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Quadrant lines are a set of horizontal lines which are plotted over price charts. The only purpose of these lines is to aid in the visual interpretation of trends - highest, lowest and average prices, for a specified time period. They do not help in any technical analysis and thus are advocated only for beginner traders, who want to investigate about price movements to get familiar with market.


Plotting quadrant lines is easy. First the highest high and lowest low points of a price movement are figured out. The top quadrant line horizontally pass through the highest high and bottom quadrant line horizontally pass though lowest low of that period. The other three lines are plotted in a way that they divide the area between top and bottom lines into four equal sectors (at 25%, 50% and 75%). Usually the middle line (mean) is represented as a dotted line. You can plot multiple quadrant lines on a price chart.

When investigating quadrant lines things to note is the height and width of a quadrant set. Quadrant height shows the range of price movement and width shows the time taken for that price movement. Quadrant lines can be applied to both short-term and long-term price trends. Many use quadrant lines in conjunction with linear regression trend line for better analysis.

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Interpretation of Ichimoku cloud lines is pretty easy and straight forward. Different colors and shades are given to different line and areas respectively for easy identification and interpretation. Ichimoku cloud indicators give better results if used in long time frames.

• Interpreting the Span A and Span B cloud: if the current trading price is above the cloud, then overall-trend is taken as bullish; if below the cloud, the trend is interpreted as bearish. If the trading price is in the cloud, then the marketing shows no trend.
• When the trading price is above the cloud the cloud top is the first support level and cloud bottom is the second support level. Similarly when the price is blow the cloud, cloud bottom is the first resistance and cloud top is second resistance.
• Interpreting Kijun Sen (ST): if the trading price is above Kijun Sen then market is moving upwards and if the trading price is below Kijun Sen, then market is moving downwards.
• Interpreting Tenken Sen (TL): Shows the direction of current trend. If flat then no significant trend.
• Crossovers between Kijun and Tenken sen are very important. If Tenken sen cross Kijun from below, then bullish trend; if cross is from above, then bearish trend.
• Interpreting Chikou Span (DL): is used to confirm the trend. If the overall trend (Chikou Span) is in the same direction of Kijun-Tenken crossover trend, then the trend is strong, otherwise it is weak.

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Ichimoku Kinko Hyo (One Glance Balanced Chart) or Ichimoku Cloud is a technical analysis tool for finding support and resistance levels, direction of trends, strength of trends, and entry and exit points. The indicator was first developed by a Japanese journalist, Goichi Hosoda, in 1968-69. Ichimoku cloud is becoming increasingly popular among traders trading equities, futures and forex currencies.


Ichimoku Kinko Hyo combines 3 technical indicators in one chart. It has 5 lines of different color; actually this abundance of lines makes this indicator look complex for novice traders.

1. Tenken Sen (TL): Indicates direction of trend (Sen means line). Calculated as sum of highest high (HH) and lowest low (LL) of last 7 or 8 trading periods divided by 2.
2. Kijun Sen (ST): Another trend indicator calculated just like Tenken Sen but of last 22 trading sessions.
3. Senkou Span A (S1): Is the support/resistance level. Calculated as sum of Tenken Sen and Kijun Sen sessions divided by two; plotted 26 time periods ahead of current price.
4. Senkou Span B (S2): Is another support/resistance level. Calculated as sum of HH and LL of last 44 sessions divided by two; plotted 22 time periods ahead of current price.
5. Chikou Span (DL): Is the market sentiment or strength of trend. Is a comparison of current closing price with the closing price 22 periods ago.

For easy interpretation, the area between Senkou span A and B are shaded making a cloud like appearance.

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Integrated asset allocation strategy is a moderately active portfolio management strategy. It is practiced mainly by mutual funds, portfolio managers and some personal investors. Integrated asset allocation strategy is somewhat complex as there are no fixed rules, and requires good knowledge, frequent investment preference changes and good analysis tools for proper implementation.

Integrated asset allocation strategy integrates aspects of all other asset allocation strategies (dynamic, tactical, strategic, constant-weighing and insured asset allocation strategies). Unlike other strategies, it gives nearly equal importance to future portfolio returns and portfolio risk tolerance. Often integrated asset allocation process starts just like tactical, strategic or dynamic asset allocation, and then the investing preferences are changed to get desired short-term or long-term portfolio return and risk tolerance.

Investors following integrated portfolio management strategy may or may not have investing preferences. Often they choose to invest a fixed portion of their capital in high-profit and/or low-risk investments and then adjusting the other portion according to market and product performances. One major mistake often made by investors following integrated asset allocation strategies is simultaneously implementing opposite (competing) strategies. This makes portfolio management more complex and difficult, and can also result in capital loss.

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Energy futures market is a liquid yet extremely volatile futures market offering traders opportunities to profit from ever changing oil and gas prices. Energy futures are traded in different markets across the world like London exchange, Intercontinental Exchange (ICE) and New York Mercantile Exchange (NYMEX).

Energy futures contracts are excellent instruments for traders, speculators and hedgers. They offer all the advantages of standard futures contracts like standardized contacts for quality and quantity, high trading leverage, high risk to return ratio, easy to go short, and choice to cash settle or to own underlying energy commodity.

Different energy futures available in NYMEX and their contract specifications are as follows.

1. Crude Oil: Most liquid energy future. Contract size is 1,000 barrels of Sweet crude oil (crude with lower sulfur levels). The minimum tick size is a penny.
2. Heating Oil: Second largest traded energy futures. Contract size is 42,000 gallons. Minimum tick size is $0.0001/gallon.
3. Unleaded Gas (RBOB): Contact size 42,000 gallons and minimum tick size $0.0001/gallon.
4. Natural Gas: Biggest of all 4 futures contacts. Contract size is 10,000 MM BTUs (British Thermal Units). Minimum tick size $0.001/MM BTU.

The delivery point of underlying energy commodities differ with markets and futures commodities. Remember different markets may have different daily price limits for different energy futures. And also many markets set position limits, which differ for hedgers and speculators.

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Fibonacci channels are an advanced Fibonacci technical indicator helpful in determining support and resistance levels. They are variations of Fibonacci retracement lines, and are drawn diagonally rather than horizontally. Fibonacci channels can be applied to both long-term and short-term trends, and to up trends and downtrends.


Many modern trading systems allow traders to draw Fibonacci channels over price charts. First a base channel is created connecting a significant price top and price bottom. Then the first slopping line is created by connecting two tops (in an uptrend) or two bottoms (in a downtrend). Then parallel lines are drawn above or below this line at key Fibonacci levels of 23.6%, 38.2%, 50% and 61.8% of the original base channel width (done automatically by the trading system). Traders can also extend the levels to beyond 100% (161.8%, 200%, 261.8%, etc) if there is significant trends.

Interpreting Fibonacci channels is just like horizontal Fibonacci retracements. When one line is crossed in an uptrend it becomes support and above line becomes resistance. Similarly when one diagonal channel line is crossed in a downtrend it becomes resistance and below line becomes support. Most traders use Fibonacci channels with Fibonacci retirements and the price levels when they cross are given significant importance.

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Both selling into strength and buying into weakness are standard trading practices, widely followed by traders of all kinds. They are proactive trading strategies which are opposite to one another. In both selling into strength and buying into weakness the trader reacts to the market before confirmation of a change.

Selling into strength is the strategy of shorting a position when price of the trading instrument is still going up. Traders do this when the price trend is expected to reverse in the near future. There is no downside risk with this strategy. Selling before confirmation of trend reversal preserves a trader’s profit. This is a good strategy as there is also no guarantee that he/she can short his/her position for a profit after confirmation of trend reversal.

Buying into weakness is the strategy of buying into a long position when prices of the trading instrument are still falling. Traders do this when the price trend is expected to reverse in near future. With buy weakness strategy there is always downside risk of loss if the price reversal does not occur. This is a good strategy for experienced traders who use effective technical and fundamental analysis tools to evaluate and predict price trends.

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Market On Close (MOC) or At-The-Close orders are market orders to buy or sell financial instruments which are executed at the last minutes of the trading day by the brokers. MOC orders are executed at market closing price (which may differ with exchanges) or very close to that price.

Market on close orders are useful when traders identify a pattern in market where the closing price is usually the highest of the trading day (ideal for sell MOC orders) or the lowest of the day (ideal for buy MOC orders).Remember many markets necessitates to enter the order well before closing of the trading day; like before 15:40 EST for NYSE and 15:50 EST for Nasdaq. Traders also cannot cancel the orders they entered after this time.

Market On Open (MOO) orders are market orders to buy or sell instruments which are filled at or near official market opening price. MOO orders are executed as soon as possible after the opening of a trading day. Like MOC orders, Market On Open orders are useful when traders identify a pattern in market where opening price is highest (for sell MOO orders) or lowest (for buy orders).

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Pivot points are the simple yet powerful technical analysis tools extensively followed by forex traders. Click here to know more about Pivot Points. Pivot points are useful for all types of traders – range-bound traders, trend traders and breakout traders – trading for long-term and short-term profits.

In forex market, it is a common practice to derive pivot points from daily charts and apply them to intraday (hourly, 30 or 15 minutes) charts. In addition to standard pivot point (P) and two support and resistance levels (S1 & S2 and R1 & R2), traders often track midpoints between adjacent levels for getting more accurate results. With pivot points, there are different strategies followed by Forex traders.

1. Range-bound traders enter a trade when the price cross an identified support level and exit the trade when the price nears the resistance level.
2. Trend and breakout traders enter a trade when the price level cross a significant resistance level and exit the trade when the pattern reverses.
3. Many traders look for candlestick formations (like shooting star and doji) to enter of exit trades.
4. Many traders check the strength of pivot point (P) before entering the trade. The idea is that strong pivot points can be effectively utilized as a support or resistance level.

With pivot points marketing timing is important. Although Forex market is a 24 hour market major price changes can occur at the opening hours of European, U.S. and Asian currency markets, and also the activity range differ greatly among trading hours of these markets.

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Exchange Traded Funds (ETFs) are regarded as the most successful trading instruments introduced in the last two decades. They are traded just like stocks, are tax efficient, are less expensive, and are a good way of diversifying portfolio. Chicago Mercantile Exchange (CME) has also introduced standardized futures contracts on ETF in 1997. CME offers electronic trading of 3 different ETF futures contracts.

1. S&P 500 Depository Receipts (SPY) futures: Futures contract worth 100 SPY shares which track large-cap stocks.
2. Nasdaq 100 Index Trading Stock (QQQQ) futures: Futures contract worth 200 QQQQ shares which track top 100 non-financial stocks of Nasdaq.
3. iShares Russel 2000 index fund futures: Futures contracts worth 200 iShares Russel 2000 index which track small-cap stocks.

There are many advantages of trading ETF futures over ETF shares. ETF futures are standardized contracts with specific expiration or settlement dates and traders have option to cash settle or to own underlying ETF shares. With ETF futures it is easy to go short with out actually burrowing shares, they lower capital requirements, can be daily settled and are easy to leverage. Two other great futures advantages include diversification of portfolio and hedging against portfolio risk.

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Fibonacci cluster is an advanced Fibonacci technical indicator used extensively by traders of all kinds to find support and resistance levels and to predict trend reversals. Fibonacci clusters are easy to interpret and are easy to use in conjunction with other technical analysis tools.

Fibonacci cluster is a collection of a number of Fibonacci retracement lines represented in different shades. Different trading systems use different methods of representing them; the most popular method of representing Fibonacci cluster is in a side bar of a price chart. The more the number of retracement lines meets in a price level, the darker will be the shade of Fibonacci cluster corresponding to the price, and the strong the support/resistance level is.

Traders can also create Fibonacci clusters manually by drawing new Fibonacci retracement lines over and over a volume/price graph (better if you use different colors each time). The more the numbers of lines at a price level the more the chance of being it a support/resistance level. It is advised to always use Fibonacci clusters in conjunction with other technical indicators and Fibonacci techniques, where clusters can be used to identify a support or resistance level and some other indicator to confirm it.

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Both fighting the tape and painting the tape are trading practices to be avoided. Fighting the tap is a trading practice where traders act against the ticker tap. That is they buy when stock prices are falling (bearish market) and sell when stock prices are rising (bullish market).

In opinion of experts fighting the tape is a deadly sin which can destroy a trader’s future. Major reasons for fighting the tape are over-optimism, over-confidence, greed, fear of loss, unavailability of inadequate data, using of wrong tools for technical analysis, and wrong interpretation of news and info.

Painting the Tape is an illegal trading practice where some traders manipulate stock price to profit from it. They buy and sell stocks in high volumes and high prices. On ticker tape report this scenario creates a feeling on other (unsuspecting) traders that the stock is good to trade or invest. As a result the stock price moves to even higher levels and the original traders profit from this. At some time later, when traders realize the stock is an over-valued, price drop considerably resulting in heavy loss to traders holding them. The increased use of automated trading systems to generate buy and sell signals by traders also helps painting the tape traders considerably. Technical analysis and rightly interpreting info are measures of avoiding painting the tape stocks.

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Mini forex trading accounts are an excellent option for beginner traders to get familiar with forex market. Mini accounts (contract size 10,000) are typically 10% of standard accounts (contract size 100,000), and also require low minimum deposits to open the account.

Mini forex trading accounts are excellent tools to decrease trading risks. For a mini trading account a 10 pip loss (For example: a decrease of EUR/USD from 1.5689 to 1.5679) can result in that is 1% of the trading account. For a standard trading account the same 10 pip loss can result in a loss of $100 (100,000 x 0.0010), which will be equal to 10% of a mini account. Also remember the usage of leverage can magnify this loss; and also profit if currency moves in opposite way. Many expert traders advice to keep the maximum loss per trade to below 3% of total portfolio; which can be easier to achieve by mini accounts than standard accounts.

Mini forex accounts provide more flexibility than standard accounts. Mini trades can trade fractions of standard accounts (contact sizes of 20,000, 30,000, 50,000, etc) or you can trade 10 minis to equalize a standard lot. This gives the trader to adjust his contract size according to his trading account size and also helps in effectively utilizing leverages. When trading lesser lots, mini accounts allow traders to place wide stop losses.

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The Week Ahead: Stocks fell for the sixth straight week while bond yields rose as Fannie Mae and Freddie Mac's stock price collapsed losing almost half there value. This has cast a cloud over the specter of a market turnaround, but Fed chairman Bernanke begins his Capital Hill testimony on Tuesday which could ease investor fears. Also look for the PPI and business inventory reports. Wednesday, the CPI, industrial production, and the FOMC Minutes release from last months policy meeting will be in focus. Thursday brings the housing starts number.

Stocks to Watch: Shares of URS Corp. (URS) jumped significantly based on a pending contract to build a nuclear complex in the United Kingdom. Jacobs Engineering (JEC) was added to Goldman Sachs "buy list" after saying it recently became oversold. Webster Financial (WBS) boosted its 2nd quarter loss provision to $25 million from $10-15 million as its stock touched a new all time low. Teva Pharmaceutical shares were off on a threat of generic competition from rival company Momenta.

Special Note: The Dow Industrials and S&P 500 appear to be readying to test or breach their 2006 lows of 10683 and 1219 respectively. If broken would open the door to more selling pressure. Similar to what happened with the Bear Stearns rescue at the March lows, a resolution to the crisis surrounding the government sponsored entities of Fannie Mae and Freddie Mac could be the event that marks another turning point for stock markets here and around the world.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Managed futures accounts are futures trading accounts which are managed by professional money managers on behalf of their customers. These money managers are known as Commodity Trading Advisors (CTAs), who are registered under Commodity Futures Trading Commission (CFTC). They buy and sell futures contracts in a discretionary or predefined basis.

There are a wide range of managed futures trading programs offered by CTAs. Some programs concentrate only on one or two futures contract types – like metals (gold & silver), equity futures (S&P & Dow futures), grains (wheat & soybeans) or soft futures (cotton & sugar). Other programs concentrate on trading a mixture of futures types. Some CTAs are trend followers, some are market neutral traders (or option writers), while some others are long-term traders. Fees that CTAs charge for managing accounts can also vary considerably; usually includes management fee and performance incentives.

• Managed futures trading accounts are considered as a good investment option because of a variety of reasons. They are an easy way of diversifying portfolio.
• They are good hedging tools against portfolio risk.
• They are professionally managed, and do not require any investing/trading knowledge from clients.
• These accounts can be opened with relatively low capital investment.

Things to consider when choosing a CTA for Managed futures trading include their futures trading plan, types of futures they are trading, drawdowns, past performance, fees involved, annualized rate of return and risk adjusted return.

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Fibonacci extensions are an advanced Fibonacci application, which are widely used by traders and investors. They help traders in figuring out the future support and resistance levels of a trend beyond 100% retracement level.

Fibonacci extensions are horizontal lines plotted on key Fibonacci ratios beyond 100 (these ratios are derived by adding standard Fibonacci ratio to 100; eg: 138.2%, 150%, 161.8%, 231.8%, 261.8%, 361.8%, 423.6% etc.). Most popular of these ratios are 161.8% and 261.8%.

Fibonacci extensions can be applied to both downtrend and uptrend. Many traders close their positions when prices touch Fibonacci extension levels. For an uptrend beyond previous swing high, extension level of 161.8% is predicted as the future resistance level and 100% level is taken as support. Similarly for a downtrend beyond previous swing low, Fibonacci extension of 161.8% is predicted as support level and 100% as resistance level. But if the trend is significantly strong, then the prices can easily cross 161.8% level, then the next extension level (usually 261.8) is taken as resistance (for uptrend) or support (for downtrend).

Many modern trading systems allow traders to plot Fibonacci extensions. When employing these tools it is advised to use in combination with other technical analysis tools to find out strength of trends and target prices.

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Tirone levels are a series of horizontal lines plotted on trading charts to predict possible support and resistance levels, developed by John Tirone. They are very much similar to Fibonacci retracements and Quadrant lines. Tirone levels are used mainly by short-term traders, especially day traders; they are also useful for long-term trading.


Tirone levels are calculated based on lowest low and highest high values for a given period of time. There are two different methods of calculating Tirone levels, Midpoint method and Mean method.

In midpoint method, the center line (mid point) is calculated by subtracting highest high (HH) value from lowest low (LL) and dividing the result by 2. Top line is drawn at 1/3 difference from HH to LL, and bottom line is drawn at 2/3 difference from HH to LL.

In mean method, there are 5 asymmetric lines. They are calculated as follow,

1. Adjusted mean (AM) = (HH + LL + Recent closing price) /3.
2. Extreme high = AM + (HH - LL).
3. Regular high = 2AM – LL
4. Regular low = 2AM – HH
5. Extreme low = AM – (HH - LL)

Interpreting Tirone levels is easy, the upper level is the immediate possible resistance and lower level is the possible support. For better accuracy, it is advisable to use Tirone levels in conjunction with other technical indicators.

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The economic advancements in many Asian, Latin American and European countries now offer good trading/investing opportunities to investors across the world. Studies have shown that many emerging market funds outperformed others. This emerging market economic growth also offers forex traders an opportunity to profit from trading corresponding currencies.

Although emerging market currencies (like Hong Kong Dollar, South African Rand, Singapore Dollar, Malaysian Ringgit and Mexican Peso) are far less traded than G7 currencies, they possess good risk to reward ratio. They offer a good chance to diversify forex portfolio and to make use of economic developments and news happening in these part of world. Many forex traders now prefer a forex portfolio mainly including Euro and US Dollar, and some emerging market currencies.

The downside of trading emerging market currencies include less liquidity, high volatility due to political and economic crisis, less floating currencies because of central bank policies, etc. One thing to remember is that many emerging market currencies are actively traded in other trading hours than of G7 currencies; so the trader may need to adjust his time according to different currencies he trading. Also remember, most of these currencies posses high amount of risk and the trader must enter a trade after proper fundamental and technical analysis.

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The Week Ahead: Job losses are now in there 6th straight monthly decline. European banks raised there interest rates. Oil eclipsed $145 a barrel, and the DOW officially reached bear market territory. Earnings season kicks off this week starting with Alcoa (AA) on Tuesday. Pending home sales and wholesale inventories will also be released. Same store sales numbers are due Thursday while the University of Michigan's Consumer Confidence report comes out on Friday. Watch for General Electric's (GE) earnings at weeks end as well.

Stocks to Watch: AmeriGroup (AGP) bounced from an oversold level after it renewed a contract with the state of Tennessee for healthcare services which also included an approved rate increase. Church & Dwight (CHD) which makes the Arm and Hammer baking soda received a brokerage downgrade because rising material costs are hurting the company's growth and profit margins. Acme Packet (APKT) dropped 40% after warning that 2nd Q earnings would fall short of estimates. Medical device maker TranS1 (TSON) cut 2nd Q revenue targets.

Special Note: Stock Markets around the world continue a pattern of inter-market bullish divergences where some are hitting new 52 week lows while other markets hold above there March lows. Regardless of this phenomenon, most stock indices here in the U.S. remain at or near oversold conditions. A relief rally could unfold at any time. The question should be at what level will this potential rally start and will it be sharp and brief or a gradual incline?

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Support and resistance levels are the most widely used technical analysis tools by all kinds of traders. Support is a price level at or below the current trading level which act as a barrier for downward price movement of the stock. Resistance is a price level at or above the current trading level which act as barrier for upward price movement of stock.

Support and resistance level can be formed because of a variety of reasons.

• Support level is created when there are many traders willing to buy stock at a price, and resistance level is created when there are many traders willing to sell stock at a price.
• At round price levels, like $50 or $60, there can be more number of traders willing to buy or sell, thus making these levels support or resistance for that stock.
• When market is on a move, stock prices dropping below certain level tempt traders to buy that stock, creating a support level. And similarly stock prices rising above certain level tempt traders to sell off stocks, creating a resistance level.
• Widespread use of Fibonacci techniques by traders, for predicting support and resistance levels, caused automatic formation of support and resistance levels as traders increasingly buy/sell stocks at these levels.
• Use of other technical analysis tools like Moving Averages, RSI and Stochastic also can contribute to support and resistance level formation.

The number of times a stock price have touched a support or resistance level can indicate the strength of that level. The strength increases in an order Single (s) – touched ones, Double (D) touched twice, Triple (T) – touched thrice, and more than triple (T+).

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Three-Factor Model is an extension of Capital Asset Pricing Model (CAPM) used to determine the return and risk associated with a portfolio management. It was developed by Eugene Fama and Kenneth French in 1993. Complicated than CAPM, the Three-factor model is more accurate as it explains more than 90% of portfolio returns (compared to around 80% of CAPM).

When determining returns, Three-Factor Model considers two more factors other than market risk (beta). They are size (market capitalization) and value (book/market ratio) factor. The reason for this is the fact that value stocks and small cap stocks regularly outperform markets and large value stocks. As per the model small value stocks usually have highest-risks and highest-returns. Although not resolved correctly, the possible reasons for the out performance of this small cap and value stocks are (1) because of the excess risks these stock carries and (2) because of mispricing demanding later price adjustments.

Studies have shown that mutual funds and portfolios which follow three-factor model outperform most others. This led to the enhanced adoption of this model by more and more funds. Many investors also adds custom factors (eg: credit risk) to the model for enhanced performances. One thing to remember is the high volatility associated with small caps and value stocks; investor must carefully diversify the portfolio to attain more than average risk with desired risk level.

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Capital Asset Pricing Model or CAPM is an investment model widely used by investors to determine return and risk associated with an investment or portfolio. CAPM is also used to determine whether a security is over-valued or under-valued. The general idea is if the investor takes any risk there must be sufficient return from it, called risk premium. The formula of CAPM is

R = Rf + beta x (Rm - Rf)

Where R is the expected return (also known as Cost of Capital), Rf is the rate of risk-free investments (or time value of money), beta is the beta value (risk associated) of the security or index, and Rm is the expected return from market. Investors following Capital asset pricing model invest in securities, if the expected return (R) equals or exceeds required return. Fore example if the risk-free ratio is 4%, the beta value of security is 3% and expected return from market is 10%, then expected return will be 4+3(10-4) = 22%.

The greatest advantage of Capital asset pricing model is the idea that risk-return relation of every portfolio can be optimized to attain lowest risk for a specific level of return. Many investors following CAPM prefer to invest in low-cost index funds rather than on stocks. CAPM necessitates diversification of portfolio.

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