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