How do you trade?

[Gonz]

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.

[Oldedit]

I think you have a good set of technical indicators in your quiver.

Do you daily check out these strong blogs on technicals?

Tehnically Speaking by a physician who lets his smarts show.

Bill Cara, a skeptical old timer who knows markets and conspiracy theories.

www.morningstar.com, which is worth the price of a subscription for its fundamental analysis, rankings of stocks, etfs, etc., portfolio tracking and stock screening tools. You don't need an MBA to do fundamental analysis if you use this site. Its boards are great, too, but its members aren't traders the way people here are. So the stock picking discussions there are less than helpful for me.

Bespoke is an impressive new invesment and economics blog.

[Luc1Grunt]

Hey Gonz, you said "for all these to lign up would be the perfect storm".

Do you use SF? That would be very easy to code.

I think you have good use of the indicators listed, but remember they all lag. especially MACD. I've used them all and use variations for screening. For actual entries or exits, I am now down to basically price and volume. Simplicity and has, over time, proven more profitable.

Hope that helps.....my $.02

[TonyM]

How do I trade? I press the buy or the sell button

Seriously though, I like the support and resistance levels which tend to work pretty well on the boring flat market days imo, but with the volatility of recent weeks I've been looking at the support and resistance levels of the S&P500 to try and chart the near top or bottom of a stock. I'm partial to blue chippers though (your core XOM holding perhaps being my favorite), stocks such as BQI do not neccessarily work as well with this type strategy.

In the end it all comes down to what works best for each individual, there are hundreds of ways to skin a market cat.

[Luc1Grunt]

Originally Posted by TonyM

How do I trade? I press the buy or the sell button

Seriously though, I like the support and resistance levels which tend to work pretty well on the boring flat market days imo, but with the volatility of recent weeks I've been looking at the support and resistance levels of the S&P500 to try and chart the near top or bottom of a stock. I'm partial to blue chippers though (your core XOM holding perhaps being my favorite), stocks such as BQI do not neccessarily work as well with this type strategy.

In the end it all comes down to what works best for each individual, there are hundreds of ways to skin a market cat.

Tony, you trading ER/ES or any of the ultra ETFs for the S&P? S/R and trendlines for the S&P is proving a better % than my standby GOOG, AAPL, QCOM, and RIMM.

[TonyM]

Originally Posted by Luc1Grunt

Tony, you trading ER/ES or any of the ultra ETFs for the S&P? S/R and trendlines for the S&P is proving a better % than my standby GOOG, AAPL, QCOM, and RIMM.

Just the QID mainly for a short and a chipper like XOM on the long side depending on the oil situation or maybe short the QID for a long side play, or just use SPY, although I feel I must offer some disclosure here; without revealing too much I'll just say I'm on a temporary hiatus from real trading currently due to a personal matter.

However I'm still trying out different strategies to apply when I return to my normal trading activities. I had started paying more attention to the spooz s/r levels a few months back though and find it to be challenging at times but quite profitable and a much better predictor than rsi/volume that I had been using on individual stocks I was trading. I like to keep an eye on the vix as well when looking at reversals in the spooz. Of course when Uncle Ben shows up in his helicopter, that tosses a bit of the technical stuff right out the window.

I do like the BQI play as well, but it's a bit of a combination of s/r and a feel for the action using a 10k share size for a quick scalp, probably a bit risky by most standards but waiting for decent pullbacks seems to work well.

[riyerusmd]

Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets" -- Review

--------------------------------------------------------------------------------

Hi,

I read Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets"book. I am interested to know, how it worked for investors in street. Are we able to use his strategies on proactive basis?

He talked about Weekly weighted MA, but there are people claims EMA works better over MA.What is this forum's thoughts?

Do we able to use Stochastic, MACD, and RSI indicators in his approach?

What are the computer-generated charts, such as BigCharts, etc. works instead of Mansfield Stock Charts ?

Are there any stock screen/fundametal check, we could use to find the stocks?

I did not find any detail discussion thread on Stan's approach. Are there any forum for his strategy discussion?

Thanks in advance.

[Luc1Grunt]

Originally Posted by riyerusmd

Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets" -- Review

--------------------------------------------------------------------------------

Hi,

I read Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets"book. I am interested to know, how it worked for investors in street. Are we able to use his strategies on proactive basis?

He talked about Weekly weighted MA, but there are people claims EMA works better over MA.What is this forum's thoughts?

Do we able to use Stochastic, MACD, and RSI indicators in his approach?

What are the computer-generated charts, such as BigCharts, etc. works instead of Mansfield Stock Charts ?

Are there any stock screen/fundametal check, we could use to find the stocks?

I did not find any detail discussion thread on Stan's approach. Are there any forum for his strategy discussion?

Thanks in advance.

Post the detailed approach and we can code it, backtest it etc.

[theticktrader]

You have some good indicators. Do you daytrade or swing ??