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Brandon Wendell: Online Trading Academy Senior Instructor and Trader Mentor As a former stockbroker, brokerage trader, and hedge fund trader, Brandon brings various market views and insight to his trading classes and lectures. A wealth of knowledge, he has held NASD securities series 7 and 63... More
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Online Trading Academy
  • Failing Funds

    The majority of investors blindly follow the "conventional wisdom" and the easiest path to investing. This usually includes placing their money into a 401k and or mutual funds in their IRA. They either don't know there is a better alternative or worse, they don't care.

    Morningstar reports the average mutual fund returns for the past few years. At face value they seem as though they are doing their job in increasing your funds for retirement. But just compare the returns to that of the market itself and you see where you will be falling short of your financial goals.

    morningstar

    Morningstar also reported that in March 2014, investors added $39 billion to equity funds. Looking at the S&P 500 as a benchmark, if you simply invested in the market itself, you would have had returns of 45.5% over the past three years. Clearly the fund managers are not doing better than you could yourself!

    spx 3 year

    Paraphrasing Warren Buffet, he once said the best way for an individual investor to be involved in the market is with an index fund. An index fund is one that mirrors the broad market index and usually has lower fees. While this is probably good advice, it doesn't address the issue of avoiding large market crashes like we experienced in 2000 and 2008. Many people fear that it is not an issue of "if" but rather when it will happen again.

    There is also the issue of flexibility. When you are investing in a fund, you generally can only redeem, (sell) your shares after the market has closed. When you are trying to time entries and exits, this can reduce returns. So an alternative is the use of ETF's in your retirement accounts. An ETF is a passively managed basket of stocks in which you buy shares of the basket. It mimics the underlying index but allows an investor to enter or exit the fund whenever the market is open.

    For instance, the SPY, (the ETF that tracks the S&P 500 index) returned over 55% in the past three years.

    spy 3 year

    What if you could bolster your returns with only a few hours of work per month? In Online Trading Academy's ProActive Investor Course, students learn how to potentially increase their returns using simple techniques.

    proactive

    So with the right knowledge and skills, nearly anyone can supercharge their retirement accounts using Market Timing Techniques developed and taught by Online Trading Academy. Stop accepting mediocre returns for your financial future. Learn how to get the stellar returns you need to have the healthy and happy life you deserve.

    Brandon Wendell

    bwendell@tradingacademy.com

    click here to view the original article

    May 03 1:39 PM | Link | Comment!
  • Are You Climbing To Success Or Failure?

    In last week's article, we discussed one of the areas that novice traders mistakenly enter trades only to get stopped out by the professionals. This week, I will revisit an older topic that is related. In that article, I answered an email from a student:

    "I want you to tell me the importance of how a price comes back to a level? What is the significance of how it arrives, if it comes in like a glider plane or a lead balloon? I think what is important is how it leaves but the arrival is an odd's enhancer. I am a 'why' guy. So why is arrival so important?"

    This is a great question and the answer highlights the true market forces behind price movement, fear and greed. I want you to think about a flagpole. If I climbed to the top of that pole it would hold my weight. However, as more and more people climbed up to the top of that same pole, eventually it would bend and break from the added weight. Prices are similar. Stock prices rise because of demand. The demand being greater than the supply causes buyers to outbid each other and climb the pole. At some point, the buyers have exhausted themselves and everyone who wanted to buy has already done so or is prevented from buying due to the high cost.

    Prices start to fall as fear takes hold. Most investors and traders will start to panic when the price starts moving against them or their stops will be triggered. If there was a lot of buying pressure and large green candles going into the supply level, there will be few buyers to stop the collapse and catch the supply being dumped onto the markets from stop orders being triggered.

    Compare this with a gradual climb that features smaller green candles and some small pullbacks to shake out weak traders. As prices fall away from a supply level in this scenario, they will be met with less stop orders and more buying pressure as the demand was not exhausted on the way up.

    greed1

    Arrival to demand zones are also important. If you arrive to the demand with large red candles signaling panic and fear, you are likely to have a bigger and better bounce. The large red candles signal that everyone who wanted to sell has now exited the stock. When buyers step in they must raise their bids quickly to attract a seller who may still be around.

    If the arrival to the demand zone is quiet, there are still many worried holders of the stock who are looking to sell at a smaller loss when the bounce occurs. This added supply will mute the bounce of price from the demand level.

    fear1Most novice traders are taught to buy AFTER prices have rallied. This is where we see them climbing to the top of the flagpole. As professionals, we want to be buying wholesale prices. We buy when prices are cheap, not expensive. The same is true for selling. Selling after a drop in price is silly. You should sell before the drop and at a supply zone. Knowing where these zones lie is critical to being successful in trading and is part of Online trading Academy's core strategy.

    Brandon Wendell

    bwendell@tradingacademy.com

    Go to the original article

    Apr 16 2:03 AM | Link | Comment!
  • All Shook Up And Out Of Your Trade

    Have you ever been shaken out of a trade only to see the price move in your favor once you were out of the position? Did it seem like the institutions attached a camera to your computer to see where you entered and exited so they could trade against you? Obviously, this is not what happened but it is frustrating nonetheless.

    What happened is that you likely thought and traded like a retail trader. Retail traders tend to buy stocks AFTER the price has risen and sell AFTER they have dropped. In essence, they have been chasing price and only catching it when the momentum exhausts.

    Look at the following chart of EBay. You can see that the largest green candle happens to be associated with the highest volume in the move upward as well.

    ebay novices

    This is a case where the novice traders got greedy and chased price as it was rising. It is funny that people do this as we wouldn't think of paying a markup for everyday things we purchase in life. Most of these same investors and traders seek out sales or bargains on everything from toothpaste to cars to furniture. But when they deal with the markets, that common sense becomes less common.

    The professionals know that novices like to chase price and they will trap you or take advantage of your naiveté when you trade the way all of the other retail traders do. In BBBY, you can see the increase in volume as the novice trader's jump into the stock as price breaks out to new highs.

    The novices jumping into the markets are often signaled by a large candle in the direction of the trend accompanied with high volume. This is a regular occurrence and offers an opportunity for the institution.

    bbby novices

    This is a case where the novice traders got greedy and chased price as it was rising. It is funny that people do this as we wouldn't think of paying a markup for everyday things we purchase in life. Most of these same investors and traders seek out sales or bargains on everything from toothpaste to cars to furniture. But when they deal with the markets, that common sense becomes less common.

    The professionals know that novices like to chase price and they will trap you or take advantage of your naiveté when you trade the way all of the other retail traders do. In BBBY, you can see the increase in volume as the novice trader's jump into the stock as price breaks out to new highs.

    The novices jumping into the markets are often signaled by a large candle in the direction of the trend accompanied with high volume. This is a regular occurrence and offers an opportunity for the institution.

    Brandon Wendell

    bwendell@tradingacademy.com

    view the original article

    Apr 11 7:19 AM | Link | Comment!
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