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What are Ascending and Descending Triangles?

What is an ascending triangle? The ascending triangles form when the price follows a rising trendline. However, the trend consolidates, failing to make new highs. Ascending triangles are considered to be continuation patterns. Therefore, a break of the resistance prompts a rally. The pattern is negated if the price breaks below the upward sloping trendline. How can we trade ascending ... Read More »

What is ADX or Average Directional Index?

What is ADX? Average Directional Index (ADX) determines the magnitude and strength of a particular trend. ADX does not indicate direction of the trend, it merely states the strength of the trend. ADX is scaled from 0 to 100, 100 being the highest trend possible and 0 being no trend whatsoever. Generally, a reading above 60 is considered rare. Therefore, ... Read More »

What is a Symmetrical Triangle?

The pattern is identified by two discrete trendlines. The first trendline connects a series of lower peaks, while the second trendline connects a series of higher troughs. Symmetrical triangles generally form during consolidation and the volatility tends to decline as the pattern progresses. Symmetrical triangles tend to be neutral and can signal either a bullish or a bearish situation. Therefore, ... Read More »

What are Bollinger Bands?

What are Bollinger Bands? Bollinger Bands plot standard deviations above and below a moving average. Typically, Bollinger Bands use a 20-day simple moving average. On a chart, the middle line represents the moving average and the two outer lines represent the Bollinger Bands. The upper Bollinger Band is typically calculated two standard deviations above the 20 SMA. The lower Bollinger ... Read More »

What are Rising and Falling Wedges?

What is a rising wedge? Rising wedges form when the market makes higher lows and higher highs within a contracting range. The pattern is considered to be a continuation pattern. A break of an upward line of the formation, allows for the price to ascend. The pattern is negated if the price breaks the lower trendline of the formation. How ... Read More »

Bullish and Bearish Flags.

Bullish Flags In a bullish flag formation, initially the price shoots up forming a ‘flagpole’. Thereafter, the price consolidates by retracing in a narrow range with slight downward or horizontal bias. The high and lows of the retracement are connected to form the flag of the formation. Bullish flags are typically continuation patterns. Therefore, a break of the higher trendline ... Read More »

The Importance of Disciplined Trading.

A trader who uses discipline in every aspect of his trading is called a disciplined trader. When you trade with discipline you ensure that all your investments are systematic and well timed. Hence you ensure a steady flow of profits. If you want to invest successfully in the financial markets (stocks, options, futures, forex, etc,,) you need to be a ... Read More »

Trading and Emotions.

Emotions and trading are two opposite poles. For example, in any business deal if some one gets emotional, he/she might lose the deal. Emotional involvement may be of two kinds. One is getting emotive in a positive way and another one is to get emotive in a negative way. Some guidelines are given below on how to remove emotions from ... Read More »

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