Tag: Trading Tips & Techniques

New trading video

Posted on by The INO.com Team

Hi,

It sure is good to be back. This past weekend I returned from vacation in France with my wife where we were cruising the canals just outside of Strasbourg. It was a great deal of fun.

I have to say, every trader needs and deserves a break away from the markets. Normally the August markets are fairly quiet, so it seemed like a good time to get away. Boy... was I wrong. Not wrong on the markets, but wrong on the markets being quiet.

Arriving back in the States having not seen a newspaper for two weeks and with limited access to internet, I was surprised to see some of the moves in the major markets. I was also happy to see the price of crude oil!!

I have known for a long time that news is not the important driver of price action. Most new traders believe they needed to be glued to the news every second of the day, frightened they will miss some news headline.

Here's a little secret... the most important element in the market is not the news, it is the market action itself. Everything else is secondary. In my new video I explain exactly how we look at the market and how you can benefit from looking at the market the same way.

The new video is only four minutes long and I think you'll find it fresh, timeless and interesting.

The simplicity speaks for itself.

Enjoy the video,

Adam Hewison
President, INO.com

Getting simple with GOOGLE

Posted on by The INO.com Team

We first showed you the theory in our introductory Traders Whiteboard video. If you missed this video we highly recommend that you take a few minutes to watch it before you watch our second video with real world trading examples.

After you watch the theory, watch as we put this theory into practice with two real world trading examples. Our first example shows how one of the biggest stocks in the world falls apart, and how you could have taken advantage of this fact by using this simple trading theory. In our next example of this theory, we show a stock whose move is just beginning and still has along way to go on the upside.

It's all here, the theory, two real world examples, and proof that this concept works. Watch, learn and benefit from this powerful new trading video. There is no charge and no registration is required to watch either video. Watch with our compliments.

Enjoy the videos.

Adam Hewison

President, INO.com

Traders Toolbox: More basic Gann

Posted on by The INO.com Team

One of the most important ways a contestant can prepare for competition is to know as much about the opponent as possible. In trading commodities, the primary opponent is the trader's own emotions. Once the emotions are under control, the "opponent" is the marketplace.

Know your market! While there are many analytical tools which may be applied to all markets, not all markets are identical. Markets have individual personalities or tendencies. It is important to study individual markets to learn specific identities.

A clear example of individuality is seen in seasonal patterns. The seasonal tendencies of each commodity are somewhat unique. Identifying a historical pattern can be very beneficial in the process of trade selection. To illustrate, a study of the monthly corn chart reveals March is a poor month in which to initiate a major short position.

With the exception of 1977, since 1972, a sale made in the corn market during March could have been bettered by waiting until later in the year. While impressive on the monthly corn chart, this pattern is even more clear for the December contract (not shown). How is such information applied?

Corn Belt farmers typically face a large portion of production expenses from late February through early April. Obviously, corn is a primary source of income for these producers and the need to generate capital spurs sales of corn in the period of need. By knowing March is a low probability month for favorable prices, plans can be made to market corn prior to the period of seasonal weakness or to postpone sales into later months. Also, producers should avoid selling the new crop (December) during March as the probability of selling at equal or higher prices later in the season is 100 (since 1972).

The applications for traders are rather obvious. If a trader is bearishly inclined, the information would suggest patience needs to be exercised to wait for a higher period of probability to initiate a short position. Bullish traders would try to accumulate long positions during March.

Seasonal tendencies are only one of many individual traits to study. Many markets have certain types of top or bottom formations which occur more often than not. For example, soybeans generally post some form of a triple top when marking a major high. Some markets respect support or resistance levels much better than others. Certain markets like to post a high percentage of turns on a specific day of the week or month. The list goes on.

There is only one way to learn market tendencies: study and study some more. Through hard work comes knowledge. W.D.Gann stated the importance of knowledge very well: "The dif- ference between success and failure in trading commodities is the difference between one man knowing and following fixed rules and the other man guessing. The man who guesses usually loses."

Traders Toolbox: Forward to Gann theory

Posted on by The INO.com Team

To TRULY be a success at almost any profession takes commitment — the type of commitment which comes from the heart, not the mind. Most successful people I know have a dedication towards their chosen path which was forged through hunger. Hunger for knowledge, hunger for power, hunger for wealth, and, in many instances, the hunger associated with survival. It's hard to be "rich" if you haven't been "poor"; "happy" if you haven't been "sad"; or "satisfied" if you haven't been "hungry".

I believe Gann's biggest secret consisted of hard work and common sense. Hard work follows a true commitment and a desire to learn. Common sense is sharpened by the process of learning from experience. In my opinion, THERE IS NO SUBSTITUTE FOR HARD WORK AND AN OPEN MIND.

In trading commodities, a critically important early step towards success is learning about yourself and how you function. You can learn about yourself quickly in the marketplace. By far, the weakest tool in a trader's arsenal is the TRADER. In this business, it is so very true that you are your own worst enemy. It is critical to understand yourself and to bring your emotions under control.

Emotions are tamed by confidence. Confidence is gained by knowledge. Knowledge is achieved by dedication to study and willingness to learn from experience. The entire process takes persistence. Persistence is fed by desire and hunger. You stay hungry by realizing and believing there will always be more to learn Never reach the point where you consider yourself an "expert" instead of a student. Stay humble, lest the markets humble you.

Become an independent thinker. Don't concern yourself with what "they" say. Don't conform your opinions for the sake of conformity. I constantly tell myself, "don't take the advice of another unless you know they know more than you know. Dare to be a success without fearing failure.

Do not apologize for failures nor be embarrassed by them. Instead view failures as an opportunity to learn. Much more will be learned from losing trades than from winning trades. Failures are a challenge of your commitment and can make you stronger if you will meet the challenge. Failures are the fuel to keep the hunger burning.

Through the learning process, you will develop the important patience and discipline needed to become a winner. In his book, "How to make Profits in Commodities", which I highly recommend, W D Gann listed 28 rules for success in the commodity markets. The vast majority of these deal with money management and/or mental discipline. Some of the sharpest analysts I know are not successful traders because they cannot overcome their own mental weaknesses.

Success does not come easily, nor should it. I CANNOT OVER EMPHASIZE the importance of mental preparation and self-examination. As an additional aid, I suggest Rudyard Kipling' s poem If.

Traders Toolbox: Reversals

Posted on by The INO.com Team

Reversals In my opinion, one of the most misused and abused terms in technical analysis is the reversal or key reversal. I often get calls from both new and experienced traders who are excited about a market because it has just posted a "key reversal." While the action these traders point to often marks a reversal day, such a day (week or month) by itself actually has little significance. There is research which indicates single period reversals mark a turn only about 50% of the time. Which gives about the same odds of indicating a turn using a coin flip.

In my studies, I use a set of rules which help me ferret out reversals which have a much higher probability of marking a turn. Before going any further, I want to clarify the term reversal when used in technical analysis. A reversal does not mean a market will necessarily reverse a trend. A reversal is a formation which may mark a top or a bottom. However, a top or bottom only signals the preceding trend has come to an end. In other words, a top will indicate an uptrend has come to an end. It does not indicate whether the new trend will be down or sideways.

Now, on to the rules. There are six rules which I use to identify a valid reversal. To clarify these rules, I have provided an example of the pattern which I watch for to mark a reversal in the circle on the weekly T- bond chart. I am listing the six rules to identify a reversal high; for a reversal low, simply reverse the parameters where warranted.

To mark a reversal high, first, the market must make a new high for the last six to eight weeks. Second, the market must close lower than the previous day's (or week's) close. Third, the market must reverse the previous day's (or week's) action. To clarify rule three, the day or week preceding the reversal must have posted a positive close. Fourth, the market must post follow through action the next day (or week). Again, to clarify, the market must close lower on the day (or week) following the reversal. Fifth, the reversal must be accompanied by moderate to high volume. And, finally, the reversal must occur in a terminal (critical) area.

Rules one through four deal with the pattern which the market must trace out and are basically self-explanatory. Rule five insures the reversal is not marked on a low-volume day (or week) such as is common in a holiday period. And rule six essentially means the market must be in an area of price or time where a turn could be expected to occur.

Notice the weekly T-bonds chart and the numerous turns which were marked by the valid reversal pattern. If you examine the chart closely, you will notice there are a number of reversal weeks which did not see followthrough action which failed to turn the market. However, it is rare to find a reversal which saw followthrough action that failed to mark a significant turn.