Stock market dealing

[Justin Passing]

#Indicators
That's the term used for things which help guide.
You can use them to indicate where to buy and sell, directly. They won't always be right, but most of the time. You can combine different ones looking for "confluence" - agreement.
They're mostly based on either a Moving Average of the price, or the Volume of buys and sales, or both.
It's important to realise they're all Lagging - none of them predict the future, though some try, using a sort-of momentum idea.
You can usually access dozens on a chart. Have a play.
They can quite useful for "swing" trading/investing, where you use the fact that all prices go in waves. You should read about them, at least.

Here are two

The price of the "instrument" (a name for any stock, bond, fund, etc) here is the one marked POLR for Polar Capital, it's on the London exchange.
The pink/green histogram bars are Volume. Taller is more, green is up pink down. On this scale not so useful, much moreso on very short term charts.
The steppy purple line and the pnk dashed one, are both something referred to as SAR or Parabolic SAR. You can look up all of them at Investopedia, linked from the Indicators heading.
The difference between th two is sensitivity, which you can fiddle with in their Settings ( always marked "..." ).
In this case they're timing/damping settings. As you can see, the steppy one ignores more of the wiggles. Buying and selling has a cost overhead, and timing errors, so doing it too frequently is often a mistake.

You can see where the Sell is indicated, the price is dropping. Being in cash there might save you from a big drop, so the error if any, is a sort of insurance. Notice that where The Buy is indicated, the price is actually HIGHER than where you sold, so with hindsight you would have been better just holding on.
If you look at the dashed line though, see that if you had reacted as soon as the line went FLAT, you would have got an advantage, just.

School maths - remember that the slope of the price line is the first derivative.
Like speed in a car, positive means you're making progress.

The second derivative is like acceleration/decceleration.
If you want an early sign to "get out of" (or into) an instrument, you react if the slope is starting to go flat. The speed, while still positive, is starting to reduce, like you're braking.
The rate of rise is reducing.
If you get out early, you miss some distance/ price increase, but you don't lose any money.
An Indicator which USES that idea is called MACD .
It shows where a TREND is not being conformed with by the price.
" a "divergence" is the situation where the MACD line does not conform to the price movement, e.g. a price low is not accompanied by a low of the MACD." That's what you look for, with this indicator.
If you follow say the S&P 500, it'll show that, perhaps 2,3,4 times a day. One of them might be wrong for a very short time.
On the lower part of the chart, MACD, you'd buy where the blue line goes above the red.
Again, you can change the numbers referring to the lengths of the periods it uses as moving averages. The default ones 12,26,9 are OK for swing trading, ie days to a few weeks. . For day trading or other periods, ask AI, it'll tell you how to alter them.

One reason to USE these indicators, along with some others (eg Anchored VWAP, or long term Moving Averages (50 day, for example) and those LEVELS I go on about ) is that the trading bots use them. So you buy when they buy, and the price goes up. Jolly good.


Questions?

 

[Justin Passing]

The SM has been "on one" for a few weeks now. It is not taking MUCH notice of the Iran war. Even Oil is not changing much (yet?).
It's been responding largely to the happy times for three memory chip makers, Sandisk, Micron, and SK Hynix, with similar performance from Samsung, in Korea alongside SK Hynix.



That's got a bit overheated now, and there are pressures of course on oil supplies to the far east. They'll be mostly OK for a very few weeks, then all hell could break loose. Same, when Trump starts bombing again.
Nvidia has been lacklustre, relatively. It is the most important single company in Tech/AI. It release results on Wednesday, and I'll be out of much of the rapidly rising stocks in the market again, by then. Excellent results can trigger a massive drop if they aren't what people expected, and then it all rises. I'd try to catch that rebound, it's safer.
The "fast" stocks are down 5% in the last day or so, but still up 80% in the same period . I am "overweight" in those.

With hindsight - and I did think of it at the time but didn't act, I should have sold stuff. Ordering Wednesday night. It would have sold Thursday, and missed most of the wobble down. I did see a flattening but not enough. That would have been Insurance for if the market goes down 30%. I didn't so I'll hope and HODL. I'm out of the fastest movers, for small losses, but a day late. I've bought sensible stocks which were hit over-badly, while they were low. Some have come up already.
Some people have "put" options which pay out if the market drops say 20%.

 

[Odds]

“The sad truth is we are in hock to the bond markets … We are already paying many billions more in debt interest than we would be if markets were charging us the same as they are charging other countries. And it is notable that the premium really began at that moment of maximum instability – the Truss premiership”.

Paul Johnson

 

[Justin Passing]

Stock market was in Stupid mode today. Again.
Memory makers like Micron, Sandisk, SKHynix, and a few other niches like Space companies, quantum computer cos, anda few others are going nuts.
They go up so much in a day you can nearly double your money at 5:1.
So I did. Well Micron went from 750 to 913 so I got some of that, x5.
It's similar stocks, all the time., but not every day, so they aren't hard to spot.

It can't continue - can it?
I have funds in several accounts which I try to leave alone. They're up a several times the % the S&P 500 is up since start of year, but it could all come tumbling down tomorrow. I don't manage to leave them alone, so I'm always fiddling. It takes up too much time.

Enough.
Every stock there is, and most bonds, will take a dive if the SM collapses. The stuff making little growth dives with the rest, nothing is safe.
Most of the safer bonds which I used to quote, have vanished. So I'll sell up and use funds which are safe. They only slightly beat inflation, but are safer than a building soc and give better returns.
That'll do.
If the SM and Trump calms down, I may put some in growing sectors, from time to time. The AI bubble could pop, or take a big "correction" any time.
Just for amusement, I can keep a lump to play with on a daily basis when I feel like it, going to cash every night. Just 2-3% say.
I'll do that with Spread Betting, to save buggering about with Tax. It's the same as trading, just with a different name.

I may leave bit in $3KOR (S Korea) when it seems right. That's gone from 2900 to 4300 in the last 4 days.
And $SOXL (4x semiconductors) That's up 7.3x since April 1st.