MACD (Moving Average Convergence/Divergence) There are numerous ways how to trade MACD in the direction of current trend (read more about MACD crossovers). Though MACD is built on exponential moving averages, which make many people immediately think about trend following, there are also ways to use the MACD for counter-trend trading and spotting probable reversals. … Read more
All MACD lines and their crossing On a typical chart the MACD shows two lines (the MACD line and the Signal line), as well as the zero line. They cross each other often enough to give us plenty of options for building various MACD crossover trend following strategies. Some of them are the classics of … Read more
There is a place on the internet where you can get a detailed portfolio snapshot from the world’s greatest traders and investors including George Soros, Bruce Kovner, Warren Buffett, Philip Falcone, or John Paulson. Regularly and for free. The place is US SEC (Securities and Exchange Commission). US Securities Exchange Act and 13F holdings report … Read more
Moving Average Convergence-Divergence MACD is one of the most popular technical indicators. It was invented by Gerald Appel in the 1970’s. While it is widely known as MACD, its full name is Moving Average Convergence-Divergence. MACD is based on two exponential moving averages of closing price with different period lengths. MACD measures how close or … Read more
If you talk to people who trade or you browse some internet trading forums, you will encounter two types of traders: those who think Stochastics is a great tool and “works” and those who think that Stochastics is “useless” and “doesn’t work”. Now you probably want to know which ones are right. The truth is … Read more
RSI (Relative Strength Index) is one of the most popular indicators. The most common way to trade with it is by looking at overbought and oversold areas. You buy when RSI says oversold and you sell when it says overbought. This approach is trading against the market trend and therefore it is possible that you … Read more
Equity market directional hedge funds vs. classical mutual funds Equity market directional funds represent the most typical hedge fund strategy group in these days. Mostly trading stocks, they are like classical stock mutual funds, but they typically have more freedom and more courage in their trading strategies. Unlike classical mutual funds, equity market directional hedge … Read more
In the previous article about long straddle option trades, we looked at them mainly from the perspective of holding a long straddle position till expiration and explored various scenarios for your P/L. Though the buy and hold approach and never looking at the position prior to expiration is one way to trade straddles, you will … Read more
Convergence trading hedge funds, or arbitrage hedge funds try to discover situations where two related securities are mispriced relative to one another. They buy the relatively underpriced security and sell the relatively overpriced one. Profit is made when the price relationship gets back into “normal.” Arbitrage funds typically use sophisticated computer models, as computers are … Read more
Another popular trading rule There are many short little pieces of popular trading wisdom. Many of them have their origin in trend following – a trading style based on catching long trends and riding them to the very end. One of these often quoted trading rules is “Cut your losses short and let your winners … Read more
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