Gonz
06-14-2007, 10:37 AM
This is the thread for people new to the game, who might feel a little lost in all the jargon being tossed around here.
I started trading a couple years ago with absolutely no idea what I was doing, and my record lamentably reflected that, to the tune of about -4k. (Luckily I inherited some XOM about twenty-five years ago, and decided not to touch that, so my portfolio's overall performance doesn't quite adequately reflect my gross ineptitude.)
I gave up to give myself time to let everything sink in, and then I started doing some reading. The consensus is, I find, that any system is better than no system, and that whatever rules one sets for oneself should be followed without exception.
Here's what I've come up with:
1) Favorable candlestick pattern: I've been doing rather a lot of reading up on candlesticks, and there's something about them that I find not only fairly effective, but also...I don't know, aesthetically and philosophically appealing. I can identify about fifteen or so of them by name, and otherwise I've all the others I've put into a word document (with visuals) for consultation. I'm not going to go into all of them here, obviously, but the gist of it is, when they look just right, it's a buy or sell signal.
2) MACD: Buy when the signal line crosses above, or convincingly looks like it's about to cross above, zero; buy when the MACD line crosses above, or convincingly looks like it's about to cross above, the signal line.
3) SMA: If 5-day SMA is above or crosses over 20-day SMA, it's a buy signal. If both of these are above or cross over the 50-day SMA, even better.
4) RSI: I'm not entirely sure how effective this is, but "oversold" triggers a buy signal.
5) Slow stochastics: "Oversold" triggers a buy signal.
6) Volume: Good volume, both real and relative, confirms. I make that stipulation because I'm wary of the value of my analyses for stocks where only a few thousand shares per day trade hands.
I realize that for all of these to line up would provide something of a "perfect storm", so I don't require that. I lend more credence to the first two (candlesticks and MACD), but my rule of thumb is this: if at least three of these indicators signal buy, then buy...unless two or more of them say otherwise, in which case, don't.
You'll notice these rules say nothing of fundamentals, which is basically because I don't want to have to get an MBA in order to trade. As for selling points, I'm pretty weak on that too. Thus far my only technique is to enter a trailing stop immediately after purchase, and then tighten it progressively as the stock goes up.
So there you have it. This thread is for three things: 1) To tell me why this is either foolish or wise; 2) To lay out your own system, and explain it (preferably in simple terms); and, 3) To ask any question, no matter how stupid you might think it to be, about trading.
I started trading a couple years ago with absolutely no idea what I was doing, and my record lamentably reflected that, to the tune of about -4k. (Luckily I inherited some XOM about twenty-five years ago, and decided not to touch that, so my portfolio's overall performance doesn't quite adequately reflect my gross ineptitude.)
I gave up to give myself time to let everything sink in, and then I started doing some reading. The consensus is, I find, that any system is better than no system, and that whatever rules one sets for oneself should be followed without exception.
Here's what I've come up with:
1) Favorable candlestick pattern: I've been doing rather a lot of reading up on candlesticks, and there's something about them that I find not only fairly effective, but also...I don't know, aesthetically and philosophically appealing. I can identify about fifteen or so of them by name, and otherwise I've all the others I've put into a word document (with visuals) for consultation. I'm not going to go into all of them here, obviously, but the gist of it is, when they look just right, it's a buy or sell signal.
2) MACD: Buy when the signal line crosses above, or convincingly looks like it's about to cross above, zero; buy when the MACD line crosses above, or convincingly looks like it's about to cross above, the signal line.
3) SMA: If 5-day SMA is above or crosses over 20-day SMA, it's a buy signal. If both of these are above or cross over the 50-day SMA, even better.
4) RSI: I'm not entirely sure how effective this is, but "oversold" triggers a buy signal.
5) Slow stochastics: "Oversold" triggers a buy signal.
6) Volume: Good volume, both real and relative, confirms. I make that stipulation because I'm wary of the value of my analyses for stocks where only a few thousand shares per day trade hands.
I realize that for all of these to line up would provide something of a "perfect storm", so I don't require that. I lend more credence to the first two (candlesticks and MACD), but my rule of thumb is this: if at least three of these indicators signal buy, then buy...unless two or more of them say otherwise, in which case, don't.
You'll notice these rules say nothing of fundamentals, which is basically because I don't want to have to get an MBA in order to trade. As for selling points, I'm pretty weak on that too. Thus far my only technique is to enter a trailing stop immediately after purchase, and then tighten it progressively as the stock goes up.
So there you have it. This thread is for three things: 1) To tell me why this is either foolish or wise; 2) To lay out your own system, and explain it (preferably in simple terms); and, 3) To ask any question, no matter how stupid you might think it to be, about trading.