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In up trends, every time price drops to the up trend line and then resume their advance, the trend line has acted as support to the price up trend. He stated that volume should expand in the same direction of the trend.

In an attempt to give more importance to more recent prices, different types of moving averages have been developed. A margined account is a leverageable account in which securities can be purchased for a combination of cash or collateral depending what your brokers will accept.

Retracement of prices often reverse when they reach the moving average level. Consequently when a trend line of long duration, which has been successfully tested many times, has been violated then an important reversal of trend has likely occurred.

You may not be aware of it, but if you do this, you are performing one of the basic experiments in probability. Also when a channel is in force we can respond to trend violation by having a recognizable entry level to trade the new trend.

I know of many professional traders who consistently year after year make money in the market. So let’s go over the basics.

If you are a very short term trader, then a moving average of as little as three days may be appropriate. He stated that volume should expand in the same direction of the trend.

Some brokers execute stops differently. However in a sideways moving market you can become out of sync with the trend and spend a lot of time being whipsawed.

Think of it like this, when you buy something you now own it. One way trader’s look to make sense from this seemingly unpredictable sea is moving averages.

If you are short a security you will buy it in order to close the position. For the purpose of this book we shall concentrate on technical analysis.

If it where not possible to make money trading because the markets are inherently random, then why do so many traders make money? For the purpose of this book we shall concentrate on technical analysis.

The difficulty arises because of the time factor. In addition to the three types of trends, Dow then went on to further qualify the trend by saying that the trend has three phases.

As an example, if you were to set a straight forward $300 trailing stop and the security moved in your favor by $1000, you could change your stop to be only $300 behind the price and lock in $700 of profit. In technical analysis, price movement in the opposite direction of the prevailing trend.

It is also not necessary for what I am trying to achieve and that is to give you a broad idea of how the markets work and some way to trade them. The normal bull/bear market cycle, usually 4 years in duration, would be entirely missed by choosing a four year moving average, a two year average would be frustratingly slow and you would be in and out of the market too late to make much, if any, profit.

If each day in the market were in fact an independent event then it would be impossible for you to make money from it consistently. The ideal will be when all three trends are in unison, but this is not a prerequisite, as intermediate trends can be substantial in both time and price.

The main point I want you to take away from the Dow theory is that there are three types of trends, a primary trend, a secondary trend and minor trends. However you approach the stop price, it is a level beyond which you are not prepared to give up profit, or where a position slips back to evens or a small loss.

The rest of the time prices will trade more or less in a side ways range. The actual theory is fairly straightforward to explain and sensible if you take the time to think about it.

This is how I approach the market but at the same time I am aware of any big announcements that may be coming out. An order to buy or sell when a price is fixed.

The Market Has Three main Trends. It’s important to insure that your stop is canceled if you close your position.

We will be going into this in more detail in future chapters when we cover learning to trade. For the purpose of this book we shall concentrate on technical analysis.

There are four commonly used moving averages: simple, smoothed, weighted and exponential. The loan in the margined account is collateralized by the security.

Next the market goes to R2 and then retraces back to S2. The price of a given security moves in trends.

I know of many professional traders who consistently year after year make money in the market. An up trend is present when prices make a series of higher highs and higher lows.

Current trades still held open in customer's account. To draw a trend line, draw a straight line from the lowest low of the period to the next lowest low.

It would be too exclusive a trading strategy to ignore these opportunities and only trade when all three trends are in harmony. The loan in the margined account is collateralized by the security.

I have put a 20 period moving average of the closes just as a visual guide and reference point. In this way you lock in profits and you are still in the game should the trade continue to go in your favor.

Some brokers do not offer this. Also, when a security nears its entry level watch very carefully how it trades.

If it where not possible to make money trading because the markets are inherently random, then why do so many traders make money? Now, if you want to buy a security you will have to pay the price at which traders are prepared to sell to you at.

The development of support and resistance levels is probably the most noticeable and reoccurring event on price charts. Also similarly with support.

It is very important to understand the concept of support and resistance. Changes in interest rates, government announcements, etc.

Now convinced that the buyers have the upper hand, buy. If each day is an independent event then the markets must be random.

It is important to realize that you must know the time frame you intend to trade. Technical analysis is the science of human behavior.

In up trends, every time price drops to the up trend line and then resume their advance, the trend line has acted as support to the price up trend. Next our established trend line was broken with a close below the line and the last piece of evidence was when we had a close below the support.

He stated that volume should expand in the same direction of the trend. Here’s where it gets interesting.

If I enter a trade from the long side I will place my stop at the next lowest support. Set the rules and ALWAYS follow them.

Simple Moving Average This is the most widely used and is simply calculated by adding up a set of values and dividing the total by the number in the set. Some brokers execute stops differently.

No one knows the future, but paying attention to how a security is trading will certainly help you make more profitable decision. Now this is important because later on as we discuss this it will play a major roll in our analysis.

Obviously it would need to close back above the 9 period moving average in an up trend. Since the coin is a "fair" one, it is just as likely to fall head as tails.