MIAMI, Fla. (MarketWatch) — With the huge advances in the stock market over the past year and heightened volatility, daytraders are back. Or maybe they never left. In the 1990’s, daytrading was all the rage, especially using risky strategies like scalping, where you’re in and out of hundreds of stocks in seconds or minutes, aiming to make small but quick profits. More recently, scalping is the strategy of choice of high-frequency traders (HFTs), the ultimate daytraders, who use high-speed computers to scalp for pennies in nanoseconds. Those pennies can add up to billions of dollars in trading profits every year.…
Commentary: Break out the Bollinger Bands, MACD and other trading toolsMIAMI, Fla. (MarketWatch) — Is it possible to predict what the stock market will do next? After months of research and interviews with dozens of traders and investors, here are a few lessons worth sharing:
What may be ahead for the economy and stock market in 2011? We asked three respected investment professionals with long forecasting track records to share their thoughts on possible long-term and short-term market opportunities—as well as the potential pitfalls.
Commentary: Stock operator’s reminiscences useful in today’s marketMIAMI, Fla. (MarketWatch) — If you ask traders to choose the most influential trading book, more than likely, they’ll mention Reminiscences of a Stock Operator by Edwin LeFevre. This book describes the experiences of one of the world’s greatest stock speculators, Jesse Livermore.
During the last one, three, and five years, the market has taken many traders and investors on a roller-coaster ride, providing many opportunities to make or lose money. As the year ends, it can be fascinating and educational to look back at how various trading strategies performed.
Commentary: Gifts from the market, whether you’re naughty or niceBOCA RATON, Fla. (MarketWatch) — After exposing the popular Hemline Index as an old-fashioned myth, I decided to take a closer look at a trio of well-known but misunderstood holiday indicators: The Santa Claus Rally, the January Effect, and the January Barometer.
Commentary: Watch prices, not skirt lengths, to gauge the economy BOCA RATON, Fla. (MarketWatch) — Of the hundreds of market indicators used by traders and investors to help predict the market’s direction, one style never seems to fall out of fashion — but it should. The Hemline Index, first observed by economist George Taylor in 1926, predicts the market’s future by the way women dress. It works like this: when women’s hemlines (the line formed by the outside of a skirt) are shorter, women are taking more risks and spending, which is good for the economy and the stock market.…
Commentary: Stay atop the cycle and don’t get gored by the herdBy Michael Sincere and Pascal Willain BOCA RATON, Fla. (MarketWatch) -- Like the hapless souls who boldly race bulls through the streets of Pamplona, Spain, unsuspecting people charge down Wall Street without fully appreciating its unpredictable and dangerous terrain. Although eager to participate, many end up getting gored by the herd.
Commentary: Warning signs posted up and down Wall StreetBy Michael Sincere and Pascal Willain BOCA RATON, Fla. (MarketWatch) -- With so many market indicators giving mixed signals, it's no wonder that many traders and investors are confused about where the stock market may go next. Some predict a complete collapse of the financial markets while others believe we'll have a mildly bullish run.
Commentary: Understanding the mystery of implied volatilityBy Michael Sincere and Mark Wolfinger BOCA RATON, Fla. (MarketWatch) -- One reason why options have a reputation for being so difficult is a mysterious concept called "implied volatility." This is the unknown factor built into the price of an option.
See how two trading systems use volume to better understand price changes.For traders and investors, volume does more than measure how many shares are changing hands between market participants within a given time period. With the right interpretation, volume can be a way to read the mood and psychology of the market, discover the strategies of large investors, and put price changes in context.
Look back at the most profitable strategiesThe last five years of markets have given traders plenty of challenges and plenty of opportunities. From huge rallies to punishing crashes, and from record volatility to tight trading ranges — the markets have gone through a huge variety of conditions. As the new year starts, it’s worth taking a look back to see which strategies have made money, and which haven't.
Enter too early or too late and you may lose money. That’s what trading reversals is all about—determining the correct entry point. With this strategy, you use specific technical indicators to recognize which stocks or markets are overbought or oversold, so you can trade in the opposite direction of everyone else. We talked to trading experts to gain some insight on when and why you may want to utilize this strategy.
With the recent spike in market volatility, many traders are looking for ways to sharpen their trading skills. Investment seminars and trading shows offer excellent learning opportunities, but before you pack your bags, take time to think about your objectives. Are you hoping to find a “magic formula” that will improve your trading results? If so, experts say you might be disappointed.