It takes confidence to hold stocks through the ups and downs of the market, but that it is difficult to have strong confidence if all you do is focus on charts and patterns. We won’t lie, in our early years of trading, we spent relentless hours watching charts, learning patterns, and understanding things like the “MACD” and “RSI.” But as the years went by, we noticed that it was difficult to have consistently positive results relying on just technicals. By technicals, we mean indicators, oscillators, volume, charts, and patterns. Yes, technicals are a big element of our trading approach, but we don’t rely on them solely to find trades. In fact, sometimes we don’t look at technicals until we find...
What is capital rotation? Capital rotation is the movement of money from one sector to another. But it is not just limited to the stock market, it can also mean money moving from a sector to a whole other asset class (for example from stocks to bonds), or even from one region of the world to another (for example U.S. stocks to foreign stocks). Investors around the globe don’t like to leave money idling by, so as they sell-off one asset, they usually find somewhere else to deploy that capital. Real life application:If oil prices spike for an ongoing period, it usually leads to more revenue and profits for oil companies such as Exxon, Chevron, and others. During this period,...
Beginner's breakdown to options trading: What is an options contract? An options contract is an agreement between two parties: a buyer and a seller (also called the “writer”). At its most basic level, the contract gives the buyer the right, but not the obligation, to buy or sell a stock at a specific price (called the strike price) before a certain date (the expiration date). The buyer pays a cost (known as the premium) for this right. The seller collects the premium and, if the buyer chooses to exercise the option, has the obligation to deliver on the terms of the contract. Each contract guarantees 100 shares. Don’t worry, this will make more sense when we share an example. The...
The Power Earnings Gap Earnings season gives birth to opportunities that can last for weeks or even months beyond the day the data is released. In fact, one of our five main strategies is called the “Power Earnings Gap.” We didn’t invent this strategy, but through more than a decade of trading experience, we’ve found it to be one of the most effective. What is a Power Earnings Gap? Most companies in the U.S. market report earnings four times a year, once each quarter. Earnings season doesn’t have an official start and end date, but it typically stretches over 6–8 weeks as thousands of companies report. During this time, you get a direct look at how businesses performed financially and...
Many enter the market with big hopes to beat the odds and be successful in the long run, but they’re approaching things the wrong way. Colorful charts and candlesticks suck foolish investors in and make them think they need to recognize patterns in order to make profits, but that alone can’t be it. You must raise your probability of success using financial analytics and information, while also applying general technical analysis to your trades. He with the most information wins...rather than staring at charts for hours, you should consider studying the three financial statements: Income Statement Balance sheet Cash Flow Why study these? Because you have to remember that at the end of the day, the stock market is about...
