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How To Trade Like A Hedge Fund

Today, I would like to show you how to create your own private hedge fund for your own account. It's not that difficult and it can make a huge difference to your bottom-line. Let me explain what I mean by that.

What Is A Hedge?

A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization.

A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of over-the-counter and derivative products, and futures contracts.

Public futures markets were established in the 19th century to allow transparent, standardized, and efficient hedging of agricultural commodity prices; they have since expanded to include futures contracts for hedging the values of energy, precious metals, foreign currency, and interest rate fluctuations.[1]
Source: Wikipedia.org.

For our purposes today I'm going to be looking at hedging stocks. I'm going to give you specific examples of what you can do today. One stock you're going to buy and go long, the other stock you're going sell and go short.

In order to make this work, you need to have the same amount of invested capital in each stock. The two stocks I'm looking at today are traded on the New York Stock Exchange (NYSE). The first stock is ONEOK Inc. (NYSE:OKE), the second stock is Basic Sanitation Co. (NYSE:SBS).

For discussion's sake, let's say you have $10,000 to invest. Divide the money up into two buckets of $5,000 each. You would then look at what price each stock was trading at. OKE is currently trading around $43 a share and SBS is trading around $6 a share. Then divide the value of 1 OKE share (presently at $43) into $5,000. This gives you 116.27 shares that you can buy or short with your $5,000. To make things easier, I would round this down to either 110 or 115 shares.


ONEOK, Inc. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments. [Read more...]

I Like The Chart Formation On This Stock

Today I will be looking at the stock chart of Cadence Design Systems Inc. (NASDAQ:CDNS). This stock just broke out to the upside from a four-month base and looks as though it wants to continue going higher. All of the Trade Triangles are green and pointing higher for Cadence Design Systems. My upside target for this stock is $22.40, CDNS is currently trading around $19.50.

Looking at the chart you can see that this stock has a very well-defined four-month base and has cleared resistance with today's breakout. If you measure from the lows of $16.52 to the resistance level which is at $19.53 it gives us a measurement of $3.01. You then add that number to the resistance level of $19.53 and this gives you a target of $22.54. I would then round that number down to approximately $22.40, which is now the upside target zone for this stock.

So what does Cadence Design Systems do?

[Read more...]

6 Lessons To Conquer Any Market

Hello traders and MarketClub members everywhere. Today, I would like to do something a little bit different and welcome all of our new members. We have had a tremendous influx in the last few months and we want to get you started on the right foot with these 6 lessons.

So on behalf of our company INO.com, the parent of MarketClub, welcome. We want you to get the very most out of MarketClub in the future. Our mission is to help coach, guide and share with you a successful pathway to profits. With that goal in mind, we have 6 lessons for you that will help you conquer any market.

The lessons are the real deal and they were learned the hard way in the trading pits of Chicago, many years ago when I was a floor trader. These are the universal truths of the marketplace and have not changed, nor will they change, as they reflect human nature and how we act as individuals. So let's get started, our first lesson has to do with drawing a simple, straight line.

LESSON 1: Trend Lines
In this lesson, I will show you the correct way to draw trend lines and how to use them successfully in any market.

[Read more...]

Here's A Stock That Technically Taxes The Mind And Looks Great

I found this stock using the Smart Scan technology and wanted to share it with you today. The stock is Apache Corp. (NYSE:APA).

I'm looking at this market on a technical basis as all of Trade Triangles are now positive and showing an upward trend.

As you can see on the chart, I have labeled numbers 1 through 7 so you can better understand exactly what you're looking at.

[Read more...]

A Trading Tool That Never Goes Out Of Style

Hello traders and MarketClub members everywhere, today I want to share with you a trading tool that never goes out of style. I learned about the power of this trading tool a long time ago when I was a member of the exchange and trading in the pits of Chicago.

It was there amongst all the hustle and bustle, standing shoulder-to-shoulder with some of the most successful traders in the world that I learned one of the most important tools in trading. I have never forgotten this tool and in fact, I still use this tool every day when I'm researching a potential trade.

As computers get more and more sophisticated and can spit out trading algorithms faster than you can blink an eye, this simple tool continues to stand alone as a universal market truth. Little did I realize that this simple tool would prove to be so valuable.

So let's get started with this same tool that I have been using now for the past 30 years. I will also share with you one of the core secrets that most traders miss when they use this powerful trading tool.

It's a short lesson that visually illustrates when and how you should use this successful trading tool.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

Is This Apple's Secret Or One Amazing Coincidence?

Hello traders and MarketClub members everywhere. Today, I am going to be looking at what could be an amazing coincidence in Apple. It could also be a profitable opportunity for alert traders. Before we get into that, I hope you all had a chance to look at yesterday's special post on gold. If you didn't, please check it out right here.

It is the last day of the trading week, with both the stock and bond markets closed tomorrow for Good Friday.

I want to lay out for you a potential trading scenario for Apple stock. To that end, I have shown on the below daily chart what I think is going to happen in the future.

In approximately 7 days from now, give or take a couple of days, Apple should offer an amazing buy opportunity if this scenario plays out like I think it will.

Apple Daily Chart

It appears after making a high, Apple sort of drifts back for the next 33 to 34 days before it once again has a sharp upward move. If that same scenario plays out this time, then somewhere between the 10th and 12th of April would be in ideal time to look at getting long stock in Apple. On April 10th, Apple is going to begin taking preorders for its new Apple Watch, coincidence maybe. I'm sure there will be legions of loyal Apple fans waiting and wanting the latest gadget from Apple. [Read more...]

My Secret Formula For Successful Gold Trading

The price of gold is now in its fourth year of a bear market. It is shocking to many gold bugs that gold, a metal revered since ancient times, could fall so dramatically from its all-time high of $1,920.56 on September 4th, of 2011. The precipitous drop of almost $800 in less than four years was more than most gold bugs could stand as stocks soared to new highs. Many threw in the towel when gold hit $1132.05 on November 7th and moved into stocks. This could prove to be a bad omen in the future. Since reaching a low on November 7th, gold has for the most part moved sideways with a slight upward bias.

You can clearly see on the chart that there is a big divergence that shows. When prices were making their lows, momentum was building for the market to bounce.

Now for the good news! [Read more...]

The Secrets Of A Dead Mathematician

Good day, let me begin by welcoming the hundreds of new members who have just joined MarketClub in the last few weeks. I welcome you and wish you every success with MarketClub.

Today I would like to share with you one of the many lessons that are available to you as a MarketClub member.

Technical analysis has been around for a long time. It has been said that Japanese rice traders kept hand charts over 200 years ago to track the price of rice. More recently in the 50's, technical analysis began to gain acceptance, and the 70's could be called the golden age of technical analysis. Technical analysis is now widely regarded as mainstream, no longer do traders and investors think of technical analysis as Ouija boards and funny-sounding chart formations. Technical analysis is a serious tool that you can use to make money.

Fundamentals are important, but technical analysis, in my humble opinion, is more important because it provides you with timing which I think you'll agree is everything in life.

I'm going to be looking at one of my favorite indicators that can help you enter or exit a market on favorable terms. This tool also works extremely well with the market-proven Trade Triangle technology.

Today's lesson is on the Fibonacci Sequence.

Leonardo Fibonacci was a mathematician born in 12th century Italy. His study of Fibonacci numbers (a sequence of numbers where each number is the sum of the two previous numbers) is often applied in technical analysis to find support and resistance in stock charts.

This timeless lesson I learned many years ago when I was a member of the Chicago Mercantile Exchange trading in pits. It is one tool that has stood the passage of time and one that I still use today.

How this amazing 12th century Italian mathematician figured this out is way beyond my pay scale, but I can say without hesitation that it works.

Watch the lesson here and then leave a comment.

How To Use Fibonacci Retracements

The principle behind a Fibonacci retracement is that after a stock moves upward or downward, the price will often retrace or correct some of this movement. Many technical analysts believe that the amount of retracement will often correspond to one of the Fibonacci levels. The five horizontal lines represent percentages of 100%, 62%, 50%, 38% and 0% (with 62 and 38 being Fibonacci numbers).

The Fibonacci sequence works on intraday charts, daily charts, weekly and monthly charts. I do not know why it works in the financial markets. Through all my reading and research, I've never found a reason other than it works in nature.

I'm going to show you just how easy it is to use Fibonacci in your own trading.

This is one lesson you do not want to miss, it will open your eyes as to how and why markets move. One of the many benefits of Fibonacci retracements is that it will allow you to enter a position with very little risk. That is a big plus in today’s markets.

So enjoy and learn from this valuable lesson and yes, take a look at some charts after watching the video and apply what you learned using MarketClub's Fibonacci tool.

By all means, please feel free to share your findings on the blog with your fellow members. You can leave your comments and findings just below this post.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

5 Ways To Immediately Improve Your Trading

How many ways can you draw a circle? It's probably a strange question to ask, but the reality is, trading is very close to the same discipline. How many ways can you successfully trade? Whether you're drawing a circle or trading, each requires certain elements to complete a perfect circle or a perfect trade.

I wanted to share with you 5 key elements that you must be using if you are going to trade successfully or invest in the markets. I like to call them the building blocks that must be in place to grow your fortune.

Each of the 5 elements are short and to the point and contain nuggets of knowledge that are essential for your success in the markets.

Rule #1: Attitude

Attitude is so important in your approach to investing and trading.

Rule #2: Game Plan

Trading without a game plan is like crossing the ocean without a compass, you are going to get lost and run into a lot of problems without a game plan.

Rule #3: Trend

I'm sure you have heard the expression, "the trend is your friend." Well, truer words were never spoken in trading. This article will show you how to quickly determine the trend in any market. [Read more...]

Have You Tried Using Donchian Channels?

Donchian Channels can be useful in visualizing the volatility of a market's price action. If the price is stable, the Donchian Channel will be relatively narrow. If the price has large fluctuations, the Donchian Channel will be wider.

Using the 20 day default period, a move above the channel signals a new 20 day high. Similarly, using a 20 week period, a move above the channel would signal a new 20 week high. Markets that continuously touch or exceed the upper channel line show strength, while conversely markets that continuously touch or break below the lower channel line show weakness.

Learn how Donchian Channels can improve your trading here.

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