San-Ku – Three Gaps Up As mentioned in Japanese candlestick analys is, the num ber three plays a very relevant part of the investment doctrine. Many of the signals and formations consist of a group of three individual signals.…
Now turn the tables over. The same enthusiasm demonstrated by a gap to the upside is just as pertinent for sellers on the downside. A gap down illustrates the desire for investors to get out of a stock very quickly. …
Figure 5 – Standard Pacific Corp. Many investors are afraid to buy after a gap up. The rationale being that they don’t like paying up for a stock that may have already moved 3%, 5%, 10% already that day. Witnessing…
How Do They Produce Profits With Candlesticks? Gaps (Ku) are called windows (Mado) in Japanese Candlestick analysis. A gap or window is one of the most misunderstood technical messages. Most investment experts advise not to buy after a gap. This…
Money Making Candlestick Formations Candlestick Line Hammer An important bottoming candle-stick line. The hammer and the hanging man are both the same line, that is a small real body (white or black) at the top of the session’s range and…
PRICING OPTIONS An option buyer has the right but not the obligation to exercise on the seller. The worst that can happen to a buyer is the loss of the premium paid by him. His downside is limited to this…
PAYOFF PROFILE FOR BUYER OF CALL OPTIONS: LONG CALL A call option gives the buyer the right to buy the underlying asset at the strike price specified in the option. The profit/loss that the buyer makes on the option depends…
ARBITRAGE: UNDER-PRICED FUTURES. BUY FUTURES. SELL SPDT Whenever the futures price deviates substantially from its fair value, arbitrage opportunities arise. It could be the case that you notice the futures on a security you hold seem under-priced. How can you…
SPECULATION, BEARISH SECURITY, SELL FUTURES Stock futures can be used by a speculator who believes that a particular security is over valued and is likely to see a fall in price. How can he trade based on his opinion ?…
SPECULATION. BULLISH SECURITY. BUY FUTURES Take the case of a speculator who has a view on the direction of the market. He would like to trade based on this view. He believes that a particular security that trades at Rs.…