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Many traders use Bollinger Bands to help them identify different stages of a market move including breakout points, continuation patterns, corrections and tops and bottoms.

There are some patterns that can forecast possible price movements that form during different stages of a move and when used with other indicators can raise the probability of that forecast.

Starting at the point where prices are in a squeeze and for this example we'll assume prices decline. (Remember a squeeze is when prices are generally moving sideways and the bollinger bands squeeze together, when prices breakout of the squeeze the bands expand and move apart in opposite directions.) As prices move down, the bands will continue to widen, at the point when the top band begins to stop moving up and turns lower, prices tend to correct. Depending on the severity of the decline this could be a bottom, but is not necessarily. The more severe the decline the more the probability prices are in a correction. The top band will then continue moving lower with prices.

At the point when the bottom band begins to turn up is when the probability of prices bottoming increases dramatically. Prices are likely in another correction at this point and will move back to the 20 period moving average.

Other variables to keep in mind are the severity of the price decline, the steepness of the moving average, volume and the conviction of the correction. Also, momentum indicators are helpful to determine if a bottom is being made. Momentum will be sharply negative by this time, but if it begins to make a B-line for zero it raises the probability of a bottom.

In a steep decline the moving average is likely falling very steep as well. If the correction is relatively flat, rather than a V type correction, the probability of prices falling again after touching the moving average is high. What happens next is important, does the closing bottom bollinger band provide support as prices decline or does it turn lower. This will forecast prices for the short term. If the band provides support, price will move above the moving average and to the top band and a new squeeze and breakout point will emerge.

Remember, there is no pattern that is 100% full proof. Each pattern has its own characteristics, but similarities exist and with study, identifying these similarities will become easier.

Author: John C Morgan
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What does one do if one wants to achieve something in life? One charts out an action plan to reach that goal. In the same way, the destination for you (if you are a trader/investor), who indulges in commodity day trading, is successful transactions that bring huge profits. Unfortunately, many like you fail because of a dearth of proper knowledge about market trends and lack of well-planned strategies.

Before going on to detail some useful tips that could help you to find high-quality commodities, it is necessary to define what exactly a commodity means.

Commodity = It is any item that is offered for sale because it is tangible and useful. It can be purchased within a restricted period of time only, as the supply does not last for long.

(1) Institutions and organizations involved with trade and finance believe that you should collect adequate knowledge about commodity day trading before venturing into the business. This gives you the opportunity to practice an advanced approach.

Experienced and practical investors/traders have been in the arena long enough to realize that the market has no permanent sequence. Hence, it is not easy to come up with a high-quality commodity.

They advise the reverse of what the experts suggest. According to these renowned investors/traders, the most important thing is to keep track of market trends. That is how you will understand what commodity can be gained and what can be lost. By going with the flow and with continual evaluation, you will learn how to foretell future prices of commodities. Thus, you are always prepared (concerning money) for the best or for the worst!

(2) Just following the market trends is not enough. Developing a strategy that works is equally essential. The trading method should match the trading necessities. Trading experts/professionals come in useful here. An alternative is to seek advice from articles and books that deal with commodity day trading.

Along with a good strategy, it is advisable to develop an objective attitude towards the business. Emotions have no role to play and should be kept aside. Perking up when there is a profit and getting depressed when there is a loss, just will not do!

Whatever be the strategy devised for commodity day trading, it should be constantly monitored. The trading plan should be adopted on a consistent basis. When the strategy is put into action time after time, success will definitely not be far away.

(3) Why would you venture into commodity day trading? To generate large revenue for yourself. To this purpose, you wish to obtain a commodity that proves beneficial.

Since adequate knowledge is lacking, there is a tendency to ask others for advice. What is to be kept in mind here is that the information is provided by genuine sources. They should not prove to be mere fairy tales!

Advice comes for free, and so there are plenty of well-wishers around--individuals and writers of articles who promise nothing less than the moon if you should purchase certain commodities! The best thing to do is to listen patiently to all the tips and guidelines offered--then, weed out what does not seem profitable. The ultimate decision about what to do and what not to do, should ultimately rest with you, yourself!

You can always try out some suggested strategies later on. If they work, well and good! Otherwise, dispose of them! After all, commodity day trading requires a certain process to be followed, since you will receive something of value at the end of it all. The commodity should be useful, as well as generate revenue.

Author: Abhishek Agarwal
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Even as a young child, I remember being fascinated by and interested in money.

* How to earn it.

* How to keep it.

* How to multiply it.

My interest in money has led me down some interesting paths. I've bought bank-owned homes and flipped them for profit. I've worked overseas for a big Fortune 500 company. And I've even been the owner/operator of a couple tattoo parlors.

Here's the craziest part. To this day, I haven't found anything quite as easy, exciting, and lucrative as option trading.

Please let me share with you eight clear reasons why I prefer option trading to any other money-making method:

1. You can get started even if you don't have much cash to play around with.

2. There are no products or inventory to keep track of.

3. You don't have to pay rent to a landlord.

4. There are no employees to take care of, no salaries to pay, and no HR issues.

5. You can trade options just about anywhere on earth--even on a tropical beach.

6. You can minimize your risk and win 7 out of 10 trades... IF you're educated and know what you're doing.

7. No glass ceiling! The sky is the limit to how much you can make.

8. And, get this: You can earn a full-time living in only 30 minutes a day.

It is important to note that I didn't become wealthy overnight. I invested many months learning everything I possibly could about option trading.

Still, where else can you get enough leverage to turn $5K into a million bucks in only three short years?

I really can't think of many opportunities that provide as much leverage and profit potential as option trading has provided for me.

And get this: Despite how much my trading "business" has grown, I'm still able to do everything from the relative comfort of my spare bedroom in a quiet Colorado town.

It's just me, my two pet cats, and an accountant who helps me update my books a few times a year.

If you're new to option trading, I strongly recommend that you learn everything you can and stick with it for the long term.

Drink up all the education you can, figure out who to listen to (as well as what really works), and -- most importantly -- make option trading an integral part of your daily wealth routine.

The pay-off? Three years from now you could be 100% financially secure and living the life of your dreams.

Author: Arnold Brown
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Day traders often seek out stories of people who have had amazing success in the markets for guidance. They flock to biographies of financial celebrities hoping to gain insight and tips to get an edge on their own careers. One such celebrity, Warren Buffet, is often seen as a role model, and a recently released book on him, The Snowball: Warren Buffet and the Business of Life, will no doubt increase his influence. But while Buffet has plenty to teach us about investing, his lessons are less applicable to day traders because of the kind of investing strategies that he uses. I'm not at all discounting Buffet's success, but I do want to stress that traders need to understand the difference between the strategies that will work for them and Buffet's kind of investing.

Warren Buffet is, of course, a legend. Before he gave almost his entire fortune to charity, he was the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a single share cost $7.50. Today, Buffet is Berkshire' chairman and CEO, and one "Class A" stock is worth more than $118,000.

Buffet is doubtless a financial genius, and many try to follow his advice to become rich. But you need to understand that he is not a stock trader. His investments are not in stocks. Instead he invests in companies.

Buffet has tried to make this clear himself. As he once said, "If, when making a stock investment, you're not considering holding it at least ten years, don't waste more than ten minutes considering it." He has also said, "[s]hares are not mere pieces of paper. They represent part ownership of a business. So, when contemplating an investment, think like a prospective owner." Based on these principles, he developed what he calls the Inner Scorecard, according to which he invests in "wonderful businesses" that fulfill, amongst others, the following criteria:

· They have a good return on capital without a lot of debt.
· They are understandable.
· They see their profits in cash flow.
· They have strong franchises and, therefore, freedom to price.
· They don't take a genius to run.
· Their earnings are predictable.
· The management is owner-oriented.

But Buffet goes even further, looking for "subjective" clues to a company's long term profitability. For example, it is said that once he purchased a company whose owner counted the sheets on the rolls of 500-sheet toilet paper to see if he was being cheated. (It turns out that he was.) Or, in another case, Buffet considered investing in a company whose owner painted only the side of the building facing the street in order to save money. And, in 1983, Buffet acquired the Nebraska Furniture Mart because he liked the way its founder, Rose Blumkin, did business: as a Russian immigrant, her strategy was to undersell the big shots, and she was a merciless negotiator.

There's a clear pattern here. Before Buffet invests in a company, his team analyzes everything: the financial data, the management (including their biographies and sometimes even their personal spending habits), the company's vision, mission and principles, the human resource policy, and much more. Then he buys enough shares to actively influence and change the company's strategies and policies. As he said "Shares represent part ownership of a business," and he acts on that idea once he is invested in a business.

Warren Buffet may well be the world's greatest investor. He buys and sells businesses, and he uses the company's shares to buy himself part ownership of a business. But Buffet is not a trader, and his strategies for success are completely different from those that make money for day traders. He does not analyze market trends, looking for movements. Instead, he looks at a company's fundamentals and decides whether he thinks that company can grow over the long term. It's important to keep this distinction in mind if you want to make money in the market. A day trader may well admire Warren Buffet, but he will have to look elsewhere for a model.

Author: Markus Heitkoetter
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