wall Street

They’re too hard to understand.

You need far too much money to trade them. They’re too risky.  Far too many of them expire worthless. Only the pros make money from them.

For over 20 years, those are just a few of the laughable excuses I’ve heard from traders that refuse to use an options strategy. 

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The Trump Effect: Top Winners and Losers of Tariff Talk

Love him or hate him, Donald Trump has had quite an impact on portfolios.

From infrastructure and cyber security to defense and biotech stocks, most have soared on the mere mention of presidential policy. 

It happened again in early February 2017.

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Why Bollinger Bands are Essential

If you pull a rubber band too far, too tight, what happens?

It eventually snaps back, or reverts to mean.

Well, the same thing happens with stocks.

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How to Spot Exhaustion up to 80% of the Time

Trade without a plan, and you plan to fail.

All too often, we buy and sell as part of the herd.  We never question if the trend is likely to stay intact, or fade and die, costing us our invested dollars.  But if you pay attention to what a chart is telling you for example, the better you stand to do. 

For example, four of the best indicators to use, include:

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State of the Union 2018: Essential Investment Takeaways

Hours before President Trump’s State of the Union in January 2018, the Dow Jones sank 362 points. But it didn’t take long for it to recover. In fact, just hours after President Trump’s State of the Union, markets were back up thanks to an address full of a “new tide of optimism.”

In fact, there were plenty of positives to speak about at the time.

The U.S. economy was strong, and was expected to continue in 2018. Corporate profits raced to all-time high. We’ve seen massive tax reform, which could fuel buybacks, dividends, and potential mergers and acquisitions. 

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The Key Advantage of Options vs. Stocks

After 20 years of trading options, I’ve heard just about every excuse in the book.

And believe it or not, they get even more ridiculous as the years go by.

- They’re too hard to understand. 

- They’re too expensive.  It’ll cost me far too much money. 

- They’re only for professionals with years of experience.  

- They take too much time to learn and execute (my favorite)

- Or, 90% of options expire worthless.  That’s too much risk for me.

They’re as ridiculous as they sound.

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Why Greeks Matter with Options

We all know that options offer great leverage, as well as flexibility.

They offer us the ability to make money if the price of the underlying instrument moves up, down, sideways, or not at all.  Let’s say I wanted to buy 100 shares of NVIDIA Corporation (NVDA) in early January 2018.

At the time, the stock traded at $223. 

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Crypto Boom 2018: Stocks that Ran with Coins

It’s not just crypto coins that have skyrocketed over the last year.

In fact, any stock even remotely related to the crypto boom has been just as exciting.

The Long Island Iced Tea Company (LTEA) changed its name to Long Blockchain Corporation LBCC) and rallied from $1.79 to $9.50. Croe Inc. (CRCW), which made fitness apparel changed its name to The Crypto Company and rallied 2,700% in December 2017.

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The 10 Dogs of the Dow for 2018

With the Dogs of the Dow, you’re simply buying the highest yielding 10 Dow Jones stocks that fell out of favor, investing an equal amount in each, liquidating by January 1 of the following year, and repeating for nearly predictable rewards.

The way you pick the Dogs is very simple.

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What to Know about the Volatility Index (VIX)

Any time the VIX drops under 10 it becomes a buying opportunity.

We noted as much in late July 2017, as the VIX traded at just 9.36:

“While many don't pay attention to such a gauge, as markets rally, it’s well worth paying attention to. You see each time the VIX has closed below 10, we’ve seen big spikes in volatility shortly after,” we said.

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Why Infrastructure Stocks Could Be Big Winners in 2018

There was a considerable amount of talk about infrastructure at the end of 2017.

At the time, an Amtrak train derailed in Washington State before derailing on a bridge over Interstate 5, sending trains onto the highway.

Three people died.  Another 100 were injured.

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What The "Greeks" Can Tell Us about Options

Without a doubt, options offer great leverage, as well as flexibility.

At times, they can offer us income almost out of thin air. They offer us the ability to make money if the price of the underlying instrument doesn’t even move.

But it gets even better than that.

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Channel Trading: Three Patterns You Need to Watch

To many, technical analysis is useless.

But as we’ve proven countless times, such analysis is essential, especially when you’re trying to gauge the strength and weakness of momentum with support and resistance. 

One of the best indicators to understand is the channel, defined as two parallel trend lines within a tight trading range. The upper line connects the price peaks in the channel while the lower line connects the price lows. 

What’s nice is that such lines tell you when to buy and when to sell. 

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An Options Strategy That Can Yield Consistent Week-Over-Week Results

One of the most successful option strategies that gets little to no press is that of selling naked puts on common stocks. All the attention is given to the massive call purchases on short-term, out-of-the-money contracts that offer the most potential exponential returns. But they also make for the most risky of all options trading strategies, and that is why 90% of those types of trades expire worthless. That’s not a typo.

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Stock Chart Patterns – How To Trade Breakouts

Not All Stock Chart Patterns Are Created Equal

There are hundreds of stock chart patterns traders use to enter as well as exit the market. One of the most if not the most popular entry method is the breakout. A few weeks ago I wrote a short article outlining success rates with breakout stock chart patterns. The basis of the article was to show readers how using different time length to determine breakouts could substantially change your success and failure ratio.

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Options 101: Understanding Time Decay

One of the only pitfalls of trading options is that they lose value the closer you begin to get to an expiration date. 

Remember, options are a decaying asset. That rate increases the closer you hold as your expiration date nears. If you’re in a call or put, and the move hasn’t happened in a respectable time frame, jump out and move to the next trade. Time decay is also referred to as theta, or a measure of the rate of decline in the value of an option over time. 

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Selling Naked Puts Can Provide Expensive Portfolio Clothing

One of the most successful option strategies that gets little to no press is that of selling naked puts on common stocks. All the attention is given to the massive call purchases on short-term, out-of-the-money contracts that offer the most potential exponential returns. But they also make for the most risky of all options trading strategies, and that is why 90% of those types of trades expire worthless. That’s not a typo.

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Technical Analysis: Why the A/D Line is Essential

When it comes to technical analysis, it’s very easy to become overwhelmed with the shear number of indicators. Everything from Bollinger Bands and MACD, to moving averages and accumulation/distribution lines can make even the most seasoned pros a bit cross-eyed and batty after awhile.

However, with practice, it’s becomes easier.

So far, we’ve talked a lot about Bollinger Bands, MACD, candlestick patterns, Parabolic SAR, relative strength (RSI) and even Williams’ %R.  Another essential one is known as A/D.

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Placing Your First Options Trade: 4 Things You Must Understand

Over the last few weeks, we’ve discussed most of the major ins-and-outs of options trading, the benefits, the leverage, as well as how to choose an options broker.

We’ve also dispelled quite a few myths along the way, too.

Now, we want to touch base on placing your first options trade, and the top four things to understand as you roll through the process.

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Options Trading: The First Step you Need to Take

Over the last few weeks, we’ve discussed most of the major ins-and-outs of options trading, the benefits, the leverage, and the simplicity.

We’ve also dispelled quite a few myths along the way, too.

As we move closer to discussing how to actually place a trade to buy to open, or even sell to close a basic put or call option, we must first discuss the fact you need a broker to do so. You also need permission to trade options as well.

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The Best Way to Hedge Your Portfolio

With markets challenging all-time highs, continued geopolitical drama unfolding, and many influential investors calling for a market correction in October 2017, it was never a bad time to consider hedging your risk. Especially in a bi-polar market…

Between September 1929 and June 1932, the S&P 500 fell 86%.

From May 1946 to June 1949, the index fell 29.6%.

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How to Spot When a Stock is in Trouble

Ignore a stock clearly in distress, and it’ll cost you.

If you own a stock with negative cash flows, high debt-equity ratios, profit warnings, or even heavy insider selling, the stock is clearly in trouble.

And you clearly have no reason to have bought it.

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POTUS: How to Trade Anticipation of News

No one can trade on the news. It’s impossible. That’s what many of us have been taught to believe. In fact, many still believe that news is immediately priced into a stock upon its release.

However, as we’ve learned through practice and research, that’s just not true.

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Are You Making as Much Money as You Possibly Can with Stocks?

They’re too hard to understand. 

They’re too expensive.  It’ll cost me far too much money. 

They’re only for professionals with years of experience.  

These are just a few of the many excuses I’ve heard over the last 20 years when it comes to options trading.  But believe it or not, none of those excuses hold weight.  

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Will the Hindenburg Omen Trigger a Correction?

Oh, the humanity!

The infamous Hindenburg Omen is back once again.

While many don’t take it serious, the dreaded Omen has appeared ahead of all stock market crashes over the last 25 years. The last time it appeared, investors foolishly ignored it in December 2015 before the Dow Jones fell from 17,714 to 15,503 in weeks.

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The Most Important Concept in Technical Analysis

The trend is the most important concept in technical analysis.

Its strength or weakness can dictate the overall direction of your favorite stock or index.  Potential uptrends can be characterized by a series of higher highs.  Potential downtrends can be characterized by lower lows.

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Bollinger Bands and the Rubber Band Effect

If you pull a rubber band too far, too fast, what happens?

It snaps back, right?  The same thing happens with stocks, indexes, and currencies.  If they’re pulled too far in one direction, eventually they’ll snap back and revert to back to the mean.  In fact, we see it happen all the time.

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The Wrong Way to Trade Options

Options are one of the greatest ways to earn consistent streams of income.

No wonder it’s become the most popular trading methods to date. So much so that since 2007, average trading volume in options exploded from 11.7 million to 16.5 million in 2017.

 

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Technical Analysis 101: The Cup and Handle Pattern

Admittedly, some technical patterns have bizarre names.

Spot them in time though, and you stand to do explosively well.  One of those is the cup and handle – one of the oldest chart patterns you’ll find.  It’s also one of the more reliable of technical indicators, too.

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The Magic of Moving Average Crossovers

By now, you’re well aware of how to find trends using simple moving averages, such as the 50- and 200-day moving averages.   But you should also know how to potentially spot when a trend could stop dead in its tracks, or birth a new trend.


 

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