End of Week 3
Things looked good for a trade this week. The market got behind the upward move with increased volume, and the stock closed for the day (and the week) above the M/A, so I'm in with my theoretical 1000 shares. This is called "paper-trading" and is used to test systems in live market conditions to see how they perform. Very highly recommended for at least a few months while you familiarize yourself with your particular system.
The OHLC Bar
The Open, High, Low, Close bar is represented on the chart by the red and green vertical bars with the little branches sticking out. Each of these represent a day's price action. The diagram below explains further.
The purchase price was $28.30 with brokerage of $35 to enter the trade, the total being $28,335 as we bought 1000 shares. This may seem like a lot of money, but you don't need that much of your own. With a margin loan, you could safely buy these shares with only $10,000 of your own money. Your broker will lend you the rest. If you were trading the options instead of the shares, you'd be able to trade with this much "weight" for an outlay of under $1,000. You'd still benefit from the price moves but using much less of your own money. This is why a lot of traders prefer options over shares. See you next week.
Week 4
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