| I have the unique opportunity to teach Traders with | | | | we first started. We get excited about more |
| a wide range of knowledge. Some individuals are just | | | | advanced methods and in the excitement we |
| beginning, while others have been around the market | | | | overlook the things that are so simple and always |
| for 20+ years. There are some "laws of life" that | | | | critical like support and resistanceWhen we discover a |
| seem unchangeable. For example, I know that some | | | | new technique we jump too fast to trade using that |
| people will earn more than me in this market and, | | | | new, not fully learned concept. With our excitement |
| unfortunately, others will never have success in their | | | | on overdrive we run with this new technique without |
| trading efforts. It's sad to think that some people will | | | | taking the time to make sure we have the whole |
| not see their aspirations for financial success | | | | process learned. I know, for me, it is really easy to |
| materialize. It is comforting to know what makes the | | | | assume I know something new, I jump to the using |
| difference between the winners and the non-winners | | | | step immediately but I have not learned the concept |
| (I choose not to use the "L" word).If I know that | | | | in sufficient depth. I end up forgetting the "practice |
| some people will never have success trading, why do | | | | perfectly before using real money" step, with terrible |
| I still teach them? Should I not be honest and tell | | | | consequences.It is so easy to slip into new |
| some people to save their money because they | | | | techniques that it is very important to, at least once |
| have no chance? The answer is simple, I have no | | | | a year, review the basics of charting. I remember |
| idea who will be the big winners and who will end up | | | | one time when I had been trading for a few years, |
| a frustrated shadow - until it happens. However, I do | | | | and it was time to do my review. After taking a |
| know what makes the difference between winning | | | | review class on technical analysis (which only means |
| and not when it comes to successful trading | | | | "how to read the charts" they use big words to |
| behavior. I also know what it takes for individuals to | | | | scare us away) it hit me like a rock that I had |
| transform from frustrated investors into top earning | | | | completely forgotten to use support and resistance |
| professionals. What is the secret? Is it really that | | | | and I was only trading from other technical indicators. |
| simple? Can anyone make it work? What do I have | | | | I find that identifying support and resistance |
| to know to finally start being successful? Who do I | | | | enhanced with candlesticks is my most important and |
| have to bribe so I can borrow the Magical Stock | | | | number one consideration before trading any stock. |
| Market Genie? Sorry to be the bearer of sad news, | | | | It's a basic concept that is the foundation for |
| the answer is not as easy as making a wish and | | | | successful trading.I want to encourage you to do a |
| waiting for money to fall out of the heavens. It | | | | solid review of the basics. There is a great review on |
| takes patience, self control, the correct information, | | | | THE DEDICATED TRADER, and we have a great |
| and practicing until perfect.Being a consistently | | | | class taught by Markay Latimer that I am going to |
| successful trader is a lot like climbing Mt McKinley in | | | | take in Toronto this year, for my annual review. |
| Alaska. Sure mountain climbing is difficult, and Mt. | | | | Markay is an awesome trader and technicals are her |
| McKinley is the highest mountain in the entire North | | | | big thing. I don't have time to share with you the |
| American Continent, rising 16,000 feet from ground | | | | details of these sources but if you are interested just |
| to highest peak. It may seem like an impossible task, | | | | call 1-800-290-7020 for details, be sure to mention |
| but climbing that amazing mountain is actually | | | | this article so you can get the best price.What |
| considered, by the professionals, "easy" when | | | | follows is a review of only a few of the basics. |
| compared to other record setting structures. The | | | | Because space is small, I will have to simplify and be |
| climb might be considered "easy" (by experienced | | | | brief.FINDING SUPPORT AND RESISTANCEMost of |
| climbers) yet during the average season if 1,000 | | | | the time, I look for support and resistance by putting |
| people make the attempt statistics indicate that 500 | | | | my one day timeframe chart into a line chart. The line |
| will succeed, 497 will be disappointed and 3 will | | | | chart shows the market closing price, which is |
| die.Why am I comparing investing to mountain | | | | generally assumed to be the most accurate for the |
| climbing? Because successfully attacking the mountain | | | | day, because amateurs open the market with |
| and coming back alive from the trading floor, requires | | | | market orders and professionals are considered to |
| exactly the same basic elements. You must have the | | | | close the market resulting in prices that are more |
| right knowledge, advance preparation, the correct | | | | reasonable.After I put my chart into a line chart |
| tools and equipment, and plenty of perfect practice. | | | | setting, I am searching for possible trends - up, down |
| You can increase your odds of success even more if | | | | or sideways. When I begin to draw my lines, if there |
| you associate with other experienced climbers and | | | | are less than three exact hits I delete the line and try |
| you have a team member that has already made it | | | | again. I try horizontal and diagonal lines. I need three |
| to the top. While on the mountain (in a trade) you | | | | or more hits for it to be significant enough of a line |
| need to be ready for unexpected changes in your | | | | to call it support or resistance. Three or more hits |
| environment. You must be mentally ready for the | | | | mean investors will remember that price and react to |
| challenge, you need to develop the right instincts and | | | | it causing a stock to stall there and perhaps change |
| you need to have total self control. Even more | | | | directions.As a more advanced look, if I don't seem |
| important, you must be able to admit defeat quickly, | | | | to find a perfect line that gets three hits I will then |
| so that you can live to climb another day, with as | | | | put my chart into candlestick mode (I am not fond |
| much of your equipment as possible. You do not | | | | of bar charts) and then I will look to see if there are |
| need to be super human and you are not required to | | | | any wicks (also known as shadows or tails) that |
| walk on water, read minds, or have a perfect sense | | | | touch a line enough times to make it an important |
| of direction."OK, what will it take for ME to be one of | | | | stopping point. If I get three or more hits then it is |
| those people that make to the top?" Are you sure | | | | good enough to call it "soft" support or resistance.I |
| that you are ready for the answer? I mean, really, | | | | prefer the line chart, but sometimes you need to |
| do you want to know the truth? I warn you, the | | | | revert to candlesticks to figure it out. Both are fine. |
| answer is not going to be what you want to hear! | | | | Remember anything less than three hits is not strong |
| Here goes, so if you choose to read on, you do so | | | | enough to hold the price level.VOLUMEVolume is |
| at your own peril. I warn you once you have the | | | | important; it shows the amount of interest in a stock |
| answer, there will be no turning back. If you read on, | | | | or market. I prefer to look at average daily volume, |
| you are agreeing to leave the world of the confused | | | | but intraday we can get a feel for what is going to |
| and to enter the secret chamber of the few who | | | | happen, on the short term. I also set my real time |
| know the magic powers of applied knowledge. What | | | | alerts to monitor unusual increases in stock volume. I'll |
| is the real secret? When you become a master of | | | | get an alert if the share trading volume reaches two |
| the basics you can conquer the top of anything - | | | | times the average volume. This alert notifies me that |
| mountain or the stock market. "That's it? That's your | | | | something is up. It is not the day traders or the little |
| BIG secret? I don't get it. Know the basics, give me | | | | guys that cause large movements in volume, but the |
| a break, there has got to be something more, what | | | | institutional trading. When the Big Guy's buy or sell it |
| did you leave out?" I warned you! Didn't I tell you | | | | causes volumes to jump, watching this activity can |
| that you might not want to hear the truth?Many | | | | give us an edge. I look at volume in two ways: I |
| years ago, when Miles and I were beginning our | | | | want to trade stock with average daily volume of 1 |
| trading education we were privileged to have access | | | | million shares, so that enough people are trading the |
| to a few of the best traders in the world. We asked | | | | stock for it to move in predictable patterns. Once |
| them what we would have to learn or do to reach | | | | you are advanced, and you have made good money |
| our dreams. Each person shared personal preferences | | | | in today's market you might drop this number down |
| and valuable suggestions but all of them were in | | | | to 500,000 shares, be careful smaller volumes means |
| agreement that making big money in the market is a | | | | unexpected volatility. I want to know if a recent |
| process of patience, self control, and focus on basic | | | | move of the stock is sustainable or not. To figure |
| rules. They also said that we should choose one or | | | | this out I look at the volume. If the volume is weak |
| two investment techniques, and then practice until | | | | for that stock, much lower than average, then the |
| we were masters of those techniques. We were also | | | | move probably will not be sustained and I anticipate it |
| told to pick a handful of companies and get to know | | | | failing that direction. If it is higher than average |
| them so well that we knew "the heartbeat of the | | | | volume then the direction is very sustainable and we |
| stock."I am sorry if my answer was a disappointment | | | | can go with the flow. Finally, if there is a jump in |
| to you, becoming a master of the basics is not | | | | volume, there could be a change of direction soon. |
| glorious and it seems too simple. Yet, being able to | | | | Volume is considered a "Leading Indicator" meaning |
| consistently apply the knowledge of the basics is | | | | that increases or decrease of volume occurs before |
| what makes the difference between winning big | | | | an event (like a change of direction). "W" AND "M" |
| money or not. It seems so easy that most people | | | | PATTERNSThis might seem silly, but believe me, it is |
| keep searching for some hidden secret or trick that | | | | NOT! I was talking to my brother the other day, who |
| will earn millions of dollars, and the answer is right in | | | | is very intelligent, he was a broker in the 80's and is |
| front of them all the time. What I think is that people | | | | now starting to trade on his own, using techniques |
| want to take a short cut so they can bypass the | | | | that I taught him. We were discussing a trade he had |
| struggle, they do not want to practice, they want to | | | | done and I asked him why he did not get out when |
| get to earning the big money right away (without | | | | the stock showed an "M" pattern. He told me that he |
| any effort).Teaching classes lately I have been | | | | had heard me mention that pattern but he had no |
| astonished at how many traders, who consider | | | | idea what I was talking about so he just ignored the |
| themselves seasoned traders, are not fine tuned on | | | | information. Based on this I want to review it in detail. |
| basic skills like reading charts and identifying Support | | | | Unfortunately, I have run out of space so you will |
| & Resistance. These "traders" act like they know the | | | | have to wait until the next newsletter for this |
| basics - but when I take a few minutes to review | | | | "basically wonderful" article to continue. I will also |
| some important points with them, such as how to | | | | discuss Trends, Entrance & Exits, pulling the plug, and |
| pick support and resistance or even using moving | | | | more. I am sorry to leave you hanging, but this article |
| averages they don't know how to properly do so. It | | | | is a real "cliff hanger".Happy Trading,Darlene R. |
| amazes me how they have traded so long (many | | | | NelsonDarlene Nelson is a well known successful |
| with 5, 10, 15 years experience) without mastering | | | | stock market trader. You can learn how to be |
| this essential skill.I believe that we get stagnant in our | | | | successful in the stock market by taking one of her |
| trading skills over time and we just forget how to | | | | great stock trading classes online or in person. |
| use the basic and simple things that worked when | | | | |