Key Takeaways The simple moving average (SMA) is calculated by adding up the closing prices of a specific number of days (or other time periods), then dividing by that number  The exponential moving average (EMA) is similar to the SMA, but it gives more weight to the most recent data Your time horizon may help […]

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Key Takeaways Use trendlines to help identify areas of price support and resistance  Learn how a breakout from a pennant can be a precursor to a trend continuation  You probably wouldn’t hop on a tour bus in a big foreign city without bringing along your handy sightseer’s guide. The same applies to the markets. Eyeballing […]

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Bull or Bear, the trend is your friend, say traders. So when it comes to determining your opinion of a trend’s strength, the Average Directional Index can help you screen for BFFs. A compass can be a great tool for unfamiliar territory, but it has limitations. It can tell you direction, yet it doesn’t necessarily […]

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If the market were the Old West, right about now you might be “shooting from the hip,” reacting to anything that moves, and every market whim. But hold on there, trader. You now have electric can openers, as well as time to identify your target, take aim, and fire more thoughtfully. From a technician’s perspective, […]

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In the world of trading, there are basically two types of approaches. Think of one as traditional and discretionary, where you manually execute trades using a set of indicators and inputs. You trade with your gut, while your emotions pose the biggest threat to smart trades. The other approach is mostly mechanical. You use a […]

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When asked to describe a widespread problem and then offer a solution I thought they meant for something like global warming. But alas, it was to solve a problem related to thinkorswim® using thinkScript®, the do-almost-anything-we-didn’t-think-of tool.  For my first trick, I want to show you how to build a chart that displays the ratio of […]

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In the many books on technical analysis, visible chart patterns seem to jump right off the page. Such is the power of selective editing. In the real world though, finding a charting pattern with a clean signal and imminent breakout is more like playing connect the dots on television static. To help sort through the […]

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WHAT’S A TREND? To some it’s a resurgence of bell bottoms and big 80’s hair—both of which can be found on my colleagues here on a daily basis. To me, it’s something that happens in a similar way enough times so that one can, with a fairly low level of analysis, predict the general details […]

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Should I stay or should I go? It’s a common, chronic question gnawing at any investor who’s watched the market do what it does. Getting into a stock, sort of like falling in love, is easy – it’s the getting-out part that’s hard. We’ll let others tackle affairs of the heart. For the purposes of […]

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They say that even a six-year old can spot a market trend. Identifying and trading with the trend can be as simple as connecting the dots and making sure you color, er … trade between the lines. Technical analysis is a mixture of art and science. There are plenty of mathematical formulas driving the myriad […]

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