Amazing Video on Stock Market Crash Of 1987 Charts.

Stock Market Crash May 2010

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5 Pro Trading Secrets That You Shouldn’t Miss!

Technical analysis is based purely on the price action. It does not take into account the fundamentals behind the price action. It only follows the swings on the charts. Many traders use technical analysis in making their trading decisions. There is no doubt that technical analysis is a powerful tool but ignoring the fundamentals altogether is not a good thing. As a good trader, you should always keep an eye on the changing fundamentals in the market.

For example, heating oil demand tends to rise in the fall and winter. Now a novice trader will think that it is a good strategy to go long on heating oil futures December contract without thinking that professional traders are already aware of this seasonality in the heating oil futures and factored this fact into the December contract prices.

Another thing that you need to always keep in mind is the date and time of release of Economic Reports. You can’t do anything about the breaking news. It is always a surprise. But as far as the Economic Reports are concerned, they have a fixed schedule. These reports are released at a fixed time and date of the week or the month. NFP is report is always released on Friday at 8:30 AM EST. So, if you are trading on Friday, you need tos top trading before 8:30 AM EST as the market usually gets too volatile around this time. There are traders who specialize in trading the NFP Report. But if you are not specifically trading NFP Report, you need to stay away from the market around this time.

Always try to follow the media. Read the Wall Street Journal, Financial Times or the Bloomberg website regularly. This will give you a good idea of the fundamentals that are moving different markets. In case, you are trading agricultural commodities like coffee, cocoa, soybean etc., it may be difficult to find information on these websites. In such a case subscribe to a specialized newsletter that can keep you abreast of the changing fundamentals in these markets.

Now, no market functions in isolation. All market in the present time have become highly interconnected and interlinked. You need to understand the interrelationship between the futures markets and the stock market. What are the double and triple witching dates and how they might affect your trading or for that matter your investments. What starts in one market may soon spread to the other markets. The stock market crash of 1987 had started in the futures market. Similarly the recent stock market crash has its origins in the subprime mortgage market.

Now markets like crude oil, gold and US Dollar can significantly impact other markets. So never limit you scope to one market only. Always use intermarket analysis to figure out what is happening to the other market and how it can spread to the market you trade.

As a trader, you need to develop the practice of keeping a trading journal and developing your own checklist. In this trading journal, you should enter each trade. Try to analyse the market before entering that trade. After closing the trade, there should be a post analysis. In your checklist, always use multiple timeframe analysis. A trend might appear different on different timeframes. So you should check that the trend on the daily chart is in confirmity with the long term trend on the weekly as well as monthly charts.

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