It is at this point of the week that I display the charts for all the symbols we are following – there are six of them. These are futures charts (except for Apple). We use them as our source. Once they trigger a trade we move to the stock market equivalent since most of you either do not have futures accounts or have accounts that preclude selling short. I also like to mention our theoretical portfolio. It started in the first week of February at $100,000 and as of writing stands at $110,087.00. A bit over a 10% gain in two months. More about returns and how they can mislead you on Monday.
The S&P 500 had that memorable sell off at the end of February. Most didn’t realize that the combination of % drop and the short time it took has only been that severe two or three times since the late 1800s.
Let us continue to crawl before we run.
The three EMAs (exponential moving averages) currently reflect a downtrend. The 21 (blue) is below the 55 (brown). Our trigger 8 (red) is at the same value as the 21. The price (candles) have used the 55 as resistance, which is common. We are now waiting for the price to cross back below the 8 giving us our trigger to place a short trade.
As an aside, we have a mini trend forming as we have a low followed by a high then a low, but not lower than the first one and then another high forming. This is the classic definition of an uptrend: higher highs and higher lows. This concept is one of the bedrock concepts your trading should be based on. You can learn more here: https://HowToTradePROFITABLY.gr8.com/offer_page.html.
Nothing more to see here.
The six symbols we work with have been selected to give you a wide swathe of the market place. Bitcoin is a cryptocurrency. I now have a proxy for this futures contract in the stock market.
The same condition on this chart: the 21 and the 8 appear to be joining forces as the price flirts with the 55. The blue is below the 55 which by definition in our simple world is a down trend. We are waiting for the price to cross back below the 8 to trigger a trade.
We have a trade in Gold. We are using the ETF (exchange traded fund) UGL as a stock market proxy for a long trade in the futures contract. There is a trailing stop on this symbol. As of writing we are still in this trade. In normal conditions I prefer a static stop at the start of a trade. But these are volatile times, so I use a trailing stop. You can see the price cross back across the 21 (blue) and then close above the 8 (red). Our trade was placed just above the close of the green candle.
If you are a beginning trader, don’t worry about using a trailing stop. Just give your trade room to breathe. Place your stop initially just below the most recent support. If you cannot identify that, drop me a line with your chart at: email@example.com I will help you with it.
Oil has been in a slide – so to speak – since January. The charts can portend events. Our job is to trade using our simple method and not consider them. Let others try to assign reasons for this or that move – it is a mug’s game, don’t indulge.
The price has crossed back above the blue line and then back down across the red. The price however has made a significant shelf of support at $20. We are about to go short oil (we will use a stock market proxy to imitate this action). More anon.
This is to give you a little taste for the Forex market. It trades over 5 trillion dollars per day. This means that these charts (of the biggest currencies) are pure information. The amount of effort and cost to manipulate this market is huge. It is the big Daddy. What happens here rolls down hill to the bond market which is 20 times larger than the stock market, which rolls down hill to the stock market. The stock market moves based on what happens in the big brother markets. It is not the be all, end all we are led to believe.
We had a signal to buy this pair as the price closed above the red (8 EMA) with the blue (21 EMA) above the brown (55 EMA). We used a stock market proxy for this currency pair, EUO, and are still in it. We have a trailing stop keeping guard.
This is chart of Apple I created using Yahoo Finance to show you that you can use charts in your trading at no cost as you learn and decide if it is a path for you. It has suffered a reversal of fortunes after a significant run. The reversal was foretold by the divergence between the price and momentum. Apple was brought into our stable of symbols late as a possible replacement for Bitcoin. I was having trouble finding a proxy in the stock market. I have found one, but I think we will keep Apple. There are some things we can learn about individual stocks – and you can unlearn – as we go.
At this moment Apple is in a downtrend as the 21 is below the 55. Our set up is therefore for a short trade. The price has closed above the blue fulfilling another of our conditions. All it needs to do now is cross back below the red.
If this occurs and a short trade is triggered. We shall go there, with a discussion of main points when shorting a symbol.
That’s all for today. Remember, any questions or comments, please email me: firstname.lastname@example.org.
If your thirst for more needs slaking, click: