What timeframe works best for the EMA Cloud?

There is no universal best timeframe. Many traders use a higher timeframe for trend bias and a lower timeframe for entries.

Did GLSI Phase II show 100% cancer prevention?

No. Phase IIb showed a substantial reduction in recurrence of approximately 80% or greater. The 100% figure came from small subgroups with limited follow-up, not the full randomized trial.

Why does Phase III show an 80% reduction instead of 100%?

As trials expand to larger populations with longer follow-up, results normalize toward statistically stable outcomes. An 80% reduction is consistent with Phase II and does not represent a decline in efficacy.

What is the baseline breast cancer recurrence rate?

For early-stage hormone-receptor–positive breast cancer, recurrence rates typically range from 10% to 30% over 5 to 10 years, even with standard treatment.

What would an 80% reduction mean in practical terms?

Using a 20% baseline recurrence risk, an 80% reduction implies a treated recurrence rate of approximately 4%, which would be a major clinical improvement if durable.

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Dissecting My 95% Winrate Trading System

2026-04-04T12:25:00.000-07:00

A trading system is everything when it comes to navigating the unpredictable and challenging stock market. I've mentioned it countless times in this blog and on X (Twitter). I've never disclosed my trading system, and I have no plans to. However, this article aims to break down the bigger details about my trading system and provide hints and tips to help you develop your winning system.

The Trading System

My trading system is quite unique. I’ve perfected it for almost a decade with countless hours of backtesting and real-time analysis. It’s definitely something I have yet to see in any public trading system that even remotely resembles it. Throughout the years, it has become quite profitable. I have managed to beat the market over the last decade using it. There are years when the market beats my returns, but as a whole, over the previous ten years, my system has come up at the top!

What people may find hard to believe about my system is that I can count the number of trading losses I've had since 2016 on one hand. Here's a breakdown of my stats since then.

I've had 55 wins and just 3 losses. Where two losses were less than $1000 on experimental option trades. The other loss was during the COVID-19 lockdown where I decided I would sell $SPY and put the money in $SPCE because the return would be greater (which ended up to be true).

Why I Have a 95% Win Rate

Without discussing my trading system in detail (as giving it away would remove the edge I have over everyone else), I'd like to share a few tips, hints, and facts about it that may help you in your trading journey.

Below are a few facts and tips about my trade system that help me become a winning trader

I rarely trade options. Options put time constraints; there is too much noise short term, and options are designed for you to lose.
I don't trade as my sole source of income. I have a regular job. With my trading system, I do not need to stare at the screen nonstop. You shouldn't have to either. This alleviates a lot of pressure, and I don’t need to force a trade. Your goal should be trading as a supplement, not your sole source of income!
I don't let large swings affect my emotions. There are times when I am down 6 figures due to volatility. None of it affects my emotions. Because I only invest in what I’m comfortable with.
I trust my trading system. I've had this system for the last 10 years. However, Market conditions continually change so do the nuances of my trading system. So even when I'm on the sidelines, I'm still studying and thinking of ways to adjust. In other words, always pay attention to the market and look for new edges to exploit!
As per #4, I don't trade just to trade period. I do have FOMO, but I try to take a break and walk away from the keyboard. I eventually got over it.
As I mentioned in #4, Market conditions continually change. At the moment, I love trading select stocks that went parabolic and then proceeded to crash. This is a tricky area as some of these stocks will never recover from their peak highs. This is where a strict trading rule set and experience come into play.
Whenever I invest in a stock, I do some basic fundamental analysis. I need to understand the business model or be passionate about the company. Otherwise, when things go bad, I may have trouble holding on.
I don't get greedy. Sometimes, I will sell for <1% profit if I'm just not in the mood for a trade. I can change my mind! I’m very flexible and understand my initial thesis can be wrong in the blink of an eye.
I don't read other people's opinions; that's just a death trap. Even as an experienced trader, I can be affected. Hence, you can see I rarely follow other traders on Twitter (X).

For those who are dead serious about trading, I have written an in-depth article that provides a step-by-step process on how to create a trading edge using your current trades. The information provided here is something I have not seen anywhere else on the internet, as it really competes with those trying to sell you trading services. After all, if I can teach you how to fish, why would you continue buying fish from others?

Ultimately, what makes a successful trading system with an insane win rate is a world-class technical analysis technique as well as hard-earned experience( I continually learn every day, as I don’t trade perfectly and make countless mistakes). There really is no shortcut to experience; sometimes you just gotta learn through the pain and losses.

Hopefully, this article inspires you to improve your trading and brings you one step closer to your trading goals. If you are looking for more stock market educational content, check out How To Create a Stock Trading Gameplan.

Should You Trade Out-Of-The-Money Options?

2026-04-01T10:41:00.000-07:00

Options enable investors to trade contracts worth 100 shares of stock that expire by a given time. Investors then leverage these contracts by betting on where they think the stock price will be by a given date. New investors turn to options due to their “cheapness” compared to buying underlying shares of stock. If investors were to buy an option, they could purchase this contract from a seller for a small fee, otherwise known as a premium. With this contract in hand, the investor can hold it until expiration, assuming the selected price will retain its value, or they can sell the contract back into the market for an additional premium to collect. However, investors don’t often consider the risks associated with options trading.

Trading Out Of The Money Options

Let’s examine a popularly traded stock, such as Apple ($AAPL). Currently, $AAPL is trading at $130.81 a share. If I were to own one share of $AAPL, I would have to invest $130.81 to buy a share. It’s quite logical, right? Theoretically, by next week, $AAPL was to increase 2% in stock price to $133.42. What would happen if an investor were to buy an unlikely profitable out-of-the-money call option on $AAPL that expires next week? Well, for example, let’s say that this investor purchased a $135 strike for next week’s expiry on $AAPL. Instead of spending $130.81 to buy a share of stock, this investor will only spend $122 to hold the contract worth 100 shares of stock, which will ultimately be cheaper than buying one share but will offer significant leverage on the investment. Little do most investors know, this leverage doesn’t guarantee any profits if the stock goes up in price. Since $AAPL increased in stock price by 2% to $133.42 a share, the investor will ultimately lose their entire investment. Here’s why: since the stock didn’t reach the strike price of $135 by the date of expiration, the option expired out-of-the-money, resulting in becoming a worthless contract.

Don M. Chance, author of Introduction to Derivatives and Risk Management states that options trades should be blamed on the investor, not the brokerage. He quotes, “Is electricity to be blamed when someone with little knowledge of it mishandles it? Is fire to be blamed when someone using it becomes careless?” Chance proposes a unique perspective on options. Instead of blaming brokerages for the mistakes of enabling inexperienced investors to trade options, he claims that the investors themselves are the problem of exposing themselves to the underlying risks. The reason that investors lose a lot of money when they trade options is because of their poor risk management. Far too many investors don’t realize that they’re taking a significantly higher risk when leveraging compared to buying shares of the underlying stock.

Ultimately, this poor risk management and lack of stability cause millions of portfolios to be wiped out, resulting in larger corporations taking advantage of such foolish investments. Unfortunately, viral and super-lucky trades of gamblers striking the lottery with out-of-the-money (OTM) options have given a lot of traders false hope. The subreddit WallStreetBets is partially to blame, giving the impression that traders can return 1000-10,000% "YOLO trading options".

For those interested in understanding how options are priced, including Out-Of-The-Money options, please check out What You Should Know About Options Pricing. For more information about options in general, please check out Why Options Are Dangerous.

For those who still want to trade options, I break down several profitable option trading strategies that will help tremendously when dealing with out-of-the-money options.

Elder Impulse: The Perfect Trading System?

2026-03-30T22:07:00.000-07:00

What is the Elder Impulse System?

The Elder Impulse System (Alexander Elder) is a simple trading framework that combines a 13-period Exponential Moving Average (EMA) to define trend and the MACD Histogram to measure momentum. When trend + momentum agree, the system highlights “impulse” buy/sell conditions using color-coded bars.

Quick Summary

Green bar: trend up + momentum up → bullish impulse
Red bar: trend down + momentum down → bearish impulse
Blue bar: mixed signals → no impulse / neutral
Works best when you align your trades with a higher timeframe trend

Jump to: How it works · Signal rules · Timeframes · Entries & exits · Conclusion

When you’re starting to trade, it helps to learn structured systems used by professionals. The Elder Impulse System, designed by Alexander Elder and featured in his book Come Into My Trading Room , is a simple but powerful framework combining trend and momentum.

How the Elder Impulse System Works

The system combines two indicators:

13-day EMA: identifies the direction of the trend
MACD Histogram: measures whether momentum is increasing or decreasing

When both improve together, you get a bullish “impulse.” When both deteriorate together, you get a bearish “impulse.”

Signal Rules (Color Bars)

The ease of use comes from the color-coded bars (see the chart at the top). Here are the rules:

Green price bar: the 13 EMA is higher than the prior period’s 13 EMA and the MACD Histogram is higher than the prior period’s MACD Histogram.
Interpretation: bullish impulse (often a “go long” environment).
Red price bar: the 13 EMA is lower than the prior period’s 13 EMA and the MACD Histogram is lower than the prior period’s MACD Histogram.
Interpretation: bearish impulse (often a “sell / go short” environment).
Blue price bar: the conditions for green or red are not met.
Interpretation: neutral / mixed signals (many traders avoid new entries here).

In plain English: green = rising trend + rising momentum, red = falling trend + falling momentum. Blue means the system is telling you to be selective.

Timeframes (Trade in Harmony With the Bigger Trend)

Elder emphasizes aligning your intermediate timeframe with a higher timeframe trend. A simple heuristic he suggests is:

Higher timeframe ≈ 5× your trading timeframe
Example: If you trade the 60-minute chart, your higher timeframe is roughly the 4-hour chart.

This helps you avoid fighting the dominant market direction.

When to Enter & Exit the Market

Use the system as a filter:

Buy bias: higher timeframe trend is up and the Elder Impulse bar is green.
Sell / short bias: higher timeframe trend is down and the Elder Impulse bar is red.
Ignore: when the higher timeframe trend is unclear or bars are mostly blue (mixed conditions).

Example: If your intermediate timeframe is daily, check the weekly chart first. If weekly is in a clear uptrend, you prefer acting on bullish (green) impulses on the daily chart.

Conclusion

Elder designed this system to encourage a professional approach: enter carefully and exit quickly when conditions change. It’s meant to keep you out of low-quality, choppy trades where trend and momentum disagree.

I encourage readers to use a website like StockCharts to paper trade and test the Elder Impulse System. It’s a strong starter system that can be refined through practice and backtesting.

Below is an example showing how to use StockCharts with the Elder Impulse System:

I hope this guide helps anyone who wants to start using an actual trading system. Check out my other articles on indicators like ADX and RSI. And if you want a deeper system-based approach, check out: Using Ichimoku Clouds for Daytrading.

McClellan Oscillator: The Best Market Timing Indicator

2026-03-28T08:25:00.000-07:00

The ability to time the Market bottom of a correction is the holy grail of trading. There are not many tools out there that can consistently indicate when a rabid market correction is underway. Throughout my decade-long trading career, I have found one indicator that can consistently do so: The McClellan Oscillator.

The McClellan Oscillator's overall goal is to measure how much money is in the stock market. This liquidity measurement is useful because the more liquidity the Market has, the higher it will go!

What Is The McClellan Oscillator?

The McClellan Oscillator is an indicator used to show the breadth of the market in terms of advancing and declining issues in a stock exchange. The indicator fully reflects the changes in the sentiment of the market as an index; strong shifts in the index are referred to as breadth thrusts. Through divergence or confirmation, the indicator can also be used to measure the strength of the index trend. In other words, it can predict future rallies and also indicate when corrections are complete.

How To Read The McClellan Oscillator

The McClellan Oscillator tends to be much harder to read and interpret than other indicators. Take a look at the indicator below, where it's used to measure the breadth of the NYSE Composite Index.

An above-zero reading indicates that the index is on the rise, while readings below zero indicate the index is on the decline.

A combination of a rising index and a falling oscillator is a warning that the index is about to start going down, while, when the index is on the decline and the oscillator is on the rise, this indicates that the index is about to start rising. This is what is referred to as divergence.

A change that is noticeable, such as a move of 100 points or more from a negative reading to a positive one, is referred to as a breadth thrust. If this occurs, it may indicate that a strong reversal from a downtrend to an uptrend is about to occur.

Readings +150 indicate the indicator is overbought, while -150 indicates the indicator is oversold.

The McClellan Oscillator Formula

For those curious about how the McClellan Oscillator is calculated, take a look below. If you are simply interested in unlocking the power of this Indicator, feel free to skip this section and go to the one below.

Ratio-Adjusted Net Advances (RANA): (Advances - Declines)/ (Advances + Declines)

McClellan Oscillator: 19-day EMA of RANA - 39-day EMA of RANA

19-day EMA* = (Current Day RANA - Prior Day EMA) * .10 + Prior Day EMA)

39-day EMA* = (Current Day RANA - Prior Day EMA) * .05 + Prior Day EMA)

* The first EMA calculation is a simple average.

• When the 19-day EMA is below the 39-day EMA, this indicates that the market is on the decline, and vice versa. When the chart indicates that the movement is on the rise, the market is in the buying phas,e while negative values show that the investors are selling their stocks.

• Crossovers from positive to negative show that the trend has changed direction.

How To Use the McClellan Oscillator

I find the McClellan Oscillator has two incredible uses: the ability to foreshadow stock market uptrends and to time market bottoms.

The

McClellan Oscillator can foreshadow future strength in the Stock Market when the indicator spends several days (if not weeks) overbought. Where overbought is readings above 150. Tom McClellan has coined the term "a complex structure".

So, a complex structure is called a complex structure when the McClellan Oscillator is overbought for several days/weeks (readings above 150). Once this occurs, the market tends to pull back afterward, then thrust significantly higher in the upcoming months.

The McClellan Oscillator predictability ranges from 1-6 months (which I consider a medium time frame). So it won't give you predictable readings that span further out than that (leave that to the NYSI indicator,r the father of the McClellan Oscillator).

Let's take a look at the example below. The McClellan Oscillator was overbought for several days/weeks, forming a complex structure. As soon as it pulled back to work off the overbought condition, it appreciated 17% in the following months. This probably blindsided many bears if they were not paying attention to this indicator.

How To Time Market Bottoms

When the McClellan Oscillator hits below -150 (which is interpreted as oversold), it tends to be great at timing the Market bottom. Readings below -150 often signify the Market is about to rebound. Thus, buying around -150 is almost always profitable.

What's even more lucrative is when the Oscillator hits -300. This is often rare and occurs maybe once or twice in two years. When this happens, it tends to mark very significant long-term bottoms. Readings of -300 in the Oscillator are a great way to buy into indexes over the long term (for those who are wise and patient enough to invest in ETFs).

Take a look at the example below, where I have marked every reading of -150 in the McClellan Oscillator and a rare reading of -300. You can see how the Market rebounded each time!

Also, take note that once the Oscillator hit -300, the market bounced very hard.

Conclusion

The McClellan Oscillator is one of the few indicators out there used to measure the amount of liquidity in the market. As the general thesis is that the more money there is, the more likely the stock market will rise as a whole. As shown above, Complex Structures are a great way to foreshadow strong bullish moves in the upcoming months (1-6 months). On top of that, the McClellan Oscillator oversold readings, making a great case for timing Market Bottoms.

There are a ton of nuances when it comes to this indicator that take years of practice and studying to recognize. I've only mentioned two uses of this indicator, but hopefully have convinced you to add it to your trading toolbox.

If you enjoyed this article, check out How to Tell If A Stock Has Bottomed Out.

How To Create A Stock Trading Plan

2026-03-24T12:09:00.000-07:00

I'm sure you've heard countless times from various outlets about the importance of always having a trading game plan. However, let's be honest: most traders don't fully understand the proper execution of a trading game plan. Novice traders emotionally fall in love with a stock and ride it either down to zero or sell at a loss. Often, people will just follow others they deem experts (unlikely they are), and that's their trading game plan.

In reality, this is no way to trade. Eventually, your account portfolio will show this, as you will realize you cannot outpace Market returns in the long run. This begs the question: What exactly are you doing wrong? The answer is many things, from lacking an actual trading system to having the most basic trading game plan.

In this article, I will help break down the essence of a trading game plan. The aim of this is to have you become a much more solid trader, and one step closer to becoming the rare Market-beating trader.

Why Have A Stock Trading Plan?

The benefits of having a trading game plan are there to help you remove emotions from your trading; it's there for you to follow when you get caught up in either the stress of everything or the euphoria of holding too long as your gains fade. In other words, a trading game plan is there to help you maximize profits and minimize losses when your emotions become overwhelming.

When things become too much, whether it be your stock squeezing to the moon or your stock tanking due to general market conditions, your game plan is there to help guide you.

I have compiled a trading gameplan outline below, which involves a series of questions you should have answered BEFORE YOU ENTER ANY TRADE! This will help remove emotions, as trading often gets heated.

I doubt you will answer these questions optimally the first time you do it. But it's all about trial and error, about the 10th or 15th time you compose your game plan from the questions below, when you will see it's much different than what you originally came up with. Why? Because of experience, you're forced to think about your trades in ways you were not before!

Below are the questions that, when answered, become a solid trading game plan. Preferably, write this down, and answer these questions for each trade going forward. Make sure to review each game plan and figure out what went wrong and what went right as you continue to make trades in the market.

The Stock Trading Gameplan

How much of my portfolio should I allocate to this trade? This question is important as it helps you sleep at night. If you have too much of one stock and it goes bad, that's when emotions come kicking in with the bad decisions. Ultimately, you should be using something like the Kelly Criterion formula for how much you should allocate of your portfolio to one stock. It's all about risk vs reward.
Do I have a stop loss? If so, what price? This is a complicated question to answer. I have huge faith in my trading system; therefore, I do not trade with stop losses. But many people don't have such a reliable trading system. Always determine your stop loss before purchasing a stock!
What will I do if things go bad? Will you decide to average down or not? Will you hedge your position at the cost of profits? Will #2 trigger? Will you follow through and sell?
What is my stock price sell target? Sometimes, your stock will squeeze hard, and if it does, it may be naive to continue to hold. You may be caught up in the emotions as your stock continues to squeeze unexpectedly, that's why you should always have a sell target. So you don't get caught up and lose profits.
Why do I believe in this stock? This is very important; this really comes from your trading system. Whether the answer is the technicals or a fundamental story, or you simply believe WallStreetBets from Reddit will eventually squeeze the stock. Having an answer will allow you to not sell when you start losing patience or when things go bad (#3).
What is the catalyst for this stock (such as earnings, news events, surprise announcements)? You need to have price-moving catalysts mapped and follow updates daily because these things can change the fundamentals of a stock easily, whether it be for good or bad. I often hate holding on to stock during its earnings. So the majority of my game plan is "will hold until before earnings and re-evaluate".
What would make me want to sell this stock? Sometimes things change, maybe a stock has declared bankruptcy, but the price hasn't reacted that badly, and that is when you need to adjust things for #2 and #3 above. Because your game plan can't always be static! Similarly, on the upside say in #6, fundamentals changed for the positive, at that point you may want to readjust your trading game plan (for example, change your sell price target). It's important to be flexible at the same time, not emotional. It's hard to maintain that line, hence why trading often becomes a mixture of art and science.

Hopefully, this list can be the start of you having a trading game plan. With practice and iteration, you will see it start to maximize your profits and minimize your losses. Now all you need is a solid market-beating trading system, and that is not so easy to come up with (as Hedge Funds can't even beat the Market long-term without cheating).

Interested in more articles like this? Make sure to read more about Stock Trading Discipline, as well as Ten Signs You Are Probably A Terrible Trader, and finally, on How to Create A Trading Edge.

Explaining The Relative Strength Indicator (RSI)

2026-03-19T17:45:00.000-07:00

Trading financial instruments is a constant process of speculation. Knowing when to buy or sell an instrument helps ensure you rake in trading profits. This can be done by using tools that aid in predicting the future movement of the price of a stock.

What Is The RSI Indicator

The Relative Strength Index, also known as RSI, measures the momentum in the price movement. This means how strongly the stock is moving up or down. A strong movement in a particular direction may indicate a likely future trend, but it may also show when a stock is overbought or oversold. The RSI's ability to give multiple signals with high accuracy in predicting future prices is why it is one of the most powerful indicators available to traders.

How To Read The Relative Strength Indicator

Technical traders use RSI as a key indicator to measure momentum. RSI stands for Relative Strength Index and is between 0 and 100. Values above 50 show that an upward movement is likely to occur, while values below 50 indicate a downward momentum. The further the distance from 50, the stronger the momentum in either direction. Values above 70 or below 30 show that the momentum is so strong, indicating that the market is oversold or overbought. Often in extreme conditions, the price will move in the opposite direction briefly to alleviate the oversold/overbought condition

Look at the example below, which shows Tesla ($TSLA). The price bounced when the RSI was oversold, followed by a pullback when the RSI was severely overbought. Notice that as the price moved in the opposite direction due to the overbought/sold conditions, the stock returned to its original direction (up). This is another reminder that stock trading is just as much science as art.

RSI is measured through how often the market closes up vs closing down and by what margin. It is calculated through the use of two relatively simple formulas:

100

RSI = 100 - ---------

1 + RS

RS = Average Gain / Average Loss

Therefore, the relative strength is measured by taking the average size of all the up moves over a particular period, divided by the average size of all the down moves over the same time.

How to Use The Relative Strength Index (RSI)

One powerful indication of a price reversal is RSI divergence. Using RSI to catch divergence makes the indicator one of the most popular and profitable indicators out there. It occurs when RSI does not confirm higher highs or lower lows. For example, the price has reached a new low, but RSI has not. The chart below shows RSI divergence and how it can signal a selling opportunity (beware of using it to short stocks). Using the RSI indicator for identifying divergence is one of the most powerful technical tools out there. Being able to identify divergence when a stock has made a lower low but the RSI has not, thus foreshadowing a reversal, can be used for a great buy entry.

I do not recommend using divergence as a tool for shorting. You would have to be really skilled and would need additional technical signals to even make this profitable.

Conclusion

As you can see from this article, the RSI has several powerful methods of signaling future price action. The first way is that once the indicator is overbought or oversold, you will likely see a price reversal. The second way is with price divergence, whether the price does not agree with the RSI. My favorite usage of the RSI is when the price makes a lower low but the RSI does not, which usually foreshadows a wicked bounce.

Lastly, I highly recommend against using the RSI to short stocks; that is a dangerous game. Ideally, you would use the RSI indicator to try to sell the high and buy the low. Whether this buys using the overbought/oversold signals or divergence. It's up to the reader to understand the nuances to maximize the profitability of this indicator through backtesting and watching the RSI in real-time, as stocks trade.

If you are interested in learning more about technical indicators, take a look at The Art Of Mastering Japanese Candlesticks as well as my favorite two stock chart technical indicators.

How To Use RainDrop Charts: New Way To Trade Volume

2026-03-10T12:16:00.000-07:00

The Financial Market world continually evolves as creativity and innovation change how things are done. Traders are always looking for better ways to view stock market price action to gain an edge. In the last couple of years, there have been many innovations in the field of Technical Analysis. One of the most impressive new indicators is EMA Clouds. However, there have been many innovations in the last few years as new traders enter the market. One such innovation is Raindrop Charts, which allows chartists to visualize stock charts in a new way.

Raindrop charts are designed to represent what is happening in the market regarding price and volume. The chart gives the trader a visual representation of supply and demand in the market over a certain time frame. The raindrop charts incorporate volume directly into every price bar through histograms, and the volume of the weighted average price is called VWAP. Hence, Raindrops are a visual culmination of where the price moved, how much time it took to get there, and the flow of the volume as time passed.

Raindrops are meant to replace/supplement traditional charts such as:

Renko
Heiken Ashi
Hollow candlesticks
Japanese candlesticks

You can see a breakdown of RainDrops below.

The image is courtesy of TrendSpider Use the link for up to 40% off!

Each raindrop is divided into two trading periods: the first and the second trading period. As in the US, the trading of equities is 6 1/2 hrs, each half will be 3 1/4 hrs, and for cryptocurrencies that trade for 24 hours, it will be 12 hours a half. Another difference between the traditional candlestick and the raindrop charts is that the raindrops do not use opening and closing prices but rather use VWAP. This is because the developers believe that using opening and closing prices doesn’t show the price action during a particular time, but only what the price of the stock was at that time.

The raindrops are color-coded into three colors: red, blue, and green. If the right VWAP of the trading period is lower than the left VWAP, the raindrop will be red, and if vice versa, the VWAP will be green; and if the VWAP is at the same level, the raindrops will be blue. The blob shapes in the raindrops represent the complete volume profile for that half of the period. This shows how volume moved during a complete half. A green raindrop is a bullish one, while a red raindrop is bearish, and a blue one shows indecisiveness.

Blue raindrops are constantly used to mark the top and bottom of a trading period. If an asset is highly liquid, buying and selling will not be the same throughout the day; hence, this is an indication of a change in price movement. Keep in mind that blue raindrops that require both halves to have the same VWAP are extremely rare!

To summarize, RainDrop charts do not show the closing price, but rather show price action throughout the day, based on two halves. Each one of these halves has a blob that indicates the volume that was traded around that price. Red, Green, and Blue RainDrops indicate whether the right side VWAP (2nd half of trading) closed lower, higher, or equal to, respectively. Simply put, RainDrops shows you the price range as well as the volume traded at that price through the time period you are focused on!

Why Use Raindrop Charts?

Raindrops aid in identifying breakouts and fakeouts. A move in either direction should be supported by volume. If a chart looks like it's breaking out, you can always double-check what the volume is saying. As such, it's best to confirm with Raindrops charts as they will be able to say if volume may not be supporting such a move, as such, they are great at detecting fakeouts
.
Raindrops aid in locating market indecision areas- A Blue Doji shows that the market is trying to determine the direction to move. It may also represent a change of a negative or positive move (basically foreshadowing a reversal).
Volume inclusivity - The volume in trade will help you in weighing the strength; this is a major merit of the raindrop charts. It helps visualize whether any move is backed by volume.
Utilization of special raindrop patterns- Strong moves are represented by balloon-shaped raindrops, which show that the volume has congregated at an extreme position. Keep note of this last point, as raindrop patterns can emerge. Spending countless hours backtesting and analyzing raindrop charts will help you identify such patterns and increase your profitability in the market.

Examples Of Raindrops Charts

In this section, I will be using many examples provided by TrendSpider's Twitter account. If you are interested in using their service as they are the creators of Raindrop charts, use my affiliate link: TrendSpider (for up to 40% off), using the link provided. Consider using the "Enhanced" package provided by TrendSpider, as it gives weekly one-on-one training by their customer training team.

The stock below is Roblox. Notice in the channel that each time a blue Doji (which represents indecision) was encountered, the price bounced hard!

The stock below is the Apple Raindrop ($AAPL) stock chart. In this real-life chart, note that after incurring two daily red raindrops, a blue indecisive raindrop shows up, which represents indecisiveness. The next day, after the blue raindrop showed up, the price bounced!

The chart below is a weekly Raindrop chart of Moderna ($MRNA). Notice how the stock continually bled, until it found support at the WVAP, where a few blue Raindrops showed up which is a sign the bearish momentum is waning.

The chart below is the daily Target ($TGT) Raindrop chart. You can see after the breakout that a blue Doji has emerged, which hints that the breakout might fail and be a "fakeout".

There are many ways to use Raindrop charts. I gave a few examples, and I left it up to the reader to continue their research and use them in practice and in real time to learn the advantages and disadvantages that they have.

Conclusion

The use of raindrop charts helps you see what other traders do not, giving you an edge. The inclusion of volume in the candles and the use of VWAP aid in identifying the strength of trade. Add this tool to your arsenal of trading indicators and back-test it to know when it gives a high winning rate.

For those interested in incorporating RainDrops, check out TrendSpider (for up to 40% off) using the link provided. Please consider the enhanced package as it provides excellent one-on-one training, weekly!

Want to learn more about RainDrops? Check out TrendSpider's Whitepaper on Raindrops!

For more next-generation indicators, check out my article on the EMA Cloud. Or if you are interested in building your own stock trading system check out this detailed guide.

How to Trade the Ichimoku Cloud (Simple Rules + Real Examples)

2026-03-07T22:12:00.000-08:00

Ichimoku Cloud Explained (Quick Summary)

The Ichimoku Cloud is a complete trend-following system that shows:

Trend direction
Momentum strength
Dynamic support & resistance
Future price bias (projected cloud)

Core Rule:
Price above the cloud = bullish structure
Price below the cloud = bearish structure

Why Ichimoku Is Different From Most Indicators

Most indicators do one thing. Ichimoku does five. It blends: • Trend • Momentum • Structure • Future projection • Confirmation logic All in one framework. Unlike single-line indicators like EMA or oscillators like RSI, Ichimoku provides context. That’s why it still works nearly 100 years after it was created. ---

How the Ichimoku Cloud Works (Deep Breakdown)

Developed by Goichi Hosoda in the 1930s, the system includes five components:

Tenkan-Sen (Conversion Line) – Short-term momentum
Kijun-Sen (Base Line) – Medium-term structure
Senkou Span A – Leading boundary of cloud
Senkou Span B – Second boundary of cloud
Chikou Span – Lagging confirmation line

The cloud (Kumo) forms between Span A and Span B and is projected forward. That forward projection is what gives Ichimoku its predictive edge. ---

How To Trade The Ichimoku Cloud Properly

Basic Trend Framework

• Price above cloud → bullish bias • Price below cloud → bearish bias • Price inside cloud → consolidation / chop

High-Probability Setup

1. Price breaks above cloud 2. Tenkan crosses above Kijun 3. Cloud ahead is green 4. Chikou Span clears price That is structural confirmation. ---

Example: Ichimoku in Action

Notice: • Clean bullish structure above cloud • Pullbacks holding cloud support • Clear transition when price breaks below Ichimoku removes guesswork. ---

How To Improve Ichimoku (Most Traders Miss This)

Default settings are fine. But edge comes from confluence. Try combining Ichimoku with: ✔ ADX for trend strength ✔ EMA Cloud for dual confirmation ✔ MACD for momentum divergence ✔ Volume analysis (Volume Guide) ---

Backtesting & Automation

If you're serious, you must test it. Manual testing is slow. Use: TrendSpider – Automated Ichimoku Backtesting & Strategy Builder TrendSpider lets you: • Scan for price above cloud • Scan for Tenkan/Kijun cross • Backtest multi-timeframe logic • Automate alerts This turns Ichimoku from visual tool → systematic edge. ---

Common Ichimoku Mistakes

1. Trading inside the cloud (low edge zone) 2. Ignoring higher timeframe cloud structure 3. Not waiting for confirmation cross 4. Using it in low volatility markets If you want deeper psychology breakdown: Common Trading Mistakes Explained ---

Is Ichimoku Better Than EMA?

EMA: • Simpler • Faster signals • More noise Ichimoku: • More structure • Clear bias filter • Fewer but cleaner trades That’s why many traders evolve from EMA to Ichimoku systems. If you’re learning moving averages first: Start Here ---

FAQ

Is Ichimoku good for day trading?

Yes — especially on 5m/15m charts during volatile sessions.

What timeframe works best?

4H and Daily tend to give strongest structural signals.

Does Ichimoku repaint?

No. The cloud is projected forward but based on historical data. ---

Build a Complete Trading System

Indicators alone don’t make money. Structure + Risk + Position sizing do. Learn to build real systems here: How To Create A Trading System Or automate using AI: Learn Algorithmic Trading With Python (Book) ---

Final Thoughts

The Ichimoku Cloud is not magic. But it is structured. And structure is where edge lives. Used correctly, it simplifies your decision-making. Used blindly, it becomes just another colorful overlay. Refine it. Test it. Combine it. Own it.

How To Read Japanese Candlestick Patterns

2026-02-26T19:45:00.000-08:00

Candlestick charts, also referred to as Japanese candlestick charts, are tools used in the technical analysis of price movements of shares in the stock market. These charts analyze price fluctuations just like bar and line charts. With a certain amount of skill in mastering candlesticks, predicting the future movement and direction of prices of shares is possible. In this article, I will highlight my top five bullish candlestick patterns and pass on some tips and tricks I've learned to help maximize your profits and minimize your losses.

How to Read Japanese Candlestick Patterns

Before we get into the list, I've picked up a few tips and nuances that I've picked up over the years that should be discussed. I've found candlesticks to be one of the most powerful tools in predicting future price movements. What I've learned is that it needs to be cut and dry. For example, it's rare to see a bullish reversal candlestick pattern formed on a daily stock chart followed by the stock bouncing hard. It's rarely that picture-perfect.

The timeframe is key when trying to predict future price movement. Over the years, I've found that bullish candlestick patterns formed on the monthly or weekly chart are much more meaningful than those formed on the daily or 60-minute chart.

Often, daily, you will see a nice bullish candlestick pattern, followed by a few red days, followed by a few more bullish candlestick patterns, and then the price finally takes off. The point here is, there isn't always a perfect setup. The price either undershoots or overshoots theoretical bounce targets, and it takes more time than one would expect for the price to change direction. This is why reading charts is an art form.

When reading charts and trying to create a profitable trade setup, you ALWAYS want to see a cluster of signals. For example, if you see a candlestick reversal pattern, you would want this to occur on the lower Bollinger Band, and on an important moving average (let's say the 50 SMA). When you have 3 signals telling you there is a reversal, the signal is much stronger. Just like in poker, you want a "cluster of tells", the same goes for chart reading.

Again, technicals alone are not always enough; you need to understand upcoming catalysts (such as earnings or product launch) as well as whether earnings are near (earnings always trump technical analysis).

Now with these tips out of the was,y let's get to my top 5 most useful ones!

1 Three White Soldiers

Three White Soldiers is a bullish candlestick pattern that takes place over three days. You will observe long candles that are white or green in color and have small wicks. The important thing to observe is that candles open and close higher than the previous day. This kind of bullish candlestick pattern is usually seen after a strong downward trend and also indicates the potential direction of the share prices in the next few days. I often like to see those near the lower Bollinger Band, as that also provides a bit of a boost to lift up the price.

2 Morning Star

This bullish candlestick pattern instills a ray of hope in the minds of investors in an otherwise gloomy market. In this pattern, a short candle is seen between two long green and red candles. It tells the investor that the selling pressure of the market is slowly ending, and they can expect a bullish market at the end of the tunnel. The potential direction of the market in this candlestick pattern is upward. I often see these with major bullish news events, whether it be stock-related news or global events lifting the stress of the market.

3 Piercing Line

This bullish candlestick pattern is formed with just two candlesticks, with a long red candle followed by a long green candle. You will find that there is a good difference between the closing price of the red candlestick and the opening price of the green candlestick. Such a pattern indicates buying pressure as the price goes up to the mid-range of the previous day's closing price or even higher. The piercing line candlestick pattern indicates a reversal after a slight downtrend. The Piercing Line is not as reliable as other patterns I've found but they are often seen when the price starts to bottom out. So don't expect a quick reversal.

4 Hammer

Hammer is one of the most popular bullish candlestick patterns. In this pattern, the candle is short with a long lower wick. Such a pattern is usually observed at the end of a long downward trend in the stock market. The hammer indicates an upward trend in the market after a period of selling pressure that brings prices down. The color of the short hammer can be red or green, but in general, the market is more bullish if it is green in color.

This is my favorite, nothing like it forming on a major moving average which coincides with the lower Bollinger band (again remember a cluster of signals confirming a direction), If you look at the havoc that COVID did to many stock charts you will see at the bottom, a ton of hammers formed across multiple stocks and indexes!

5 Bullish Engulfing

This is a candlestick pattern formed by two candles, one of which is red and the other is green. The first candle is red, which is short, and it is seen completely engulfed by the 2nd green candle. The large green day is often formed with a "gap down" (which usually means exhausted selling pressure). So always keep in mind what potential candle can be formed in real-time, so you can capture the entire move (i.e., look for those gap downs as a buying opportunity,y especially when things start to get very oversold)

Conclusion

When looking for bullish candlestick patterns, remember that not everything is cut and dry; you won't instantly see a reversal once you see these out in the wild. Also, keep in mind, if these patterns are formed near the lower Bollinger Band or around a significant moving average, this will yield a more powerful confirmation.

These slight nuances and deviations from theory to practice are what make trading stocks equal parts art and technicals.

To learn more about candlesticks, check out our article on Mastering Japanese Candlestick Reading.

Also, credit to IG for providing the images above for candlesticks.

How a Stock's Volume Affects Price

2026-02-19T09:58:00.000-08:00

How a Stock’s Volume Affects Price (Quick Explanation)

Volume is how many shares trade in a period. It’s the market’s “vote count.” Price moves with rising volume are usually stronger and more likely to continue. Price moves with weak volume often fail (fake breakouts, weak reversals).

Jump to: Why volume matters · Breakouts · Reversals · Accumulation vs distribution · Volume indicators · Printable checklist · More chart lessons

Technical analysis studies market behavior using price and (sometimes) volume. If you’re coming from fundamentals, here’s my primer: Fundamental analysis explained.

Why Volume Matters

Price tells you direction. Volume tells you conviction. When a move has strong conviction, it’s more likely to continue.

High volume = more participation, stronger confirmation
Low volume = less participation, weaker confirmation

One quick mental model: Volume is the fuel. Price is the car. Big moves without fuel often stall.

High Volume vs Low Volume Breakouts

A breakout is when price escapes a range (above resistance or below support). The most common mistake traders make: assuming every breakout is real. Volume helps separate “real breakouts” from “tourist breakouts.”

In the chart above:

Valid breakout: price clears resistance + volume expands (often 2x+ average)
Fake breakout: price clears resistance + volume stays weak (often reverses quickly)

Want a better foundation for chart structure? Read: How to tell if a stock has bottomed.

Second Example: Volume Spike Reversal (Capitulation)

Volume is extremely useful at turning points. A classic reversal setup looks like this:

Downtrend for weeks
Large red candles + fear
Massive volume spike (capitulation) and then a strong rebound

The logic: the final “panic wave” flushes weak hands, then demand takes over. This doesn’t guarantee a new bull market — but it often marks a tradeable low.

For confirmation tools that pair well with volume, see: RSI explained and MACD divergence.

Accumulation vs Distribution

Volume helps you spot whether large players may be quietly buying or selling.

Accumulation (Quiet Buying)

Price goes sideways
Dips keep getting bought
Volume slowly rises over time

This often happens before a breakout.

Distribution (Quiet Selling)

Price makes new highs
Volume fades
Rallies get sold into

This often shows up near tops and can precede sharp drops.

Best Volume-Based Indicators

Volume alone can help, but these tools can add structure:

Volume Moving Average (most practical: “is today unusually active?”)
On-Balance Volume (OBV) (tracks whether volume supports price direction)
Accumulation/Distribution Line (estimates buying vs selling pressure)
Volume Profile (where the most trading happened at price levels)

If you want to test whether volume indicators actually improve results, the fastest path is backtesting. I use: TrendSpider (discount link).

Printable Volume Checklist (Use Before Every Trade)

Volume Checklist (Print / Screenshot This)

Trend: Is price in an uptrend, downtrend, or range?
Context: Is this move happening near support/resistance?
Volume vs average: Is today’s volume above the 20/50-day average?
Breakout rule: Breakouts should have expanding volume (ideally 2x+ average).
Fakeout warning: If price breaks out on weak volume, assume higher failure risk.
Reversal rule: Big bottoms/tops often show volume spikes (capitulation / blow-off).
Confirmation: Does RSI/MACD/structure agree (or diverge)?
Plan: Where is your invalidation level (stop / exit)?
Position sizing: Is the risk small enough that a loss doesn’t matter?

Simple rule: If you can’t explain what volume is saying, skip the trade.

When Volume Misleads (Important)

Volume can be noisy in these cases:

Low-float stocks (easy to manipulate)
Penny stocks (promotions + fake liquidity)
News spikes (one-time shock)
Meme stock frenzies (emotion-driven trading)

This is why you should use volume as confirmation, not as a magic signal.

Conclusion

Volume doesn’t predict the future — it shows you how much the market agrees with the move. Strong moves usually show expanding volume. Weak moves often fade. Combine volume with structure and a plan, and you’ll avoid a lot of bad trades.

More ChartLearning Lessons (Recommended Next Reads)

If you liked volume analysis, read these next:

Core charting foundation: Master Japanese candlesticks
Momentum + confirmation: MACD explained (divergence) and RSI explained
Volatility framework: Bollinger Bands (my favorite indicator)
Build an actual system: How to create a winning trading system (backtesting) and How to create a trading edge
Stop common losses: Common mistakes traders make and Trading discipline
If you’re tempted by options: Stop trading options (scams + reality check) and How options are priced (gamma/delta)

Prefer a “start here” path? Try: Learn how to trade (beginner roadmap).

Cryptocurrency Explained (Simple Guide): Bitcoin, Blockchain & Wallets

2026-02-17T09:00:00.000-08:00

Cryptocurrency Explained (Quick Answer)

Cryptocurrency is digital money recorded on a shared database called a blockchain. You can send it directly to others without a bank, but the tradeoff is higher risk: prices are volatile, scams are common, and mistakes (like losing a seed phrase) can be permanent.

Jump to: What is crypto? · Blockchain (simple) · Coins vs tokens · Wallets · How to buy · Risks & scams · FAQ · Conclusion

Crypto is everywhere because it creates big winners and big losers fast. The confusing part is that people explain it with jargon. This guide keeps it simple: you’ll learn what crypto is, how blockchain works, how wallets work, and the main risks that blow people up.

Recommended next reads on ChartLearning:
• How to Create a Winning Trading System
• How To Create a Trading Edge (Free)
• How Options Are Priced (Greeks Explained)

What Is Cryptocurrency?

Cryptocurrency is digital money that exists online. Instead of a bank keeping the “official” record, a network of computers maintains a shared ledger called the blockchain. When you send crypto, the network verifies the transaction and stores it permanently.

Two key ideas:

Ownership is controlled by keys (like ultra-important passwords): whoever controls the private key controls the coins.
Transactions are hard to reverse: “send” mistakes and hacks are often final.

Blockchain (The Simplest Explanation)

Think of a blockchain like a public spreadsheet that many computers help update. New transactions get grouped into “blocks.” Each block links to the previous one, creating a chain.

Why people care: it can reduce the need for middlemen (banks/payment processors), but it also shifts responsibility to the user.

Coins vs Tokens (Most People Mix This Up)

Coins = the native currency of a blockchain (e.g., Bitcoin on the Bitcoin network, ETH on Ethereum).
Tokens = assets created on top of an existing chain (many meme coins and “new projects” are tokens).

This matters because tokens are easier to launch—so the scam rate is much higher.

Common Cryptocurrencies (And What They’re For)

Bitcoin (BTC): often treated as “digital gold” because supply is limited by design.

Ethereum (ETH): a programmable blockchain—think “apps + money.” It powers many tokens and smart contracts.

Stablecoins (like USDT / USDC): designed to track the U.S. dollar. They’re used heavily for trading and transfers.

Meme coins (like DOGE): hype-driven coins/tokens that can pump hard and crash harder.

Quick tip: If you’re going to trade crypto like an asset (instead of “hope investing”), treat it like any other chart—levels, volatility, and risk rules matter. If you want a serious charting + backtesting tool, I use: TrendSpider (discount link).

Crypto Wallets: Hot vs Cold (In Plain English)

A wallet doesn’t “hold” coins like a physical wallet. It holds the keys that control your coins on the blockchain.

Hot wallet = connected to the internet (more convenient, higher hack risk)
Cold wallet = offline storage (less convenient, usually safer)

Rule of thumb: small amounts = hot wallet is fine. Serious money = use cold storage + backup your recovery phrase safely.

How People Buy Cryptocurrency (Beginner Checklist)

Most beginners buy crypto using an exchange app. Before you do anything:

Decide your goal: investing vs trading vs transferring money
Enable 2FA (authenticator app is best)
Start small and do a test transfer first
Learn fees: spread + trading fees + withdrawal fees
Have a plan: where you’d take profit and where you’d cut risk

If you like expressing “probability-style” views (not just price charts), prediction markets can be an alternative way to place a view: Kalshi (get $25).

Is Crypto Safe? The Real Risks (No Sugarcoating)

Crypto can be useful tech, but it’s also a playground for scams. The biggest risks are:

Volatility: huge moves can happen fast (both directions).
Scams & pump/dumps: many tokens exist mainly to enrich insiders.
Exchange risk: platforms can freeze withdrawals, get hacked, or fail.
Self-custody risk: lose your seed phrase = permanent loss.
Regulatory/tax complexity: transactions may create taxable events.

The Most Common Crypto Scams (Learn These Once)

“Influencer coin” launches (thin liquidity + insider dumping)
Fake airdrops that steal wallet approvals
Phishing (fake exchange emails / fake wallet sites)
“Guaranteed yield” schemes (often collapse)

Basic defense: never click random wallet links, never share seed phrases, and assume hype = marketing, not value.

Crypto Vocabulary (Fast Definitions)

Blockchain: shared ledger that records transactions permanently.

Decentralized: not controlled by a single company/bank; the network runs it.

Private key / seed phrase: the secret that controls your wallet. Lose it = you’re done.

Exchange: platform where you buy/sell crypto.

Market cap: price × supply (not always meaningful for thinly traded tokens).

HODL: slang for “hold through volatility.”

Smart contract: code that executes on-chain (powerful + risky if buggy).

Meme coin: hype/community-driven coin/token with highly speculative price action.

FAQ (Beginner Questions)

Is cryptocurrency real money?

It can function like money (you can transfer value), but it’s not the same as government-issued currency. Most people treat it like a speculative asset rather than a stable spending currency.

Can you lose all your money in crypto?

Yes—prices can crash, exchanges can fail, wallets can get drained, and people can lose keys permanently. That’s why position sizing and security matter more here than in normal investing.

What’s the safest way to hold crypto?

For serious amounts: cold storage + backups stored safely + 2FA everywhere. For small amounts: a reputable exchange + strong security hygiene can be enough.

Are most new coins scams?

Many are low-quality or hype-only. The easier it is to launch a token, the more noise you get. Treat “new coin launches” like you’d treat penny-stock promotion: assume incentives are misaligned.

Is Bitcoin anonymous?

Not really. Bitcoin is pseudonymous: addresses aren’t your name, but transactions are public and can be traced with enough data.

What’s the difference between Bitcoin and Ethereum?

Bitcoin is primarily designed as a scarce digital asset for transferring value. Ethereum is a programmable blockchain that can run applications and smart contracts.

Conclusion

Crypto is easiest to understand when you view it as: digital ownership + a shared ledger. The upside is speed and flexibility; the downside is risk and responsibility. If you participate, do it with a plan, size small, and prioritize security.

Next Steps (If You Want to Improve Fast)

• Build a repeatable process: How to Create a Winning Trading System
• Learn how traders think about edge: How To Create a Trading Edge (Free)
• Learn how options are priced (risk literacy): How Options Are Priced

If you want to learn how traders automate research and build systems (including crypto strategies), here’s a solid book: Hands-On Trading with Python (QuantConnect & AWS) .

How to use ADX Indicator & Trading Strategies

2026-02-15T20:08:00.000-08:00

Technical analysts have used indicators for decades. They analyze historical price and volume behavior to understand trend strength and manage risk — not to “predict the future” with certainty.

Indicators are reactive by design. They measure what price is already doing so traders can make better decisions about entries, exits, and position sizing.

In this article we’ll break down a powerful but underused trend-strength tool: the ADX (Average Directional Movement Index). ADX helps identify when a stock transitions from random price action into a sustained, high-momentum trend.

🔎 ADX Quick Checklist (Before Entering a Trade)

✔ ADX was flat below ~20 (no prior strong trend)
✔ A catalyst or strong price expansion just occurred
✔ ADX is rising and pushing above ~25
✔ +DI is clearly above -DI (bullish dominance)
✔ Price structure confirms higher highs / higher lows

When these conditions align, a stock may be transitioning into a strong directional trend — exactly what ADX is designed to detect.

What ADX Measures

ADX measures trend strength, not direction. It works alongside two companion lines:

+DI (Plus Directional Indicator): buying pressure
-DI (Minus Directional Indicator): selling pressure

Think of it simply:

+DI vs -DI shows directional dominance
ADX shows how strong that dominance is

You don’t need the math to trade it effectively — just consistent interpretation.

ADX Indicator Settings

The default ADX setting is 14 periods.

Lower settings (7–10): faster but noisier
Higher settings (20–30): smoother but slower

Start with 14 and backtest based on your timeframe.

How to Use the ADX Indicator

According to Wilder, a strong trend typically develops when ADX rises above ~25.

Below 20 → weak / range-bound market
Above 25 → developing trend
Rising ADX → strengthening momentum
Falling ADX → weakening momentum

The Catalyst Expansion Setup

Stock reports major news (earnings, guidance, product launch)
Price gaps or expands strongly
ADX begins rising from below 20
+DI accelerates above -DI
ADX crosses above ~25

At this stage, the stock often transitions from a one-day spike into a sustained institutional trend.

⚠ Common ADX Mistakes

Using ADX alone. Always confirm with price structure.
Buying when ADX is already extremely high. May be late-stage trend.
Ignoring the slope. Rising ADX matters more than the level.
Trading in chop. ADX fails in sideways markets.
Confusing DI crossovers as automatic entries. Context matters.

Real Trade Example: Fastly ($FSLY)

Notice how ADX, +DI, and -DI were relatively flat before the earnings catalyst. After the gap, ADX expanded above 25 while +DI dominated.

📊 Quick Self-Test

Is ADX rising?
Did a catalyst just occur?
Is +DI clearly dominant?
Is price structure confirming strength?
Am I early trend expansion or late exhaustion?

ADX vs RSI vs MACD: What’s the Difference?

Many traders confuse ADX with other momentum indicators. They measure different things. Understanding the difference improves signal quality.

Indicator	Measures	Best Used For
ADX	Trend Strength	Confirming strong directional moves
RSI	Overbought/Oversold Conditions	Mean reversion & momentum shifts
MACD	Momentum + Trend Crossovers	Trend direction & early crossover signals

Key Insight: ADX tells you how strong a move is. RSI tells you how stretched a move is. MACD tells you when momentum shifts.

The strongest setups often occur when ADX confirms strength while RSI stays healthy (not extremely overbought) and MACD supports the direction.

🔧 Want to Backtest ADX Properly?

If you’re serious about using ADX, manual chart scrolling isn’t enough. The real edge comes from backtesting the exact ADX settings across hundreds of charts.

I personally recommend using TrendSpider to scan and test ADX breakouts automatically.

✔ Automated ADX scans
✔ Strategy backtesting
✔ Multi-timeframe confirmation
✔ No coding required

If you’re going to trade trend expansion setups, using the right software dramatically reduces guesswork.

Frequently Asked Questions (FAQ)

Is ADX a leading or lagging indicator?

ADX is a lagging indicator. It confirms trend strength after price expansion begins. It does not predict breakouts — it validates them.

What is the best ADX setting?

The default 14-period setting works well for most traders. Short-term traders may use 7–10. Swing traders may prefer 14–20. Always backtest based on timeframe.

What does ADX below 20 mean?

An ADX reading below 20 usually signals a weak or range-bound market. Trend-following strategies perform poorly in this condition.

What does ADX above 40 mean?

ADX above 40 indicates a very strong trend. However, extremely high readings (50–60+) may signal late-stage momentum.

Can ADX be used for day trading?

Yes, but lower timeframes require tighter risk management. False signals are more common intraday compared to daily or weekly charts.

Conclusion

ADX is one of the cleanest ways to measure trend strength. Used correctly, it helps traders align with sustained moves after volatility expansion.

The key is not prediction — it’s confirmation.

Backtest it. Paper trade it. Match the settings to your timeframe.

If you want to learn more indicator strategies, check out Japanese Candlesticks, RSI, or my take on technical indicators.

How To Trade Parabolic Stocks

2026-02-15T19:46:00.000-08:00

What if parabolic stocks aren’t always “pump-and-dumps,” but the pullback after the initial euphoria can be one of the best opportunities to generate alpha?

At one time or another, Bitcoin, Tesla, Apple, and Amazon all went parabolic and suffered severe corrections—then consolidated and moved higher. The catch: not every parabolic stock that crashes continues higher.

You need experience and a fundamental sense of what is (and isn’t) a quality stock to avoid the traps. I’ve written about common mistakes traders make. A practical filter I use: is there a credible catalyst after the crash? Catalysts keep the narrative alive—and narrative is often what drives parabolic moves in the first place.

The rest of this article is intentionally chart-heavy: a collection of parabolic patterns with minimal indicators—just price. You’ll notice a recurring structure: parabolic run → sharp crash → base/consolidation → expansion higher.

Parabolic Stock Chart Examples

Tesla ($TSLA) Parabolic Stock Chart

Gold ($GLD) / ($IAU) Parabolic Chart

Bitcoin ($BTC) Parabolic Chart

Virgin Galactic ($SPCE) Parabolic Chart

Virgin Galactic has had major “story stock” moments and recurring catalysts. This kind of narrative + volatility is exactly what produces parabolic behavior—just be careful, because these names can be extremely punishing when hype fades.

Update (10/19/2021): As mentioned earlier in 2021, the price reached ~55 and then fell hard. I do not recommend trading it just because it hit a prior target—always reassess risk/reward.

Greenwich Lifesciences ($GLSI) Parabolic Chart

Lucid Motors ($LCID) Parabolic Chart

Lucid is a good example of why parabolic patterns take time. Often it’s months—not weeks—before price rebuilds a base after a crash. A key question is whether upcoming catalysts (deliveries, product milestones, guidance updates) keep momentum alive.

FuboTV ($FUBO) Parabolic Chart

FuboTV shows how quickly sentiment can flip in a story stock. The bull case depends heavily on catalysts and execution (earnings, guidance, new product initiatives, etc.). If a narrative stays alive long enough, parabolic patterns can reappear— but the risk is equally high when hype fades.

Conclusion

The next time you see a parabolic stock crash, think twice before calling it a pump-and-dump. Some of the best risk/reward setups come after the euphoria—but only if the stock is real, the story is credible, and catalysts exist to rebuild momentum.

One final warning: some parabolic moves really are fraud-driven, hype-driven, or structurally broken. Always do your due diligence.

If you enjoyed this article, check out: How To Tell If A Stock Has Bottomed Out .

EMA vs SMA Explained (Which Moving Average Is Better for Trading?)

2026-02-15T19:07:00.000-08:00

EMA vs SMA: Which Moving Average Is Better?

Short Answer:

EMA reacts faster → better for short-term momentum and faster trend shifts.
SMA is smoother → better for long-term structure and fewer fake signals.

The real answer depends on your timeframe, volatility, and strategy design.

What Is a Moving Average?

Moving averages smooth price data to help traders identify trend direction and eliminate noise. They do NOT predict price. They quantify existing trend structure. There are two dominant forms:

Simple Moving Average (SMA)
Exponential Moving Average (EMA)

The difference is weighting. ---

How the Simple Moving Average (SMA) Works

The SMA takes the average of the last "n" closing prices. Formula: SMA = (P1 + P2 + ... + Pn) / n Example: A 10-day SMA sums the last 10 closes and divides by 10. All data points are weighted equally. This makes SMA: • Slower • Smoother • Less reactive It filters noise well — but lags. ---

How the Exponential Moving Average (EMA) Works

The EMA gives more weight to recent prices. Multiplier formula: 2 / (period + 1) For a 10-period EMA: 2 / (10 + 1) = 0.1818 Each new candle influences the EMA more than older candles. This makes EMA: • Faster • More responsive • More sensitive to volatility But also more prone to whipsaws. ---

EMA vs SMA: Side-by-Side Comparison

Speed: EMA > SMA
Smoothness: SMA > EMA
Short-term trading: EMA preferred
Long-term trend filter: SMA preferred
Whipsaw resistance: SMA better

Key Insight: EMA helps you enter earlier. SMA helps you avoid reacting too quickly. There is always a tradeoff between speed and reliability. ---

Timeframe Matters More Than Indicator Choice

On a 1-minute chart: EMA is often superior because momentum changes fast. On a daily or weekly chart: SMA often performs better as a structural filter. This is why institutions often monitor: • 50 SMA • 200 SMA While day traders use: • 9 EMA • 20 EMA ---

Whipsaws: The Hidden Cost of EMA

When markets chop sideways: EMA will flip direction rapidly. SMA will hold steady longer. This is why combining indicators improves stability. For example: Bollinger Bands + EMA or ADX + Moving Averages Adding a trend-strength filter reduces false signals. ---

EMA vs SMA Crossovers (Golden Cross & Death Cross)

A common system: • Short-term MA crosses above long-term MA → Buy • Short-term MA crosses below long-term MA → Sell Popular combinations: • 20 EMA / 50 EMA • 50 SMA / 200 SMA These systems work best in trending environments. They perform poorly in sideways markets. Backtesting is essential. If you want to learn proper system building: How To Create a Stock Trading System ---

Advanced: Which One Do Professionals Use?

Most professional traders do NOT rely on one moving average alone. They use: • Structure • Volume • Volatility • Trend context Moving averages are just dynamic support/resistance. For example, EMA Clouds (an evolution of Ichimoku concepts): EMA Cloud Strategy Explained ---

Verdict: Which One Should You Use?

If you are: Short-term trader: Use EMA. Long-term investor: Use SMA. Swing trader: Test both. The real edge comes from: • Risk management • Position sizing • Market selection Indicators alone do not create profitability. ---

Tools to Backtest EMA vs SMA

If you're serious about optimizing periods: TrendSpider All-in-One Market Research & Trading Software (Exclusive Discount Code) TrendSpider allows automated backtesting across multiple MA combinations. If you're serious about building quant-based systems: Learn How To Trade With AI and Python (Book) ---

Frequently Asked Questions (For Featured Snippets)

Is EMA more accurate than SMA?

No. EMA reacts faster, but that does not mean more accurate. It produces earlier signals with more false moves.

Do professionals use EMA or SMA?

Both. Institutions often monitor 50 and 200 SMAs. Active traders prefer EMAs for speed.

What is the best EMA period?

Common: 9, 20, 50, 200. There is no universal “best.” It depends on volatility and timeframe.

Can moving averages predict reversals?

No. They confirm trends after price has already moved. ---

Final Thought

EMA vs SMA is not about which is better. It is about: Speed vs stability. Fast signals vs clean structure. The professional approach is not choosing one. It is understanding when to use each. ---

Continue learning:

The EMA Cloud: The Next Generation Of Indicators?

2026-02-15T19:02:00.000-08:00

EMA Cloud Indicator (Quick Answer)

The EMA Cloud is a trend-following indicator (popularized by Ripster) that plots two exponential moving averages (EMAs) and shades the area between them. Traders use the cloud to quickly see trend direction and likely support/resistance zones during pullbacks.

TL;DR

Green cloud (fast EMA above slow EMA) = bullish bias
Red cloud (fast EMA below slow EMA) = bearish bias
Best in trending markets; can whipsaw in sideways chop
Common settings: 5–12, 8–9, 20–22, 34–50

Jump to: How to use · Best settings · Step-by-step · Backtesting (TrendSpider) · Examples · FAQ · Conclusion

Most traders use the same public indicators in the same obvious ways—so they end up with the same results. Real edge comes from thinking outside the box, testing variations, and building a repeatable process. The EMA Cloud is a “simple-but-useful” twist on traditional EMAs that makes trend and pullback zones much easier to see at a glance.

How to Use the EMA Cloud Indicator

EMA Clouds are built from two EMAs. When the faster EMA is above the slower EMA, the shaded area becomes a bullish (green) cloud. When the faster EMA drops below the slower EMA, the cloud flips bearish (red).

In the SPY example above, the 20 EMA is above the 50 EMA, creating a green cloud. As price pulls back into the cloud, many traders treat it like a dynamic support zone—a place where price may bounce and continue the trend.

If this concept feels familiar, that’s because it overlaps with the logic behind the Ichimoku Cloud System: a shaded zone that helps visualize trend and likely support/resistance.

Best EMA Cloud Settings

Common EMA Cloud settings include 5–12, 8–9, 20–22, and 34–50. The first number is the faster EMA, and the second number is the slower EMA. The shaded region between them becomes the cloud.

According to Ripster, popular combinations include:

5–12 or 5–13 for a fluid trendline (often used for day trades)
8–9 to help identify pullback/bounce areas
34–50 as a higher-timeframe trend filter (bullish above / bearish below)

Below is an example where the 34 EMA is below the 50 EMA (34–50 setting). The cloud turns red and starts acting as resistance.

Many traders layer multiple clouds: 34/50 as the long-term trend filter, plus faster clouds for pullbacks, adds, and exits. This creates the “rainbow” cloud effect shown below.

Step-by-Step Guide on Using the EMA Cloud

Find the indicator on your preferred platform such as TrendSpider (exclusive discount code available via the link). As new as this indicator is, it’s only available on a few platforms—currently TrendSpider and TradingView.
Add your preferred moving average type (commonly the exponential moving average). Use one longer-term set (e.g., 34–50) and one shorter-term set (e.g., 8–9).
Much like Ichimoku, you can shift the cloud forward/backward using an Offset. Offset 0 keeps it aligned to current price; higher values push it forward. Test this—offset can improve visuals, but can also create false confidence if you don’t validate it with real results.

Backtest EMA Clouds (Instead of Guessing)

EMA Cloud settings can work great in trending markets, but the best combo changes by ticker, timeframe, and volatility regime. The fastest way to improve results is to backtest and scan setups consistently.

Backtest EMA Cloud settings across markets/timeframes
Use automated scanning to find strong trends faster
Confirm entries with multi-timeframe analysis
Reduce whipsaws by filtering out sideways chop

Open TrendSpider (exclusive discount code)

Disclosure: This is an affiliate link. If you use it, I may earn a commission at no extra cost to you.

Chart Interpretation

Bullish: When the short-period EMA crosses above the long-period EMA, the cloud turns green.
Bearish: When the short-period EMA falls below the long-period EMA, the cloud turns red.

Pay attention to inflection points where the cloud flips colors—these can act like trend confirmation signals. But avoid getting chopped up: use settings that don’t flip too easily in sideways markets.

Examples

Here is another example showing how SPY repeatedly reacts to the EMA Cloud over time (daily chart, 20/50 EMAs):

Below is an annotated example from Ripster using a 1-minute AAPL chart and the 34/50 EMA cloud:

EMA Cloud FAQ

Is the EMA Cloud good for day trading?

It can be, especially in trending sessions. For choppy markets, consider stricter filters (higher timeframe trend, fewer flips, or confirmation).

What timeframe works best?

There is no universal “best.” Many traders use a higher timeframe (daily/4H) for trend bias and a lower timeframe for entries.

What are the best EMA Cloud settings?

Common sets include 5–12, 8–9, 20–22, and 34–50. The best settings depend on the market, timeframe, and volatility.

Is EMA Cloud the same as Ichimoku?

No. They share a “cloud” concept visually, but Ichimoku has multiple components and different logic. EMA Cloud is simply two EMAs with shading.

Next Reads (Build Your Edge)

Conclusion

The EMA Cloud is a rare “simple innovation” that improves how traders visualize trend and pullbacks using EMAs. The real key is to backtest settings on your markets/timeframes and learn when it works (trends) versus when it fails (chop).

If you want a faster workflow to test EMA Clouds and scan for strong trends, use: TrendSpider (exclusive discount code via the link).

Why the CEO of Greenwich LifeSciences Keeps Buying

2026-02-08T12:28:00.000-08:00

One of the most common questions around GLSI isn’t really about the science anymore — it’s about behavior. Specifically, why does the CEO keep buying stock if the Phase III trial is still blinded and unresolved?

The answer is more disciplined (and less conspiratorial) than people assume.

What the CEO absolutely does not see

Let’s clear this up first, because this is where many investors go wrong.

In a properly run, double-blind, randomized Phase III oncology trial, the CEO cannot see:

placebo vs treatment outcomes
hazard ratios
curve separation
interim efficacy results

If he could, insider buying would be illegal, the FDA would invalidate the trial, and the entire program would be dead. There is no gray area here.

The real advantage: process, not outcomes

The CEO’s edge isn’t secret efficacy data. It’s process-level visibility.

He knows whether the machine is running cleanly, even if he doesn’t know the final score.

What the CEO can legally see

These signals don’t tell him the drug works — but they do tell him whether the downside risk the market is pricing is justified.

Event accrual speed (without direction)
He can see how fast recurrence events are occurring overall, not which arm they’re coming from. In a recurrence-prevention trial, very fast events are often bad; slower accrual is neutral to positive.
Data Monitoring Committee behavior
He is informed only whether the independent DMC says:
- continue as planned
- or stop/modify for futility or safety
  No futility stop means nothing is obviously failing.
Safety profile
Aggregate safety data is visible. Clean safety is critical in the adjuvant setting and often determines whether modest efficacy can still be approvable.
Enrollment quality and execution
He sees whether patients are enrolling, completing dosing, and staying compliant. Poor execution kills trials quietly; strong execution keeps optionality alive.
Regulatory tone
FDA interactions, manufacturing approvals, and procedural cooperation matter. FDA clearance of commercial manufacturing doesn’t prove efficacy, but it does signal the program is viewed as credible, not fragile.

What repeated insider buying actually signals

Repeated buying usually means:

belief that the market is over-discounting catastrophic failure
confidence that nothing operational, regulatory, or safety-related is broken
conviction that probability-weighted outcomes exceed the current price

It does not mean:

“I know the hazard ratio”
“I know placebo is worse”
“I know approval is coming”

The prevention-trial inversion most investors miss

In late-stage metastatic trials, speed is good. In prevention trials, speed can be bad. If events are accruing slowly and the trial keeps progressing without interruption, that often reflects exactly what the therapy is trying to do: reduce recurrences. That doesn’t prove success — but it weakens the bear case that “something must be wrong.”

Bottom line

The CEO isn’t buying because he knows the outcome. He’s buying because he understands the process well enough to believe the market is mispricing the risk. Clean execution, no futility stop, no safety issues, and constructive FDA engagement don’t guarantee success — but they do justify conviction. Insider buying here is not a signal of hidden data; it’s a signal of alignment and belief that the odds are better than the tape implies.

Breaking Down $FUBO Reverse Stock Split Move

2026-02-05T12:15:00.000-08:00

Reverse stock splits (R/S) are often viewed negatively by investors because they are frequently associated with distressed companies facing shrinking revenues, cash burn, and impending dilution. However, FuboTV represents an important exception. When evaluated across market capitalization, profitability trajectory, merger dynamics, and revenue growth, Fubo’s situation diverges meaningfully from the historical R/S failure pattern.

1. Market Capitalization: Scale Matters

Typical R/S failures

Sub-$100M market caps
Thin liquidity
Vulnerable to manipulation and forced selling

Fubo’s position

Post-merger market cap remains materially larger than most R/S peers
Institutional relevance is preserved
Liquidity remains sufficient to support normal price discovery

Why this matters
Reverse splits are most damaging when they push already-tiny companies into irrelevance. Fubo’s scale prevents that dynamic and reduces the probability of sustained post-split compression.

2. Profitability: This Is Not an Operating Failure

Key distinction
Fubo is not losing money because its core business is broken.

Adjusted EBITDA is positive
Losses are largely driven by non-recurring legal and transaction expenses
Underlying unit economics (subscriber ARPU, ad monetization) are improving

Contrast with typical R/S companies

Chronic operating losses
Negative gross margins
No clear path to break-even

Implication
An R/S attached to improving profitability behaves very differently from one attached to structural cash burn.

3. Merger Dynamics: A Strategic Reset, Not a Lifeline

The Hulu Live TV transaction fundamentally reshapes Fubo’s profile:

Revenue scale increased immediately
Content costs and economics normalized
Strategic alignment with a dominant industry player
Reduced long-term competitive risk

Most failed R/S cases

Reverse split precedes dilution
No structural business change
Capital raise follows shortly after

Fubo’s case

The merger is the restructuring
The R/S is a technical compliance step, not a solvency move

4. Revenue Growth: The Core Engine Is Expanding

Revenue growth is real and sizable
Ad-supported streaming tailwinds remain strong
The subscriber base is larger and more diversified post-merger

This directly contradicts the classic R/S warning sign: shrinking or stagnant revenue.

5. Common R/S Risks — And Why They Largely Don’t Apply

❌ “Reverse splits always lead to dilution.”

Dilution risk is highest when cash burn persists
Fubo’s improving EBITDA reduces capital dependency

❌ “Institutions abandon reverse-split stocks.”

Institutions avoid distressed R/S stocks
Fubo remains revenue-scaled and strategically relevant

❌ “Retail sentiment collapses permanentl.y”

Short-term selling pressure is common
Long-term price action follows fundamentals, not mechanics

The One Risk That Does Apply: Near-Term Volatility

The current pullback is expected and mechanical:

Forced selling
Algorithmic de-risking
Psychological aversion to reverse splits

This is not fundamental deterioration — it is a positioning reset.

Conclusion

Fubo’s reverse split does not resemble the historical “R/S kiss of death” because:

The company has scale
The business is profitable
The merger provides structural improvement
Revenue growth remains intact
The split is technical, not existential

The market is treating Fubo like a distressed R/S case — but the fundamentals do not support that classification.

The disconnect between perception and reality is precisely why this situation is being mispriced in the short term.

The Missed Hidden Gem in Fubo's Earnings Report

2026-02-04T17:22:00.000-08:00

A closer look at FuboTV’s recent financials reveals an important nuance that headlines often miss: the business was operationally profitable when excluding extraordinary legal expenses.

In Q4, Fubo reported a GAAP net loss, but that figure was heavily impacted by one-time litigation and legal costs related to ongoing disputes and strategic transactions. When those costs are removed, Fubo’s adjusted EBITDA turns positive, indicating that the core business — subscriber revenue, advertising, and content economics — is generating profit.

This distinction matters. Legal expenses are non-recurring and not tied to day-to-day operations. By contrast, adjusted EBITDA reflects whether the underlying business model works. In Fubo’s case, it does.

The takeaway is straightforward:
Fubo’s losses were not driven by a broken business model, but by temporary legal overhead. As those expenses normalize, reported profitability should more closely reflect the company’s improving operational fundamentals.

For investors and observers focused on sustainability rather than short-term noise, that’s a meaningful signal.

How To Tell If A Stock Has Bottomed

2026-01-31T09:31:00.000-08:00

How to Tell a Stock Has Bottomed (Checklist)

There is no single “best” bottom indicator. What works is a cluster of signals that all appear together, showing seller exhaustion and a high-probability reversal.

My Bottom Reversal Cluster (look for these at the same time):

Gap down (potential exhaustion, especially after extended bleeding)
Open below the lower Bollinger Band (oversold condition)
Strong bullish close (hammer / long wick / closes near highs)
Bonus: clear catalyst context (lock-up expiration, news-driven flush, etc.)

Jump to: Cluster rules · Real-life examples · Conclusion

Trading in a bearish environment can be brutal—especially for new traders. It feels like a stock can bleed forever. But sharp pullbacks in fundamentally sound companies often create high-quality buying opportunities.

By “fundamentally sound,” I mean: no major red flags, not purely a hype meme trade, and no obvious controversy that makes the downside open-ended.

If you can identify true seller exhaustion and catch the reversal, the bounce can be violent — which is why learning bottom patterns matters.

How To Tell a Stock Has Bottomed

I’ve said this many times on the blog: you need a cluster of indicators. One signal alone is weak. Multiple signals aligning is what creates probability.

In this article, we focus on the following showing up AT THE SAME TIME:

The stock gaps down. Gaps can mark exhaustion — but they can also start a new trend. Context matters. If a stock is already down ~50% and then gaps lower, sellers are often closer to exhaustion.
The stock opens below the lower Bollinger Band (oversold). If you’re not comfortable with Bollinger Bands, start here: Why Mastering Bollinger Bands Is A Must.
A bullish candlestick at the close. Ideally: a hammer with a long wick or a candle that closes near the day’s highs after bouncing hard off lows. If you want to sharpen this, read: Mastering the Art of Japanese Candlestick Reading.
Bonus: Understand the catalyst. Lock-up expiration flush? Broad market panic? Liquidity event? Earnings miss? As a rule: don’t assume the first post-earnings dump is “the bottom” — it often isn’t.

Real-Life Examples of Stocks Bottoming

These examples show the same pattern repeating: gap down + below lower Bollinger + strong bullish close.

Example 1: Lucid Motors ($LCID) — bottomed during a lock-up period flush. Notice the cluster signals:

Example 2: FuboTV ($FUBO) — almost identical structure: gap down, deep below the band, strong bullish close:

Example 3: Virgin Galactic ($SPCE) — same cluster: gap down, oversold open, and strong reversal candle:

Conclusion

Hopefully this gives you a clear framework for how I detect bottoms. There’s no perfect bottom indicator — it’s about a cluster of signals plus context.

Always zoom out. Pay attention to broad market conditions (S&P 500 / Nasdaq: $SPY, $QQQ) and major news events. Not every bottom looks like the examples above.

Rule of thumb: when panic is high and buying feels scary, that’s often when the best opportunities appear. Avoid gambling with options. Focus on quality stocks and think in terms of swing trades — that’s where the money is.

If you enjoyed this article, check out: breaking down parabolic stocks.

How To Trade Bollinger Bands

2026-01-29T09:11:00.000-08:00

Bollinger Bands (Quick Answer)

Bollinger Bands measure volatility around a moving average using standard deviation. They help traders spot overbought/oversold conditions, potential mean reversion, and volatility expansion setups like the Bollinger Squeeze.

TL;DR

Upper band = often “overbought” zone (context matters)
Lower band = often “oversold” zone (context matters)
Band squeeze = volatility compression that can precede a big move
Default settings: 20 SMA with 2 standard deviations

Jump to: Calculations · How to trade · Bollinger Squeeze · Tools & backtesting · FAQ · Conclusion

Traders and investors use Bollinger Bands to assess expected price action in financial markets. Bollinger Bands are a popular technical tool plotted at a standard deviation above and below a simple moving average. When used correctly, they can help identify when a stock is stretched (overbought/oversold) and when volatility is about to expand. I don’t say this lightly: using Bollinger Bands effectively is necessary for serious technical traders.

Famous analyst John Bollinger developed Bollinger Bands in the early 1980s and trademarked the term in 2011. The goal was to define a volatility “envelope” around price—so traders can estimate a realistic range where price is likely to travel.

Three lines comprise Bollinger Bands: the lower, the middle, and the upper. The middle line is typically a 20-day simple moving average (SMA). The upper and lower bands expand/contract based on volatility (standard deviation). You can customize the settings depending on your market and timeframe. See the breakdown below.

Bollinger Band Calculations

First, calculate a simple moving average. Next, calculate the standard deviation over the same number of periods as the moving average. The upper band is the middle band plus a multiple of standard deviation. The lower band is the middle band minus a multiple of standard deviation.

Typical values used:

Short-term: 10-day moving average, bands at 1.5 standard deviations.
Medium-term: 20-day moving average, bands at 2 standard deviations.
Long-term: 50-day moving average, bands at 2.5 standard deviations.

Backtest Bollinger Bands (Stop Guessing Settings)

Bollinger Bands are powerful, but results vary by ticker, timeframe, and volatility regime. If you want to use them professionally, you should backtest your band settings and build rules you can repeat.

My preferred platform for fast testing and clean charting is: TrendSpider (exclusive discount code via the link).

Disclosure: This is an affiliate link. If you use it, I may earn a commission at no extra cost to you.

How To Trade Bollinger Bands Effectively

The most common use is identifying overbought and oversold conditions:

If price touches or rides the upper band, it can be overbought and due for a pullback (especially if it pierces hard).
If price touches or rides the lower band, it can be oversold and due for a bounce (but bounces are not guaranteed—context matters).

A key skill is separating “temporary stretch” from “real trend continuation.”

Check out this Lucid Motors example, where price pushed aggressively above the upper band—hinting at a pullback that followed quickly:

Important: Different traders apply Bollinger Bands differently. Some buy near the lower band and take profits near the middle band. Others trade band “breaks” (momentum) and exit on a reclaim or failure.

One thing to watch: prices can snap back fast after a band touch—especially when the bands are tight and volatility is low. That leads into the Bollinger Squeeze.

What Is a Bollinger Squeeze?

When the bands tighten, volatility is compressing. In many markets, low volatility doesn’t last forever. A squeeze can foreshadow a sharp move—either direction.

The mistake beginners make is assuming a squeeze is automatically bullish. It’s not. It’s a volatility warning. Direction should be confirmed with trend, volume, and/or a catalyst.

Simple Bollinger Bands Rules (Good Starting Point)

Mean reversion setup: fade extreme pushes outside the bands only when trend is weakening or momentum stalls.
Trend setup: in strong trends, price can “ride” the upper band for days—don’t short it blindly.
Squeeze setup: treat tight bands as an alert; wait for confirmation (break + follow-through + volume).
Risk management: define exits before entry (stops and targets), because band touches can fail.

Conclusion

The beauty of Bollinger Bands is probabilistic: with standard settings, price spends most of its time within the bands. When price stretches far outside, it often reverts (not always immediately, but often). Capturing high-probability reversals—and knowing when not to fade a strong trend—is why Bollinger Bands are a must-learn indicator.

Like everything in the market, it’s not plug-and-play. You’ll need live screen time and backtesting to get a real feel for how bands behave across different tickers.

Want to Get Better With Bollinger Bands Faster?

The fastest improvement comes from testing your rules on different markets and timeframes, then refining what works. If you want a clean workflow for charting + scanning + testing: TrendSpider (exclusive discount code via the link).

Disclosure: This is an affiliate link. If you use it, I may earn a commission at no extra cost to you.

Check out my other articles on indicators that can help you make money. Also, if you are interested in more trading systems, check out: Using Ichimoku Clouds for Daytrading and The Elder Impulse System.

Bollinger Bands FAQ

What do Bollinger Bands tell you?

They show volatility around a moving average and help identify stretched prices (potential overbought/oversold zones) and volatility compression (squeezes).

Are Bollinger Bands good for day trading?

Yes, but they work best when combined with trend context and risk management. In chop, band touches can whipsaw.

What settings should I use?

The standard is 20 SMA with 2 standard deviations. Some traders adjust to 10/1.5 for short-term or 50/2.5 for long-term. Backtest your market.

Does touching the upper band mean sell?

Not always. In strong trends, price can ride the upper band. Treat it as a “stretch” signal, not an automatic reversal.

Top Stock Trading Books

2026-01-24T10:25:00.000-08:00

Best Trading Books (Short List)

If you only read 3 books, start here:

Hedge Fund Market Wizards (process + edge)
Technical Analysis of the Financial Markets (core TA foundation)
Trading in the Zone (psychology + probability mindset)

Jump to: Must-Read · Technical Analysis · Psychology · How to Read These · Free Resources · FAQ

Becoming a consistently profitable trader is hard—most retail traders never get there. In the beginning, I wasted a lot of time bouncing between random strategies, watching “guru” videos, and taking trades without a real framework.

The right books fix this by teaching how professionals think: risk management, probability, trade selection, and execution discipline. Below is my curated list of books that actually moved the needle, broken into: Must-Read Trading Books, Technical Analysis, and Trading Psychology.

Pro tip: Read + apply. Don’t just collect information.

If you want a clean setup to study charts while you read, try TrendSpider (exclusive discount code) for charting + backtesting, and TipRanks for research context (news, analyst moves, sentiment).

Best Must-Read Trading Books

Hedge Fund Market Wizards: How Winning Traders Win — Jack D. Schwager

Schwager interviews elite traders and exposes the consistent pattern behind long-term success: edge + risk control + repetition. Profitable traders don’t “predict”—they run a process.

Stock Investing for Dummies — Paul Mladjenovic

A simple, surprisingly strong foundation for stocks, ETFs, diversification, and risk. Great if you want structure without overwhelm.

Best Books on Technical Analysis

Technical Analysis of the Financial Markets — John Murphy

The gateway into TA: trends, support/resistance, chart patterns, indicators, and confirmations. Also doubles as a reference guide.

Encyclopedia of Chart Patterns — Thomas N. Bulkowski

The chart pattern bible. The real value is the statistics and reliability behind each pattern (not just the drawings).

Japanese Candlestick Charting Techniques — Steve Nison

One of the fastest ways to improve entries/exits. Candlesticks (in context) help you avoid buying tops and shorting bottoms.

Two free candlestick articles on this site: Mastering the Art of Japanese Candlestick Reading (recommended first), and How To Unlock The Power Of Japanese Candlesticks.

Bollinger on Bollinger Bands — John Bollinger

A volatility framework that’s actually grounded in statistics: squeezes, mean reversion, and volatility expansion.

If you want the practical version, read my guide: Why Mastering Bollinger Bands Is A Must .

Best Books on Trading Psychology

The New Trading for a Living — Alexander Elder

Great blend of psychology + discipline + charting. Helps you become a more “complete” trader.

Trading in the Zone — Mark Douglas

The probability mindset. If you keep breaking rules or revenge trading, this book will hit you in the face (in a good way).

Also check out: 4 Top Must-Read Trading Books From a Hedge Fund Manager .

How to Read These Books Without Wasting Time

Most people read trading books like entertainment—then nothing changes. Here’s a simple method that actually works:

Pick one category (TA or Psychology) and commit to 30 days.
Extract rules: write down 10–20 actionable rules (entries, exits, risk, mindset).
Backtest 1–2 ideas (even basic manual review is fine).
Paper trade until execution becomes boring.
Go small and scale only after consistency.

If you want a structured path, start here: How to Create a Stock Trading System .

Free Resources

If you prefer free content, browse the (frequently updated) library here: Stock Market Education.

Want to practice probability trading without guessing direction? Prediction markets can be a good sandbox. If you’re curious, check out Kalshi (get $25 when you join).

FAQ

Which book should a complete beginner start with?

Start with Stock Investing for Dummies , then read Hedge Fund Market Wizards .

Which book helps the most with discipline and emotions?

Trading in the Zone . It forces you to think in probabilities, not predictions.

What’s the best “technical analysis foundation” book?

Technical Analysis of the Financial Markets (Murphy). It’s the clearest all-around TA base.

Which book is best if I want data-backed chart patterns?

Encyclopedia of Chart Patterns (Bulkowski).

Do I need to read all of these?

No. If you read one from each category and apply the ideas, you’ll beat most traders who only consume content. A solid trio is: Market Wizards + Murphy TA + Trading in the Zone.

Explaining FDA Approval of $GLSI

2026-01-22T08:09:00.000-08:00

GLSI announced that the FDA approved the use of a commercially manufactured lot of GP2 vials in its Phase III FLAMINGO-01 trial. On the surface, that sounds like meaningful FDA approval — yet the stock reaction has been muted.

This post explains what the announcement actually means and why the market is not repricing GLSI materially higher yet.

What Was Actually Approved by the FDA

The FDA did not approve GLSI-100 for commercial use. Instead, it approved the use of a commercially manufactured batch of the GP2 peptide within the ongoing Phase III FLAMINGO-01 clinical trial.

GP2 is a peptide vaccine component designed to stimulate an immune response in patients with HER2-positive breast cancer after standard of care treatment.

In practical terms, this FDA clearance allows Greenwich LifeSciences to:

Use commercial-grade GP2 material in its Phase III trial
Validate manufacturing consistency at scale
Generate CMC (Chemistry, Manufacturing, and Controls) data required for a future BLA submission
Establish up to three years of product stability data

This is a manufacturing and regulatory readiness milestone — not a clinical efficacy event.

Why the Stock Did Not Move Higher

1. This Is Not Drug Approval

Markets react strongly to three types of biotech catalysts: clinical efficacy data, regulatory marketing approval, and commercial launch visibility.

This announcement does not directly check any of those boxes. It advances the infrastructure behind a potential approval, but does not alter the probability of success in the eyes of risk-adjusted investors.

2. Manufacturing Progress Is Expected — Not Surprising

By the time a company reaches Phase III, the assumption is that manufacturing scale-up will occur if the program is viable.

Because this step is necessary but not differentiating, the market largely treats it as confirmation rather than new value creation.

3. No New Efficacy Data Was Released

GLSI’s long-term valuation depends on whether FLAMINGO-01 ultimately demonstrates a statistically significant reduction in breast cancer recurrence.

Until updated Phase III data or interim efficacy readouts are released, institutional capital remains cautious.

4. Timeline Risk Still Dominates

Even with manufacturing clearance in place:

The Phase III trial must complete enrollment and follow-up
Data must meet predefined endpoints
A Biologics License Application must be submitted and reviewed

That places true commercial inflection points years away, which caps near-term valuation expansion.

5. Capital Structure Overhang

Like most development-stage biotechs, GLSI does not generate revenue and has historically relied on equity financing.

Investors discount regulatory progress unless it clearly reduces dilution risk or accelerates time to market — which this announcement does not.

What This Announcement Actually Does for GLSI

While it is not a pricing catalyst, the FDA clearance is still constructive.

It:

Reduces execution risk around manufacturing
Strengthens the eventual BLA package
Signals regulatory alignment with trial design
Supports long-term commercialization credibility

In other words, it de-risks the future without re-rating the present.

Bottom Line

The FDA approval announced by Greenwich LifeSciences is a legitimate operational milestone — but it is not the type of event that fundamentally changes valuation today.

Until GLSI delivers definitive Phase III efficacy data or moves substantially closer to marketing approval, the stock is likely to remain range-bound and headline-sensitive rather than trend-driven.

Long-term value will be determined by clinical outcomes — not manufacturing permissions.

How to Make Money on Kalshi

2026-01-18T16:41:00.000-08:00

Most people approach Kalshi the wrong way.

They try to “be right.” They argue macro narratives. They hold positions to settlement.

That’s not how experienced traders approach it.

Kalshi is a pricing market.

If you understand probability, expected value, liquidity, and settlement mechanics, you can build an edge. If you don’t, it slowly drains your account.

What Kalshi Really Is

Kalshi is a CFTC-regulated binary prediction exchange.

Every contract settles at:

$1 if YES
$0 if NO

If a contract trades at $0.32, the market implies a 32% probability.

Your job is not to predict the future. Your job is to determine whether 32% is mispriced.

Edge = Expected Value (EV), not conviction.

How Traders Actually Make Money on Kalshi

Mispriced probabilities
Timing & liquidity shifts
Settlement rule precision
Event-driven volatility

This is closer to probability-style trading than traditional betting.

Want to test it without committing real capital? Get $25 free on Kalshi and treat it like a structured practice account.

The “Bet Everything NO” Idea

Short answer: It works sometimes.

Long answer: It works selectively and fails badly when misused.

Why NO Positions Often Look Attractive

Many markets are structured around deadlines:

“Will approval happen by X date?”
“Will CPI exceed Y?”
“Will recession be declared by Z?”

Processes take longer than expected. Deadlines slip. Bureaucracy moves slowly.

Because of that, YES contracts can be slightly overpriced due to optimism.

When NO Has Real Edge

Short-dated contracts
Process-based approvals
Multi-step regulatory outcomes
Hype-driven narratives

You are betting against timing, not truth.

Why NO Eventually Fails as a Blind Strategy

1) Fat-tail risk
One low-probability YES resolving true can erase weeks of NO gains.

2) Capital drag
NO positions tie up capital for long durations.

3) Market efficiency improves
Edges shrink as participation increases.

Kalshi Strategies That Work in Practice

1) Selective NO Bias (Low Risk Base Strategy)

Tight timelines
Multi-step approvals
Over-optimistic sentiment

Risk small. Exit early if pricing shifts.

2) Buy YES Early, Sell the Hype

Buy when liquidity is thin
Sell into media-driven price spikes
Do not hold through binary resolution

This converts Kalshi into a volatility market, not a prediction contest.

3) Settlement Rule Arbitrage

Every contract specifies:

Data source
Time cutoff
Specific wording

Minor wording differences create opportunity.

4) Event Volatility Harvesting

During CPI, Fed decisions, elections, spreads widen. Skilled traders enter early and exit before normalization.

Common Mistakes

Confusing belief with probability
Holding every trade to settlement
Ignoring capital efficiency
Oversizing positions
Trading headlines emotionally

Simple Framework

Risk 3–5% per contract
Track expected value, not win rate
Favor short-duration contracts
Take profits before settlement when possible
Always read settlement wording

FAQ

Is Kalshi gambling?

No. It is a CFTC-regulated exchange trading binary event contracts.

Can you consistently make money on Kalshi?

Yes — but only if you approach it as probability trading and manage risk appropriately.

Is betting NO a guaranteed strategy?

No. It works selectively, not universally.

Final Takeaway

The edge on Kalshi is pricing, structure, and discipline.

Test it with $25 free: Claim $25 on Kalshi

Trading event contracts involves risk. This article is educational and not financial advice.

Breaking Down The Latest $GLSI Clinical Data

2026-01-17T12:54:00.000-08:00

If you have not read the original GLSI analysis, this article builds directly on that foundation. You can find the full breakdown of the company, trial structure, and valuation framework here: GLSI Life Science Data Breakdown and Stock Analysis.

In a previous article, we broke down Greenwich LifeSciences (NASDAQ: GLSI) from a stock and clinical perspective, focusing on trial structure, risk, and long-term valuation drivers. Since then, the company has released additional analysis that has sparked confusion around its Phase II and Phase III results — particularly the discussion of “100% prevention” versus an “80% reduction.”

This follow-up article clarifies what the data actually reveal, why the numbers appear different at first glance, and what investors should take away from the latest clinical update.

Phase IIb Results: What Was Actually Proven

The randomized Phase IIb trial of GLSI-100 demonstrated a strong and durable reduction in breast cancer recurrence compared with placebo. Across longer-term follow-up, the treated group showed approximately an 80 percent or greater reduction in recurrence rates.

That level of efficacy already places GLSI-100 above most existing adjuvant therapies, which typically reduce recurrence risk by roughly 20 to 40 percent.

The often-cited “100% disease-free survival” figure came from early presentations and sub-analyses involving smaller patient subsets and shorter follow-up windows. In those specific groups, no recurrences were observed during the observation period.

However, this was never the overall Phase IIb outcome across the full randomized cohort. The correct interpretation of the Phase IIb data is a substantial reduction in recurrence risk — not absolute or permanent prevention.

Phase III (FLAMINGO-01): What Has Been Reported So Far

Early observations from the ongoing Phase III FLAMINGO-01 trial are consistent with the Phase IIb findings. In the open-label, non-HLA-A*02 arm, preliminary analysis has shown approximately an 80 percent reduction in recurrence trends to date.

It is important to emphasize that Phase III results are still early and not yet based on final, event-driven comparisons. As follow-up continues and more data mature, results will naturally stabilize.

Crucially, this does not represent a step backward from Phase II. Instead, it reflects the expected transition from smaller datasets to broader populations with longer observation periods.

Baseline Recurrence Risk: The Missing Context

Understanding recurrence reduction requires context around baseline risk. Patients in GLSI trials are not untreated. They already receive standard of care, which may include surgery, radiation, and endocrine therapy.

Even with standard treatment, recurrence risk remains meaningful. For early-stage, hormone-receptor–positive breast cancer, the typical recurrence risk is:

Approximately 10 to 30 percent over 5 to 10 years
Higher-risk subgroups may exceed 30 percent with longer follow-up
An annualized recurrence rate of roughly 1 to 3 percent per year

As a simplified benchmark, prevention trials often assume a cumulative recurrence risk of around 20 percent over several years.

What an 80% Reduction Actually Means

An 80 percent reduction in recurrence does not mean recurrence drops to 20 percent. It means recurrence is reduced by 80 percent relative to the baseline risk.

Using a 20 percent baseline as an example:

Baseline recurrence risk: 20 percent
80 percent relative reduction
Implied residual recurrence risk: approximately 4 percent

That difference — from 20 percent down to roughly 4 percent — would represent a major clinical advance if confirmed durably in Phase III.

Why the “100% Prevention” Narrative Persisted

The idea of 100 percent prevention came from specific subgroups, limited follow-up periods, and intervals where no recurrence events were observed. As datasets expand and follow-up lengthens, results naturally converge toward more statistically stable outcomes.

This normalization toward an 80 percent relative reduction is expected and does not imply that the therapy has become less effective.

Why an 80% Reduction Still Matters

Most approved breast cancer adjuvant therapies reduce recurrence risk by 20 to 40 percent. A durable 80 percent reduction would place GLSI-100 in best-in-class territory, particularly as a prevention-focused therapy.

From a regulatory standpoint, consistent relative risk reduction matters far more than claims of perfect prevention. This is why the program remains in Phase III and continues without safety-related trial modifications.

Bottom Line

Phase IIb never demonstrated universal 100 percent prevention, and Phase III has not regressed from earlier findings. The consistent takeaway across both phases is a substantial reduction in recurrence risk of roughly 80 percent.

With baseline recurrence rates commonly ranging from 10 to 30 percent, this implies a treated recurrence rate in the low single digits if results hold over longer follow-up. If Phase III confirms this effect durably, the clinical and valuation implications for GLSI would be significant.

Everything You Need To Know About $GLSI For 2026

2026-01-12T13:45:00.000-08:00

Below is a clear, practical look at Greenwich LifeSciences, Inc. (NASDAQ: GLSI), covering its most recent clinical and financial updates, how the stock is behaving in the market, and where the real risks and potential upside sit. This is based on publicly available company disclosures, trial updates, and market data.

1. Latest Company Results (Clinical and Financial)

Clinical Trial Progress – FLAMINGO-01 (GLSI-100)

Greenwich LifeSciences continues to advance its Phase III FLAMINGO-01 trial for GLSI-100, an immunotherapy aimed at preventing breast cancer recurrence. Unlike late-stage cancer treatments, GLSI-100 is designed as a prevention-focused therapy, which is why the trial outcome carries outsized importance for valuation.

As of the latest update, the company has activated roughly 140 clinical sites, with plans to expand further. One of the key trial arms, the non-HLA-A02 group, is now fully enrolled with approximately 250 patients. Early observations from patients who completed the primary immunization series showed an estimated 80 percent reduction in recurrence.

Importantly, the Data Safety Monitoring Board recommended that the study continue without any modifications. While this does not guarantee success, it does suggest the trial is progressing without major safety concerns.

It is worth stressing that these findings are preliminary and open-label. They do not yet represent final regulatory-grade efficacy data. However, they are strong enough to keep the trial moving forward, which is a necessary condition for any upside scenario.

Financial and Operational Status

From a financial standpoint, GLSI remains a development-stage biotech. The company is not profitable and continues to report negative EBITDA, which is typical for a Phase III clinical-stage company.

Annual cash burn is approximately $7 million and is currently funded primarily through at-the-market financing. This creates ongoing dilution risk, although the company appears to have sufficient short-term liquidity, with a current ratio above 1.

The next scheduled earnings update is expected in April 2026.

2. Stock Price Outlook

Recent Performance

GLSI is a highly volatile stock. Over the past 52 weeks, shares have traded between approximately $7.78 and $30.82. More recently, the stock has been consolidating in the $22 to $26 range, with volume beginning to increase.

This type of price action is typical for late-stage biotech stocks, where sentiment and expectations can shift quickly based on limited information.

Analyst Price Targets

Time Frame	Price Target Range	Implied Upside
12-month average	$39 – $47.50	Approximately 60% to 112%
High-end forecasts	$45 – $50+	Approximately 80% to 100%+

Analyst coverage remains limited, and estimates vary widely, which is common for companies at this stage of development.

Projected Scenarios

Short Term (1–3 months)

In the short term, the stock is largely driven by technical levels and sentiment. Support currently sits in the $22 to $24 range, while upside resistance appears near $26 to $28. If momentum continues, the stock could attempt another push higher, but volatility should be expected. Daily swings of 10 percent or more are not unusual.

Long Term (12+ months)

Longer term, outcomes become binary. Strong Phase III data combined with regulatory acceleration could support a move toward $45 to $50 or higher. On the other hand, weak efficacy data or trial failure would likely result in a sharp downside move.

3. Risk Profile

Key Risks

The primary risk is clinical. A Phase III failure or unexpected safety issue would likely result in severe share price declines, as the company’s valuation is almost entirely tied to this program.

Financial risk remains elevated due to ongoing cash burn and the possibility of dilution. GLSI has no commercial revenue to offset operating costs.

From a valuation perspective, the stock trades at elevated multiples relative to peers, reflecting expectations of future success rather than current fundamentals.

Finally, liquidity and volatility are meaningful concerns. The stock carries a high beta, and sharp volume-driven moves can occur with little warning.

Potential Upside Catalysts

On the upside, positive interim or final Phase III data would be the most meaningful catalyst. Regulatory developments such as FDA fast-track or accelerated approval could also materially re-rate the stock. Strategic partnerships, licensing deals, or acquisition interest would further support valuation.

Recent insider buying and extended lock-ups suggest management confidence in the long-term outcome of the program, though this should not be viewed as a guarantee.

. Summary Price Scenarios

Scenario	Expected Price Range	Notes
Base case	$30 – $45	Phase III progresses without major issues
Bullish case	$45 – $60+	Positive data and regulatory momentum
Bear case	$5 or lower	Trial failure or loss of confidence

Conclusion

GLSI is a high-risk, high-upside biotech stock where outcomes are largely binary. With no current revenue and ongoing cash burn, the stock is priced on future clinical success rather than present fundamentals. Investors should expect significant volatility and be prepared for sharp moves in either direction as trial milestones approach.