There is a system to trading pullbacks that can earn you a great deal of money.

The most vital thing to do is to establish the longer term trend. In the event that the stock is in an uptrend even with the pullback, then the setup is great.

The majority of stock traders have problems distinguishing between a regular pullback in a bullish uptrend, and a pullback that signifies a trend reversal. It is the main reason traders lose money.

The whole step to trading pullbacks is to measure how much a stock pulls back. The research into computing pullbacks is called Fibonacci Retracements.

The vital Fibonacci Retracement ranges to watch are 38.2%, 50%, and 61.8%. You have to memorize these retracement levels.

Up to 70% of most Fibonacci Retracements occur between the 50% and 61.8% ranges so shoot for a 50% retracement entry.

I like to use the ADX technical indicator with retracements. J. Welles Wilder invented the Average Directional Index (ADX) to determine the strength of an ongoing trend. In the event the +DI crosses above the -DI line just after the stock hits a major retracement level, the odds of success of the trade go up.

How I trade with these two tools is to think okay, let’s see what happens when the 50% retracement level is struck. Did it bounce? No? Then let’s see what the results are once the 61.8% retracement level is hit? Did it bounce? Yes? Has the ADX DI line crossed above the -DI line? If not, then I stay on the sidelines and await confirmation of the short term swing trade up by watching the ADX. Yet another thing I ask myself is did the pullback reverse the trend? Was the lower Donchian channel wall hit? Is the volume rising on the downside? Any major support level broke like the 50 or 200 day moving averages?

Within the video below, I am going to examine Ciitigroup (C) and what your frame of mind should have been as the stock pulled back and hit the major retracement levels. I’ll also explain to you how making use of the ADX tool would have confirmed that something was nastier regarding the pullback.

I have got plenty of requests for my opinion on Yamana Gold.

I am certainly not a gold bug and I do not own any stock in this company and so you are going to get my neutral, independent viewpoint on it.

Yamana Gold is in a very weak uptrend which has a 3 month low hit just last month in July. A very weak uptrend is nothing to get pumped up about. This could result in a boring sideways to a little up trading range until buyers all of a sudden begin to show up.

You want to buy a stock which is in a strong uptrend, not a very weak uptrend.

The question for you personally is that you truly are unable to imagine a better way to play the bullish gold market than to buy Yamana Gold?

There are numerous gold junior mining stocks and also gold ETFs which are in strong uptrends. Why would you settle for a very weak uptrend with so many better looking gold associated stock charts out there?

Exactly how I’m mastering the bull market in precious metals right now is to buy the Proshares Ultra Gold ETF (UGL). I prefer playing the uptrend in Gold in a more uncontaminated kind of way.

A long time ago, in the event you wanted to play gold, gold mining stocks were the obvious way to do it. These days that is no longer true. There are now numerous financial vehicles readily available for playing gold and investors realize it. There has been plenty of conversations about the negative impact these gold ETFs have had on gold mining stocks as traders now have a wider array of ways for playing an uptrend in gold.

With this video clip, I do stock chart analysis on Yamana Gold. Folks, this stock is really a perishing horse that really needs a bullet put in its head. This stock chart feels like garbage. I do think a very weak uptrend rating is being kind.

A Burial Cross happened in this stock back in March of 2009. That was your very first signal to take your loss and get out. The 50 day has been underneath the 200 day moving average since that time. Even the stock itself is trading below the 50 day moving average. You have the 50 day below the 200 day moving average, and the stock below the 50 day moving average. How much more terrible can you get! This stock is garbage.

I just don’t understand why anyone with commonsense would elect to buy Yamana Gold when there are plenty of other better looking stock charts and strategies to play the current uptrend in gold.

Nokia released the news in July about a $200 million deal to sell its wireless modem business to Japan’s Renesas Electronics Corporation. Per the agreement, Nokia will send its wireless modem technologies for LTE, HSPA and GSM standards and about 1,100 Nokia research and development employees to Renesas, the vast majority of which are based in Finland, India, the UK, and Denmark.

Prices for wireless modems have plunged over the last several years amongst competition from Huawei and ZTE, both headquartered in China.

Huawei is the European market leader in wireless broadband modems, with an estimated 61 percent of the market, followed by ZTE, with 29 percent. Put simply, the Chinese control 90% of the U.S.B. wireless modem market.

The standard selling price for wireless broadband modems was about $38, down from $150 in just 3 years. A lot of mobile operators in Europe now give away wireless broadband modems, which are typically plug-in U.S.B. sticks, to draw new mobile broadband clients.

The U.S.B. market has become a suprisingly low-margin business. Nokia has seemingly decided it is better to give full attention to more lucrative aspects of the business.

A couple weeks ago, the European Commission said it had opened an enquiry into a grievance by Option, a Belgian maker of wireless modems, which testified that unidentified Chinese competitors were dumping wireless modems, or selling them for less than the expense of manufacturing, in Europe.

This looks like it’s just another occasion of the Communist Chinese using tax paying dollars to offer products below market cost effectively eliminating the competition. After 5 to 10 years of doing this, almost all of the competitors go out of business or like Nokia, start working on other things, and only then do the Chinese begin raising their prices once they have wiped out many of the competition.

It’s really a practice that G9 countries have asked China to quit. I do think what needs to occur is all countries need to start raising tariffs on Chinese products until they comply.

Renesas Electronics is not a publically traded company but it is one of the world’s largest semiconductor corporations. It had been formed in the 2010 merger of NEC Electronics and Renesas Technology, two chip makers that were ranked second and first in the world-wide market for microcontrollers, the chips that operate computer printers, microwave ovens, along with other relatively simple electronic products. Chips made by Renesas Electronics are used in auto engines, digital cameras, flat-panel televisions, PCs and computer peripherals, refrigerators, toys, washing machines, and wireless phones, among other applications. Ownership of Renesas Electronics is shared among Hitachi, Mitsubishi Electric, and NEC.

In the video below, I carry out technical analysis on Nokia and tell you where I think this market is going.

The QQQQ trading technique hit the investment world by storm 12 years ago.

Every John that could put up a internet site began supplying his QQQQ trading alerts for approximately $25 per month.

In the event that you ever in your life signed up for this kind of a service then you already recognize, it’s garbage.

These kinds of QQQQ trading internet sites that are allegedly going to allow you to make a good deal of bucks with their built up trading systems are merely around to help the proprietor of the internet site make money off you.

Returning in the later part of the 90’s, I just had to try such a system to see what it was exactly about. I opted for a QQQQ trading service from a business called Highlight Investments Group.

You never really are able to end up with the same profits that they report on the website because of slippage. Highlight Investments Group just totally disregards the cost of placing a trade. As an illustration, their website reveals, “Long 7/22/2010 Enter at $45.93 7/23/2010 Sell at $45.98 For a 0.11% Gain”. So the website reports this stock trade as a gain! Having the cost of the trade figured in, this stock trade was a loss for almost all unless of course you are trading some $100,000 dollars in QQQQ and even then, you’d probably almost certainly have your order filled in multiple chunks on the way up.

A more genuine system by Highlight Investments Group would be to cut 2% off each and every signal for slippage as if someone put $1,000 at risk using their trading signals.

Highlight Investments Group has on their internet site: “QQQQ Signals – Past 3 Months – Our Compound Returns = 17% – Buy & Hold Returns = -9%”

This is a excellent model of how you can use numbers to lie. The impression you get is that if you bought and held, you’d be down money, but if you used their trade signals, you’d be up 17% over the past 3 months. Why did they use 3 months? What if you used 1 month instead? Over 1 month, a buy and hold strategy would have you up virtually 10% in QQQQ while using their signals would have you up only 3.5%, and that’s not counting slippage which would add another 5% (3 trades over last month at about 1.5% cost per trade) loss on the downside for a total loss of -1.5%!

Don’t you know that if Highlight Investments Group was actually able to crank out these kind of returns, why would they be seeking to sell the system to you for $30 a month? Why would they deal with irritated clients crying out for refunds, website hosting fees, business filings, income taxes, IRS business returns, and the dozen other things a online business has to cope with. Would not they just quietly utilize their own system to turn into wealthy investors without having all the concerns associated with running their own online business?

You are much better off folks studying how to stock trade and performing technical analysis on your own as opposed to using some sort of secret black-box top secret buy and sell signals you have no concept how they were derived and are not authorized to look inside and analyze.

In this video tutorial, I execute technical analysis on QQQQ and offer you my opinion on where this market is going.

One of my favorite day trading chart patterns to swing trade short term is the Symmetrical Triangle breakout.

The Symmetrical Triangle formation is sort of odd since it appears as if energy increases as the stock moves closer into the head of the formation then it abruptly does a breakout.

The anticipated target of the breakout move is equal to the distance the stock moved going into the chart pattern.

Nevertheless you should use the Symmetrical Triangle chart pattern in conjunction with other technical indicators like the MACD.

The MACD should have the signal and the divergence lines both trending higher.

For knowing the best time to sell after the breakout move, I choose to look at the Slow Stochastic. What I will take the time to do is fiddle with my Slow Stochastic settings for the stock or market I am trading. You should see the previous episode I did about the interactive gizmo I use to accomplish this in a few seconds. When you have the optimal settings for your trading style and that have given at the very least three correct buy and sell signals, you will have your exit mark.

Currently in the Market Vectors Steel ETF (SLX), the optimized Slow Stochastic settings are 4, 4, 2.

The plan is to buy as soon as the stock does a breakout, and exit out of the market on the Slow Stochastic cross of the %K and %D lines.

I dig this chart as well for a possible re-entry. We have had a picture perfect Fibonacci retracement of 38.2% after the Symmetrical Triangle breakout. The Slow Stochastic is back closer to oversold territory.

You have to watch out though because the 50 day moving average is below the 200 day moving average but the 50 has turned up.

On a basic level, I like steel and understand why it did a Symmetrical Triangle breakout. As the global economic recovery picks up pace, steel consumption will burst upward as economic activity spurs construction and the use of steel.

I understand we hear a lot about a double dip global recession but I just do not imagine that is very likely now after the second quarter 2010 earnings season. An estimated 60% to 70% of all companies reported an increase in earnings year over year.

Something else you should keep in mind is that fear sells and media groups know this. What headline do you think generates more interest, “Global Economic Recovery Slows But Continues” or “Fed Closes 5 More Banks, Teeters On Global Collapse”? Everybody wants to know the spooky and scary facts of such an astonishing, attention grabbing headline. The first headline is just, yawn, well, right, yippe ki-yay and let’s all hold hands and sing Kum bay ya, my Lord, kum bay ya.

You also are going into the November 2010 elections so you have Republicans and their bogus Fox News attempting to talk down the economy and certainly who do not want an economic recovery before November.

Then you have your gold insects which usually are Republicans, and who have a big financial interest at stake in the U.S. dollar falling and other gloom and catastrophic economic stats. The plan being they do not want an economic upturn as they want everybody petrified and running out buying gold.

Lastly, you have media groups like Fox News bringing together both Republican politics of attempting to stop an economic recovery before November, and gold bugs by combining the commonly shared interests of the two. That’s why you had Glenn Beck, Bill Oreilly and a few others taking money from gold companies like Gold Line.

Can I still be a millionaire day trader by the time I’m 50?

At the time I first started stock trading in 1994, I started in mutual funds. I did not have much. I kept putting in a tiny bit of money each month from my day job to my stock trading account and when I had enough, I would purchase more of the same large funds. I brought my trading account up to $10,000 which was also the bulk of my entire net worth.

I got tired of the little gains each year from my mutual funds and then Janus was busted by the SEC for permitting their favored patrons to trade in and out of their funds while small dudes like myself had to buy and hold.

I started looking at penny stocks and greediness filled my brain with how much I would make quickly if I went long the right one.

I was innocent, susceptible white meat for the next sly penny stock scam that came along.

I invested $1,000 in a pink sheet stock called Plasticon. I discovered this stock from Investor Business Daily. The periodical looked trustworthy. Afterward College Stocks profiled Plasticon, and last Green Light. Truly this was the next sizzling penny stock.

I was youthful. Everything published about this pink sheet company was a fib. The CEO Jim Turek even went on Investors Business Daily streaming video news show and lied. I remember telling my wife he looked honest and she agreed.

Subsequent to my initial $1,000 invested, the stock fell 50%. Hence what did I do? Why double down of course. I purchased an added $2,000 worth of stock.

Then Yahoo Finance published the news story that Plasticon was filing for a listing to the OTCBB. This stock is a show jumper I thought! Therefore I researched the subject of stocks that went from the pink sheets to the OTCBB and found that some did really well after uplisting. Consequently what did I do? Well I bought $1,000 more of Plasticon as any decent penny stock investor would do.

The stock fell an additional 50%. I was a little nervous. But then a news story came out that Plasticon had just signed with a major distributor to sell their plastic re-bar supports! This could be like Tazer I imagined. A small penny stock supplying product to a major distributor means wild pay-day profits! I bought an additional $2,000 on the news.

The stock fell an additional 50%. I was becoming very nervous now. But suddenly, like a reward from God (I used religion in my stock trading back in those dumb days), James Turek announced that Plasticon was not going to file for an OTCBB listing, oh no, they changed their mind and were going to file for a listing to the AMEX. Hence what did I do? Well if I thought that an uplisting to the OTCBB was worth $1,000, then surely an uplisting to the AMEX was worth $2,000. Therefore I purchased $2,000 more!

All this occurred over a 3 year period until finally, the penny stock fell under $0.001 and Plasticon filed for bankruptcy.

There are so many errors that I made along the way to losing everything. Clearly I was quite despondent about how much I had lost. What made it all the more depressing was that it was my entire life savings. That money was everything to me. It was all my hopes and ideas, especially when you compound this amount at some 4% or 5% for maybe 40 to 50 years ahead of me. I sat down long and hard, reviewed all of my mistakes, and attempted to understand my stock trading and investing lessons. My wife asked why I was doing it at all, waking up at 6:00am PST for so many mornings to trade stocks, reading hundreds of books about investing, and yet I had zilch to show for it, but a gigantic hole in the pocket and heart. It was a great question, and I had an uncommon answer.

My own response was “I prefer to lose it all now in my thirties, rather than losing it all in my fifties. If I be taught my lessons early, I would not make the same big mistakes much later. Nowadays, I am stock trading and investing some $15,000. One day, I hope to be managing and investing one million dollars. I can afford to lose $10,000 in my thirties, but I won’t be able to afford to lose even 20% of a million dollars when I’m older.” Sure, I was in pain from my unfathomable loss. But I was so unwavering in continuing my stock trading and investing, and I was sure that one day I would be managing a much larger amount. Because I knew I would be investing for the next 30 years or more, the earlier I learned how to do it the better.

Each one of my past investing and stock trading errors has continued to help me to become a better investor and smarter trader. My big loss of everything in my early thirties has made me a much more careful and knowledgeable investor. He who has grabbed a bull by its tail knows twice as much as he who never has. I realized some of the lessons you can never learn from books. All the real crucial lessons must be learned from agonizing errors.

Below is a video of some of the painful lessons I learned.

I have received tons of attention on my pair strategy article and the position I entered in both Apple and Research In Motion. I went long Apple and short Research In Motion.

The approach of matching a long position with a short position in two stocks of the same sector is called pair trading. This forms a hedge against the sector and the overall market that the two stocks are trading in. The hedge created is essentially a wager that you are placing on the two stocks; the stock you are long in against the stock you are short in.

As its name implies, a pair trading approach is a double-pronged strategy, where 2 seemingly unrelated option or stock trades are opened at the same time. The method can give somewhat of a safety net to guard against an unanticipated move in a specific sector, while capitalizing on a specific equity’s relative-strength backdrop.

Fundamentally, a pair trader hedges his or her bets, opening positions in two interrelated equities or indexes and playing them against one another, choosing 1 call (bullish) position and 1 put (bearish) position. The pair of positions then together enables profitable returns among a number of outcomes.

For example, I had a great view regarding Apple, but a pessimistic sentiment about Research In Motion. I went long on Apple at the same time as I shorted Research In Motion.

I also had an uneasy feeling concerning the whole technology sector. Through taking a short position in Research In Motion, it allowed me to profit if a large sell off in tech took place. This profit on the short side would counteract my losses in Apple on the long side.

Apple maintained its relative strength versus Research In Motion. The shares rallied and the short side of the trade (Research In Motion) dropped. Both sides of the paired trade entered positive territory.

However let’s say the whole technology sector suffers a large decline. The Research In Motion short is profitable, counter-acting the Apple long position which nets a loss. This is a superior outcome than if I merely went long on Apple.

You are looking for the percentage change in the market between Apple and Research In Motion to move in Apple’s favor no matter which direction Apple or Research In Motion head.

On May 14, 2009, I went long Apple at 122, and short Research In Motion at 71. I closed out the pair on July 10th 2009 with Apple at 137 and Research In Motion at 66. I made 12% on my Apple long, and 7% on my Research In Motion short. So the total gain was 19%.

Conceivably the most popular intraday stock trading technique practiced by skilled stock traders is the Opening Range Breakout. Since its conception, the Opening Range Breakout has evolved into a number of various strategies.

We are going to define the Opening Range as the initial 30 minutes of trading. At the thirty minute mark, we can draw a line on our chart or make a mental note of the highest price and lowest price during this time frame. So the fundamental foundation of defining the Opening Range is that the predisposition for trading the underlying stock will be determined by where the stock is trading relative to the Opening Range.

As long as the stock or market trades within the Opening Range, it is trend impartial and does not give either a buy or sell signal.

Provided the stock breaks above the high of the Opening Range do not do a thing yet. You must have a close above this range on a 5 minute chart.

Provided you get a 5 minute candle breaking above the Opening Range, the next signal you need is verification. You must have one more 5 minute bar closing above the range to prove the breakout.

If the stock crosses below the low of the Opening Range, do not do a thing. You must have a 5 minute candle crossing below and you must have an additional candlestick for confirmation just like a break over.

Any stock trading above its opening range has a bullish prejudice, and a stock trading below its opening range has a bearish bias provided it meets the extra necessities talked about above.

Keep in mind that the trend is your friend. Breakouts that transpire in the direction of the larger trend have a greater success rate. So make sure that you determine the larger trend first.

Consider volume as market emotion. Greater than average volume increases the potential for the breakout to go on in your favor. A lack of volume will decrease the expected profitability of the trade.

In this episode, I didn’t want to simply show you an ideal session. I took the last trading day prior to doing the video. I also sought to include actual market data on SPY instead of just showing you a static diagram or stock chart.

Looking back in time at a chart with price movement in the middle of the chart is always easy to guess. The actual challenge is the closer you get to the right of the stock chart in terms of truly predicting future price direction. Thus in the video, I deal with the chart as far to the right as we are able to go to reproduce what this strategy looks like in real time as you trade all through the day.