Divergence Trade..(Most Potent)......

When divergences between price and momentum indicators (roc, rsi & macd)arise, it can lead to some very profitable, high probability trades.
These set-ups are counter trend tactics, and as such, one must employ a hard stop in the event that the trend reasserts itself and you are on the wrong side. Contrast this tactic with the principle: “Trends have a higher probability of continuation than reversal.”
When you play for a momentum divergence trade, you are always playing for a target closer to the price the divergences commenced and playing for a possible shift in buying/selling pressure. Before attempting any such trade, I suggest researching further on this potentially profitable topic.

Some of the most popular Oscillators/indicators for uncovering price divergences include the MACD, stochastic, RSI, Ultimate Oscillator, rate of change, etc. You have to discover which indicator works best for you. Indicators are used as ‘training wheels’ until you can develop an intuitive sense of determining where the buying and selling pressure (momentum of the move) are diverging with the price action. This process takes time, yet indicators can help highlight these conditions. There is no perfect indicator to do this. I am using a fast MACD oscillator in my chart example. You can also spot divergences in other momentum oscillators.
Momentum precedes price in that a slowing of momentum indicates that a possible change in price is yet to come. Do not get caught in the trap of searching for momentum divergences all over the chart. Examine them at the (possible) end of mature trends for greater probability. Again, we are not seeking the end of a trend move (reversal), but just a retest and a small target. In fact, we are playing for a simple retracement swing against the direction of the prevailing trend. This illustration may help:
We are in a mature uptrend and price is continuing higher. A situation develops where the buyers are becoming less aggressive in their momentum (force of buying pressure) and momentum is declining while price is not.
Of importance to note (and the reason behind the divergence in the oscillator) is also price based. Note the steep rise of the previous swing up (creating heightened oscillator/indicator readings) and then the more gradual rise of the second swing up (creating a lower peak in the mathematical oscillator). This sets up the divergence while the reason for it is declining momentum.
If momentum precedes price, then in this case, a decline in momentum forecasts a decline in price as the most probable swing play. If buyers are less aggressive to raise their offers, then it won’t take much effort for price to fall and those who own the stock will begin to sell.
This chart highlights momentum divergences finally reversing the trend:
Divergences are difficult to quantify for a mechanical system, so this is one area discretionary traders may have an edge over programmers.
I did want to highlight another point through the use of various time-frames. Divergences and momentum concepts are valid across all time frames.
There are a few factors to be aware of when identifying momentum divergence plays:
• Momentum divergences are invalidated (and nonexistent) in range bound, consolidating markets
• Only look for momentum divergences in the context of a mature trend (however short the time-frame)
• Momentum divergences work best after a “three-impulse” pattern in a trend( That is two impulse moves followed with a consolidation/pause/sideays move with a final impulse move)
• Momentum divergences are to be played for a target (price correction) commensurate with the time cycle it is noticed and NOT in the higher time cycle.
• The best divergences resemble “double-top” or “double-bottom” chart patterns.
• Keep a stop in the market close to the last pivot point in the event that the strong trend reasserts itself and causes great losses.
• Exit divergence trades which do not resolve within a time parameter.
. Trading momentum divergences is a complex strategy and should only be attempted after repeated exposure and internalization of the price behavior that sets up the pattern.


courtsey: just nifty blog

Get Wiser laughing............

The Turtles
A turtle family decided to go on a picnic. The turtles, being naturally slow about things, took seven years to prepare for their outing. Finally the turtle family left home looking for a suitable place. During the second year of their journey they found a place ideal for them at last!

For about six months they cleaned the area, unpacked the picnic basket, and completed the arrangements. Then they discovered they had forgotten the salt. A picnic without salt would be a disaster, they all agreed. After a lengthy discussion, the youngest turtle was chosen to retrieve the salt from home. Although he was the fastest of the slow moving turtles, the little turtle whined, cried, and wobbled in his shell. He agreed to go on one condition: that no one would eat until he returned. The family consented and the little turtle left.

Three years passed and the little turtle had not returned. Five years...six years... then on the seventh year of his absence, the oldest turtle could no longer contain his hunger. He announced that he was going to eat and begun to unwrap a sandwich. At that point the little turtle suddenly popped out from behind a tree shouting, 'See! I knew you wouldn't wait. Now I am not going to go get the salt.'

[Some of us waste our time waiting for people to live up to our expectations. We are so concerned about what others are doing that we do not do anything ourselves.]
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The Frogs

A farmer came into town and asked the owner of a restaurant if he could use a million frog legs. The restaurant owner was shocked and asked the man where he could get so many frog legs! The farmer replied, 'There is a pond near my house that is full of frogs -millions of them. They all croak all night long and they are about to make me crazy!' So the restaurant owner and the farmer made an agreement that the farmer would deliver frogs to the restaurant, five hundred at a time for the next several weeks.

The first week, the farmer returned to the restaurant looking rather sheepish, with two scrawny little frogs. The restaurant owner said, 'Well... where are all the frogs?'.
The farmer said, 'I was mistaken. There were only these two frogs in the pond. But they
sure were making a lot of noise!'

[ Next time you hear somebody criticizing or making fun of you, remember, it's probably just a couple of noisy frogs. Also remember that problems always seem bigger in the dark. Have you ever laid in your bed at night worrying about things which seem almost overwhelming like a million frogs croaking? Chances are pretty good that when the morning comes, and you take a closer look, you'll wonder what all the fuss was about.]

Who is the teacher..??

Dedicating this story to a persistent "Dinesh Rishi"
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As she stood in front of her 5th grade class on the very first day of school, she told the children an untruth. Like most teachers, she looked at her students and said that she loved them all the same. However, that was impossible, because there in the front row, slumped in his seat, was a little boy named Teddy Stoddard.

Mrs. Thompson had watched Teddy the year before and noticed that he did not play well with the other children, that his clothes were messy and that he constantly needed a bath. In addition, Teddy could be unpleasant. It got to the point where Mrs. Thompson would actually take delight in marking his papers with a broad red pen, making bold X's and then putting a big "F" at the top of his papers.

At the school where Mrs. Thompson taught, she was required to review each child's past records and she put Teddy's off until last. However, when she reviewed his file, she was in for a surprise.

Teddy's first grade teacher wrote, "Teddy is a bright child with a ready laugh. He does his work neatly and has good manners... he is a joy to be around.."

His second grade teacher wrote, "Teddy is an excellent student, well liked by his classmates, but he is troubled because his mother has a terminal illness and life at home must be a struggle."

His third grade teacher wrote, "His mother's death has been hard on him. He tries to do his best, but his father doesn't show much interest, and his home life will soon affect him if some steps aren't taken."

Teddy's fourth grade teacher wrote, "Teddy is withdrawn and doesn't show much interest in school. He doesn't have many friends and he sometimes sleeps in class."

By now, Mrs. Thompson realized the problem and she was ashamed of herself. She felt even worse when her students brought her Christmas presents, wrapped in beautiful ribbons and bright paper, except for Teddy's. His present was clumsily wrapped in the heavy, brown paper that he got from a grocery bag. Mrs. Thompson took pains to open it in the middle of the other presents. Some of the children started to laugh when she found a rhinestone bracelet with some of the stones missing, and a bottle that was one-quarter full of perfume . But she stifled the children's laughter when she exclaimed how pretty the bracelet was, putting it on, and dabbing some of the perfume on he r wrist. Teddy Stoddard stayed after school that day just long enough to say, "Mrs. Thompson, today you smelled just like my Mom used to."

After the children left, she cried for at least an hour. On that very day, she quit teaching reading, writing and arithmetic. Instead, she began to teach children. Mrs. Thompson paid particular attention to Teddy. As she worked with him, his mind seemed to come alive. The more she encouraged him, the faster he responded. By the end of the year, Teddy had become one of the smartest children in the class and, despite her lie that she would love all the children the same, Teddy became one of her "teacher's pets.."

A year later, she found a note under her door, from Teddy, telling her that she was the best teacher he ever had in his whole life.

Six years went by before she got another note from Teddy. He then wrote that he had finished high school, third in his class, and she was still the best teacher he ever had in life.

Four years after that, she got another letter, saying that while things had been tough at times, he'd stayed in school, had stuck with it, and would soon graduate from college with the highest of honors. He assured Mrs. Thompson that she was still the best and favorite teacher he had ever had in his whole life.

Then four more years passed and yet another letter came. This time he explained that after he got his bachelor's deg ree, he decided to go a little further. The letter explained that she was still the best and favorite teacher he ever had. But now his name was a little longer.... The letter was signed, Theodore F. Stoddard, MD.

The story does not end there. You see, there was yet another letter that spring. Teddy said he had met this girl and was going to be married. He explained that his father had died a couple of years ago and he was wondering if Mrs. Thompson might agree to sit at the wedding in the place that was usually reserved for the mother of the groom. Of course, Mrs. Thompson did. And guess what? She wore that bracelet, the one with several rhinestones missing. Moreover, she made sure she was wearing the perfume that Teddy remembered his mother wearing on their last Christmas together.

They hugged ea ch other, and Dr. Stoddard whispered in Mrs. Thompson's ear, "Thank you Mrs. Thompson for believing in me. Thank you so much for making me feel important and showing me that I could make a difference."

Mrs. Thompson, with tears in her eyes, whispered back. She said, "Teddy, you have it all wrong. You were the one who taught me that I could make a difference. I didn't know how to teach until I met you."

(For you that don't know, Teddy Stoddard is the Dr. at Iowa Methodist in Des Moines that has the Stoddard Cancer Wing.)

Warm someone's heart today. . . I love this story so very much, I cry every time I read it. Just try to make a difference in someone's life today? tomorrow? just "do it". Random acts of kindness, I think they call it!

May all of your days be filled with random acts of kindness.

Pivot Points Trading (The Most Basic).....

Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations.

The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels.

Every day the market you are following has an open, high, low and a close for the day. This information basically contains all the data you need to use pivot points.The reason pivot points are so popular is that they are predictive as opposed to lagging.

Because so many traders follow pivot points you will often find that the market reacts at these levels. This give you an opportunity to trade.

If the market opens above the pivot point then the bias for the day is long trades. If the market opens below the pivot point then the bias for the day is for short trades.

The three most important pivot points are R1, S1 and the actual pivot point.

The general idea behind trading pivot points are to look for a reversal or break of R1 or S1. By the time the market reaches R2,R3 or S2,S3 the market will already be overbought or oversold and these levels should be used for exits rather than entries.

A perfect set would be for the market to open above the pivot level and then stall slightly at R1 then go on to R2. You would enter on a break of R1 with a target of R2 and if the market was really strong close half at R2 and target R3 with the remainder of your position.

If, after starting the day above the Pivot, the Price crosses back through the Pivot, the Pivot will act as a Resistance area. Pivot Points and Support and Resistance levels behave exactly like any historical Support and Resistance level.

Unfortunately life is not that simple and we have to deal with each trading day the best way we can. Combine these with simple channeling, retracement levels, past critical supports & resistances, SAR will enhance the success rate.
Pivot Points - Trading Methodology:
To make the discussion a bit less abstract, let's take a most superficial look at some simple trading methodology employing Pivot Points.
Step 1
"In general, if the day's Price Action starts above the Pivot, it will tend to stay above the Pivot.
This simple observation provides the basic rules for two of the simplest Pivot trading systems.
System 1:
Open is above Pivot: Buy
Open is below Pivot: Sell
System 2:
Place Buy and Sell stops bracketing the Pivot. Whichever is not filled acts as safety stop for the other.
These "systems" are very much too raw for my tastes. Too much chance of getting whipsawed. Let's take it one step deeper. Let's refine these simple systems just a bit more:
Step 2
First Fundamental Of Pivot Trading After the opening range (first 15-30 min. to one hour), if price is above/below the Pivot, Price Action will strongly tend to remain above/below the Pivot for the session.
Although this rule bids us to wait out the Opening Range and thus avoid much of the wildness and whipsawing, overlooking the next Fundamental Of Pivot Trading could be disastrous:
Step 3
If the market opens, or later trades at the extremes (R2, R3 or S2, S3), it will exhibit a tendency to trade back toward the Pivot. Thus, the general rule, 'Avoid buying the High or selling the Low', becomes increasingly more stringent as price moves farther from the Pivot.

I have picked 5 days of last week and what follows are some ideas on how you could have traded those days using pivot points.
........................26.10.09-Monday.......................
.........................27.10.09-Tuesday....................
.........................28.10.09-Wednesday.................
.........................29.10.09-Thursday.................
.........................30.10.09-Friday....................
.......Week starting 26.10(Mon) to 30.10(Fri).....
Keep those weekly, daily Pivots and fine tune them to perfection.

courtsey: just nifty blog

If you haven't done it, start NOW.....

Scholars and scientists, including Albert Einstein and Orville Wright thought enough of Jimmy Yen to vote him one of the top ten Modern Revolutionaries of the Twentieth Century. Yet all he did was teach Chinese peasants to read.

What made that so amazing was that for four thousand years reading and writing in China was only done by the Scholars. "Everybody" knew, including the peasants themselves, that peasants were incapable of learning.

That thoroughly ingrained cultural belief was Jimmy Yen's first impossible barrier. The second barrier was the Chinese language itself, consisting of 40,000 characters, each character signifying a different word! The third barrier was the lack of technology and good roads. How could Jimmy Yen reach the 350 million peasants in China?

Impossible odds, an impossibly huge goal-and yet he had almost attained it when he was forced (by Communists) to leave his country.

Did he give up? No. He learned from defeat and expanded his goal: Teach the rest of the Third World to read. Practical reading programs, like the ones he invented in China, started pumping out literate people like a gushing oil well in the Philippines, Thailand, Sri Lanka, Nepal, Kenya, Columbia, Guatemala, Indonesia, Bangladesh, Ghana, India-people became literate. For the first time in their entire genetic history, they had access to the accumulated knowledge of the human race.

For those of us who take literacy for granted, I'd like you to consider for a moment how narrow your world would be if you'd never learned how to read and there was no access to radios or TVs.

180,000 Chinese peasants were hired by the Allied Forces in WW1 as laborers in the war effort. Most of them had no idea-not a clue-where England, Germany or France was, they didn't know what they were being hired to do, and didn't even know what a war was!

Try to grasp, if you will, the vacancy, the darkness, the lack that existed in those people because they couldn't read. Jimmy Yen was a savior to them.

What was the secret of Jimmy Yen's success? He found a real need, and found in himself a strong desire to answer that need. And he took some action: He tried to do something about it even though it seemed impossible. He worked long hours. And he started with what he had in front of him and gradually took on more and more, a little upon a little.

The English author Thomas Carlyle said,

"Our main business is not to see what lies dimly at a distance, but to do what lies clearly at hand."

And that's what Jimmy Yen did. He started out teaching a few peasants to read, with no desks, no pens, no money, no overhead projectors. He started from where he found himself and did what was clearly at hand.

And that's all you need to do. Start now. Start here. And do what lies clearly at hand.

Instead of hoping for a miracle, it's much wiser to act on proven principles. Most of all, whatever your present situation is, it's important to get started today. If you put together a plan and follow it, you'll be amazed at the progress you can make.

Inspired from Jimmy Yen's Life.