Part 2: Formula to Calculate HV

As mentioned in Part 1, to obtain Historical Volatility, we need to calculate the standard deviation of the price returns using historical data (which can be in terms of daily, weekly, monthly, quarterly or yearly) over a certain period. Commonly, the daily price data for the period of 10 days, 20 days, or 30 days are used. Theoretically, the formula to calculate Historical Volatility (i.e. standard deviation of % stock�s returns) is as follow: After the standard deviation is calculated, we then need to annualize it. To annualise the Standard Deviation resulted from formula (1) in order to get Historical Volatility...

Read more »

Part 1: Definition

Historical Volatility (HV) is a measure of the fluctuations of the stock price (i.e. how volatile the prices had fluctuated) over a certain period of time in the past. Suppose the daily closing prices of Stock X and Y for the past 10 days are shown as follows: As can be seen from the data above, regardless of the direction (up or down), the closing prices of Stock X in the past 10 days have fluctuated / changed by $2 to $5, whereas Stock Y by $1 to $3. Since given the same initial stock price of $100, Stock X has shown bigger fluctuation in terms of dollar, Stock X is said to be more volatile than Stock Y. Now, suppose Stock Z has an initial...

Read more »

Market Analysis Video: This Reliable S&P Formation Could Make You Money

This short video on the S&P 500 is worth watching. It shows a detailed analysis on a particular chart formation that has proven to be very reliable in the past. If the analysis is right, we couldsee a further move and run in the S&P500 to the upside.Check it out!Other Learning Resources:* FREE Trading Educational Videos with Special Feature* FREE Trading Educational Videos: Learn Technical Analysis from Award Winning Author John MurphyRelated Topics:* Understanding HEAD & SHOULDERS BOTTOM Pattern* Options Trading Basic � Part 1* Options Trading Basic � Part 2* Understanding Implied Volatility (IV)* Option Greeks* Understanding Option�s Time Value* Learning Charts Patterns* Learning Candlestick Charts* Getting Started Trad...

Read more »

THREE BLACK CROWS - Bearish Candlestick Pattern

Three Black Crows (Bearish) Three Black Crows is a top reversal / bearish reversal formation.It could occur at the end of an uptrend, or during a bounce within a downtrend, or at the resistance.This pattern consists of 3 consecutive long black candlesticks that appear in an upward price trend.The opening price of Candles 2 and 3 of the pattern should be higher than the previous day's closing price (i.e. The prices open within the previous day�s body).And all the 3 candles should close near or at their lows, and make new lows in each day.Since all the 3 candles should close near or at their lows, the lower shadows of the Three Black Crows formation...

Read more »

One-Cancels-Other (OCO) & One-Cancels-All (OCA) Orders

One-Cancels-Other (OCO) Order is a group of orders that consists of two individual orders; if one of the orders is executed, then the other order will be automatically canceled.One-Cancels-All (OCA) Order is a group of orders that consists of 2 or 3 individual orders. When any one of the orders in the group fulfils a trigger condition, the triggered order will be sent to the market for execution, whereas the other order(s) will be automatically canceled.Basically, One-Cancels-Other (OCO) Order and One-Cancels-All (OCA) Order are similar. The difference may be that OCO Order consists of two individual orders in a group, while OCA Order can be made up of 2 or more individual orders in a group.Generally, the following are some characteristics of One-Cancels-All (OCA) Order:* Individual orders...

Read more »

FALLING WEDGE PATTERN � Part 2: Important Characteristics

Go back to Part 1: Falling Wedge FormationImportant Characteristics of Falling Wedge PatternExisting Trend:There should be an established existing trend (either uptrend or downtrend). As mentioned before, Falling Wedge, which has a bullish bias, can be categorised as a reversal or continuation pattern.As a reversal pattern, Falling Wedge normally occurs after an established downtrend. The slope of Falling Wedge will be downward, which is in the same direction as the prevailing trend.As a continuation pattern, Falling Wedge occurs after following an uptrend. The slope of Falling Wedge will still be downward, but this slope will be against the prevailing uptrend.Shape of Falling Wedge:* There should be at least 4 reversal points to draw two converging lines, i.e. two successively lower peaks...

Read more »

FALLING WEDGE � Part 1: Formation

Falling Wedge is generally regarded as a bullish pattern. The breakout usually occurs upwards through the wedge and then move on into upward trend.Falling Wedge can be categorised as a reversal or continuation pattern.As a reversal pattern, Falling Wedge normally occurs after an established downtrend. The slope of Falling Wedge will be downward, which is in the same direction as the prevailing trend.As a continuation pattern, Falling Wedge occurs after following an uptrend. The slope of Falling Wedge will still be downward, but this slope will be against the prevailing uptrend.Regardless of whether it occurs as reversal or continuation pattern,...

Read more »

Market Analysis Video: Updates on Dow and Nasdaq Markets

Watch the following videos to see what�s happening in both of the markets:* Updates on Dow marketIf nothing else, watch this video as this could be one of the most important weeks for the DOW and its future. This 3-minute video will share both interesting and educational analysis from both a Fibonacci and Japanese candlestick point of view.The weekly chart on the DOW is flashing the same Japanese candlestick signal that it had earlier in April of this year. Back then the DOW dropped from 11,200 to 9,700 in the space of just 10 weeks!* Updates on Nasdaq marketThis video shows an eerily similar pattern in the NASDAQ. If the pattern repeats, then it certainly is going to be a rough 3rd and 4th quarter for most investors.The video would also give you exact points and the formation that could make...

Read more »

Market Analysis Video: Make or Break in the S&P Market

This new short video shows you one key element that could make or break the S&P 500 market.See how to interpret the trendline, Fibonacci, Moving Average Crossover, and Divergence analyses together.Other Learning Resources:* FREE Trading Educational Videos with Special Feature* FREE Trading Educational Videos: Learn Technical Analysis from Award Winning Author John MurphyRelated Topics:* Options Trading Basic � Part 1* Options Trading Basic � Part 2* Understanding Implied Volatility (IV)* Option Greeks* Understanding Option�s Time Value* Learning Charts Patterns* Learning Candlestick Cha...

Read more »

Bracketed Order

Bracketed Order allows traders/investors to manage the trade/position by �bracketing" an order for opening a position (i.e. the �main order�) with two opposite �side orders� for closing the position in order to limit losses and lock in profits, without having to constantly follow the position.The order quantity for the �side orders� matches the original order quantity of the �main order�.When the Bracketed Order is placed, the trader/investor must determine the corresponding prices for all the 3 component of the Bracketed Order (One �main order� for opening position and two opposite �side orders� that bracketed the �main order� for closing the position).When one of the side orders is being executed, the other side of the order will automatically be cancelled.Depending on the �main order� for...

Read more »

Market Analysis Video: Intense Bull vs Bear Battle in the Current S&P Market

The battle between the bulls and the bears continues in the S&P 500 with neither side able to gain the upper hand. This choppy trading action will eventually lead to a large move one way or the other. The bulls are betting that we are headed higher and the bears are betting that the economy is going to tank.This new video shares some of the key technical points that are still in play and where the market needs to go in order to break out of the current logjam that it's in.Other Learning Resources:* FREE Trading Educational Videos with Special Feature* FREE Trading Educational Videos: Learn Technical Analysis from Award Winning Author John MurphyRelated Topics:* Options Trading Basic � Part 1* Options Trading Basic � Part 2* Understanding Implied Volatility (IV)* Option Greeks* Understanding...

Read more »

THREE WHITE SOLDIERS - Bullish Candlestick Pattern

Three White Soldiers is a 3-day bottom reversal / bullish reversal formation.It could occur at the end of a downtrend, or during a pullback within an uptrend, or at the support.The appearance of Three White Soldiers pattern signals that higher prices are likely ahead.This pattern is more powerful particularly when it appears after an extended decline followed by sideways movement.Three White Soldiers pattern consists of 3 consecutive long white candlesticks that occur during a downward price trend.The opening price of Candles 2 and 3 of the pattern should be lower than the previous day's closing price (i.e. The prices open within the previous...

Read more »

Market Analysis Video: Determining Potential Downside Target for S&P Market

This new video shows how to use the combined analysis of Moving Average Crossover, Fibonacci Retracement, RSI (Overbought/Oversold), and Chart Pattern (i.e. Head and Shoulder pattern) in trying to predict where the market is moving to and the potential target price.Other Learning Resources:* FREE Trading Educational Videos: Learn Technical Analysis from Award Winning Author John Murphy* FREE Trading Educational Videos with Special FeatureRelated Topics:* Learning Charts Patterns* Learning Candlestick Charts* Options Trading Basic � Part 1* Options Trading Basic � Part 2* Option Greeks* Understanding Implied Volatility (IV)* Understanding Option�s Time Va...

Read more »

Trading Educational Video: BEARISH ENGULFING Candlestick Pattern

Japanese Candlestick patterns have been popular and widely used by traders. There are several major Candlestick Patterns which most technical traders should be familiar with, such as: Bullish vs. Bearish Engulfing, Harami Bullish vs. Bearish, Piercing Line vs. Dark Cloud Cover, Hammer vs. Hanging Man, Inverted Hammer vs. Shooting Star, etc.This video shows the real current example for BEARISH ENGULFING Candlestick Pattern in the Nasdaq market. Do watch it to see the more detail analysis and why you should pay attention to this pattern when it appears in the chart.You may want to read this previous article to find out more about Bullish & Bearish Engulfing Candlestick Pattern.To learn about other Japanese Candlestick pattern, please refer to the following:Learning Candlestick ChartsOther...

Read more »

Trading Educational Video: How To Use FIBONACCI RETRACEMENT and MARKET DIVERGENCE in Your Trading

Some of the powerful tools in the technical analysis which many traders use to help them in their trading are Fibonacci Retracement and Market Divergences.How to make use of these two powerful tools in your trading?The following are two videos that discuss and explain in very detail about how to use Fibonacci Retracement and Market Divergence to help in your trading analysis.* Fibonacci Retracements Explained* Market divergences ExplainedI believe the explanation in the videos will be very useful & educational, along with the real examples from the current markets.Happy learning!Other Learning Resources:* FREE Trading Educational Videos with Special Feature* FREE Trading Educational Videos: Learn Technical Analysis from Award Winning Author John MurphyRelated Topics:* Options Trading Basic...

Read more »

The Battle of the Bull and Bears in S&P 500 market

The battle between the Bulls and Bears continues with very choppy trading action. The rally from a potential double bottom is a cause for concern for the Bears. However, the Bulls are in a similar situation as they have to prove their case with sustained market action.This video shares some of important key levels in the S&P 500 market. Volume continues to be light and that is why the markets are moving around and are so volatile at the moment.Analysis Tool:Get Free Trend Analysis for your favorite symbolsOther Learning Resources:* FREE Trading Educational Videos with Special Feature* FREE Trading Educational Videos: Learn Technical Analysis from Award Winning Author John Mur...

Read more »

HEAD AND SHOULDERS BOTTOM PATTERN � Part 2: Important Characteristics

Go back to Part 1: Head & Shoulders Bottom FormationImportant Characteristics of Head & Shoulders Bottom PatternExisting Trend:There should be an established existing DOWNWARD trend prior to the pattern.Shape of Head & Shoulders Bottom Pattern:1) Head & Shoulders:Ideally, the shape Head & Shoulders should be symmetry. The Left & Right Shoulders should bottom at about the same price level. The Left & Right Shoulders should also about the same distance from the Head, which means the time duration to develop the formation between the bottom of Left Shoulder & the Head should be about the same as that between the Head & the bottom of Right Shoulder.However, in the real world, the Shoulders are rarely perfectly symmetrical. Sometimes, one shoulder is lower than...

Read more »

HEAD AND SHOULDERS BOTTOM PATTERN � Part 1: Formation

Head & Shoulders Bottom Pattern is a bullish reversal pattern that normally forms after an extended downtrend, which marks a shift in trend from bearish to bullish. This pattern is very popular because it is regarded as one of the most reliable of all patterns.Head and Shoulders Bottom pattern is sometimes referred to as Inverse Head and Shoulders pattern.The Formation of Head and Shoulders Bottom PatternHead and Shoulders Bottom Pattern contains three consecutive, sharp bottoms, whereby the middle bottom is the lowest (Head) and the other two bottoms (left & right bottoms) are higher & roughly equal in size (Left & Right Shoulders).This...

Read more »

Market Analysis Video: Bearish View on Dow and S&P markets

Watch the following videos for an update on Dow and S&P markets:* Dow market analysis* S&P market analysisIn the videos, you�ll again see the �power� of Fibonacci tools, along with MACD Divergence analysis. Happy watching! :)Other Free Trading Videos for Learning Resources:FREE Trading Educational Videos with Special FeatureAnalysis Tool:Get Free Trend Analysis for your favorite symb...

Read more »

Binary Options

What is Binary Options?According to Wikipedia, Binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all.There are two main types of binary options:* Cash-or-nothing binary option: Pays some fixed amount of cash if the option expires in-the-money.* Asset-or-nothing binary option: Pays the value of the underlying security if the option expires in-the-money.Hence, the options are �binary� in nature, because there are only two possible outcomes.They are also called all-or-nothing options, digital options (more common in forex / interest rate markets), and Fixed Return Options / FROs (on the American Stock Exchange).For example:A trader speculates on a binary cash-or-nothing Call Option on Company ABC that its stock price will be at $50 at the...

Read more »

HEAD AND SHOULDERS TOP PATTERN � Part 2: Important Characteristics

Go back to Part 1: Head & Shoulders Top FormationImportant Characteristics of Head & Shoulders Top Pattern:Existing Trend:There should be an established existing UPWARD trend prior to the pattern.Shape of Head & Shoulders Top Pattern:1) Head & Shoulders:Ideally, the shape Head & Shoulders should be symmetry. The Left & Right Shoulders should peak at about the same price level. The Left & Right Shoulders should also about the same distance from the Head, which means the time duration to develop the formation between the top of Left Shoulder & the Head should be about the same as that between the Head & the top of Right Shoulder.However, in the real world, the Shoulders are rarely perfectly symmetrical. Sometimes, one shoulder is higher than the other, or...

Read more »

Important: Rare Opportunity Offered by Market Club

If you often watch many of trading videos here, you should have known about Adam Hewison from Market Club and the powerful tools he uses. Now, the Market Club is opening up a rare opportunity.... a 2 week free trial where you can have access to try all the powerful tools at no costs at all.There are 4 powerful tools available to Market Club members that you, as a free trial member, will have access to: Smart Scan, Trade School, Chart Analysis, and Data Central. They all will be opened up just for you.On top of that, you can get unlimited support via emails and phones, and also from Adam Hewison himself.However, you must be quick to grab this rare opportunity, as it is only available until 9 April 2010 (inclusive).So, don�t miss this chance to give it a try! Register yourself here n...

Read more »

HAPPY EASTER 2010!

Wishing you a Blessed and Happy Easter 2010!Source of the picture: http://www.flickr.com/photos/52334279@N00/2327100884/Hope you enjoy and be blessed by the song below here....GOD bless!http://www.youtube.com/watch?v=qrPAZbD6fG0&feature=rela...

Read more »

HEAD AND SHOULDERS TOP PATTERN � Part 1: Formation

Head and Shoulders Top is a bearish reversal pattern that normally forms after an extended uptrend, which marks a shift in trend from bullish to bearish. This pattern is very popular because it is regarded as one of the most reliable of all patterns.The Formation of Head & Shoulders Top PatternHead and Shoulders Top Pattern contains three consecutive, sharp peaks / tops, whereby the middle peak is the highest (Head) and the other two peaks (left & right peaks) are lower & roughly equal in size (Left & Right Shoulders).This pattern forms when the price is in an existing uptrend. The price increases and hits a high then declines...

Read more »

Trading Educational Video: �Day Trading Made Simple�

If you�re keen to learn some knowledge about Day Trading, here is the chance to learn from a renowned trading expert William Greenspan for FREE.Watch this video, and grab this chance while it�s still fr...

Read more »

A Technical Video Analysis of the Equity Market

Although all the indices are undergoing some correction recently, the major trend for all the indices still remains positive. However, the trend may potentially reverse to negative in these markets should the key reversal price levels are broken.This new short video will show you an analysis of where the key reversal area is in the S&P 500, the NASDAQ, and the Dow, if in fact the markets are ever going to reverse to the downsi...

Read more »

Conditional / Contingent Order � Part 2: Examples

Go back to Part 1: How It Works.Examples of Conditional / Contingent Orders:Example 1:Stock XYZ has been trading in a range between $30.00 and $35.00. You want to place a buy order to buy the shares of XYZ when the stock has broken out the range and show upward price movement. You can place a contingent order and set a condition that when the price is trading at $35.20 or above (Trigger Price >= $35.20), place an order to buy XYZ at $35.30 (i.e. Limit Order with Limit Price $35.30).Suppose when the market opens the next day, XYZ opens at $35.25, the order will be triggered and sent to the market as a Limit order. The order should be executed at a price around $35.25. Basically, the order will only be filled with the price $35.30 or lower.However, suppose stock XYZ opens at $40.00, the order...

Read more »

10 Important Trading Lessons

I got to know that there is a series of free trading lessons, which consists of 10 topics that traders, both beginners and experienced traders should find them very useful.While for more experienced traders, they could serve as a refresher, I think these trading lessons are particularly even more important for beginners.The 10 Free Trading Lessons will cover the following topics:(1) The importance of psychology in price movement.(2) How to spot mega trends.(3) Understanding of technical price objectives.(4) How to picture price objectives.(5) How to trade with moving averages.(6) How to use point and figure trading techniques.(7) How to use the RSI indicator.(8) How to correctly use stochastics in your trading.(9) How to use the ADX indicator to capture trends.(10) How to capitalize on natural...

Read more »

Conditional / Contingent Order � Part 1: How It Works

Conditional / Contingent Order is an order with sets of criteria attached (specified by the trader / investor placing the order), which will automatically be submitted to the market if the predetermined sets of criteria are met.How Conditional / Contingent Order WorksConditional / Contingent Order can be specified as a Market Order or Limit Order.You can then set one or more conditions attached to the order, and normally the condition is set in terms of price and/or volume.You can also specify those conditions for stock, option or combination orders, and use many different triggers (e.g. the price and/or volume of the security being traded and/or another security, including security index).When you are setting condition in terms of Price & Volume, for the order to be sent to the market,...

Read more »