Questions About Trading
How long does it take to trade with success?
It takes time to develop your technical knowledge and trading skills, but it also takes time to develop a winning mindset. Most people seem to take 1-3 years to be competent traders. Some people can learn quickly, others take more time, and a lot depends on what path you take and how much time you invest in learning. It also helps if you have experienced at least one bull and bear market cycle because market conditions can greatly affect your results.
What does 50/50 mean or stand for?
50/50 is the name that was given to two trading signals that occur before a stock should be considered for purchase. The two signals are: 1) when price crosses above a rising "50" exponential moving average (EMA) and 2) when the Relative Strength Index (RSI-20) indicator crosses above the "50" level. The 50/50 signals alone are not an automatic reason to buy a stock, but they alert the trader to a potential for a trade setup. You can also apply the signals to stocks you are researching, and if a stock's price is below the 50-EMA and/or RSI-20 is below 50, then you probably want to avoid buying it (in a portfolio, your losers will probably show fit these inverse signals).
What is the ProTrend Methodology
The ProTrend Methodology is an approach to trend trading that incorporates the 50/50 signals in the analysis of stocks and the stock market; the 50/50 signals are an essential part of the 50/50 trading strategies which can be applied to range breakouts, trend pullbacks, and trend reversals. There are 4 main strategies which have been dubbed the "awesome foursome."
What are the Awesome Foursome?
The Awesome Foursome refers to four trend-trading strategies that are the mainstays of the ProTrend Methodology. The trades are: 1) 50/50 Breakout Riser, 2) 50/50 Higher Riser, 3) 50/50 Low Riser, and 4) 50/50 Reversal Riser. Almost any stock can be trend-traded using one of these strategies, or the strategies can be adapted for special situations.
What is the 50/50 High Riser Strategy?
The 50/50 High Riser is a trend-trading strategy that seeks to enter very strong uptrends during a price pullback to the 50-EMA. The basic setup will have a rising 50-EMA and a falling 10-period simple moving average (10-SMA) that remains above the 50-EMA throughout the pullback. The best High Riser trends will have a continuously rising 50-EMA, and this indicates strong institutional buying and support.
What is the 50/50 Low Riser Strategy?
The 50/50 Low Riser is a trend-trading strategy that seeks to enter strong uptrends during a deeper price pullback than the High Riser. The basic setup will have a rising 50-EMA and a 10-period simple moving average (10-SMA) that crosses under the 50-EMA and RSI-20 falls below the 50 level. The Low Riser setup is not complete until the 10-SMA crosses back above the 50-EMA and RSI-20 is back above the 50 level. While the trend is less strong than the High Riser, the Low Riser allow the trader to buy a stock at a much lower price than the High Riser.
What is the 50/50 Breakout Riser Strategy?
The 50/50 Breakout Riser is a trend-trading strategy that seeks to enter a "potential new" uptrend when price breaks out of a long period (several months) of sideways movement. The length of time for the range period can vary, but the best setups have been nontrending for several months. During the range period, the 50-EMA will move sideways, and the 10-SMA will generally cross below and above the 50-EMA a few times. At some point (perhaps after earnings are released or there is very positive news), price breaks above the highest recorded price of the range period. RSI-20 must be above the 50 level as price breaks out from the range, or there is no valid signal to enter.
What is the 50/50 Reversal Riser Strategy?
The 50/50 Reversal Riser is a trend-trading strategy that seeks to enter a "potential new" uptrend after price begins to move upward after have been in a long period of decline.The basic setup is a 50-EMA that forms a higher low, and the 10-SMA crosses above the 50-EMA. Once price holds support above the 50-EMA, the trade is entered on a new high, and RSI should also make a new high above the 50 level. The strategy does not try to predict the bottom of the downtrend; instead, it waits for price to gain strength and begin rising. Reversal Risers generally take longer to rise due to overhead resistance, but they are well suited for traders willing to hold a stock for several months to years.
What is a growth stock?
A growth stock is one that is expected to have above-average gains when compared to other stocks in the market. They are often newer companies that are beginning to grow and expand, and they generally have new products or services that are just entering the marketplace. Growth-stock companies generally reinvest their profits (if they have them) back into the company, so they usually DO NOT pay a dividend. Traders profit from growth stocks due to the "capital gains" that are generated when the stock is sold at a higher price than it was bought. Growth stocks will usually have quarterly earnings growth that outpaces most stocks in the market. These stocks are highly sought by traders because of their potential for high returns.
What is a dividend stock?
Dividend stocks, also called income stocks, provide investors with a regular source of income in the form of dividends that are usually paid quarterly. Dividend-stocks tend to be from older, well-established companies that pay out a portion of their earnings to shareholders. These companies are not in a high growth phase, but they will rise with the stock market in periods of economic expansion. Sometimes, a dividend-stock can undergo a period of growth if their products/services are suddenly in demand. In this case, the trader will benefit from both capital gains and dividend income. There are four key dates to know if you plan to invest in dividend stocks: 1) Declaration date, 2) Record date, 3) Ex-dividend date, and 4) Payment date.