NASDAQ stands for the National Association of Securities Dealers Automated Quotation System. Unlike the New York Stock Exchange where trades take place on the NYSE, "NASDAQ" is an electronic stock market that uses a computerized system to provide brokers and dealers with price quotes.
The NASDAQ Stock Market consists of two separate markets which are:
- NASDAQ National Market that trades the largest and most active securities
- The NASDAQ Small Cap Market that lists a smaller number of emerging growth companies.
For those of you who actively trade (or desire to learn how to trade) the financial and futures markets, there are a lot of other things outside the markets you should be following. But, I guess my bigger message is for those of you that aren’t in the futures markets, whether you trade them or not, the futures markets have a significant impact on what happens in the other financial markets, including forex, currencies, options and stocks. That’s why you should soak up every piece of good trading knowledge like a sponge in a quest to clearly see the bigger picture.
The NASDAQ Stock Market electronically lists quotes for over-the-counter securities and many New York Stock Exchange listed companies.
For a company to trade on the NASDAQ Stock Market, it must meet a number of listing requirements, such as having a minimum market capitalization and number of publicly held shares.
HOW TO SPOT LONG-TERM TOPS AND BOTTOMS
Is it possible to accurately forecast long-term tops and bottoms in the various commodity markets without error? Probably not. But there are a few trader tools, which we can use to put the "odds" in our favor.
For the past few months, I've been studying several long-term commodity charts in order to find some type of forecasting tool, which could be used to spot major tops and major bottoms in the markets.
For the most part, I focused on the grains, meats, metals, and soft commodities. The majority of the price charts examined contained over 25-yrs of market data.
Specifically, I discovered that when a particular market reaches 85% of its historical trading range, it's on the verge of topping out or bottoming out.
If a market does indeed exceed 85% of its historical trading range, it will usually continue to move until it exceeds its all-time high or low. Once the market exceeds its all-time high or low, most of the time it enters a "blow off" phase which could last as long as several weeks.
When the "blow off" phase has been completed, the market will make a sharp and sudden reversal.
It's virtually impossible to determine the end of the "blow off" phase. Therefore, I've found that it's best to wait for the market to put in a 20-day swing high or swing low.
For instance, the cotton market is currently in a "blow off" phase to the downside. When will cotton prices "bottom out" and at what price level? I have no idea. However, when the cotton market trades above its 20-day high, there's a fairly good chance that a major bottom is in place. This method is certainly not perfect but it's better than trying to pick the exact high/low (which can be quite damaging to your account balance).
Do Seasonal Trades Make Money?
Basically, I use two types of trading methods (a short-term breakout method and a long-term method). My long-term method is based on seasonal trading patterns. I'd like to discuss the pros and cons of using seasonal trades.
First, please allow me to provide you with a definition of seasonal trades. Seasonal trades are repetitive price patterns that occur at approximately the same time each year.
Personally, I've been using seasonal trading patterns since the early 1990s. Overall, trading results have been quite positive. However, seasonal trades (like other trading methods) are not perfect.
For example, some seasonal trades have a tendency to experience "contra-seasonal moves." In other words, they move in the opposite direction of their "normal" seasonal pattern. Obviously, these trades will lose money.
Why do "contra-seasonal moves" occur? They occur because "outside forces" cause these markets to "abandon" their normal seasonal patterns. Examples of "outside forces" are droughts, floods, early freezes, wars, and anything that disrupts the natural flow of the "commodity channel" from producer to consumer.
The good news is contra-seasonal moves do not occur very often. The bad news is that we never know when an "outside force" will enter the market or how long it will last. However, sooner or later the markets will return to "normalcy" and the seasonal patterns will begin to work once again.
As most traders know, there are a large number of vendors who sell seasonal trades. Some are better than others. However, the major problem with most "seasonal vendors" is the fact that they offer an excessively large number of individual trades. It's not uncommon for a seasonal vendor to include 200 to 500 trades per year in his/her "seasonal package." A trader who purchases this information is overwhelmed by the number of trades. Obviously, it would be virtually impossible to take every trade (unless you had a extremely large trading account).
The trader who purchased the list of seasonal trades is faced with a major dilemma. Which trades should be taken and which trades should be ignored? At this point, most traders simply pick one or two trades and hope for the best. As is usually the case, the trades that were picked end up losing money and the trader quits in disgust. Unfortunately, the trader is now convinced that seasonal trades don't work.
In order to reduce my seasonal trading list, I adhere to a very strict rule which each trade must possess. Specifically, each of my seasonal trades must have an "accuracy rating" of at least 70% over the past 20-years. In other words, these trades have shown a profit at least 70% of the time over the past 20-years (or longer).
By using this "rule of thumb," I have managed to reduce my list of seasonal trades to 25 or 30 per year. Therefore, I generally establish about 2 or 3 new trading positions per month.
Based on my research and experience, I have found that seasonal trades will perform best during periods of moderate economic growth (2% to 3%) and moderate inflation (2% to 4%). It also helps to have a "calm and peaceful" trading environment (no wars, droughts, floods or international crises).
I've also found that "industrial commodities" contain the most accurate seasonal price patterns. Examples of "industrial commodities" include: Copper, Cotton, Crude Oil, Lumber, etc.
In conclusion, seasonal trades are certainly worth looking into. However, seasonal trading methods do require a great deal of patience and commitment.
NQB Organization is currently researching trading information and working on special reports covering the NQB market, nqb stock exchange, on-the-web electronic quotes, nqb stocks, nqb listings, blow-off top action, stock chart reversal, nqb securities, the NBC stock exchange, nqb securities exchange, seasonal trading, contra seasonal moves and NASDAQ futures trading.
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Reprint permission from Webtrading.com