This online stock trader was gone a few days for the 4th, and missed the excellent move in AEM, and the warrants AEMLW. I did catch the rule of 4 breakout in the XAU on Friday though. The chart speaks for itself!

XAU 148 is the next area of resistance. Now I want to mention something that is interesting about the daily XAU chart. Let’s start counting candlesticks beginning with the first pivot low. You have 5 bars until resistance at the first pivot high. Next, there’s 8 bars to the second pivot low. If you keep counting you’ll see that there’s 13 bars (ending with a red wide range bar). Then a reversal, and 5 candlesticks leads XAU back to resistance at point 2. 5 bars back down leads us to the 4th pivot low. It’s not an exact science, so there’s an extra candlestick at the third pivot high. 5 bars bring the XAU back down to the 5th pivot low, and 5 back up to resistance. Ok. So here’s a trick to look for on any time frame. The sequence of Fibonacci numbers is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, etc. We’re really only concerned about 3, 5, 8, and 13 when trading. Notice how the sequence of candlesticks up and down, between support and resistance, correlates with the Fibonacci numbers. Stocks will generally stay in 3 – 5 bar swings. You will have periods when they’ll move to extremes of 8, or 13 bars though. That’s when it’s time to look for reversals. It’s amazing how this often works, and a trading tactic to keep in mind.

Based on the sequences that were playing out, it was a fairly decent bet, that the last move up from support was going to last 5 bars.

A reader, Jake emailed me, and noticed I still use CRTs in my multiple monitors trading system. He asked why I haven’t upgraded to the delicious Flat Panel LCDs, commonly seen on current trading platforms with 3, 4, 5, or more, multiple monitors. I gotta say, if it ain’t broke… don’t try and fix it. After the years I’ve been trading, these Dell Sony Trinitrons have been the easiest monitors on my eyes. The 3 monitors on my right are controlled by a separate video card each. The 2 monitors on my left, a separate video card for each monitor also. This was the easiest way to setup the multiple monitor system at the time I did it. Now they have those nifty multiple monitor stands where each lcd is set in different configurations in the stand. Sure. They look sweet. A pair of dual Apple computer cinema displays would look rockin in a multi monitor setup, but this still works. I have thought about some 21″ monitors though. These are 19 inches. The extra screen real estate would be handy.

It’s about time I upgraded my towers though. Having the proper trading tools and equipment is crucial. I’ve noticed my computers are starting to show their age.  Any suggestions?

This week I’ve seen two organizations offering free online stock trading. On CNBC, the group at Zecco was profiled Monday, and Bank of America today. You’ve got to wonder, how can they do this? Is it really the smart way to go when trading? If you’re serious about the stock market, I think you’ll find that there’s really no free lunch when you’re talking trading and execution.

Now, I’m not going to knock these two systems, as I don’t know what they specifically offer. I will though, offer a few advantages to using a direct access system with multiple routes for your trades.

Speed of execution is one advantage of using a direct access broker. Most web-based trading platforms require you to manually enter your symbol, price, the number of shares, etc. Direct access allows you to click on the symbol, share amount, charts, and individual ECN routes. In a fast moving stock, this is crucial. When you’re competing against other traders who may see the same setup, you’re at a disadvantage already by having to manually enter your trades. Using ARCA – Archipelago, is probably the fastest way to get your order executed. There is a small fee equal to about .30/100 shares, on average, but a few quicker executions can make this up in no time flat.

Multiple ECN routes allow the direct access trader to choose the route of the trade. What happens if you’re free web-based broker goes down when you’re in a trade? If you’re trying to make an exit, having multiple options is an advantage.

Is your cash swept into some money market based account when you aren’t trading? Compare the yields to make sure you’re money is making interest when you’re not in a trade.

When you shop around for a broker, ask yourself what your priorities are. For the individual who makes infrequent moves in the market, a free online stock trading option may work best. For those traders with serious intention, direct access trading platforms are a must have.

Yesterday, I mentioned that in evaluating the potential trade in QSII, I looked at the 60-minute, daily, and 15-minute time frames to help make my buy decision. For every trade, I believe it’s important to not just look at a few charts, but 5 charts of the same stock which include:

• 1 or 2-minute candlestick chart
• 5-minute candlestick chart
• 15-minute candlestick chart
• 60-minute candlestick chart
• Daily candlestick chart

I find doing this so beneficial, I devote a single monitor for it.

When you watch multiple time frames,, you’re getting the big picture of the stock or equity you’re trading online. It’s similar to buying a car. Before you drive off, you kick the tires, check the seating, estimate the gas mileage, and make sure it’s the color you want. So why just look at a daily chart, or a daily chart and 5-minute chart? A few benefits of monitoring a larger range of times include:

• Having more opportunities for trading patterns to emerge
• Easier to establish trends (ex. the daily chart may be neutral, so that uptrend you spotted on the 5-minute chart may stall easier)
• Longer time frames can be used to set stops (less noise or volatility)
• Shorter time frames can be used to manage stops near resistance areas
• Stops and targets are easier to determine

During those whippy markets, finding a stock that’s trending can be difficult. Instead of entering on a 5-minute buy signal, and risk getting stopped out quickly, the 15-minute chart could be used. Or, let’s say you see a high probability pattern emerge and, decide to enter with a tight R. You can, by utilizing the 1-minute, or 5 minute charts. It really opens up your available trading setups.

Online stock trading is difficult enough. Using more than one or two charts to watch a singe stock adds to that discipline we all use in trading.