5 Tips on Trading the Hammer Candlestick Pattern

Written on 01-05-2007 7:54 pm by Craig

I've Been Tagged

I've been tagged by Chris Perruna.

So I guess I have to answer the following questions...

My Five Obsessions?

1. Going on trips with my wife
2. Coffee
3. Gardening/Landscaping
4. This website
5. Music (I just bought an HD Radio for my car)

Five Reasons Why I Blog?

1. Helps to organize my thoughts
2. Get to meet new people
3. Learn new trading tips everyday
4. Great opportunity to help other traders
5. To achieve search engine dominance (#1 ranking on Google) for the phrase "swing trading" and become King of the Web and eventually, Leader of the Free World.

(Ok, I made that last part up.)

NOW I GET to tag some other bloggers. Hmmmm....How about these:

• Green On The Screen
• Dummy Spots
• DowntownTrader
• Phileo's Picture Windows

Written on 06-05-2007 10:36 am by Craig

I'm Leaving on a Jet Plane (don't know when I'll be back again)

I love that song.

Anyway, I'm leaving for my trip to Las Vegas. I can hardly wait!! But, it is going to be a long plane ride so I was trying to think of a book that would keep me entertained along the way.

Hmmmm....

I haven't read Reminiscences of a Stock Operator yet this year. Since I have to read it at least once a year, I decided to take that along for the ride.

A man has to believe in himself and his judgement if he expects to make a living at this game. That is why I don't believe in tips. If I buy a stock on Smith's tip I must sell those same stocks on Smith's tip. I am depending on him. Suppose Smith is away on a holiday when the selling time comes around? No, sir, nobody can make big money on what someone else tells them him to do. I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgement. It took me five years to learn to play the game intelligently enough to make big money when I was right.

Classic!

See ya when I get back...

Written on 16-05-2007 6:12 pm by Craig

Back From Vegas (and a bookstore special)

Well, I made it back in one piece from my little trip to Vegas and I'm trying to get back into the groove. It's amazing how much catching up you have to do after being gone for just a few days!

In case you didn't know, there is a $9.99 bookstore special going on this month in my Traders Bookstore. There you will find page after page of stock market and technical analysis books and DVD's for $9.99 or less. This special lasts until the end of the month.

Next up...

Bollinger Bands

Written on 20-05-2007 9:23 am by Craig

Are Bollinger Bands Useful?

I'll probably catch some heat from all of the Bollinger band fans out there for this post. But what the heck. Feel free to disagree with everything that I am about to say.

First of all, stocks do not "run into resistance" or "find support" at the upper or lower bands. Why would a stock reverse after running into any line that some trader put on a stock chart. That includes moving averages, trendlines, Fibonacci levels, and of course Bollinger bands.

They don't reverse at these lines because that is just not how the stock market works!

Heck, John Bollinger himself says:

...but they do not, as is commonly believed, give absolute buy and sell signals based on price touching the bands.

But how many countless times have you heard Joe Trader say, "XYZ stock just reversed at the Bollinger band!"? If you buy or sell stocks just because it hits one of these bands, YOU WILL LOSE MONEY!

Take a look at the following chart:

At first glance it sure appears that this stock "bounced" off of these upper and lower bands. But if you look real close you will see that in reality they reversed at significant price levels on the chart - areas that you would see without the bands overlaid on the chart.

I'm not totally down on Bollinger bands.

I think they can be a fantastic scanning tool. You can write scans to find stocks that have reached a price extreme. Or you can use them to find stocks that are experiencing low volatility and poised to break out (see the chart above).

So...

I think Bollinger bands can be an incredibly useful tool to use to find stocks that meet a certain criteria. But I wouldn't use them on a stock chart!

Written on 24-05-2007 6:52 pm by Craig

What Do You Look at on Intraday Charts?

Show me your intraday charts and I'll show you mine!

I've had the same setup on intraday charts for as long as I can remember. So I got to thinking: What do other traders look at during market hours? What does their computer screen look like?

I don't spend a whole lot of time looking at real time streaming charts but when I get into a stock, I want to at least get the best possible entry that I can. For this I use QuoteTracker.

Here are the things I look at on intraday charts:

• Trade Panel: This allows me to type in my orders.
• Transaction Panel: This gives me a list of all my transactions for the day.
• Index Panel: This shows the current market action. In this panel, I have the Dow, Nasdaq, S&P, TICK, TRIN, and the Q's
• Under this I have my symbol list which shows the high, low, open, volume, change, etc. Pretty much the standard things you want to know about a stock.

And then I have my charts:

This is obviously a smaller version of what my charts look like (so that it would fit on this web page). I have the 5 minute chart on the left and the 60 minute chart on the right.

On each chart I have the following:

• moving averages (10, 30, and 200)
• volume
• QuoteTracker marks off the previous high and low.

Sometimes I look at the 15 minute chart if the 5 minuted chart is sloppy. Also, I have a time and sales screen open. I have Real Time with my StockCharts.com account so I usually have that minimized in the background.

I would guess that my setup is pretty basic compared to other traders. What do YOU look at on intraday charts? I would love to see how other traders have their intraday charting workspace set up.