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Why Mastering Bollinger Bands Is A Must

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Traders and investors all over the world use Bollinger bands to assess the expected price action in the financial markets. Bollinger Bands are a highly popular technical trading tool plotted at a standard deviation above and below a simple moving average of the price. It is considered the most reliable and useful trading tool since it has the best predictability in determining if the stock is oversold or overbought. I don't say this lightly, mastering Bollinger Band is a must in order to be a profitable trader. Famous financial analyst John Bollinger developed Bollinger Bands in the early 1980s and trademarked this term in 2011. Initially, it was known as trading bands but John later evolved this concept and called it Bollinger Bands. It was designed to offer unique instincts that give investors a higher probability of determining a volatility range in which a particular security price is moving up or down. There are three lines comprising Bollinger bands, that is, the lower, the

Futures Vs Options: Should You Be Trading Futures?

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Options contracts give traders the opportunity to trade but not the obligation. In essence, investors have the right to buy or sell options shares at certain prices at any period if the contract is in effect. On the contrary, futures trading requires a seller to sell shares and buyers to buy them on a specific date unless the holder closes his position before it expires. Therefore the transaction is solid and must go through since with futures you are often dealing with physical commodities (corn, gold, oil). There is no backing out when it comes to futures, the transaction must go through at the expiration date. While both futures and options are financial products to make money, their markets are widely different and pose considerable risks. This article considers the differences between these two financial products to help you make a better-informed trading decision as an individual investor. What Is Futures Trading Futures are contracts that require buyers or sellers to buy or sell

Making Money Using Elliot Wave Theory

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The financial market is one of the avenues that gives an opportunity for innovativeness. The more innovative you are, the more money you will make period. After spending some time with the graphs and having an understanding of the price action, you can go ahead and come up with a system that will give you an advantage over other traders (however in the year 2021 that is difficult to do nowadays, but still possible). Your system should work and have some supporting evidence to back it. That is what Ralph Nelson Elliott did to come up with the Elliott Wave theory. After Elliott was forced into early retirement due to illness, he was left with a collection of various price action graphs and he studied them to understand the market price action. Ralph was able to identify fractal wave patterns that kept recurring. These waves could either be seen in stock price movements and also in consumer behavior representing recurring long-term price change patterns directly related to changes in the

How To Create A Trading Edge

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“90% of traders fail” It’s a phrase that almost all traders have heard at least once in their trading journey. Some might have even experienced it and quit already, some would have overcome it and some probably are thinking about quitting now. This post is for the group of traders who are still struggling to find their path to consistent profitability and for those winners who are trying to maximize their edge even more. Trading is a field where the odds are stacked against you from the start. It’s your job to choose the right instruments to trade, the right side of the trade, and the right strategy to execute at the right time if you want to stay afloat in the game. Getting so many things right can be very difficult to do for a new trader. Setting yourself up for success in trading is simply having a strategy or a system with a positive expectancy system - in simpler terms, if you trade, you should make money over a period of time or over a certain number of trades. Some call this hav

The MACD: The Perfect All In One Indicator?

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Expert traders are fast to let you know that combining two indicators will inevitably give you better and more reliable signals on when to enter or exit an open position. Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship in the movement of the price of a security. It combines two indicators ; a 12-day exponential moving average for the short-term changes and a 26-day exponential moving average for the long-term changes. The MACD was invented by Gerald Appel in the 1970s, where his intention was to create an indicator that will reveal, direction, momentum, strength, and length of a stock's trend. This makes it unique compared to other indicators, as it's really an "all in one" indicator.  The MACD Formula The calculation of MACD is done by taking the 26- period exponential moving average (EMA) and then minus 12-period EMA. This gives a 9 day EMA of the MACD referred to as the signal line.  When the 12-