Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Disclaimer

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Tim started writing this blog on March 29, 2005 simply as a personal diary. Over the months and years, readership of this blog has increased to tens of thousands of people every day, even though the blog’s purpose – Tim yammering on about charts and the markets – hasn’t changed much.

This blog is not, and have never been, investment advice. It is a free blog that allows me to express my own views on the market and specific securities – as well as make whatever cultural observations or other odds and ends strike me as worth writing about. So I take absolutely no responsibility for the losses – – or any credit for the gains – – you may or may not make from reading this forum. Whether you lose your life savings or make a fortune is entirely up to you and your own skills/luck/fate.

Several things to remember about this blog:

  • + This isn’t investment advice. I’m just talking about my own views of the market.Your decisions are your own. I’m just exercising my right to free speech in this once-great land of ours.
  • + I am afflicted with the disease Ursinus Perpetuus, which gives me a strong inclination to short stocks. Those with a bullish bent may feel discomfort, rage, and – occasionally – envy. Suffice it to say I tilt to the bearish side.
  • + The comments section is one of the key components of this blog. Keep it lively, but also keep it civil. All views are welcome here, as long as you don’t resort to ad hominem attacks (especially against your host), obscenities, advertisements for other sites, or other behavior which strikes me as beneath the noble little corner of the web we’ve got here.

Please note I am the principal of Tim Knight Organization, LLC, a California-registered investment adviser. The content of the postings and investment strategies and discussions provided herein do not necessarily reflect the views, opinions or policies of Tim Knight Organization, LLC and Tim Knight Organization, LLC makes no warranties regarding the accuracy of their content or their completeness.

Books I’ve Written

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Chart Your Way to Profits - Second Edition

Technical analysis is the study of past price movement for the purpose of predicting future price movement. If done correctly, it can lead to substantial trading profits. But making money in the market isn’t easy. No one knows this better than author Tim Knight, who has been charting and trading the financial markets for more than twenty years. The company he founded, Prophet Financial Systems (now owned by TD Ameritrade), was ranked for years as the number-one site for technical analysis by both Barron’s and Forbes.

In the first edition of Chart Your Way to Profits, Knight showed how to use the powerful technology available online in conjunction with technical analysis to analyze markets and make the most profitable trading decisions possible. Now, in this revised Second Edition, he offers many new technical tools for tracking individual stocks and also shows you how to use ProphetCharts® to do advanced intermarket technical studies to identify the best opportunities.

Written in a straightforward and accessible manner, Chart Your Way to Profits, Second Edition introduces the ProphetCharts® application (accessible to anyone with Internet access and an account), which allows you to perform your own analysis with the help of hundreds of real-world examples. Along the way, you’ll also become familiar with some of the most important rules of sound trading. The author examines a variety of chart types, highlights essential indicators, explores numerous analysis methods, and offers a wealth of in-depth insight and practical advice throughout the book.

No matter what you trade, technical analysis can make you a better and more profitable trader. Price charts will consistently provide the most complete representation of the supply and demand behind any financial instrument because everything that can be publicly known or speculated is already built into the graph. Through the ups and downs of financial markets, technical criteria and charting allow traders to be completely objective in their assessment of price action, while leaving emotion out of the decision-making process. Chart Your Way to Profits, Second Edition can help you do the same, as it shows you how to combine technical analysis with powerful online tools to achieve trading success.

The hyperlink above will send you to Amazon. If you’d prefer to get a signed book directly from me, just sent a $75 payment via PayPal to trader.tim.knight@gmail.com or mail a check to Tim Knight 555 Bryant #711 Palo Alto CA 94301. If you are outside the United States, please include an additional $10 to cover the extra shipping fees.

The Slope of Hope Bathroom Reader

0904-bathroom Please note there is also a new book directly from Slope’s archives which can be purchased here. You can read the reviews about the book here. Check it out!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Probability Trade Setups

A key element of trading is identifying situations in the financial markets that can produce a profitable trade. Fundamental analysts search for situations where a stock is undervalued or if a stock’s prospective earnings growth is underestimated by a majority of investors. Technical analysts look at patterns in the market that historically indicate the direction of the markets next move. High Probability Trade Set-Ups catalogs the best trading situations from a variety of technical approaches.

Engaging and informative, High Probability Trade Set-Ups provides a detailed explanation of twenty powerful, recurring tradable situations in the financial markets. Each pattern is thoroughly described, including its strengths and drawbacks, ease of identification, and the degree to which it produces profitable trades. Most importantly, the author provides entry and exit points for each set up. Examples of the set-ups include chart patterns such as ascending triangles, diamonds, gaps, pennants, and channels.

  • * Features many new technical tools for tracking individual stocks
  • * Contains a resource guide, which will help to monitor the market for the trade set-ups discussed throughout the book
  • * Reveals how to use ProphetCharts to perform advanced intermarket technical studies and identify the best opportunities

Written in a straightforward and accessible style, High Probability Trade Set-Ups covers a lot of ground with respect to this approach and shows you how to use it to make the most of your time in today’s dynamic markets.

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Trading Rules

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If you trade for a while, you will see a lot of rules lists. These are guidelines put together by individuals so they can, bluntly stated, attempt to avoid screwing up like they have in the past.

There is a lot of overlap among rule lists, and most of these lists aren’t worth much, particularly in cases where they comprise dozens of different rules. On reading these, one can conclude the writer of the list has made a glittering variety of errors that he believes he can circumvent if only he has a lengthy-enough document to follow.

I’ve got my own list, but it is short. I ignore some of these rules from time to time, and virtually every time I do, I regret it.

It has cost me a huge amount of money to formulate these “trading laws”, and I offer them up for free, with the hope that it will help some of you. If one day I can follow these rules absolutely consistently, I’ll be a much better trader for it.

Stops – a stop price must be in place at all times for all positions, and stops should be set generously enough so as not to exit a position prematurely. It is permissable to cancel stops before the opening bell to let the initial ten minutes of market activity transpire before re-establishing the stops, as the majority of “problem” stop-outs occur at the opening bell.

Opening Bell – with the sole exception of updating stops,

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actions should be taken in the first 30 minutes of any trading session. In addition, off-hours trading (either before or after) is to be avoided altogether.

Freshness – stop prices should be regularly refreshed, particularly when the market has moved in your direction a meaningful amount so that you can lock in some profits with tighter stops.

Emotional Awareness – use emotional awareness to your advantage, understanding fear often accompanies reversals in your favor and hubris often accompanies reversals against your positions.

Exits – the only acceptable exit is either being stopped out of a position or reaching a target price which has a clear technical rationale, and even in cases of the latter, partial exits are preferable to outright closes.

Following these rules consistently isn’t easy. But every year I get a little better at it. I urge you to consider making these rules an important part of your trading life.

Contact Me

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I adore my readers (well, most of them, anyway), and I’d love to hear from you. My mailing address is 555 Bryant Street # 711, Palo Alto, CA 94301.

If you want to email me, you can send a note to my Gmail account, but please do not ask for advice of any kind. I will not offer any opinions about anything to any individual (although if you have an idea you’d like to share with me, I’m all ears). By “advice”, this includes stop prices, market direction, whether I’m long or short something, what color I think the sky is, etc. I will not respond to anything asking for any opinion on any particular investment or technique. I hate to be rude about it, but so many people have ignored softer warnings that I had to kick it up a notch.

Recommended Reading

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I am often asked what reading I would suggest to traders that want to learn more. Well, in addition to Chart Your Way to Profits and the Slope of Hope Bathroom Reader. Here are a few others I really like……

Currency Wars – excellent and easy-to-read volume about fiat devaluation and how countries use it for both positive and negative motives. This is far and away the best book I’ve ever read about currencies, and the way he weaves history into the text makes it fascinating.

The Big Short – an absolutely superb account of the mortgage bond meltdown of 2007-2008. Michael Lewis has written another can’t-put-it-down bestseller.

Art of the Trade – Unlike anything I’ve ever read; very philosophical, very subtle – – almost sublime – – it helps you get inside the mind of a winning trader.

Fooled by Randomness – Nassim Taleb’s superb book about statistics, causality, probabilities, and the market. This is one of the best books related to trading I’ve ever encountered.

Trading in the Zone – a terrific guide to trading discipline……almost zen-like.

Technical Analysis of Stock Trends – the Bible of technical analysis. A must-read. Its advanced age its evident from its old-timey charts, but every technician must read this book.

Encyclopedia of Chart Patterns – a rigorous, statistical analysis of chart patterns and their effectiveness. Brilliant.

Education of a Speculator – fascinating amalgam of personality and trading style (even though his fund went belly-up shortly after publication!)

Market Wizards – a can’t-put-down collection of interviews with traders. Essential reading.

Books

About Tim Knight

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Tim Tim Knight in 1992 founded Prophet, a wholly-owned online software company that was acquired by Investools in January 2005; he served as Senior Vice President of Technology for Investools from 2005 through 2010. His book, Chart Your Way to Profits, published by John Wiley, offers a solid introduction to both technical analysis and the ProphetCharts product. He has also recently published a compendium of this blog’s writings, The Slope of Hope Bathroom Reader.

An active trader and chartist, Tim founded Prophet to provide market data to self-directed investors using stand-alone technical analysis software. With the advent of the Web, he envisioned providing the power of these expensive software packages with browser-based convenience – enabling traders to focus on their analysis, instead of worrying about software upgrades and database issues. His online technical analysis suite at Prophet.Net delivered on this vision. Prophet was in “the cloud” before there was a cloud.

In his professional role as a full-time money manager today, Tim relies on technical analysis as the primary basis for his investment decisions, and he leveraged his passion for the markets to fuel the innovation for which Prophet.Net is known. In fact, Barron’s and Forbes consistently named Prophet.Net the #1 Web Site for Technical Analysis.

Before starting Prophet, Tim was Vice President of Technology Products at Montgomery Securities in San Francisco, where he led the development of an institutional online-trading platform. Additionally, he has held various positions in marketing management at Technical Tools and Apple Computer and is the author of 20 computer books. You can subscribe to his Twitter feed by clicking here.

Message from Tim: Please note I am the principal of Tim Knight Organization, LLC, a California-registered investment adviser. The content of the postings and investment strategies and discussions provided herein do not necessarily reflect the views, opinions or policies of Tim Knight Organization, LLC and Tim Knight Organization, LLC makes no warranties regarding the accuracy of their content or their completeness.

Watch the Euro

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In tonight's Short-Term Update from Elliott Wave International, I found this chart of sentiment (used with permission) quite fascinating:

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Optimism has returned to the levels seen in late October 2007 when the S&P was well above 1500! Bulls are everywhere! Cramer is actually uttering the phrase "Four Horsemen" again! It's as if November 2007-March 2009 never happened.

My snark-o-meter continues to peg pretty high. Fistfights are breaking out at other blogs. Slope tends to hold the high ground in terms of etiquette and comment decency, although some modest snarks are appearing here and there. And I would remind those who sneer that this is a "bearish blog" that I was quite vocal about being bullish on energy and commodities, which have performed spectacularly. So foo-foo to you.

It appears there are some of you who don't spend every waking hour on Slope, and thus the blog platform change was completely unknown to you. Many of the features to which you grew accustomed on the old blog are gone, but most will be returning. A notable one is the watch list feature, which resembled this:

0601-watchlist

Rest assured, Slope is going to be better than it ever was. I've performed a few miracles to change platforms and move thousands of old posts over in the span of three days, so just give it some more time.

Finally, keep an eye on the EUR/USD. Its ascent has been driving just about everything higher, and it's reaching an exhaustion level. Once this turns down, you can expect energies and commodites to follow suit.

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