The Official Trading Blog Of Alessio Rastani

Welcome to Leading Trader

Join our group of experienced professional traders who will help you on the path of successful trading, whether you are a new trader or a seasoned veteran.

Here you will learn key trading methods and strategies in simple step-by-step language that is designed to help you understand even the most complex trading ideas. You will gain trading insights from professional full time traders, Alessio Rastani, Kevin Burton and Kym Watson.

Become part of our trading community if any of the following applies to you:

• You are a new trader and want to learn trading strategies to trade different markets;
• You are an experienced trader but want to take your trading to the next level;
• You want to know which trading opportunities are opening up in the markets during the week;
• You want to have a better understanding of the markets other than what is available in books and online sites;
• You are just curious and want to know more about how to get started…

Greek Exit | Will Greece Leave The Euro?

There seems to be an overwhelming consensus in the media that Greece could well be leaving the Euro. Even bookmakers are placing high odds on the prospect of a Greek exit. Continue Reading »

Research In Motion (RIMM) – Is It Time To Buy This Hated Tech Stock?

Research In Motion (RIMM), the makers of Blackberry smartphones, arguably has not found much love with Wall Street. The Street’s favourite still remains to be Apple (AAPL).

While Apple’s stock price has almost doubled since April 2011, RIMM has been “bleeding like a pig” and is down by 72%. In fact, RIMM is down 90% from its peak in 2008.

But is there finally some signs that there may be light at the end of the tunnel for RIMM? Is it now a good time to load up on this hated tech stock?

Note: This article is discussed in greater detail in the video below. We highly recommend you watch it.

In 2007, RIMM had 44% share of the smartphone market. When Apple came out with the iPhone, it destroyed the sales of RIMM – i.e. the sales of Blackberry – and now its share of the smartphone market is 16%.

When RIMM was dominating the smartphone market its market capitalisation was $60 billion. Now RIMM is valued by the market at $7 billion.

However, as shown in the above video, RIMM still has $1.5 billion in cash, more than 20% of the market value, and has twice assets versus debts.

Now let’s examine RIMM from a technical perspective.

We can see from the weekly chart of RIMM, we are starting to form a double bottom pattern.

A double bottom is a bullish reversal pattern and is formed when a market that has been trending down forms one bottom, but then it fails to make a second bottom that is lower than its first one. This is an initial sign that the downward trend may be weakening, or about to come to an end.

Confirmation of the double bottom will come when RIMM closes above $18, which is the middle part of the “W” or double bottom pattern.

Momentum on the weekly chart is also gradually shifting from negative to positive.

We also have positive divergences on both the weekly and the daily charts of RIMM. A positive divergence is formed when a stock or market is making lower lows (as shown in the above video) but the indicator underneath (usually a momentum-based indicator such as the Relative Strength Index (RSI)) makes higher lows.

Divergences can be early useful signals that a trend in a particular direction is weakening.

In the case of a stock like RIMM that has been in a downward trend for quite a long period of time, this can be an early sign of gathering strength in the stock.

However, the volume behind the buying is still not particularly conclusive as yet.

On the daily charts of RIMM, we can see that it is inside a channel, and the price is currently hugging the top part of this channel – which is acting as resistance (see above video).

It is quite risky, in my view, to buy RIMM right now. If sellers take control they could push RIMM down to the bottom part of this channel – i.e. from its current price at $14 down to perhaps $11.

I would like to see RIMM closing above its resistance trendline (slightly above $14.80) and then for it to re-test the trendline, before I consider buying it. Markets tend to re-test their previous support or resistance levels (in this case known as “kissing the trendline goodbye”) before they continue to new price levels.

Once RIMM has shown some positive signs of strength above $14.80, its next targets are at its most recent previous highs at $18, then $20 which is a psychological round number, and then $24.

Research In Motion has some good upside potential, and it is worth keeping an eye on this stock for the coming weeks.

If you would like to know more about identifying opportunities in the stock market, you can attend our Free Live Trading Webinar this week.

Is Trading A Business Or A Gambler’s Playground?

This article is by our guest contributor and trader Goncalo Botelho.

When I usually mention to people I’m a trader, it doesn’t take long until they throw out the word “play” somewhere into the conversation and it hits me every single time. This notion that trading is somehow a casino game brings a lot of misconceptions about the activity itself.

Trading is a business, much like any other and it is crucial that you have a well thought plan, to be able to achieve success.

For those who like to refer to trading as gambling, we can compare trading to the most common decisions people take in our society, and by doing that we can clearly see that trading isn’t the biggest “gamble” they could be taking.

Take for instance, the average working man taking up a mortgage to pay his house, when the future of his job/company is unknown and workers within the company are being laid off. Or take the example of the graduate university student who took a loan of about 30k or more for his education, only to find himself having a job behind the counter of an average retail shop earning the minimum wage.

In that view, we can generalise and say that every decision you make in life is a “gamble” in the same way you are considering trading to be. Even the eggs you buy at the store pose a risk to your health if they are infected with salmonella, yet you always ignore that risk and end up buying the eggs in what could become the largest gamble of your life.

Trading is more a matter of risk management rather than gambling.

If you’re looking to be successful at trading then you need to take trading seriously, like a business. And this will require your effort to invest in what matters.

Invest in:

1. Education: The web has lots of resources regarding trading from the very basics to the advanced levels of mastery. Attend webinars and look for good minded experienced traders who are willing to mentor you on your way up. There is nothing better than anyone who has been in your shoes to provide you with some guidance and prevent you from making classic mistakes.
2. Observation: An active observer does not necessarily have less experience than the ones acting. You can learn a lot just by actively focusing and observing the markets.
3. Practice: There is something known as the “10,000 hour rule”, which is essentially a theory which claims that success can be achievable through repeating the same activity over a period of 10,000 hours. This can be obviously relative depending on your background and education. But the point of this rule is that you can achieve success by forcing yourself to focus and gather the experience you’ll need in order to thrive in whatever you’re doing.  You can’t win until you lose.
4. Developing a System: Once you feel comfortable with what you’ve learned, develop a system that will work out for you in order to meet your demands. There is no point for a busy doctor to have a short-term scalping system. Develop a system that matches you and your lifestyle. By that time you’ll gain a greater appreciation for trading and hopefully, you’ll know what you’re doing.
5. Planning: Always plan ahead before setting a trade. Know what your limits are and what to expect. Remember to manage your funds accordingly to match the risk of that particular trade and look to the big picture because after all, you’re a trader, so don’t get too attached to a single view. Markets change all the time, and so will your opinions to match the markets. The more scenarios you’re aware of, the better prepared you will be to trade them.

You can connect with Goncalo Botelho on Facebook.

Gold and Silver Hanging by a Thread

Gold and Silver look like they could be a short sellers wet dream right now. Gold is struggling to get past resistance at the daily 21 Moving Average and the downward trend-line.

It is also worth noting the action on the US Dollar index which is looking increasingly bullish right now. If the Dollar manages to break higher out of its bullish flag, we could see fresh downward pressure on gold and silver. This is because traditionally gold is seen as a hedge against a falling dollar, so a rising dollar does not support gold.
Continue Reading »

Goldman Sachs | Greg Smith, Tell Me Something I Don’t Know!

Greg Smith, the former Goldman Sachs executive director, has said that he has fallen out of love with the Goldman Sachs’ culture – which has “disappeared” – and that Goldmans no longer put their clients’ interests first.

Greg – come on, give me a break! Tell me something we don’t already know!

Speaking as the trader who claimed “Goldman Sachs Rules The World”, I find myself strangely disappointed in Greg Smith.
Continue Reading »

Silver Update | Will Silver Break Through Key Levels?

Silver faces a wall of resistance at the $35.50, a confluence of key levels:

• Daily Downward trend-line resistance at the $35.60 level (see above video)
• Daily 200 Moving average
• Weekly 50 Moving Average
• Symmetrical projection of the September-October swing

The only thing helping Silver is the daily squeeze that is preparing to fire (see video) which could push silver past these key levels.  However, if this fails, we could see a pullback to the mean averages.

Also noteworthy is the action of Dollar Index.  The Dollar Index traditionally has moved in opposite direction to the precious metals, although not always.

A look at the Dollar Index shows that there may be some volatile moves ahead.  If the dollar declines (and heads towards its supporting trendline) then we could see some upward pressure on both Silver and Gold.

As a buyer of silver I would be cautious right now until the wall of resistance is breached.

Trading Success | Forget Technical Indicators And Learn How To Trade

It’s amazing to me how many traders I meet who have completely the wrong idea of what it means to trade successfully.

Let me make it clear. Trading success and profitabiliy have absolutely NOTHING to do with the following:

1. Owning or using the next “holy grail” fancy technical indicator;
2. Tweaking the settings of your fancy indicator;
3. Trying to predict the tops and bottoms of the market; Continue Reading »

Dow Transports | A Warning For Stock Markets As Transports Head Lower

While most of the major stock markets have been ploughing higher this week, one key market index has not followed suit. The Dow Jones Transportation Index has in fact dropped by 4% since last week.

Why does this matter?

This is because the Transportation Index (or Transports) are composed of stocks that are sensitive to swings in the economy and it is viewed as a leading indicator of the stock markets and the general economy (see video below).

In simple terms, when goods are manufactured they need to be shipped and transported elsewhere for consumption. Therefore demand for transportation of goods is directly linked to the functioning of a healthy economy.

The Transports therefore hold a unique position as a leading indicator, so it is important to keep an eye on it. In fact, I have yet to see an instance where the Transportation Index has not led the other markets.

As the above chart shows, the Transports have been showing divergence on the Relative Strength Index (RSI) – while the Index made new highs, the RSI failed to make new highs – indicating weakness in the trend. We also have a squeeze forming, which could mean that the next move on the markets could be pretty explosive and volatile.

At the time of writing the transports have already broken through their Friday lows of 5214 and are heading lower. This could be an opportunity to look for shorting setups on the major markets.

If the Stock Markets do start to roll over, we could see the S&Ps (ES) head towards 1300 or possibly the levels at the beginning of the year.

Get Ready For A Stock Market Reversal

Stock Markets are showing signs of weakness and an imminent reversal (see above video).

The volatility index (VIX) – also known as the market’s “fear index” – surged by nearly 16% on Friday and closed above its 21 EMA. A rising VIX usually has bearish implications for the stock markets.

The Nasdaq which has enjoyed six consecutive weeks of gains, and is arguably the strongest index at the moment, is looking over-extended. Its weekly Stochastic-RSI (which measures momentum and force of the trend) has now flat-lined in the overbought region. This indicates the upside is limited in the short term.

What I also pay attention to is Continue Reading »

Next Page »