Stock Trading Systems

Welcome Back! One component of a robust trading system is knowing how to find support and resistance levels. Both levels are barriers.  Knowing where those barriers reside can save lots of frustration.  For example, it wouldn’t be wise to buy near strong resistance and sell near solid support. It’s not that difficult to find support [...]

Volatility can be an important part of a trading system. So that we’re all on the same wavelength I’m talking about the kind of volatility that measures the deviation from an average price.  It’s sometimes called statistical volatility. I’ve never heard anyone say they hoped to buy a stock or ETF and have it flat [...]

photo credit: Paul Keller Making money in the market means using a sound trading system and having the nerve to stick with it.  Here are a few suggestions: Know what you want before trying to find a trading system.  Write down your requirements.  Narrow your focus. For example, how much time can you devote to [...]

Personally, every chart I study has a trend line on it.  It’s one of the oldest, but most valid technical tool.  Learn how to draw them correctly and you’ll save yourself lots of headaches. Trend lines will keep you on the right side of the market.  That can be the difference between making money or [...]

Here’s a quick, low risk, and profitable trading system for short entries – Find a stock trading below its 200 day moving average.  A stock in this predicament is already weak. When it stops declining and starts rising in price, place an order to go short beneath the low of the first up bar. Continue [...]

An outside day is a price bar that occurs frequently on a daily chart.  To be a true outside bar it must have a high higher than the previous bar and a low lower than the prior bar. This is what an outside bar looks like – There are dozens of outside bars in this [...]

Successful trading systems take advantage of conflicting information.  That’s when you’re likely to make the most money, when no one else believes what you believe. “Buy when there’s blood in the streets.” –  Baron Rothschild Did your system flash buy signals here? I was trading full-time during those lows.  Doubt and skepticism was rampant when [...]

I was rummaging around my trading library the other day.  It’s full of books written by famous traders like Martin Pring, Joe DiNapoli, Larry Connors, and even J. Welles Wilder  I will often pick up some of these volumes and thumb through them looking for a little gem that I may have missed or not [...]

There are few one bar price patterns that bear watching or should be included in a trading system.  The exception are the key reversal bars.  They don’t happen too often, but can be reliable clues to a trend change. Lets first look at a key reversal bar up.  This is going to be a little [...]

Exits are likely the most important component of a trade. Get it wrong and you can lose a lot of money. My suggestion for exiting trades is to use trailing stops.  My method for setting trailing stops uses the ATR (Average True Range). ATR is a volatility indicator.  It doesn’t forecast the direction of price, [...]