Understanding how to execute the trade
So in my quest to trade more efficiently I’ve learned a few things along the way. I hope to share some of those with you today.
Let’s discuss “trend lines”. Trend lines are basically the direction a security is headed, could be uptrend or downtrend. Simply put, trend lines connects two pivot points during a single trading session or over a longer period of time. These lines can show you things that you normally would not see. For example; if you were to look at a chart most experienced traders can tell you the trend without these lines, but, for the less experienced traders if I drew a simple line connecting two pivot points you can quickly and easily tell me what’s the trend. In most scenarios a trade will follow a set trend until that trend is broken. Even when a trend is broken it is not uncommon to find it retesting that same area. When I trade a broken trend I will look for that break either to the upside or downside depending on my position. Once I see that trend broken I will not dive right in, I may take a small position to get my feet wet but will wait for a retest of that exact trend from the opposite direction. Once I have seen the line holds and the trend has been broken it is ONLY then that I would consider adding to my position.
You have read above about “pivot points” and may be asking yourself “what’s that”? A pivot point is exactly what it sounds like. It’s a point during a trade that the price action takes a sudden turn. Pivot points are always related to the trend line in some way. They can be found at the bottom of your trend line as a stock bounces, or at the top where it pulls back.
RSI or relative strength index is something I also use as part of my trading tool. It helps me to understand how “hot” a trade is if I’m short biased or how “cold” it is if I want to go long. I also use volume indicator, this one besides seeing the exact volume tells me what others are thinking also. I’m not the only one trading this stock, but with this tool it provides me with an insight into every other trader out there that’s possibly in the same mindset as I am. Never thought about that huh? I also use the MACD, I personally use this one in conjunction with the others the most. It gives me the best turn around or gradual movement to approach a trade. I can see a trend forming while seeing trades form by using the MACD.
So those are a few of the tools that I use, hope it helped you even a little. Please keep the comments and questions coming as I will try to address each and every one as we progress.
And as always, if you would like to see me use these tools to help you execute a trade join me at awesomecalls.com, thank you.