Trader Knowledge » Exchanges

Trend Trading Systems

Administrator — Thu, 21 Dec 2006 22:45:53 +0000

I’m not sure if what I’m about to say is entirely true, but from what I have read, Trend Trading is one of the most popular and long lived trading system around.

I really like Trend Trading and use it as the basis of my trading system. It has always seemed to make sense to me – A kind of ‘if it ain’t broke, don’t try to fix it’ approach to calculating the future price of something.

However, I also understand that it is not the only trading system that words, but I have success with and so do many others. I am also a Technical Trader, and Trend Trading probably lends itself more to the technically inclined.

What follows is a brief introduction to the world of Trading the Trend. Let’s take a look at what it is, how it works and who uses it.

What is Trend Trading?

Basically, Trend Trading is buying or selling financial instruments depending upon the recent price action going in a particular direction and determining the likelihood of it continuing in that direction.

To find out if a stock is Trending, take a look at its chart. It its price action forms an upward, downward or sideways line, then the chances are that it has formed a trend.

The next thing to do is decide whether you want to buy or sell the stock and then jump onto the trend and hopefully make a nice profit.

Of course, it the stock is trending sideways, then there is no money to be made from that trend.

How does Trend Trading work?

Trend Trading works because a number of people will believe that a financial instrument is incorrectly valued over a certain period of time.

Once the trend begins, more traders and investors will jump onto the trade and keep the price going up.

Often, people who invested at the beginning of the trend will increase their positions as the trend shows signs of becoming established.

Statistically, a stock that is trending in a certain direction has about an 80% chance of continuing in that direction. That’s pretty good odds, and is a reason that a trending stock will continue to trend as investors take those odds.

Who does Trend Trading?

There are many great examples of people who have traded trends to make their fortunes. If you are interested in Trend Trading, then it would pay to read about some of them.

Jesse Livermore did a fair bit of trend trading to make (and sometimes lose) a few dollars. His accounts of Trend Trading can be found in the pages of Reminiscences of a Stock Operator.

Ed Seykota is one man who made his fortune trading the trend. You can read about him and a little of how he did it in Jack Schwagers Market Wizards book.

Nicolas Darvas provides an excellent account of how he used Trend Trading to make 2 Million Dollars In The Stock Market.

Darryl Guppy has written a good book called Trend Trading which is worth a read. It is pretty much a Trend Trading 101 on the topic and I would recommend it.

Finally, please remember that this is only an introductory guide to Trend Trading. If you feel that you would like to try and make some money using this trading system, then please remember to do your research!

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Financial Blog Carnivals

Administrator — Mon, 18 Dec 2006 21:13:20 +0000

TraderKnowledge.com has featured in the most recent editions of the Carnival Of Personal Finance and the Carnival Of Investing.

You can check out the Carnival Of Personal Finance at A Penny Saved where Growing Your Investments With Compound Interest is featured.

You can also visit the Carnival Of Investing at Lazy Man and Money where What Are Exchange Traded Funds? is featured.

It is worth surfing over to these websites to check out the other submissions. Hat’s off to the guys who put these carnivals together .. I’ve done one before and it’s a lot more work than it looks!

In other news, the Free Compound Interest Calculator has been awarded the “User Choice” award at FreeDownloadManager.com. This is exciting news for me because I have never won an award for any of my software before In fact, I’ve been amazed at how much traffic has arrived at this website from people looking for a Compound Interest Calculator!

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Chicago Board Options Exchange (CBOE)

Administrator — Tue, 11 Apr 2006 08:15:06 +0000

The Chicago Board Options Exchange (CBOE) is one of the worlds larget options exchanges. It was formed in 1973 by the Chicago Board of Trade (CBOT).

It served as the first formal and standardised place for the trade of stock options in a fair and orderly manner, and on the 26th of April 1973, 911 contracts were traded upon 16 underlying stocks.

Technorati Tags: options, cboe, options+trading

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FTSE100

Administrator — Mon, 03 Oct 2005 08:38:11 +0000

The FTSE100 is the leading Share Index on the London Stock Exchange, and is comprised of its largest 100 stocks.

It serves as a leading indicator for the state of the UK Financial Market and is also considered to be one of the leading share indexes in Europe.

It is generally referred to as the footsie – and has been around since 1982 and came about from the a joint venture between the Financial Times and the London Stock Exchange with their formation of the FTSE All Share-Index in 1962. The FSTE100 was then formed in 1982.

Some of the companies that are included in the FTSE100 are British Petroleum (BP), GlaxoSmithKline (GSK), Rolls-Royce Group (RR), and Vodafone (VOD).

The 100 companies of the FTSE100 account for 80% of their market and the requirements for being included in the index is a market capitalization of about 2 billions pounds sterling.

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LSE – London Stock Exchange

Administrator — Sun, 25 Sep 2005 09:48:29 +0000

The London Stock Exchange (LSE) was founded in 1801 and has grown to be one of the largest in the world with over 2,800 companies listed upon it.

The exchange itself actually comprises of the Main Market – listing the larger and more prestigious companies with a market capitalisation of more than £3,500bn – and the Alternative Investments Market (AIM) – which functions to represent the small cap growth market.

The LSE‘s former building was located on Threadneadle Street in the heart of the City of London or the Square Mile (Londons financial district) and was opened in 1972. It consisted of a formal trading floor where stocks were exchanged face to face. This became largely redundant however in October 1987 when the Big Bang shook up the UK’s financial industry by deregulating many of the LSE‘s activities.

The LSE was to move again in 2004 to Paternoster Square which is still in the Cities Square Mile.

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NASDAQ – National Association of Securities Dealers Automated Quotations

Administrator — Wed, 14 Sep 2005 09:24:24 +0000

The NASDAQ stock exchange is popularly known as the exchange where the high tech stocks of the dot-com boom are traded. The Exchange gets its name from formerly being an acronym for National Association of Securities Dealers Automated Quotations and when founded in 1971 was the worlds first electronic stock market – and continues to be the largest electronic exchange in the USA.

NASDAQ is able to boast about 3,300 listed companies and, on average, more trades per day than any other USA market. The companies that are listed on the NASDAQ represent a wide range of industries including retail, communications, technology and financial services.

The primary index on the NASDAQ stock exchange is the NASDAQ-100 Index which represent the 100 largest non-financial companies listed on the exchange by market capalization.

Market hours on the NASDAQ are 9.30am to 4.00pm (EST), Monday to Friday.

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Forex

Administrator — Mon, 12 Sep 2005 09:01:01 +0000

The Forex (Foreign Exchange) is the worlds largest financial market turning over more than $1.5 trillion a day. It is unique in that it has no physical location. Instead of traders buying and selling in a formal marketplace, it takes place through an electronic network of banks. These banks operate around the world and therefore around the clock. The Forex is open from when the bankers arrive at work on Monday morning in New Zealand until they finish work at 5pm in the West Coast of the USA. However the greatest trading volume generally occurs during the European and USA working day.

Trading on the Forex has become increasingly popular during the last few years with an abundance of brokers springing up to cater for the traders who have become interested in it. Competetition between brokers has resulted in ‘commission free‘ brokerage and an abundance of trading education.

Before leaping into the enticing world of Forex trading – the private trader should take time to assess the risk involved. Many Forex brokers operate on leverage of up to 200:1. This means that $200 depostited in your trading account can control $400,000 of buying power on the currency market. Small gains in the currency you have bought can equal large gains in the equity of your trading account. Likewise, small losses in the currency you have bought can easily wipe out your account.

Remember to do your homework before venturing into this market.

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NYSE – New York Stock Exchange

Administrator — Thu, 08 Sep 2005 10:43:08 +0000

The New York Stock Exchange (NYSE) was first formed back in 1792 when a group of 24 New York City stockbrokers signed the Buttenwood Agreement (because it was signed under a buttonwood tree) outside number 68 Wall Street.

Despite these humble beginnings, the NYSE has grown to be the largest stock exchange in the world. An average day sees 1.46 billion shares at a value of $46.1 billion traded on the NYSE. It is home to about 2,800 listed companies carrying an estimated market capitalization of $20 trillion.

Although trading on the NYSE is carried out face to face, the NYSE claims to be world’s largest and most technologically advanced equities market
. All orders are delivered electronically with about 10% being carried out automatically.

The NYSE is also home to the Dow Jones Industrial Average (DJIA) – a stock market index of 30 of the largest and most widely held public companies in the USA.

Market hours on the NYSE are currently 9.30am to 4.00pm (EST), Monday to Friday.

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