Recently TradingSim launched a free trading simulator that is specifically geared for day traders.

Day trading is unlike other trading strategies in that all decisions must be made quicker, and you have to rely on strict rules to protect yourself from monumental losses. TradingSim aims to help traders learn and practices this type of active stock trading without risking any money.

More about TradingSim

TradingSim streams tick data through their web interface, allowing users to practice/fine tune their day trading skills through a historical market replay. They store the last 5 weeks of trading data for all Nasdaq symbols so users can trade any symbol they want for any of those days. The app has been taken one step further and offers the time and sales information as well as the level 1 info.

How To Use TradingSim

TradingSim is pretty easy to use and is a fun resource to play around with.

1. Pick a stock and let it stream.
2. Based on the current setup, determine what the proper trade would be.
3. Once you have made your decision, fast-forward the streaming chart and see what the actual result was.

Tradingsim requires no downloads and is completely web based (as compared to the other apps which force a download). Additionally, there is no need to have a brokerage account. You just have to create a free account to actually transact through the simulator (its for legal reasons)

Best of all, the app is completely free to use! Try out TradingSim.

I reviewed the service when it first came out a while back, but have never really looked at it since, so I thought I would give it another go. You can check out the video review below.

Overall, it is a great resource for TD Ameritrade users and doesn’t cost anything, but I wouldn’t necessarily rush over to sign up just for it. There are other similar applications, such as Finviz.

With the help of MarketClub, we were able to get this video analysis of gold together. Who knew that we would actually use this as more of a teaching tool.

This video is packed with some pretty interesting content…

Of course, I have already mentioned energy fields, which equivocates to little consolidation breakout patterns. This video also takes a look at the head and shoulder examples.

Take a second to watch this video and see how a professional breaks down gold and uses technical analysis to do it.

Watch video – Energy Fields

• Support and Resistance (StockCharts)
• Support and Resistance Basics (Investopedia)
• Support and Resistance 2 (Wikiepedia)
• Technical Analysis Basics: Support and Resistance (Million Dollar Journey)
• Support and Resistance Part 1 (Learning Markets)
• Support and Resistance 3 (Incredible Charts)
• The Simple Keys To Winning Trades (Wealth Daily)
• Support and Resistance 4 (Swing-Trade-Stocks)
• Support and Resistance Levels (The Stock Bandit)
• Understanding Support and Resistance (About)
• Support and Resistance 5 (Metaquotes)
• Understanding The Importance Of Support And Resistance (RightLine)
• Support and Resistance Reversals (Investopedia)
• Day Trading Lessons – Support and Resistance (YouTube)
• Support and Resistance Trading Benefits (TradeStalker)
• Understanding Support and Resistance 2 (Traders Log)

The idea is pretty simple. An ascending top is formed with the combination of higher lows and higher highs. Common in a bull market, a prime stock is usually within a positive trend upwards.

It is important to remember that these movements won’t last forever. Eventually all buyers will be in and the stock will begin to drop. If you use stops, then a good point would be at the most recent low before the move upward.

Just like many formations, there is also a bearish indicator, which is essentially the complete opposite of ascending tops. Ascending bottoms are created with lower lows and lower highs.

Essentially it measures the difference between two different exponential moving averages. Allowing you to determine the trend of a current stock.

All the terminology and ideas can get congested in text, so we have created this video that clearly shows how to accurately use MACD to predict any future trend.

Before watching the video keep these ideas in mind:

• Positive MACD – when the gap between the 12-day EMA and the 26-day EMA is widening, which represents that the rate-of-change of the faster moving average is higher than the rate-of-change for the slower moving average. Positive momentum is increasing, indicating a bullish period for the price plot.
• Negative MACD – when the negative gap between the faster moving average and the slower moving average is expanding. Downward momentum is accelerating, indicating a bearish period of trading.

What is a Gap?

At its core, a gap is defined by a stock’s price essentially jumping up or down from the current value. A common place to experience a gap in a stock’s price is between the closing of one market day to the opening of the next. This happens because buy or sell orders are placed before the open which causes the price to open higher or lower than the previous day’s close.

Example: Stock X closed on Monday at $47.07, but they reported great earnings after the market closed. Suddenly an influx of buy orders are placed for Stock X between Monday closing and Tuesday morning. Once the market opens Tuesday the price has suddenly jumped to $48.58.

Another popular gap time is when a company has recently been bought. Usually the company has been purchased at a premium (meaning higher than the actual stock price), which causes the price to gap up higher.

Problems with Gaps

While gaps can be a good thing, they also usually don’t come with any type of plausible support. Many times you will see a stock gap high followed by eventually profit-taking and other type of selling, which may cause the stock to drop back down to where it first gapped.

Important Notes and Reminders

• Be weary about entering a stock after it has already gapped.
• Gaps created by emotion are more likely to recover back to normal price; Gaps caused by factual data are more likely to stabilize where they are.

Fibonacci analysis is a simple study that allows traders to forecast levels of support and resistance and project price targets. The Fibonacci tool is study just like a moving average. You input your parameters, and information will be given to you. The data is objective, but your inferences based on the data are subjective.

Essentially the Fibonacci tool allows you to measure the a stock’s previous trend from the low to the high point. Thereafter, the tool will spit out 3 levels of retracement: 33%, 50%, and 68%. All three can be used as support or resistance depending which side they are coming from. The tool can also be used to determine if a stock is within a trading range.

The Fibonacci is a very powerful tool that is easy to use, and will instantly improve your trading. To learn more and see it in action watch the video below:

Watch the video – How to use the Fibonacci tool

Official Terminology

Triple Top – 3 equal and successive highs followed by a break of support following the last high. A bearish pattern.

Triple Bottom – 3 equal and successive lows followed by a break of resistance following the last low. A bullish pattern.

Overall Concept

Whether we are examining a triple bottom or triple top, everything is pretty much the same except for the difference in sentiment each gives.

In a triple top, a reasonable price target is the length between the highs and support.

The triple top and bottom are not complete until a breaking of their respective support or resistance. In order to limit risk, it is best to wait till a breaking has occurred before executing any trades.

Concept in Action

The chart above shows exactly how triple top looks and reacts after the third high. A triple bottom would resemble exactly the opposite of this chart.

While all three highs in a set do not have to be exactly equal, the closer they are the better chance of seeing more accurate results.

Important Notes and Reminder

• The pattern is not complete until breaking of support or resistance.
• A good price target is the distance between the triple set and point of breakout.
• A full triple top indicates a bearish sentiment; a full triple bottom indicates a bullish sentiment.

Official Terminology

Simple Moving Average (SMA) - The mean of closing prices during a given time period.

Exponential Moving Average (EMA) – Also known has weighted moving average, the EMA is similar to SMA but more weight is given to most recent prices in relation to the time period.

Overall Concept

Unlike support, resistance, and other patterns that are pretty much subjectively inferred, the moving average is a study that allows traders to select a time frame and the output does not vary; however, what traders decide based on the moving average can differ.

Although one can create the time frame of their choice, the more popular ones include 10, 20, and 200 days. The time period used depends on the time frame of the trader. Day traders are more than likely to ignore a 200 day moving average and opt for something smaller such as 10 day moving average.

Most patterns require a combination of different resistance, supports, and other straight lines, which can sometime lead to a wider than desired target. Moving averages are rarely straight lines and allow traders more specific price targets.

It is best to use moving averages only after a current trend or pattern has been established.

SMA vs. EMA – While that actual difference between SMA and EMA is minimal, each one is optimal for different traders and different time frames. EMA tends to respond to movement much faster than SMA because more weight is put on the recent prices; however, sometimes it could overshoot proper targets.

Quick Check: You are a long term buy and hold trader. Stock X just crossed the 10 day SMA. Is this of any significance to you?

Answer: No, because the crossing of that 10 day moving average is only significant if you are looking for short term or swing trades. If you plan to buy and hold, then longer term moving averages such as the 200 day moving average is more important to you.

Before making any final decisions about support and resistance make sure to check to the moving average that is best suited for your time frame.

Concept in Action

The stock chart above shows the 100 day moving average (blue line) of the stock. While the average was below the current price we saw a constant uptrend. Eventually the stock got in a trading range, which causes the moving average to be useless. Once the average became greater than the price, the stock headed downwards.

The last we see is the stock about to move into another trading range. At this point we would be looking for the moving average to cross back under the price, which it eventually did and the stock headed back up.

Important Notes and Reminders

• Moving averages are mostly used to determine overall change in trend for a specific time period.
• Moving averages are an objective study, which creates subjective decisions.
• Longer your time frame, the longer moving average time frames that should be of importance to you.
• Use moving averages only after a trend has been established.
• Moving averages are useful to sort out stocks in scans.