In December 2012 I had to make a choice. The choice was should I go in debt to pay a semester in college or should I go in debt to pay for a course in technical analysis. That day was a critical moment in my life because I was entering another semester in school. But seeing our past graduates still unemployed I knew college wasn’t promise.
Whether put all my eggs in one basket I decided to take another route. I decided to attend a trading seminar in New Jersey where I discovered Online Trading Academy. The problem was I couldn’t afford the course, even when it was a smoking deal for $4990 unlimited retakes for life. Thankfully at the end of their presentation they had a loan program I qualified for. I figured if I could go in debt $4990 to learn to work for money why not go in debt $4990 to learn how money can work for me.
Today, I’m glad I made that decision because it opened my eyes to a new world of money. Today I see what others can’t see, giving me the ability to generate income regardless market conditions. The point is if you’re struggling with money today, it may very be theres something you don’t know. This doesn’t mean you should do what I did; it simply means, search for better answers. One thing I learn about education is the greatest knowledge is not taught in school. Below are a few I want to pass on to you, and as always, paper trade first.
What is Technical Analysis?
Technical Analysis is the study of price movement, volume, and price relationships in a stock. What you are analyzing is the price history of a stock, and the future behavior base on its past. As you study these price movements you’ll begin to see repeated price patterns. The pattern that forms is driven by buyers and sellers; your job is to trade its supply and demand.
Why supply and demand?
As most of you already know the world banks on supply and demand. Products, services, you name it, supply and demand determines price. The stock market is no different when you analyze supply and demand rules. When demand exceeds supply prices go up, and when supply exceeds demand prices go down. This is the fundamental of trading succesfully if you can grasp this you will do well. Next we will review the second step, and that step is reading charts.
Learn to read charts
There is a saying that goes “Men lie women lie but numbers don’t lie”. I like this saying because it has many truths, especially if you can read charts. As I mention earlier in this article the chart tells the story of a stock. Below is an example of a daily chart of Facebook since its IPO (Initial public offering). The question is what do you think it tells?
Trade with the Trend
As you can see in the diagram Above Facebook is in an upward trend. To me it makes sense to trade with its trend, until the chart tells me otherwise. When looking at this chart on facebook it’s no secret theeir catering to investors. But be mindful no stock goes up forever so prepare yourself for a reversal.
Watch 15minutes, 30minutes and Daily Charts
To trade with better accuracy its best you watch 15, 30 and daily time frames. Lower time frames(1 or 5 minutes) can distort information and represent an illusion on what’s really going on.
Trade using trend lines
In this February 21st Facebook chart you may notice I’m using trend lines. The purpose of trend lines is to plot entry and exit points as you see in the example below. I bought call options when the trend line was broken and exited when the line broke again. Diagram 1 is an example of supply and demand and diagram 2 is my closing transaction. This is how fast money is made in markets, estimate trading time 30 minutes.
Diagram 1 Increase selling volume
Diagram 2 closing transaction
Always use “STOP ORDERS”
You should never trade a stock or options without using a STOP ORDER. A stop order protects you from unlimited loss. Average traders do not know how to use stop orders, which the reason why they say trading is risky. There’s always risk in any vehicle, but the one that’s risky is the person in involve. When you buy a stop order you’re telling your broker you want out on a declared price. The declared price is set by you.
Once entered your stop order becomes a market order, if triggered you’re out the trade. In the diagram below you can see I place a $6.00 stop order on the call option I was currently trading. My stop order was triggered and I’m out the trade, this is how professionals minimize risk. The reason for setting a stop order was to protect my self and at the same time protect my profits. This is how I made $500 in the above diagram, these transactions are done everyday.
Search for More Answers
I never forgot one semester in college, my math professor was teaching us complex fractions. I watched students grew frustrated with the course, so I ask him when will we ever use it in life? His reply was “You will always use this in life”. From his tone I knew he was defending his reality. So with a generous gesture I replied “Thanks” and couldn’t wait till the semester was over.
Although I respect him as a professor, I’ve never used complex fractions after that course. This is not to say college was a waste of time, it’s to point out the difference in education. I’ve graduated and I’m happy I’ve earned a degree but the search for answers was really what made me money. Indeed it’s a tremendous accomplishment to finish school but my greatest accomplishment was I searched for more answers.
If you’re struggling today with money, this is the best advise I can pass on to you. Remember life have many secrets, this what truly separates the haves from the have nots. So in your journey on discovering how to earn more money, the secret is to search for more answers. As always please don’t forget to subscribe. If this was beneficial, share it with someone you know.Thanks for reading.
Disclaimer
Trading involves risk. It’s important to know your risk before you trade. The information provided is for education purposes only; any decision made by you holds you fully responsible.
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