Keep Investing inDope Stocks

K.i.D.S. - a Trader gang reference

Attention: TRADERS, SCALPERS, INVESTORS

YTD DAILYYEAR-TO-DATE

What is technical analysis?

Technical analysis is a method of forecasting the future movement of share prices by studying past market activity like prices and volumes, using charts and other financial tools.

There are several benefits of using technical analysis:

• Focuses on price movement, so the necessary data is easily available • Trends and patterns are easily identifiable• The Relative Strength Index (RSI)• The Moving Average Convergence Divergence (MACD) • The Stochastic Oscillator • Darvas Box Theory

What is the Relative Strength Index (RSI)?

The RSI is an oscillator indicator. Welles Wilder created the RSI in 1978, to measure relative changes that occur between the closing prices of stock over a period of time. This information can be used to determine overbought and oversold conditions, which help traders determine when to enter and exit the market. It is usually displayed below the chart indicating the price movement of a stock.

The RSI will always move between 0 and 100. As suggested by Wilder, a value above 70 is in the overbought zone, while a value below 30 is in the oversold zone.

Calculating the RSI is a two-step process. First, the average gains and losses are identified for a specific time period, say, fourteen days. The absolute gains are added up and divided by fourteen. Similarly, the absolute losses are added up and divided by fourteen. The ratio of average gains to average losses is known as the relative strength.

To further calculate the RSI, the following formula is used:

RSI = 100 - 100 1+RS

The RSI is presented on an individual chart, or below the price graph. The indicator has an upper line at 70, a lower line at 30 and a middle dashed line at 50. Wilder recommended a tracking period of fourteen days.

Interpretation of RSI

Wilder posited that when the price of stock rallies rapidly, it will be considered overbought at some point. Similarly, if the price falls continuously, the stock is oversold

Technical Analysis -In both cases, Wilder theorized that a reversal is imminent. Therefore, the RSI indicates an upcoming reversal of trend, whether it is downwards or upwards. Traders should also watch the volume indicator to understand if interest in the scrip is waning, and whether other traders are starting to book profits, or accumulate more shares.

The RSI gives three types of trading signals – divergence, charting signals and the level of the RSI, in order of importance.

1. Bullish divergences: which give buy signals, occur when the price falls to a new low, but the RSI makes a shallower bottom in comparison to the previous. It is advisable as soon as the RSI turns upwards from its second trough. A bearish divergence is a sell signal. It occurs when the price of a share rallies to a new peak, but makes a lower top than the previous rally.

2. When the RSI breaks its downtrend line, a trader should place an order to buy above the price trend line. When it overcomes a steady uptrend line, a trader should place an order to sell short below the price trend line.

3. When the RSI crosses the oversold line of 30, one can interpret it as a buy signal. When the oscillator crosses the overbought line of 70, it is a good time to sell.

What is MACD?

MACD is Technical Analysis indicator that was developed by Gerald Appel in 1970 to spot changes in stock movement and the underlying trend. It is a collection of three signals that are calculated from the historical prices of the stock – namely the MACD line, the Signal Line and the Divergence.

It is broadly a momentum indicator that shows the relationship between two moving averages of price i.e MACD is calculated taking into account the difference between a short term Exponential Moving Average (12 days) of a stock and longer term Exponential Moving Average (26 days) of the stock against the Signal Line which shows the 9 day Exponential Moving Average.

How is MACD calculated?

An MACD chart consists of a two coloured lines –the MACD line and the MACD Signal line. The MACD line is calculated by by following this process -1. Calculate a 12 day EMA of closing prices2. Calculate a 26 day EMA of closing prices3. Subtract the longer EMA in (2) from the shorter EMA in (1)

The the MACD Signal line is calculated by taking the 9 day exponential moving average of the stock.

ARITHMETICCAVEMAN

STATISTICS BINARY DATA

INTERNET SEARCH ENGINES

SOCIAL MEDIA

E-COMMERCE

EARTH FORMED

"Top-Down Approach of the world from a profitable trader"

-Sumant C.@myTraderGang

In response to Maslow's Motivational theory, Trader Gang

was established.

Understand the system before investing into

anything. Start with dinosaurs and

perhaps include Trilobites. Now, drill down to Gigabytes &

Terabytes.

We're the aliens...

A TRADER GANG PHILOSOPHY

B.C.

1970s

1990s

2000s

2005s

When the MACD line i.e Red Line falls below the Signal Line, it indicates a bearish signal and is taken as an indication to ‘Sell’.

When the MACD line goes above the Signal line, it indicates a bullish signal and is an indicator to ‘Buy’. The crossovers between the lines point to a divergence that would eventually converge helping the trader predict the direction of the price movement.

"When there were constant losses an occasional small gain would give me hope, like the carrot before the donkey’s nose”.

“This is how I applied my theory: When the boxes of a stock in which I was interested stood like a pyramid, on top of each other, and my stock was in the highest box, I started to watch it. It could bounce between the top and bottom of the box and I was perfectly satisfied. Once I had decided on the dimensions of the box, the stock could do what ever it liked but only within that frame. In fact if it did not bounce up and down I was worried, no bouncing, no movement meant it was not a lively stock”.

Read about the Box Theory here! <http://vantagepointtrading.com/wp-content/uploads/2010/05/How-I-Made-2000000-in-the-Stock-

Market.pdf> WallSt.

Tips

DARVASBOX

Use of Fibonacci #'s in Technical AnalysisFibonacci numbers are commonly used in Technical Analysis with or without a knowledge of Elliot wave analysis to determine potential support, resistance, and price objectives. 38.2% retracements usually imply that the prior trend will continue, 61.8% retracements imply a new trend is establishing itself. A 50% retracement implies indecision. 38.2% retracements are considered nautral retracements in a healthy trend.

ABC'sPrice objectives for a natural retracement (38.2%) can be determined by adding (or subtracting in a downtrend) the magnitude of the previous trend to the 38.2% retracement. After the 38.2% retracement the stock should break through the previous swing point(B) on heavier volume. If the volume isn't there the magnitude of the move will usually be diminished, especially on very low volume.

A-B =C-D when B-C =38.2% of A-B

61.8% retracements are warning signs of a potential trend changes

Fibonacci analysis evaluates the short term (30 days) intermediate term (60 days) and long term trends (120 days) and retracements. Stocks that retrace 38.2% or less of a trend will usually continue the trend. Retracements exceeding 61.8% indicate a reversal. Alerts will include ABC's up/down (multiple 38% retracements) and various reversal signals

TRADERGANG SIGNS

Stay Tuned for Real-Time Alerts and Profitable Charts!

KUTV - jumped 60% on Friday after my morning alert as it broke through previous resistance.

RWLK - jumped 25% on Friday and I was able to scalp 14% in under an hour!

MicroCaps, SmallCaps, Mid-Caps, LargeCaps, BlueChips

TRADER GANG

TRADER GANG