Stock Trading Game

Just for the record, I do not own KGC and never have and I have no affiliation with the company, it is just by way of illustration. I know how this company reacts.

This is a condensed version of three posts, you can find on facebook on the Big Board Raider Pages where they have the proper cronology of events. I posted it here because I started it here and felt it need to be finished here. yada yada.

Hopefully, this is the last time I’ll talk about KGC, which was never intended as a recommendation, it’s just an example that served to illustrate my point at the time. DO NOT BUY IT on what I am showing you here. It’s going to drop now, so don’t go losing your money.

Then on October 13 (above) price hit the top of the Bollinger band as it narrowed and I said this is probably a head-fake. On the 14th it started to back off (with a red candle). The start of the head fake. I also added the fibonacci retracement lines and some channel lines for illustration. We’re learning stuff, right?

Well in the October 18 chart (below) you can see it hit the top and changed direction like all head-fakes do. It’s cool because it is quite predictable.

Then on friday, I said “As an aside, I think it will drop down to the bottom of the blue line I drew on the chart and I base that on my suspicion that the Elliott wave count is a wave 4 correction, but I COULD BE WRONG.”  I put a small red circle on the above chart to show where I thought it might drop to.

When you’re hot you’re hot.

Now I will let KGC alone.

I said this, but now another interesting situation is developing, it never ends. Look at the convergence of the 50 and 200 day moving averages. And that is where support seems to be developing. In a few days, we’ll likely see a great entry point. The RSI and MACD are dropping like a stone in water. I think this is all because the FED is pumping up the dollar. It won’t last.

Please don’t invest on my say so. I am not an financial professional. I say you have to be your own advisor. This is just to make you think and get you to see the possibilities and look at TA as another skill you could have. There is much to learn before you put down hard earned money. You can start with the stock trading game called Big Board Raiders, it’s a lot of fun and you can practice with out the pain that losses bring and get your kids started early, that’s my mission, the kids.

And it is pain, if you lose money, your other half will remember it on their death bed with their last breath. “You shmuck you lost our money.”

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Here you can see that the price did try to return to the mean (or if you want to think of it as the moving average), which is the dotted line within the green bands, called Bollinger bands. Then I said I thought we might have one more kick at the can, and as you can see in the graphic below, that happened. But that is not what I want to show you. An interesting thing has set up, and in Bollinger band speak, its called the “head-fake”.

The guy who created the Bollinger band, John Bollinger, originally intended it to be a measure of volatility with the reasoning that as the outer green bands narrowed, it indicated lower volatility. But an odd thing happens most of the time. As the bands narrow, price will go in a direction until it hits the outer band and then reverse to a much larger degree than the original move from the narrowing point.

That’s why its called the head fake.

So I am expecting price to rise till it hits the upper band and then reverse to the down side. If it doesn’t it ain’t a head-fake.

I had to point that out because it’s a peculiarity of Bollinger Bands.

And you know I hated statistics. Probably in large part to the pedantic way it was presented. I just couldn’t see where I would ever need it.

Anywho, over and out.

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