Technical Analysis for Stock Option Trading

We are an investment group focused on stock options trading. We learned how to trade options from  A.J. Brown, a renowned options trading expert.  Our stock options trading strategies are based on his teachings at tradingtrainer.com. We rely heavily on charting analysis and stock trading software to guide our trades.  Our goal is to build a steady stream of income from options trading, and not necessarily go after the get rich quick avenues.  We prefer to concentrate on those securities that the "smart money" tend to follow and have investment interests. We also prefer those securities with a good history of trend. But we will also dabble in the explosive breakout stocks that tend to develop around the quarterly earnings seasons. We typically target only those stocks residing in the Nasdaq, Dow, or SP500 whose fundamentals are strong.  We further narrow the list of securities to only those with market price of $50 or higher. We typically trade on a short-term basis and do not utilize Leaps. Our swing trading techniques consist of selecting high probability stock candidates using the marketclub stock trading software. After the market closes each day we use marketclub to scan for stock candidates and then evaluate those candidates by applying charting analysis to help uncover price trends. The data gathered from the charting analysis are used to generate a final list of stock candidates, with specific information in entering a trade and also specific criteria for exiting the trade. We utilize a small set of indicators, in addition to the price and volume charts, to help determine the trending bias of a particular stock. The stock indicators that we employ are the Williams %R, the MACD, the Chaiken Oscillator, the Relative Strength Index (RSI), On Balance Volume (OBV), Accumulation/Distribution, the Commodity Channel Index (CCI), the Stochastics and finally, the Fibonacci Retracement Lines to help guide our trade decisions. Although these indicators were created from logical mathematical formulas, an experienced trader will recognize that the price movement of a security is not always predictable and no single indicator or sets of indicators will be 100% accurate. Thus far, we are not aware of any mathematical formula that can truly predict the price behavior of a stock; simply because no formula exists that can accurately account for the HUMAN factor. Many traders tend to trade the same securities day-in and day-out. As a result, each stock over time, tends to develop a unique personality that reflects the trading mentality of the investors who follow that particular stock. As the traders' behaviors change over time, the stock's personality will also evolve. At first glance, it may seem contradictory that our members continue to utilize the charting analysis and the stock chart technicals to study the price behavior of a stock. But we have come to realize that all of the traders have access to the same indicators and are using the same charting analysis tools.  It would seem logical for our members to utilize the same set of tools and stock trading software, in order to gain insight into the trading behaviors of the masses. By learning to find clues in charting analysis, we learn to anticipate the movements of the masses... and to-go-with-the-flow.

By recognizing that certain combinations of indicators work well together in helping to predict price movement, AJ Brown learned how to trade options and developed a set of templates that can be used to identify the personality of a particular stock. These combinations of  leading and lagging indicators, can be categorized as exhibiting either a REACTIVE personality, a BUFFERED personality, a CHAIKEN personality, a BREAKOUT personality, or an OSCILLATORY personality.  By setting up these templates to help filter stocks to their appropriate personalities, we have been very successful in identifying stock trends and in determining entry points (i.e. buy call and put options) and exit points (i.e. sell call and put options). AJ Brown's stock options trading system has been successfully utilized by many of the investing members at the optionsoutlet.com website, in addition to the 900+ stock options trading students that are currently under AJ's tutelage.  Anyone interested in learning how to chart stocks or to gain a better understanding of stock chart technicals, we recommend that you visit AJ's stock tradingtrainer.com website. Investors interested in obtaining additional trading mentoring services, we recommend evaluating the TheTradingAuthority Coaching Program. It provides personalized coaching that helps to shape your trading habits to become a more disciplined trader. The site currently offers free daily trading strategy lessons to interested investors. We came across this review site (The Trading Authority Review) when we were looking for additional coaching and additional information on how to trade options.  It provided some insights into the coaching program and also gave us a feel for what others are saying about the TheTradingAuthority coaching program.

The following links provide a log of our investment activities, in addition to the  stock option candidates that we are currently monitoring: