Trend Lines For the Stock Market - How Trend Lines Will Help Your Trading

A trend line is nothing more than a straight line joining two points, but at the same time, should not be underestimated. If the line drawn between two points is extended, there is more to be gained and the more point that you can join up the better. Now, you may not get an exact fit but that is nothing to worry about. The more choppy the stock that you are looking at, the more difficult it will be to construct a trend line, and the less choppy, the better. The stocks that lend themselves to such line are usually called trending stocks anyway.

Most of the time trend lines are drawn in pairs, one along the low prices of the stock, the other, along its high prices. This creates a channel or range for us and also another term, called range trading. The upper line is call the resistance, and the lower one, the support. Each line signifies a possible trade entry point for you to open a position. What you are seeing if the price breaks either line is the mood of the market. The trader psychology is causing a shift of sentiment, a surge of buying or selling.

Trend lines are one of the fundamental aspects of technical trading, which is chart based. There is no need to follow company performance. You just need the result of the performance in terms of price. And even better, you don’t need to go drawing lines everywhere nowadays because it is all done for you. Technical traders, or chartists have a world open to them in the form of software, most of it well within people’s budget. With the software are all the construction tools you need.

It can take a little experimentation to draw, or click, a trend line into the best spot on your nice fresh chart. There is often more than one place that looks good for a best fit, but practice will be your best friend.

One of the better areas to use trend line is with the Forex, and I have applied some extremely good trend lines to the US Dollar versus the UK Pound chart. I used a relatively quick feed on my chart, and had three mini screens showing 15 second, one minute, and five minute, live price feeds. The trend lines acted as the main indicator for that method of trading, known as scalping.

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Ian Jackson is an authority on Day Trading information, learning the hard way - and now he reveals how you can learn the business too, without all the growing pains.

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Successful Speculation - Trading on Your Gut Feelings

Are successful speculators born or made? Obviously, having good instincts helps in any situation. But can you trade on instincts alone?

To answer this question, we must look into the makings of good speculators. They come from all walks of life and backgrounds but what they all have in common is passion for what they do and the drive to succeed. They are determined to achieve the results they want, no matter what it takes. I believe it’s that hard work and determination that make one develop and hone good trading instincts.

When it comes to trading, there is only so much you can learn from books; there are only so many good books on trading, and they only cover so much. The rest comes from observation and the daily grind. As you accumulate knowledge, your mind begins to recognize and respond to patterns faster than you can formulate your thoughts: you see a chart and get excited because you have seen it before and know what’s going to happen next. Ask such a trader why he bought a particular stock, and chances are you will hear: because it wants to go up.

The opposite is also true: there is something in the market that just does not feel right. You can’t explain it, you try to reason the fear away but it gnaws at you. So you sell. The next day the market takes a dive. Premonition? Hardly. It’s just that your subconscious has registered that similar situations in the past ended badly, so your “preservation instinct” told you to sell.

Recognizing past patterns means accumulating a long list of zoomers you missed and mistakes you made, which suggests that analyzing past trades and learning from the successes and failures of others, as well as your own, is key to developing good trading instincts. If you never look back to analyze why what happened happened, and ascribe your successes to your investment prowess while blaming others for your mishaps, you will never learn, and will never develop good trading instincts.

Many amateurs put the cart before the horse: they are too lazy (or too busy) to do the homework and just want the stock picks that will make them rich. They never do what it takes to develop good trading instincts and just hope that by acting on their gut feelings alone they will be able to become good stock pickers and successful traders. And as professionals know, hope is a poor investment guide.

Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC - a provider of proprietary trading data that swing traders can put to work right away. http://www.tradingzoom.com/

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