Agilent stock price at Key support level before Earnings report

Agilent stock price at Key support level before Earnings report
Agilent stock price at Key support level before Earnings report

Earnings report for Agilent Technologies (NYSE:A) is coming out today, while Agilent stock price is trading at a key support level. Agilent share price had found significant support at $35.50 twice before the hammer candlestick was printed on Friday’s close. Depending on today’s A stock news and the price action, the support level could be confirmed once more before Agilent stock reverses. We shouldn’t rule out a breakout though, due to a bearish pattern found in the weekly Agilent stock chart.

Descending Triangle at weekly Agilent stock graph

The bearish trend line along with the horizontal support’s line complete a descending triangle at the weekly Agilent stock graph. This is strong evidence that Agilent share price will breach the support level and continue trending downwards. On the other hand, if a triangle fails (meaning A stock price climbs above the declining trend line), technical analysis considers the failure very important given the significance of the triangle formation in the first place.

weekly-agilent-stock-graph

Bullish trend line at monthly Agilent stock graph

One of the most crucial support levels of Agilent stock price is $10. That is clearer by looking at the monthly Agilent stock graph. Since Agilent share price found support for the last time there in 2009, the stock has been trading for up to $55 per share in 2011, before Agilent share price pulled back. Nowadays Agilent stock is trading very close to the bullish trend line and perhaps the earnings report will push prices away from the trend line.

monthly-agilent-stock-graph

So, will earnings report send Agilent stock price much higher than the monthly trend line or will it lead the support level to fail? That would also confirm the descending triangle of the monthly stock graph. What is your prediction before the Agilent Technologies earnings release? Let me know in the comments below.

EUR/USD Forecast: Using Fibonacci Retracement Levels in Forex Graph

EUR/USD Forecast: Using Fibonacci Retracement Levels in Forex Graph
EUR/USD Forecast: Using Fibonacci Retracement Levels in Forex Graph

EUR/USD currency pair is trading at the 61.8% Fibonacci retracement level these days, since it printed a double top pattern a month ago at 1.3170 and that may come in handy when forecasting. Fibonacci retracement levels are considered as hidden support and resistance levels. Quite often they coincide with obvious support and resistance levels, like in the forex graph in question. That makes them even more important price levels for either a rebound or a breakout.

How to draw Fibonacci retracement levels in the EUR/USD forex graph

A retracement takes place when a trend has already been established. Fibonacci retracement isn’t possible in consolidating markets in other words. Regarding the recent trading action of EUR/USD, I am assuming that the long-term downtrend of the forex pair has ended in July and an uptrend is being developed ever since. Therefore, I will use the low point of July (1.2034) and the recent high one of September (1.3173). Connecting those two points with the Fibonacci line starting from July’s low (white line in the graph), the key Fibonacci retracement levels (38.2% and 61.8%) are drawn automatically by the charting software. Depending on your trading software, you may be able to draw additional levels like the 50% one.

How to use Fibonacci retracement levels in EUR/USD graph

First let us take a closer look to the daily forex graph now that we already drew the retracement levels.

eur-usd-fibonacci-retracement-chart

How cool would it be if EUR/USD retraced exactly to 1.2738! Support and resistance levels though don’t point out exact prices where support or resistance is to be expected, rather than areas. Again, look at the first graph of the post. The support and resistance level has been confirmed 3 times in the past, although it was penetrated for a couple of days before the confirmation occurred, apart from June’s confirmation. I first talked about this particular support and resistance level in the first days of EUR/USD corrective drop.

Having that in mind, note the doji candlestick that was printed last week just a few ticks below the support level. That price action indicates a confused market where sellers aren’t that sure of their decisions anymore and buyers step in cautiously. Doji candlesticks printed at key support or resistance levels are much more significant than other doji’s.

My personal EUR/USD forecast

The precious-resistance-now-support level is a key level, no question about it. I am forecasting that EUR/USD will at least try retesting the resistance level at 1.313 once more,. If it fails, forex traders could trade out profitably in case the pair moves up 30-40 pips over the next few weeks before failing.

Now that doesn’t mean that EUR/USD won’t necessarily breach it. I suppose the chance for a bounce back to higher prices is bigger than a breakout towards the 38.2% Fibonacci retracement level. Thus, a stop loss is essential to manage the trade’s risk, in case my EUR/USD forecast is wrong.

Would you agree with my EUR/USD forecast? Do you also use Fibonacci retracement levels when trading forex? Or maybe you predict that EUR/USD will resume its long-term downtrend. Let me know in the comments below.

Day Trading Stocks with Technical Analysis Rules: Trend lines

We have already explained how to use support and resistance levels when day trading stocks and what is momentum trading in day trading. Today we will talk about trend lines and how we can find entry points for a trend-following strategy. It doesn’t matter if the stock is trading up or down during the day, since the same principles apply in either way. Identifying trend lines is an essential part of technical analysis and it’s difficult to find day trading strategies, that don’t make use of them.

Day trading rule: Identify the trend drawing a trend line

You have probably heard it: Trend is your friend. This is why we should always start analyzing stock graphs by identifying the trend. Drawing a trend line is simply connecting the lows during an uptrend or the highs of a down trend. Like any line in geometry, we need at least two points in order to draw a line. Let’s see the NOW 5-min stock chart.

day-trading-now-stock-chart-up-trend-line

I drew the trend line by connecting the two points indicated with red circles. Until then day traders couldn’t be sure of the trend’s direction, even with previous day’s data. The second higher low provided evidence that NOW stock would probably be heading north on 15th of November and a trend line could have been drawn at about 11:15.

Given the presence of a trend line, day trading NOW stock would have been relatively easy, by buying NOW shares, when the stock price pulled back to the trend line. These entry points are noted with green arrows. Also note the trend’s acceleration at 14:00 that would have been quite generous for anyone day trading this stock yesterday. However, buying at a much higher low like $30.50 due to the pullback would be considered a more risky investment, while the stock could have retraced back to $30 at that time. Also, the more times the trend line is confirmed, the more important the trend line is. Thus trading long at the last possible entry point would be regarded as the safest entry point of all.

On the other hand there isn’t usually that much time or volatility available when day trading stocks, in order for traders to draw trend lines. And even when volatile stocks do provide the necessary price fluctuations, we still need at least two lows or highs during the 7.5 hours window. Take a look at the 5-min WMC stock chart.

day-trading-wmc-stock-chart-up-trend-line

Online day trading the WMC uptrend would have been fruitless, since the entry point would have been 30 minutes before the closing bell. There was not so much time to take advantage of the uptrend. The only workaround in this stock chart would be if we connected the open’s price with the first low (first red circle) and entered long in the second circle. Yet, the significance of such a trend line wouldn’t have been the same and we might have been caught in a trend reversal.

As we discussed in the beginning, applying technical analysis with trend lines can be done even when stock prices are declining. Here is yesterday’s 5-min CRUS stock chart.

day-trading-crus-stock-chart-down-trend-line

The declining trend line is drawn using the first two highs. In comparison with WMC chart, the two points are well defined and we are not really “creating” the trend line. Always listen to the market, don’t create scenarios that have a few clues of existence. The trend line was confirmed at around 11:15 when we could have shorted CRUS shares at $30. All 7 candlesticks that followed printed new lows, which means we could have exited on the next green candlestick without ever worrying about our position. The profit of the short sale would have been $1.50 per share in half an hour. The next entry point was at 13:45 (second red arrow), while the last one is very close to the day’s close.

Day trading for a living can be as simple as following simple day trading rules, like trend lines and support and resistance levels. A lot of day trading and charting software provide additional sophisticated tools to identify trends and predict price movements. Before you begin using those, I suggest you excel in basic elements of technical analysis such as trend lines.

Buying Wal-Mart stock during Pullback

wmt-stock-chart

Wal-Mart stock is in the news today due to the Q3 earnings report. The reason I am writing about WMT stock though is to remind you the words I had written about this stock during the previous earnings report 3 months ago when WMT stock was trading at $75: I’m buying Wal-Mart stock on retracement to $60-65, and today that retracement has breached the support level at $71 with a gap down!

I’m no expert when it comes to stock trading. I am still studying the markets, reading books and improving my trading skills, while I am discussing about finance in this blog. That why I was quite surprised to receive 4 responses in StockTwits when I had posted about my prediction regarding the WMT stock in August.

stocktwits-wal-mart-stock

Despite the 9% increase of 3Q net income that Wal-Mart is reporting today, the stock is down 4.5% during the first hour of NYSE trading. If you read that old post of mine, I was mentioning the support level between $60-65 that is found in the WMT monthly stock chart. If I was going to invest in Wal-Mart stores, that is the price I would be looking for once again. Finally, although I talked about trading long when a retracement takes place, short-selling WMT stock was not in my plans. Trading against the trend isn’t my trading style and I would very much like to take advantage of an established trend, when stock price retraces. And it seems the WMT stock pullback will offer plenty of opportunities to buy WMT shares.

Investing in 5 Gambling stocks of London Stock Exchange

Ladbrokes, William Hill, Betfair, 888 and Bwin/PartyPoker are 5 of the most popular online gambling sites. Their stocks are trading in the London Stock Exchange (LSE) and you’d better be well informed before investing in these gambling stocks. During the past months European Union is trying to regulate online gambling business by imposing taxes and offering operating licenses in various countries. However, regulating the gambling market sometimes leads to unfortunate events, like Betfair not willing to offer their exchange model to German punters and several bookmakers not interested in acquiring a gambling license in Greece.

12-month gains for William Hill and Ladbrokes stocks

Both William Hill and Ladbrokes stocks are gaining during the past 12 months, although they both lost 50% of their stock value in 2008. The market capitalization of the two gambling companies is 2.31B and 1.73B pounds respectively.

Investing in 5 Gambling stocks of London Stock Exchange
Investing in 5 Gambling stocks of London Stock Exchange

Betfair and Bwin.Party stocks consolidating

Over the previous months, Betfair share price has tried to test resistance levels after bouncing off the all-time high at £571. Betfair Group (market cap: £757m) stock has been inactive for 6 months now, possibly getting ready for a sudden move. Question is which way! Bwin (market cap: £966m) share price in the meantime is testing the 5-year low of £100 lately. Bwin was valued at £4.64B when the company went public on the London Stock Exchange in June 2005.

betfair-bwin-party-stock-charts

888.com stock testing resistance

The uptrend of 888 share price seems to meet resistance at £115. Sellers have previously not allowed 888 stock to climb any higher than that and I guess they won’t now either. Unless of course buyers are still interested in investing in the 888 stock, while shares more than tripled their value since July 2011. The market capitalization of 888 Holdings PLC is £378m.

888-stock-charts

Disclaimer: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.

Buying Apple Stock when AAPL Share Price Hit $700

Buying Apple Stock when AAPL Share Price Hit $700
Buying Apple Stock when AAPL Share Price Hit $700

Fortunately I didn’t buy Apple stock for $700! AAPL share price has dropped 21.5% since the all-time high and you can invest in an Apple share for “just” $547 at the start of this week. Several technical indicators show negative signs regarding the strong uptrend of Apple shares, such as MACD divergence and a “morning star” candlestick pattern at the weekly graph, in addition to the bearish formation printed in the monthly graph. AAPL share price has pulled back to a key support level that will probably be used as an entry level for some stock traders. The question is whether Apple stock will breach the resistance level at $610 or $650 once again. If not, $700 would be nothing more than a sweet memory for Apple.

I would be very surprised if Apple share price breaches the support level at around $530 in the following weeks. A bounce is much more likely I guess. Due to the MACD divergence I am predicting that Apple’s uptrend is coming to a halt though. $700 will be key resistance from now on for any upward movement for Apple stock, which is expected to enter a consolidation phase in the next months. Consolidating between $530 and $700 or $650 doesn’t mean avoiding buying Apple stock, but rather being more cautious and less optimistic for new highs.

aple-stock-monthly-graph

Perhaps by consolidating, AAPL share price will build up enough strength to shoot over the resistance level of $700. If that happens, momentum and over-reaction by investors will guarantee much higher prices for Apple stock. On the other hand, should the support level at $530 fail, I won’t be buying Apple stock until it finds support somewhere between $350 and $400. And even then I won’t be that excited with my investment, given I don’t own any Apple product, like an iPad or an iPhone! Perhaps Apple fanboys have a different view of the Apple stock!

Disclaimer: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.

Day trading: Analyze your past trades when you lose money

I picked 3 stocks on yesterday’s open for day trading because of them opening at new highs. Guess what; I lost money on all of them, since most of the gaps were filled during the day! Stock trading on market’s open is considered quite risky, as volatility is significantly increased and day traders need to make quick decisions. I tried to take advantage of the momentum in day trading, but the momentum quickly dried up and uptrends reversed a couple of minutes after I bought the stocks. Normally I wouldn’t visit the charts of those stocks again, but I found out that by analyzing your past trades, your trading is improved.

Day trading APKT stock

By the time I spotted the APKT’s gap up, the stock was already up 6%. However I still went long and set the stop loss right below the most recent support level, since I highly respect support and resistance levels in day trading. My exit strategy would force me to trade out when a new 10-minute low was printed, unless I’m at breakeven point. That is what happened with APKT stock and my stop loss was hit 25 minutes since I entered long. Fortunately that turned out to be a money-saving decision, as the stock filled the gap surrendering all gain.

Day trading: Analyze your past trades when you lose money
Day trading: Analyze your past trades when you lose money

Day trading GPOR stock

Buying GPOR stock was another late entry for day trading. I bought during a strong trend but it turned out that I actually bought at almost the high of the day! Again, my stop loss saved me money while GPOR shares dropped 2 dollars. By the time the closing bell was heard, GPOR stock price had returned to the support and resistance level I had traded out.

day-trading-gpor-stock-chart

Day Trading CIEN stock

While I didn’t make money by day trading CIEN stock yesterday, the chart shows that I should have traded out at $14.60 as my day trading rules state. The moment that orange candlestick printed new 10-minute lows, my finger should have been clicking “sell”. Instead I let my trading capital take another 1% loss, when my position was closed on the support’s failure. The stock might not have filled the gap, but the uptrend didn’t resume either.

day-trading-cien-stock-chart

Analyzing my past trades reveals that making money by day trading online, when a gap up is printed on the 5-min chart, isn’t always that easy. The risk of buying at the daily highs is quite large, no matter the strength of the momentum. Perhaps I have been unlucky, but my previous day trading performance doesn’t really make me that confident!

Day Trading Stocks with Technical Analysis Rules: Momentum trading

Momentum trading is one of the most popular online day trading strategies. Although technical analysis doesn’t help that much here like in the first day trading rule of support and resistance, momentum building is a common characteristic of actively trading stocks that develop strong trends right from the beginning of the day. Market opens and stocks begin trading at much higher or lower prices than the previous day’s close. It’s not that rare to find gaps in 5-min charts that offer excellent setups to make money in online stock trading! The difficult part of day trading these stocks is to discover them, since the momentum usually lasts an hour or so. Read why I recommend StockTwits as a stock screener for day trading.

Day trading rule: Take advantage of the momentum

A stock opens considerably lower than previous day’s close, printing a gap down. The evolving bear market continues pushing the stock price to daily lower lows, printing continuously declining candlesticks. Buyers are nowhere to be found and the decline picks up momentum, as several day traders join in! Short selling orders are overwhelming and obviously no one is betting against the trend. Where would the decline find support and what kind of indicators will help us in our exit strategy? Let’s see the PBI 5-min chart and provide some answers.

Day Trading Stocks with Technical Analysis Rules: Momentum trading
Day Trading Stocks with Technical Analysis Rules: Momentum trading

On Friday PBI stock opened almost a dollar below the closing price of Thursday as the gap down indicates. During the first 15 minutes of trading, the stock dropped 7% more before the first glimmer of hope appeared as a green candlestick. Yet the downtrend resumed quickly until the support level at $12.60 proved to be strong enough to end the decline. But why $12.60? Is that in fact a random support level? Hm, here is the daily chart.

day-trading-pbi-daily-stock

Well, well, 3 months ago PBI stock had found support at $12.60 and since then it is trading up and down between $12.60 and $15.30! Now back at the 5-min chart, sellers tried to push the price lower than $12.60 but failed 3 times during that very day! No surprise there, since the support and resistance levels found in charts of longer time frames are considered much more crucial than the levels found in shorter time frame charts. The long shadows of the first candlesticks that touched the support level were also additional indicators of technical analysis pointing that out.

Apparently trading out at the support level should be a rewarding exit strategy should we have day traded PBI stock on Friday. However, momentum can easily be exhausted and a trend reversal can quickly eat up all the profits before the price confirms a support level! That is why trading out when a new high is printed is also recommended. Due to the nature of momentum trading, day traders are advised to be prepared to trade out as soon as they notice any reversal signal. Take a look at the ENZ 5-min chart.

day-trading-enz-stock

ENZ stock printed a gap up shooting for new multi-month highs, a tempting trading setup for day traders! Say we bought ENZ shares at the market’s open. If we didn’t trade out when a new low was printed, we would have lost all the money we would have made till then! Day trading online for a living certainly does not include giving profits back! A very tight trailing stop or trading out at the bearish candlestick pattern should have saved a lot of money.

In future posts we will discuss about gap fills as an extension of this trading strategy. For the time being though, the very next post will actually be about how to use trend lines when day trading stocks.

Presidential election influenced by debates and hurricanes

According to the Betfair trading graphs of the Presidential Election betting market, debates enhanced Romney’s chance to win the election but during the hurricane Sandy Obama’s odds improved considerably. We can find proof of this statement by taking a look at the implied chance percentage graph of Betfair graphs. Obama’s chance dropped from 85% to 60% and during last week the trend reversed and his decimal odds shortened to 1.33 or 75%.

Presidential election influenced by debates and hurricanes
Presidential election influenced by debates and hurricanes

Last time I discussed about predictions for Presidential election 2012 and graph analysis of the betting odds, I made a comparison between the Pew poll and the election’s graphs. Since then, the upward trend line of Obama’s odds was breached while debates between the two candidates were taking place, proving that people began betting more on Romney. Then came the hurricane Sandy and Obama’s chance bottomed at 60% and reversed, gaining about 15% during the last 7 days!

It’s now really a question of whether the resumed uptrend will retest the resistance level at 85% and breach it or will fail to print new highs. In that case dropping odds of Obama will likely begin drifting and Romney’s chance might in fact climb to more than 40%, his all-time high at the betting exchange! Trading on Betfair is another way to wager on the next presidential election and it is pretty similar to futures trading, with political futures expiring on the 6th of November. After all, Betfair trading resembles a lot of online stock trading.

What do you think will further influence the odds of Obama and Romney until the election day? Would you agree that hurricane Sandy was the reason that Obama’s odds dropped or was it something else? Let me know in the comments below.

Support and resistance levels in PSSI monthly stock chart

What happens when you are a shareholder of a company that is acquired by another one? In the case of PSS World Medical Inc. your investment gains 30% in a day following the announcement of the acquisition by McKesson Corporation. That is exactly what is happening today regarding PSSI stock; a stock that I bought several months ago for $19.50 per share and is today trading for $28.70, gaining 32.50% from yesterday’s close at $21.63! The unrealized profit from this trade is almost $1,000 as my profit target hasn’t been hit yet. Yes, I am not looking to sell below $29, although depending on Friday’s trading activity, I might change my mind. After all, the long-term resistance level is just half a dollar above today’s PSSI stock price.

Support and resistance levels in PSSI monthly stock chart
Support and resistance levels in PSSI monthly stock chart

Why did I buy PSSI stock in the first place?

My decision was based on technical analysis and specifically on support and resistance levels found not in the daily or weekly stock chart, but rather in the monthly chart! See for yourself.

pssi-monthly-daily-stock-chart

This is a line graph of the PSSI stock price, meaning that the price fluctuations per month aren’t included since the line is created by connecting the closing price of each month. So, although I bought PSSI stock in May for less than 20 dollar per PSSI share, the monthly stock chart fails to show that price. I suppose the support level at $20 is quite obvious, which led me to buy about 100 PSSI shares. The stop loss was set at $18.50 risking no more than $100 in this trade, in case the support level failed.

How about my profit target?

Again support and resistance levels of technical analysis proved valuable when it came down to set a profit target. The resistance level of the all-time high of PSSI stock price is a perfect long-term target for PSSI traders to take their profits. A profit target isn’t that important to be met though. If it does, that’s good of course. However, if the stock price approaches the profit target and prints a reversal candlestick pattern, I am willing to trade out. One of the worst feelings in stock trading is to wait for a couple of cents to make a killing, and end up losing all your profits when the price collapses before the profit target is reached.

The resistance level rests at about $29. According to the acquisition agreement, McKesson will acquire all outstanding shares of PSS World Medical for $29.00 per share in cash…

Zynga – Party Poker Deal: Would you buy Zynga or Bwin stock?

Now that Zynga joins forces with Bwin’s Party Poker, are you going to buy Zynga shares or invest in the Bwin stock that is traded in the London stock exchange? Bwin shares are gaining 4.5% this morning, although they are down 2.5% since London stock market opened.

Zynga – Party Poker Deal: Would you buy Zynga or Bwin stock?
Zynga – Party Poker Deal: Would you buy Zynga or Bwin stock?

Zynga stock meanwhile is up 13% during after-hours trading in New York! Zynga earnings report came out yesterday posting $52m loss but stronger-than-expected revenue for the third quarter. Zynga also announced the partnership with Party Poker in the earnings call, offering real money online poker and casino games in UK and a buyback plan of repurchasing up to $200 million of its shares that could further increase the value of the remaining shares.

after-hours-trading-zynga-stock

Zynga stock price however is a lot lower than the offering price of the Zynga IPO one year ago. Shareholders and investors who bought Zynga shares for up to $16 at one point haven’t been that happy, since their investment has lost more than 80% as Zynga shares plunged to $2.13 on Wednesday.

znga-stock-chart

Will Zynga manage to reverse the long term downtrend by entering the gambling business? If you had read my post about the Facebook and Zynga IPO, you would have stayed away from these internet companies. Now though that Zynga stock is trading for $2.40 per share and given the positive news, we might actually see at least a short-term reversal up to maybe $3.30.

On the other hand, Party poker has seen a 33% decline in cash game traffic year on year, despite retaining its second place spot behind Pokerstars. Party will surely welcome those Zynga poker players who will decide to play poker with real money. Speaking of gambling, Bwin.Party shares are trading at £123 but you might need to take a look at the 6-year stock chart before you buy Bwin stock!

bwin-party-stock-chart

Day Trading Monster Energy stock during breaking news

Monster Beverage Corporation is all over the news since FDA began investigating reports of five deaths associated with Monster energy drink yesterday. The breaking news resulted to a 14.23% decline of the Monster stock during Monday’s trading session. However MSNT stock had barely moved in the first 4 hours of trading.

Day Trading Monster Energy stock during breaking news
Day Trading Monster Energy stock during breaking news

Day traders should have spotted a trading range between $52.90 and $53.40 by then. The next 5 minutes though signaled the beginning of a strong downtrend. Note that although the range’s bottom failed, another price level ($52.50) might have provided support during the predicted downtrend.

Monster-energy-stock-intraday-chart-2

The next candlestick that was printed on the 2-min Monster stock chart was quite impressive, penetrating the support level and going all the way down to $52.35. When that candlestick was completed, I would short sell MNST stock ($52.50), setting a stop loss at the last candlestick’s high ($52.90) and risking 40 cents per share. It was more than obvious that breaking stock news was the reason for the birth of the new trend at the intraday chart.

Monster-energy-stock-intraday-chart-3

However, speed is paramount in day trading. There’s no time to over-analyze charts and contemplate your next trade. Monster stock lost 2 dollars per share in the next 2 minutes! If I had been short MNST on the previous candlestick’s close, my trade would offer a 5-1 reward-to-risk ratio already (2 dollars-to-40c).

Monster-energy-stock-intraday-chart-decline

What would my exit strategy be if I had been day trading Monster stock? As soon as a new high was printed, I would trade out. That new high ($49.50) happened 18 minutes later. 9 candlesticks were printed since the entry point. Total profit of this trade would have been $3 per share while the risk would have been just 40c.

 Monster-energy-stock-intraday-chart-day-trading

Another exit strategy could have been to trade out when a resistance level failed. That happened at 15:30 ($46.50), half an hour before the market’s closing bell. In case day traders would have opted for that exit strategy, profits would double up (6 dollars per share).

Monster-energy-stock-intraday-chart-exit-resistance

The intraday Monster stock price decline was a perfect example of how much money you can make in stock trading and specifically in day trading. In addition, the MNST stock chart shows how breaking news affects stock prices when the stock market is open. Next time you hear of important news, don’t forget to load up some intraday stock charts and take advantage of the momentum.

Swing Trading Day 11b: 5 new Stock Picks

The 5 new stocks I added in my swing trading portfolio are DRYS, ACAD, STI, UAL and VVUS. I went long the first 4 stocks while VVUS was the only stock I could pick for short selling in a day that I lost count of uptrend breakouts! Maybe the next stock trading strategy I’m going to test would involve this kind of breakouts!

DRYS stock price is trading inside a slightly upward channel. Well defined support and resistance levels offer good entry points and I decided to buy DRYS stock instead of waiting to short-sell at the resistance level, due to the slightly upward slope.

Swing Trading Day 11b: 5 new Stock Picks
Swing Trading Day 11b: 5 new Stock Picks

ACAD stock on the other hand is clearly in an uptrend. The support level at $2.30 was confirmed twice and the new 5-day high that is printed today forced me to buy 300 ACAD shares, setting the stop loss right below the support level and the profit target at the resistance level for a possible 2-to-1 reward-risk trade.

buy-acad-stock-chart

Trading STI stock’s uptrend seems riskier. I use a much tighter stop loss and target a bigger than normal reward. Considerable resistance was met at $31 and I’ll need to monitor closely this one.

buy-sti-stock-chart

Deciding on buying UAL stock wasn’t that difficult, given the smooth 3-month uptrend that printed consecutive 60-70% pullbacks and new highs. Would the trend continue until UAL stock price returns to $25? I myself would be quite satisfied if the stock makes it at least to $21.5 once again for a 2-to-1 RR trade.

buy-ual-stock-chart

There is great potential for VVUS sellers. The gap down that took place in September and led to new lows, was filled in October and the downtrend’s resume looks promising. This short trade would be one of my biggest winners, if VVUS stock price plummets to $17.5 where I plan to trade out and make money in stock trading predicting downtrends.

short-selling-vvus-stock-chart

Stop Loss and Trailing Stop orders in Online Trading

Money and risk management in online trading is everything. Stop loss and trailing stop orders are some of the tools traders use to manage their risk and cut their losses as soon as possible, in order to make money trading online. No matter the security one trades, the stop loss order is necessary when the prediction is wrong while the trailing stop loss is usually placed to exit the market when the trade is already profitable.

Stop loss order in stock trading

Traders who bought SPY stock yesterday or are looking to buy today after the price bounced at the support level will most likely submit a stop loss order exactly below that specific support level. If the stock price of the ETF fails to resume the uptrend and collapses, the stop loss order will automatically be transmitted as soon as $142.50 is hit, minimizing the risk.

Stop Loss and Trailing Stop orders in Online Trading
Stop Loss and Trailing Stop orders in Online Trading

Stop loss order in forex trading

Forex traders who went long EUR/USD the previous week at 1.2930, may have submitted a stop loss order at 1.28. Should the currency pair plunges below the most recent support level, their maximum risk is restricted to 130 pips in this specific forex trading.

forex-trading-stop-loss

Stop loss order in Betfair trading

Surprised to read about Betfair trading? Sports trading is a popular form of online trading and Betfair trading is quite similar to online stock trading. What is stop loss in Betfair trading? Since there is risk involved in this kind of trading online, stop loss orders have an immediate effect on one’s profitability. The ever popular betting market of US Presidential election provides a fine example of using stop loss orders in Betfair trading. Traders who trust an Obama win in the next election, should have set a stop loss at the 60% support level of the implied chance percentage. In other words, if you have bet on Obama at 1.50 (decimal odds) or lower, you should trade out if the odds climb above 1.67, managing your risk with a stop loss. Another usage of stop loss is in betting against Manchester City to win this year’s English Premier League. Those who bet against (lay) Manchester City at 2.80, should cut their losses in case the odds reverse their trend and fall below 2.60.

betfair-trading-stop-loss

Technical analysis can further help in football trading other than setting stop loss orders.

Trailing stop loss orders in online trading

What is trailing stop loss orders? These kind of orders are usually stop loss orders that traders move up, as their prediction is confirmed and prices climb. For instance, in the SPY stock chart above, the stop loss order will be moved up at breakeven point, if SPY rises to $146 for a risk-free trade. If it continues climbing above the resistance level at $148, traders will lock profits by further moving the stop loss order up, protecting their profits in case the stock reverses. Likewise, forex traders will move the stop loss from 1.28 closely to the EUR/USD price, should Euro continues rising and sports traders will follow up as Obama’s chance to win the election is improved or Manchester City’s odds keep on drifting. Effectively the stop loss orders are converted into trailing stop loss orders, as soon as they are moved up to at least the breakeven point.

Trailing stop orders are commonly used to protect profits, unless the price hits the profit target. Profit targets can be set at recent resistance levels, at Fibonacci extensions or anywhere traders think it’s the fair price of the traded security.

Swing Trading Day 9: Positive Profit and Loss

The stock portfolio of the swing trading system still shows a positive profit and loss statement after almost 10 days of testing the strategy, despite the realized loss of $1,200. On Monday’s close of the market the unrealized profit of 22 stocks comes down to $1,450 for a net profit of $250. Bad news is that I neglected the system the past week and didn’t add any new positions. Good news is that there are a couple of interesting stock charts to analyze.

NXPI stock was the worst performing stock of the portfolio. Due to a bad calculation of the stop loss and the number of traded shares, the resulted loss amounted to about $200, that is double the normally expected loss per trade. The stop loss was hit as soon as the support level failed.

Swing Trading Day 9: Positive Profit and Loss
Swing Trading Day 9: Positive Profit and Loss

Trading ACI stock proved to be the most successful trade until now. I bought ACI stock on day 2 of the swing trading system for $6.48 per share and traded out on Thursday (day 7) at $7.95 for almost $300 profit (200 shares).

aci-stock-profit-trade

Another trade that was completed on day 8 began on the very first day, when I short-sold 300 shares of ORCL at $31.70. A week later I bought back half of those at $30.60 and kept 150 shares in case ORCL stock price went lower. The trailing stop loss I used was hit two days ($31.15) later, bringing the total profit down to $244.

orcl-stock-profit-trade

Finally, S stock printed a gap up in the daily chart and the profit target that was set at the recent resistance level was overcome for additional profit ($145), closing out the trade at $5.94. That meant a 14% gain in a matter of days, since I was long 200 ORCL shares at $5.20.

s-stock-profit-trade

Since today I am long IDTI and SPLK. Here are the two daily stock charts.

idti-stock-chart-swing-trading

splk-stock-chart-swing-trading
The three stocks currently showing the most unrealized profit in the swing trading portfolio are X, ANR and BX.

x-daily-stock-chart-swing-trading

How much money can I make in online stock trading?

How much money can I make in online stock trading?
How much money can I make in online stock trading?
You can make money in online stock trading as long as you are following a trading strategy and don’t trade emotionally. Whether you are position trading, swing trading or day trading stocks, your goal remains the same: to predict uptrends when buying stocks and to predict downtrends when short selling stocks. The kind of the trading strategy only dictates the time frame you are supposed to be holding the stocks.

Position trading

Position trading in online stock trading refers to trading in the longer time frame stock charts and holding a position for months or even years! Position trading is quite often similar to investing, as investments need time to pay off and it’s not the quickest way to make money. Investors or position traders make money when companies perform exceptionally for a long time, leading their stocks to trend upwards for months. Apple stock is a great example when it comes to position trading. Traders who bought AAPL shares for $7 a piece back in 2003 have now made 100 times their initial investment, as Apple stock price recently hit $700!

apple-monthly-stock-chart

Wonder how the nine stocks I picked for position trading in 2012 are doing? Check them out!

Swing Trading

Swing trading is getting quite popular lately as an online stock trading system. Usually swing traders hold on to their stocks for days and trade the price swings during a trending market. PepsiCo stock’s uptrend in 2012 must have offered plenty of opportunities to make money by swing trading the stock.

pep-stock-swing-trading

Let’s see some profitable swing trades of PEP stock:

  1. Buying for $65 a share in April and selling at the recent resistance level ($66.5) – 2.5% gain.
  2. Buying at $67 during June’s pullback and selling at resistance level ($69) – 3% gain.
  3. Buying at $70 on filled rising candlestick in July and selling at new daily low ($72) 5 days later – 3% gain.

Swing trading can also be applied in downward trending stocks, such as Intel.

intel-downtrend-daily-stock-chart

  1. Selling at the resistance level ($28) with a stop loss at $28.5 and buying to cover at the support level ($25) would complete a 6-1 reward-to-risk ratio trade. You would have risked $0.5 per share and would win $3 per share! Thus, if you short-sold 200 INTC shares, you would have made $600 by risking $100.
  2. Short selling at $27 and exiting at $25 during August’s downtrend – 7.4% gain in 10 days.
  3. Shorting at new low ($24) would let you hold onto your position even until today, one month later and already gain 10.5%!

 

Day Trading

Day trading stocks can be quite risky but rewarding as well. Just imagine you are position trading or swing trading in a time frame of 7 hours. You are not allowed to hold stocks overnight and you continuously buy and sell shares in a matter of minutes or seconds! The obvious question is how much stock prices move during a day, to effectively be able to extract substantial gains by day trading. A fine example would be my day trading experience in August, when I made $1,000 by trading PSX stock on the market’s open. But here is Glu Mobile’s stock chart of Friday’s trading session.

gluu-intraday-stock-chart

The stock found support in the first 10 minutes of trading at $3.00 and climbed up to $3.47 four hours later. Day traders who bought GLUU shares for $3 and traded out at $3.40 increased their investment by 13.3% in just 4 hours. In dollar terms, if you bought 1,000 shares at $3.05, setting a stop loss at $2.95 and sold at $3.40, you would have made $350 risking $100.

No matter the trading strategy you like in online stock trading, you can make money by trading stocks. Yet you need to first test your strategy by paper-trading it before risking real money. Sometimes you would need to set tight stop losses using the intraday stock charts or loose ones in case you are going to hold the position for days or weeks. Keep studying the stock markets and stop worrying about how much money you can make in online stock trading! Profits will come when you learn how to trade stocks.

Greek Banks: Buy-and-Forget Stocks

Greek Banks: Buy-and-Forget Stocks
Greek Banks: Buy-and-Forget Stocks
Are Greek bank stocks the best stocks to follow a buy-and-forget trading strategy at this time? For many wealthy Greeks, investing in Greek banks sounds very promising given the very cheap prices these stocks are trading for in the Greek stock market. “How much more can they possibly decline?” is their common argument. Of course that argument failed miserably during the last couple of years as Greek economy weakened. Here are the stock charts of 3 popular Greek banks.

Bank of Greece (TELL.AT)

The most expensive Greek bank stock is currently trading at €13.70. The worst year was definitely 2008, as the bank’s shares plummeted from €94 to €38, indicating the start of the Greek bank crisis. TELL stock might trade for lower than this year’s all-time low of €9 in the future but it might also reverse, climbing back up to €100 and gaining almost 1000%, in which case the buy-and-forget strategy would be proven extremely profitable.

bank-of-greece-stock-chart

The bank’s stock symbol (TELL) comes from T(rapeza) ELL(ados), whereas “Trapeza” means bank and Ellados means “of Greece”.

National Bank of Greece (ETE.AT)

National Bank of Greece stock also experienced heavy losses in 2008, but unlike TELL, it gained 400% during a strong uptrend between 2003 and 2006. The National Bank’s stock closed at €2.12 on Friday, about one euro up from the all-time low of just €1! Reversing to €40 would increase the investment’s value by 20 times, if investors are courageous and patient enough to buy and forget ETE shares!

national-bank-of-greece-stock-chart

ETE stock symbol stands for E(thniki) T(rapeza) (Ellados), whereas “Ethniki” means “National”. That is why the ADR symbol of National Bank of Greece in New York Stock Exchange is NBG, and traders can nowadays buy NBG shares for about $2.70.

Alpha Bank (ALPHA.AT)

Alpha Bank stock is one of the few Greek bank stocks that trade for more than €1 per share at the Athens Stock Exchange.

alpha-bank-stock-chart

Plunging Greek bank deposits in June 2012 resulting from a Greek bank run due to the Greek elections were quite harmful for bank stocks in Greece, since all of them printed new lows on their stock charts at that time. For many optimistic investors that low price is the market’s bottom and some have already bought shares of Greek banks. Time will tell if their buy-and-forget strategy will pay off.

Economic Indicators and Spread Betting

Economic Indicators and Spread Betting
Economic Indicators and Spread Betting
Financial spread betting in the UK has access to more than 12,000 financial markets, including shares, indices, commodities, currencies and more – even the number of sips of water taken by Chancellor George Osborne during his budget speech. Certain economic indicators have an impact on the markets followed by spread betting. It would be better to use a spread betting demonstration account if you wish to become accustomed to their effects.

The Monetary Policy Committee (MPC) of the Bank of England meets for two days every month. The interest rate set by the MPC is the basis for every other British interest rate, and has a knock-on effect on Sterling, gilts, mortgage rates and more. If the rate set by the MPC differs from market expectations, there can be a large impact on UK markets, and also on European markets, although that would be to a lesser extent.

The Consumer Price Index measures changes in the prices charged for commonly-used goods and services. The Office of National Statistics collects the prices of more than 500 goods and services from about 150 locations throughout the United Kingdom. The components of the index are weighted to take account of the importance of items, so a rise in the cost of petrol would have a larger impact than a rise in the price of bread.

If the Consumer Price Index rises and the Bank of England wishes to restrain inflation, it will raise interest rates, which makes holding Sterling more attractive, causing exchange rates to improve, whereupon a spread bet could make money. The Office of National Statistics releases Consumer Price Index figures at 8:30am around the middle of the month.

The Current Account measures the flow of all goods, services and transfer payments to and from the United Kingdom and is reported by the Office of National Statistics at 08:30am at the close of the final month of a quarter. Persistent deficits in the Current Account can cause Sterling to depreciate in value as this usually means that Sterling is leaving the country. Figures are released some weeks following the period reported, which reduces the impact of the report. The Current Account will forecast long-term changes in exchange rates.

Gross Domestic Product (GDP) is the broadest indicator of economic activity, measuring as it does the total value of goods and services produced within the country. Rising GDP reflects an economy that is improving, which is usually beneficial to Sterling. If it expands too rapidly, however, there can be an inflationary effect. It tends to be well-anticipated, but there can be significant market movement if it differs from expectations.

united-kingdom-gdp

The Unemployment Rate is released by the Office of National Statistics every quarter around the middle of the month. People are registered as unemployed if they are actively seeking work or have found a job and are waiting to start within the next two weeks. If the Unemployment Rate is low, people have jobs and so there will be more consumer expenditure, which results in economic growth, but can again lead to inflation if it occurs in excess.

Economic indicators constantly affect markets to a greater of lesser extent and should be followed by anyone conducting spread betting.

Technical Analysis EUR/USD: When to Buy in a Corrective Drop

EUR/USD is trading below 1.30 today further extending the corrective drop since the 4-month high at 1.3175. After successfully predicting the currency pair’s retracement, the question now is when to buy back the sold euros, or when to enter long again. Support and resistance levels can provide the most obvious answer, although hidden support and resistance levels pointed out by Fibonacci retracement line may also help forex traders pinpoint the best entry points. In other words, we are getting prepared with the help of technical analysis when forex news ends the drop!

Support and Resistance level in daily forex graph

Technical Analysis EUR/USD: When to Buy in a Corrective Drop
Technical Analysis EUR/USD: When to Buy in a Corrective Drop

The most clear resistance level that failed recently was the one at 1.2750. EUR/USD had found support during the decline in June, before dropping to the lowest low at 1.2042. Given the downtrend ended and reversed since then, traders would have expected the new established uptrend to meet resistance at 1.2750. On the contrary the currency pair penetrated that level in a single day (September 7) and quickly verified the uptrend’s support level on the next candlestick (Monday, September 10). Here’s the 30min forex graph of that period.

eurusd-forex-30min-graph

Fibonacci Retracement Levels

Let’s go back to the daily EUR/USD graph and plot the Fibonacci retracement levels. Well, what do we have here?! The key 61.8% Fibonacci retracement level coincides with the already discussed support level at 1.2750! Maybe it doesn’t line up to that exact number (1.2738) but it’s a great indication of the importance of that level! Even the other crucial Fibonacci level (38.2%) also aligns with another key support level (1.247).

eurusd-forex-daily-graph-fibonacci-retracement

We now have 3 reasons to buy EUR/USD if it retraces to 1.2750:

1)      Previous resistance – now support level.

2)      61.8% Fibonacci level.

3)      Round number!

Do you also use technical analysis in forex trading? Have Fibonacci retracement levels helped you in currency trading? Let me know in the comments below!

Double Top pattern in EUR/USD chart signaling Retracement

Double Top pattern in EUR/USD chart signaling Retracement
Double Top pattern in EUR/USD chart signaling Retracement

EUR/USD recent uptrend has pushed the currency pair up to 1.3175 since the multi-month low of 1.204 that printed in July. Technical analysis now implies a likely retracement that is regarded as a correction drop in currency trading. The double top pattern printed in the 30-min forex chart is a sign that Euro might as well be heading south the following weeks. I suppose quite a few forex traders will be trading out today taking their profits. I myself, having missed the party, tried to short the currency and buy 65 thousand dollars at 1.3110 yesterday but unfortunately I was stopped out at that specific double top pattern, before taking advantage of the predicted short-term decline.

eurusd-forex-trading-order

I was expecting the EUR/USD uptrend to meet resistance at 1.30 mark. Unexpectedly the currency pair traded close to 1.32 before signaling a pullback during yesterday’s trading session. When I shorted EUR/USD at 1.3110, I set my stop loss at 1.3130 unwilling to risk more than a hundred dollars in this trade. The doji candlestick in the daily chart is now a great reversal candlestick, which will most likely be accompanied by today’s falling candlestick to complete a strong bearish pattern according to technical analysis.

daily-eurusd-forex-chart

Should I have set my stop loss at the previous high of 1.3180? That would mean risking 70 pips instead of 20, which would lead me to trade 4 times less money, in order to keep my risk amount at the same level. In that instance, I would also need to set a profit target much lower to compensate the increased threshold of me being wrong and maintain a sound reward-to-risk ratio. A retracement back to 1.2750 seems very possible and 360 pips would be a huge win but what if EUR/USD decline stops at the round number of 1.30? The profit would be 110 pips and while it would still be a profitable trade, I’d rather have a 5.5-1 RR ratio than a 1.5-1.

The double top pattern found at the 30-min forex chart is a great technical indicator for traders to better define their entry point, instead of looking at the daily chart. The much more detailed 30-min chart hid a reliable reversal pattern inside the doji candlestick of the daily chart that is highly expected to predict the future retracement of EUR/USD. Have you been active in currency trading lately? Let me know what you think of the chart analysis in the comments below.