Friday, June 12, 2009

What is Technical Analysis?

There is nothing mystical about the markets. Their movements can be analysed and understood by anyone who understands the basic concepts of energy.

- Trend gives us the direction of the market
- Momentum gives us the strength of the trend
- Cycles give is the timing for a change in energy
- Support and Resistance are barriers to energy

Technical analysis is the reading and evaluation of these energies.

We use Technical Indicators to measure these various energies so we have an objective evaluation of them.We cannot definitively say what a particular share price will do. However, when these energies align, as measured by the indicators and price patterns, we are presented with a low-risk, high-probability trade that we should act on.Successful trading is a combination of:

- Developing a trading plan with set rules
- Incorporating stringent risk management strategies into your plan,
- Evaluating the energies in the market through the application of technical analysis.
- Having the patience to wait for a low-risk / high-probability trade
- Executing the trade in accordance with your predefined plan.

Tuesday, June 9, 2009

The Secret of Writing Options by Louise Bedford

The writing of options in a sideways market is one of the few safe and effective ways to generate income for those with a blue-chip portfolio or a margin loan drawing capacity. “The Secret of Writing Options” by Louise Bedford is designed to guide interested readers in this field. This book provides detailed guidance on the subject of writing covered calls and puts to generate income. Louise Bedford takes a conservative approach concentrating on practices to protect the investor from loss. Both writing options on existing stock and undertaking a 'buy and write’ strategy are covered in detail however, this publication is not for those wishing to trade options on the options market.

The major topics covered in this book are:
· the benefits of writing options;
· a detailed explanation of the nature of call and put options;
· the stocks to use;
· an appreciation of both the buyer's and seller's perspectives;
· an analysis of pricing issues;
· an introduction to candlestick and trend charting;
· strategies to use;
· taking dividends into account; and
· putting your knowledge into action.

Learning "the secret of writing options" is assisted throughout the book by examples drawn from the Australian market, well-structured chapters, review questions at the end of each chapter, and a comprehensive glossary. I found this book to be an excellent read and a practical guide to the writing of options.

Saturday, June 6, 2009

Louise Bedford: Australian Professional Trader

Louise Bedford is considered within trading circles to be a trading genius. She has been trading profitably for almost twenty years and currently trades from her home in Melbourne. She is in high demand as a keynote speaker on the science of trading, and she holds degrees in Psychology and Business from Monash University, the knowledge of which she applies to her trading principles.

Louise Bedford not only trades profitably but also educates others on trading and the secrets of her success. She conducts workshops and seminars throughout Australia, and is the author of the following trading publications: Trading Secrets, Charting Secrets, The Secret of Candlestick Charting, and The Secret of Writing Options. These books by Louise Bedford contain the foundation of strategies that have been implemented by numerous successful traders. They are a must read for serious traders, and those about to dip their toe into the trading world.

A sign of her true success is that many other authors of trading quote her works within their respective publications. Quite an achievement and compliment.

Many traders owe a great deal of gratitude to Louise Bedford for their success as the information she shares is priceless. I certainly fall into this category of individuals.

Friday, June 5, 2009

All Ordinaries - week ended 5/6/09

The Australian All Ordinaries (XAO) closed the week 4.11% higher at 3869.00. There were four (4) positive days and one (1) negative day with the biggest move for the week occurring on Monday the 1/6/09 where the All Ordinaries closed up 1.98% higher. However, this was closley followed by Thursday the 4/6/09 where the All Ordinaries closed down 1.92%.

Once again the ASX 200 Financial Sector (XFJ) did not perform as well closing the week only 2.71% higher. This was primarily due to the Sector losing ground on Thursday and Friday (2.32% was lost over these two days).

The ASX 200 Materials sector outperformed the All Ordinaries closing the week 7.49% higher. This was helped by a 5.57% gain on Friday the 5/6/09. Last week I forecasted the Materials Sector would be up this week but I did not expect it to be this significant.

Wednesday, June 3, 2009

NCM (New Crest Mining) trade I conducted

On Friday the 22 May, 2009 I bought 308 NCM shares @ $32.37 as the 26 12 9 daily Moving Average Crossover Divergence (MACD) crossed above the 0 line. I trade CFDs so the trade only cost me the 10% margin - $997.00

On Friday the 29 May, 2009 I added to my position and bought another 305 NCM shares @ $32.80. I paid the 10% margin of $1000.40.

On Monday the 1 June, 2009 I added to my position and bought another 300 NCM shares @$33.24. I paid the 10% margin of $997.20.

On Wednesday the 3 June, 2009 NCM shares closed at $34.40 so I am sitting on a nice paper profit of $1461.24.