Some call it a bull trap; others use the more colorful term suckers' rally. Either way, traders don't want to get caught. Is a bounce off the lows for real, or just a ruse?
When your stock options trading strategies aren't working as expected, it could mean you have to revisit the strategy, change your trade position sizes, or tweak a few strategy parameters. Here are some ways to fix the problem.
With so many technical indicators to choose from, it can be tough to choose the ones to use in your stock trading. Consider a top-down approach to help you decide whether to use stock momentum indicators, trend indicators, or consolidating indicators.
Too many indicators can lead to indecision. Check out this stock analysis tool from TD Ameritrade that can help you make decisions about stock trades.
The volume-weighted average price (VWAP) indicates the average price of an intraday period weighted by volume. The value is calculated during the trading day, from open to close, making it a real-time dynamic indicator.
Identifying entry and exit points is crucial for any trading strategy. A simple moving average crossover system can help.
Trend direction and volatility are two variables an option trader relies on. Combining trend following, momentum, and trend reversal indicators on the thinkorswim platform may help you determine which direction prices may be moving and with how much momentum.
Using stock charts and buy-sell indicators can bring a modicum of probability with which to make trading decisions. Here are three that are worthy of attention — the Standard Deviation Channel, Schaff Trend Cycle, and Simple Cloud.
Understand the difference between trading range-bound stocks versus stocks in a trend.
Confirmation indicators such as moving averages and the relative strength index can help ascertain whether a stock will continue a trend.
Fundamental or technical analysis? You don’t have to choose. A combination can help with potential entries and exits.
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Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
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