The best traders follow consistent strategies. Many use the same signals repeatedly to show them when to enter and exit a trade. In other words, they place orders on a trading system that they have developed through trial-and-error. In my experience, this is true for all traders. Many old school traders are not even aware […]
technical analysis
How To Trade A Price Rejection Trading Strategy
A price rejection trading strategy aims to identify levels at which a price trend – either upward or downwards – will reverse as a result of the market’s reluctance to move above or below that level. Price rejection strategies work for both long and short positions depending on the previous directional pattern. For uptrends, a […]
Analysis Of Entry Signals
I have just published a new class called Analysis Of Entry Signals. This is a 1-hour class where I take 40 different trading signals and analyse their profit potential on US stocks over different time horizons, spanning 2-days to two years. The idea behind this class is to analyse a large amount of historical data […]
What Trading Signals Work Best For Long-Term Investors?
Simple technical analysis is of limited use to long-term investors. Momentum can last for a long time but it doesn’t have much predictive ability on a five or ten year time horizon. Likewise, indicators like moving averages or RSI are best suited for shorter-term trading. With that said, you don’t know until you test. So in […]
20 Technical Analysis Patterns You Need To Know
Technical analysis is a highly debated subject because academics say that markets are too efficient to be predicted by simple patterns or indicators on a chart. For some, the whole concept of technical analysis is a fool’s errand. However, this viewpoint is not completely accurate. The truth is that technical analysis is such a broad […]
How To Trade The Controversial Double Top Pattern
The double top is a bearish chart pattern consisting of two consecutive price peaks that leads to a bearish reversal. For years, traders have claimed that the double top pattern is a high probability short setup. This is because a double top signifies that bulls are having trouble pushing the price past the prior high. […]
MFI Vs RSI – Which One Makes More Money?
RSI is one of the most popular technical indicators among quant traders, particularly the 2-period and 4-period RSI. Previous analysis and articles have shown how RSI(2) maintained a strong edge in stocks through most of the 2000s. The MFI indicator (money flow index) is similar to RSI but incorporates volume as well. MFI is not […]
Does Technical Analysis Work? Evidence From The Social Sciences
Debate has raged for years as to whether or not technical analysis is actually a useful tool in helping to generate long run profits in the markets. For some, technical analysis is no more than hocus pocus. An approach that is based on faith rather than legitimate science. For others, technical analysis is the foundation of […]
Is The Shooting Star Pattern Too Simple?
Last Friday the S&P 500 formed a shooting star candlestick pattern on the daily chart. This is a Japanese candlestick formation that is normally a bearish reversal signal. Sure enough, the S&P 500 moved lower the next day, dropping around 15 points. We saw this happen last September too. But how often does this bearish […]
What Is RSI And Can It Make You Money?
In this article I explain the RSI technical analysis indicator for stocks. I then test the indicator on historical stock market data in order to analyse its effectiveness. The relative strength index (RSI) is a technical analysis indicator (or more specifically a momentum oscillator) that is used by traders to measure periods of strength and […]
