Sunday, August 11, 2019

Market Analysis/Swing Watchlist Session 8/11/2019

The U.S. stocks finished the week a tick lower, with the S&P finishing .05% lower putting it now up 16.4% on the year.  We continue to see volatility in the market due to the ongoing trade tensions between the U.S. and China. Global markets reacted to an unexpected drop in the value of China's currency, which was originally viewed as a retaliation to the recently announced tariffs on Chinese goods scheduled to take effect in September. Chinese officials have come out to reassure markets that they don't plan to embark in a currency devaluation campaign which seems to have satisfied those fears.  I still believe that there will be a compromise in this trade war but as I have been saying for the last six months, I do not believe it will be an easy fix and it won’t happen anytime soon.  The general consensus is that the outlook is still positive based on resilient economic expansion, modestly rising corporate profits, and still-low interest rates. This will continue to create volatility in the market, but I believe it can position itself in a range for quite a while. 

The S&P 500 was at an all-time high just two weeks ago, but as we stated earlier this latest escalation in the US-China Trade war and the Fed dropping the interest rates led to the market experiencing its worst day of the year on last Monday.  However, it is seeming to hold on this ascending support.  I believe that range between the ascending support level (blue line) and the descending resistance level (purple line) will continue to close up and hold the price action in that range channel.

SPY SPDR S&P 500 ETF daily Stock Chart

The Basic Material sector continues to anchor the other sectors I believe due to the trade tensions, which can make this snap back on any positive news related to trade or crude oil.

You can get a better look at it on this chart.  I use the 50sma as my guide so a big parabolic move away from the 50 will trigger some type of snap back to it.

Coming Up This Week

This second-quarter earnings season will continue to slow down with less than 3% of companies in the S&P 500 reporting results this week. Economic data being released in the U.S. include inflation on Tuesday, retail sales on Thursday, and consumer sentiment on Friday.

Oversold Watch

DLTR Dollar Tree, Inc. daily Stock Chart

DXC DXC Technology Company daily Stock Chart

20EMA Crossover Watch

TER Teradyne, Inc. daily Stock Chart

52 Week High Watch

EIX Edison International daily Stock Chart

HSY The Hershey Company daily Stock Chart

ROKU Roku, Inc. daily Stock Chart

Friday, April 19, 2019

The Truth About Day Trading Simulators

Learning how to be a consistently profitable day trader requires practice as much as it does fundamental knowledge. You must be able to apply the knowledge that you are receiving from the courses that you are taking.  A day trading simulator might not mimic all the pressures and risks that come with having real money on the line, but they are very valuable for learning and honing your trading skills and strategies if used correctly.

A day trading simulator is a tool.  Nothing more, nothing less.  And as such, if you use it incorrectly, like any other tool, it can lead to catastrophic results.  So, playing games and having challenges during the learning process is definitely a misuse of this tool and can lead to a prospective trader never reaching the levels that they seek.

*  Using a day trading simulator is a way to develop confidence in your trading decisions and trade without fearing mistakes. Simulators often have real-time or slightly delayed market data, so you can monitor market conditions, and explore different charting tools and indicators.
*  You can also familiarize yourself with trading software and the steps involved in entering, reviewing and executing your trades before working with real capital, and practice using stop-loss orders and limit orders as part of your risk-management strategy.
*  Most brokers offer different types of software called trading platforms. These are actually simulators because all they do is simulate the price action and conditions in the market real time by interpreting the data and providing it in an easy to read format.
*  Using the demo time to explore how each platform functions will give you the chance to see which one of them best suits your trading style.

How should you not use the simulator:
*  You should not play games in it.  Serious trading is not a game.  What happens is that the parameters of the game will never match reality.
*  It will cause you to develop actions and behaviors detrimental to you as a trader.
*  Even though it is a real time market simulator, the execution conditions are not the same so the fills will not be the same as a live account.

How you should use the simulator:
*  Learn how to use and execute on your platform of choice
*  Practice the strategies that you are learning
*  You must simulate your personal conditions.
     -Account size
     -Stocks that you can actually trade with your account size
     -Position size
     -Risk management
     -Build Your confidence in your trading strategies and in your execution of them

So, to sum it all up, stock market simulators provide a safe, structured environment where prospective traders can lean and develop trading skills without risking any money. With time and practice using the simulators, the transition to actual trading in a live brokerage account can become seamless. Just remember, once you leave the simulated world and start trading with your money, mistakes can be costly and a premium is put on your risk management skills.