Technical analysis of the stock market, or any other market such as Forex, Bonds, Futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.

You only have to think back to major stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.

So what is the secret to technical analysis?, I’m about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings don’t mess with them.

The real secret to technical analysis is to become VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying much the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

Top Dog Trading Review

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There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of money fast, or can be used to grow your capital consistently month after month.

There’s also a lot of hype about how complicated it is to learn and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their trading course on options.

Lets cover a few of the basics about options trading and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.

When trading stocks your leverage is 1:1, if you go on margin you can get get 1:2 leverage, but thats about it. With options it is not quite as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.

So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.

However the downside is that a big loss can also happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk.

What I’ve just described is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non-directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much less dependance on getting the stock direction correct, but it still matters.

So should you trades options?, in my opinion you should not do directional option trades until you become an expert stock trader 1st. This is because you really need to be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.

Whereas if you want to do non-directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.

Learning how to trade options is a very useful skill you have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from Top Dog Trading Review.

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Just a year ago (May 2008) My Trading Robot day trading service was launched.  My Trading Robot allows users to watch a real day trading robot live in action every day.  The robot day trades stocks that are in the S&P 500 and Nasdaq 100 indexes.   Added features to improve the day trading experience over the last year include allowing users to create custom watch lists that can be saved and loaded when needed,  improvements in the statistics associated with each signal, and enhancing the display of information to include maximum draw downs while a trade is active.

“I am very excited to celebrate the 1 year anniversary,”  its founder said, “The robot has been extremely consistent, and has adapted to this very difficult market with ease.It still works terrific each day finding some decent winners, with a simplicity that is not matched anywhere.  We are still the only day trading information service I know of that broadcasts in real time over an instant messenger to subscribers.”

My Trading Robot day trading software is fully hosted, so there is nothing for users to download or install.Because there is so little to setup or do, it is probably the easiest software by far for day trading anyone has ever used.  All you have to do is make a watch list and then the robot will trade your watch list in real time for you.  The robot broadcasts its entry signals, exit prices and stop losses over instant messenger in real time.Additionally, a majority of the entry prices for each trade are done using stops that are away from the current market which gives traders plenty of time to look at the idea.

“I am busy working to implement some terrific additions, which will include a low price trading service that will day trade stocks priced from 1 to 12 dollars a share only,”  Trader X said, ” and also at the same time My Trading Robot is launching a swing trading service for those who do not have the time to day trade or it is just does not suit them.”  These should be online soon and available to all users.  Every member of My Trading Robot will have full access to all three products, and they will all work in the same way by sending signals over instant messenger.

My Trading Robot day trading robot is currently still in beta (ending soon) and is free to all users who wish to sign up and try it out.  Historical archives for all day trading activity can be found at http://www.my-trading-robot.com

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There are many people who have been successful in making huge amounts of money from online stock trading. Following these tips will really help some online traders to make lots of money from online stock trading.

1 – Candle Chart reading in stock trading is the best training step for traders to trade proficiently. By becoming skillful in the activity of reading charts, candlestick charts in particular, you can easily weed out the stocks that will move up or down, depending on other indicators also.

2 – Make a habit of setting mental stop losses whenever you trade or else your entire account will get knocked down pretty quick. You should always proceed by cutting your losses early and by allowing the winners to ride. Basically, this is one of the tactics of the successful trader.

3 – You should never purchase a stock that is dropping and think that it will increase suddenly after you purchase it. You should always opt for the stock that is constantly moving up and will keep on touching the heights. Therefore, you should get rid of a myth “buy low and sell high” from your mind. The new motto is buy high and sell higher.

4 – You should never trade on information from the news. It is better if you work alone while trading online, turn the TV off too. This is because there are frequent ups and downs in the stock market and by the time news reaches you, it’s too late. Therefore, it is recommended that you should always work with your brain instead of trading by using someone else’s brain.

5 – You should always search for the brokers whose commissions per share are low or else your profits will be spent in paying the commission to the brokers. Keep in mind also that it should be a good and reputable broker, and not a fly by night outfit offering these outrageously low commissions. Beware.

These 5 stock trading tips will really help everyone to their goal of hitting it big while trading stocks online.

Good stock trading starts first with education, then with practice trades, then you do small live trades. For a good start on reading candle stick charts, I highly recommend this as your first stop. The Candlestick Course.

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Support and resistance levels either support prices on declines in down trends or resist prices on rallies in up trends.

In an up trend, short term and day traders will attempt to buy at support or at levels of support. In a down trend, short term and day traders will attempt to sell at resistance levels or in resistance areas.

If you can’t determine support and resistance levels, then you won’t know where to enter or exit a position. It is very important for stock traders to develop strategies and methods for determining support and resistance levels. These levels can be determined with the use of trading tools like candlestick charts, and Fibonacci grids.

Day traders have a big advantage when it comes to support and resistance levels, in as much that the day trader’s trades normally end when the trading day is over and if a bad decision was made based on support or resistance levels, he or she will not repeat it the next trading day.

Finding support and resistance levels are way different for the day trader than the long term position trader. This is because support and resistance levels for the day trader must be closer to the current market price than they are for the long term traders. Markets can only drop so far in one day, and consequently the determination of support and resistance levels by the day trader must be realistic in terms of what can be expected – however this does mean that day traders must be willing to use realistic technical support and resistance levels in order to establish their positions.

The following rules may appear very simple, but they are very effective at isolating support and resistance levels and can be applied in any market:

1. Follow a 3-day simple moving average of the lows, and a 3-day moving average of the highs.

2. Take the 3-day moving average of the highs to act as your resistance level, and the 3-day moving average of the lows to act as your support level.

3. Draw a line at the support of the lows, if the trade has made a 3-day high in say the last 3 days (you can use four or five days, depending on your trading method) This means that you will only draw in the 3-day moving average of the highs if the stock has made a 3-day low in the last three days – this means that you only want to sell when the short term is down.

This is a very simple method of trading stocks and forex on a daily basis, and if done correctly they will work. Combine this with the insight that candlestick charts give you and you can create a system that works for you.

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We all have a few favorite stocks we like to watch. Since I keep my eye on them, I can better tell what investors are thinking just by looking at my candlestick chart.

For instance, if your favorite stock is going higher, and it starts to go down a little bit one day, and you get a small red candlestick, on low volume, and bollinger bands moving closer. Then I can say it is consolidating and getting ready for a move higher. If it moves past the previous days high, then it can go much higher and its off to the races so to speak. I like to look for a consolidation move of about half of the previous move.

I can usually tell if a particular leg up is over, if the volume starts to dry up, and my stochastics indicator is saying overbought. The next day we may get a doji symbol, or an evening star symbol. Where the price of the stock opens and closes at about the same level. Then its time to sell or take profits. Maybe waiting until the stock hits another level of support to buy in again. I like to trade options deep in the money and at least 2 months out. Using my charting strategy, I have to close my position as fast as possible and take profits. At the same time keeping losses to the minimum without panicking.

A lot of information can be learned from candlestick charts, but the chart only tells part of the story. Used with other indicators like volume and bollinger bands, candlestick charts can actually tell what the market is feeling or thinking.

If you want to use candlestick charts in your trading, then you should seek out as much information as possible. There are so many possible ways to interpret them. And many ways and systems to make money from them. Find a charting system you like and stick with it.

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