INVESTMENT RISK/MONEY MANAGEMENT

INVESTMENT RISK/MONEY MANAGEMENT Stock market provides the same chance for investors to take their return, but so many investors can’t earn enough returns and lose money, why? Because they don’t know what is risk management and don’t use it. What is Risk Management? There are different ways and definitions about…

INVESTING IN MUTUAL FUNDS

INVESTING IN MUTUAL FUNDS What are mutual funds? Mutual funds enable investors to pool their money and place it under professional investment management. The portfolio manager trades the fund’s underlying securities, realizing a gain or loss, and collects the dividend or interest income. The investment proceeds are then passed along…

LEARN BASICS ABOUT FUNDAMENTAL ANALYSIS

LEARN BASICS ABOUT FUNDAMENTAL ANALYSIS The definition of Fundamental Analysis Fundamental analysis is a stock valuation method that uses financial and economic analysis to predict the movement of stock prices. The fundamental information that is analyzed can include a company’s financial reports, and non-financial information such as estimates of the…

Weighted Moving Average

Weighted Moving Average The Weighted Moving Average places more importance on recent price moves; therefore, the Weighted Moving Average reacts more quickly to price changesthan the regular Simple Moving Average (see: Simple Moving Average). A basic example (3-period) of how the Weighted Moving Average is calculated is presented below: Prices for…

Volume Accumulation

Volume Accumulation   Volume Accumulation Defined Volume Accumulation Divergences   The Volume Accumulation indicator combines volume and a price-weighting that shows the strength of conviction behind a trend; the Volume Accumulation indicator is a helpful tool in uncovering divergences. The formula for the Volume Accumulation formula is shown below:   Volume…

Ultimate Oscillator

Ultimate Oscillator Developed by Larry Williams and first described in a 1985 article for Technical Analysis of Stocks and Commodities magazine, the “Ultimate” Oscillator combines a stock’s price action during three different time frames into one bounded oscillator. Values range from 0 to 100 with 50 as the center line.…

Ulcer Index

Ulcer Index Comparing Investments Using the Ulcer Index The Ulcer Index measures the “stress” of holding a trade or investment by measuring price retracements. The Ulcer Index is based on the notion that downward volatility is bad, but upward volatility is good. Unlike standard deviation, the financial industry’s benchmark way…

Triangular Moving Average

Triangular Moving Average The Triangular Moving Average is a Simple Moving Average that has been averaged again (i.e. averaging the average); this creates an extra smooth Moving Average line. The chart below of the E-mini Nasdaq 100 Futures contract shows the relation between a 10-day Simple Moving Average and a…

Simple Moving Average

Simple Moving Average The Simple Moving Average is arguably the most popular technical analysis tool used by traders. The Simple Moving Average (SMA) is used mainly to identify trend direction, but is commonly used to generate buy and sell signals. The SMA is an average, or in statistical speak –…

On Balance Volume

On Balance Volume Joe Granville introduced the On Balance Volume (OBV) indicator in his 1963 book, Granville’s New Key to Stock Market Profits. This was one of the first and most popular indicators to measure positive and negative volume flow. The concept behind the indicator: volume precedes price. OBV is…

Price Volume Trend

Price Volume Trend Price Volume Trend combines percentage price change and volume to confirm the strength of price trends or through divergences, warn of weak price moves. Unlike other price-volume indicators, the Price Volume Trend takes into consideration the percentage increase or decrease in price, rather than just simply adding…

Moving Average Convergence Divergence

Moving Average Convergence Divergence Developed by Gerald Appel in the late seventies, Moving Average Convergence-Divergence (MACD) is one of the simplest and most effective momentum indicators available. MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter moving average. As…

Linear Regression Curve

Linear Regression Curve The Linear Regression Curve plots a line that best fits the prices specified over a user-defined time period. Think of the Linear Regression Curve as numerous lines, but both extreme ends of the lines are hidden, while the center portion is shown and is connected to other…

Keltner Channel

Keltner Channel The Keltner Channel is a moving average band indicator whose upper and lower bands adapt to changes in volatility by using the average true range. The Keltner Channel is used to signal price breakouts, show trend, and give overbought and oversold readings. There are many variations to calculating…

Fibonacci Numbers

Fibonacci Numbers Overview Fibonacci numbers are the result of work by Leonardo Fibonacci in the early 1200’s while studying the Great Pyramid of Gizeh. The fibonacci series is a numerical sequence comprised of adding the previous numbers together, i.e., (1,2,3,5,8,13,21,34,55,89,144,233 etc..) An interesting property of these numbers is that as…

Exponential Moving Average

Exponential Moving Average The Exponential Moving Average (EMA) weighs current prices more heavily than past prices. This gives the Exponential Moving Average the advantage of being quicker to respond to price fluctuations than a Simple Moving Average; however, that can also be viewed as a disadvantage because the EMA is…

Elliott Wave

Elliott Wave Elliott Wave Theory interprets market actions in terms of recurrent price structures obedient to the Fibonacci sequence. Basically, Market cycles are composed of two major types of Wave : Impulse Wave and Corrective Wave. For every impulse wave, it can be sub-divided into 5 – wave structure (1-2-3-4-5),…

Directional Movement Index

Directional Movement Index Part of the ADX indicator, the Directional Movement Index (DMI) consists of two lines, the DMI plus line (DMI+) and the DMI minus line (DMI-), which generate buy and sell signals. The chart below of the E-mini Russell 2000 Future shows an example of the DMI: DMI…