Before you dive into the content, check out this video on moving average crossover strategies. The video is a great precursor to the strategies and Bollinger Bands Explained Video Check out this quick video on bollinger bands. The video will help you familiarize yourself with the indicator and pr Please take the time to watch this video in its entirety. What you will notice is that I break down how much you can make based on trading for 1 a c Guys, this pattern keeps repeating itself over and over again.
If you guys have watched the videos that we have been putting together, you have he Hi Guys, it's Kunal from Tradingsim. Earnings season is here! This is the period of time where momentum traders do really well as many story stock One of the most powerful trading setups is the short squeeze. A short squeeze occurs when you have a crowded trade on the short side. Today, were going to cover another low float parabolic stock, OPTT. There have been many of these types of trades in the last couple weeks.
I saw a great trade example that I had to share with you guys; we are going to walk through how to day trade a bull trap. As many of you know, Valea Hi Guys, I've put a quick video together on a great trade from earlier in the week. The trade illustrates how you can use key support and resistance In this example, we are covering a buyout or takeover rumor on HOG: It was a broad based market rally that essentially retraced everything that Too often, traders are day trading UVXY a What I look for in the ORB is Trading low float stocks are a day traders dream, especially when there is a news event to trigger a run, it is like pouring gasoline on a fire.
This is Kunal from Tradingsim. We have received a ton of requests from you all on day trading education. I wanted to experiment by creating videos w Are you ready for the Volatility? You can be up handily in one second and then give b The bottom tail formation is a trend reversal pattern that comes at the end of a down move. Below is the setup for the bottom tail pattern: Why is Volume Important?
Volume analysis is the technique of assessing the health of a trend, based on volume activity. Volume is one of the ol Are you a day trader?
If yes, then you will definitely find this article helpful as you begin to navigate the world of day breakouts. Today we are goi The video is a great precursor to the strategies and more advanced topics detailed in this article. So, what is the simple moving average? Once you begin to peel back the onion, the simple moving average is anything but simple. This article will cover a host of topics; to name a few, we will discuss the simple moving average formula, popular moving averages 5, 10, , some real-life moving average examples and a few crossover strategies, and my personal experience with the indicator.
The simple moving average SMA is the most basic of the moving averages used for trading. The simple moving average formula is calculated by taking the average closing price of a stock over the last "x" periods. Let's take a look at a simple moving average example with MSFT.
The last five closing prices for MSFT are:. To calculate the simple moving average formula you divide the total of the closing prices and divide it by the number of periods. I mean every indicator is based on math, but it's not some proprietary calculation with trademark requirements. Generally speaking in life, the things that are of most value are given as gifts to help the world become a better place. If you are thinking you will come up with some weird 46 SMA to beat the market let me stop you now.
It is important to use the most common SMAs as these are the ones the majority of traders will be using on a daily basis. While I do not advocate you following everyone else, it is important to know what other traders are looking at for clues. Below are the most common SMAs used in the market:.
This shorter the SMA the more signals you will receive when trading. Beyond SMA you are basically looking at primary trends. Most investors will look for a cross above or below this average to represent if the stock is in a bullish or bearish trend. Most traders will tell you to trade simple moving average crossovers and the profits will fall from the heavens.
Unfortunately, this is not accurate. Oftentimes stocks will tick over or under moving averages to only continue in the primary direction. This will leave you on the wrong side of the market and down on your position. Below are a few ways to make money trading the SMA. Now that I have given you enough doubt before even attempting to trade with the simple moving average, let's review a few ways to make money with the SMA. The simple moving average is probably one of the most basic forms of technical analysis.
Even hard core fundamental guys will have a thing or two to say about the indicator. Below is a play-by-play for using a moving average on an intraday chart. In the below example, we will cover staying on the right side of the trend after putting on a long position. I know this is a few years ago, but the market is destined to repeat prior setups; it's all human nature at the end of the day. Notice how the stock had a breakout on the open and closed near the high of the candlestick.
A breakout trader would use this as an opportunity to jump on the train and place their stop below the low of the opening candle. At this point, you can use the moving average to gauge the strength of the current trend. In this chart example, we are using the period simple moving average.
Far too many traders have tried to use the simple moving average to predict the exact sell and buy points on a chart. A trader might be able to pull this off using multiple averages for triggers, but one average alone will not be enough.
So save yourself the time and headache and use the averages to determine the strength of the move. Now take another look at the chart. Do you see how the chart is starting to rollover as the average is starting to flatten out?
A breakout trader would want to stay away from this type of activity since the money in this example grows as the stock increases in price.
Now again, if you were to sell on the cross down through the average, this may work some of the time, but over time you will end up losing money after you factor in commissions. If you don't believe me, try simply buying and selling based on how the price chart crosses up or under a simple moving average. Remember, if it was that easy, every trader in the world would be making money hand over fist. I like to call this the holy grail setup. This is the setup you will see in books and seminars.
Simply buy on the breakout and sell when the stock crosses down beneath the price action. Look at how the price chart stays cleanly above the period simple moving average.
The brain is a funny thing. I remember seeing a chart like this when I first started out in trading and then I would buy the setup that matched the morning activity. I would look for the same type of volume and price action, only to later be smacked in the face by reality when my play did not trend as well.
This is the true challenge with trading, what works well on one chart, will not work well on the other. Remember, the SMA worked well in this example, but you can not build a money making system off one play.
Another way to trade using the simple moving average is to go counter to the trend. One of the more higher probability plays is to counter. There have been a number of studies regarding gaps. Another validation a trader can use when going counter is a close under or over the simple moving average.
After the gap, the stock trended up strongly. You have to be very careful with counter trade setups. If you are on the wrong side of the trade, you and others with the same position will be the fuel for the next leg up. Now let's jump forward one day to July 1, But what about moving average crossovers as a trigger for entering and closing trades?
Let me take a clear stance on this one and say I'm not a fan of this strategy. First, the moving average by itself is a lagging indicator, now you layer in the idea that you have to wait for a lagging indicator to cross another lagging indicator is just too much delay for me.More...