NPD_BANDIT's Blog : Experiment

Bandit - I will give you my quick thoughts on how I approach trading. I set any chart with the following. I use bollinger range, simple moving average 4,19 days, select momentum, and use a Bar Chart. I have started using 4,30 days due to a leveling of the market. Any time a selected stock breaks below the 30 day SMA, moniter momentum to see its lowest point. Once momentum has three consecutive upticks this is a "buy signal". As a stock is moving upward do not sell as long as the most recent low is not lower then the previous low. Ex: 1st day $4.00, next $4.20, next $4.15, next $4.44, next $4.25 ... this trend is a strong momentum move and the stock is building. Now if the stock crosses the high end Bollinger Band, This is a point to take profits and look for a pullback within the bands. Once a low is lower then the previous low, sell the position with profits and watch momentum again. This is a simple method to take emotions out of trades, and mimimize risk taking or greed. Happy Trading.

Thanks for the input. Just set up a chart with those settings this morning. Default for momentum on my chart is 10 days...should it be more in line with the long MA? Do you ever use this to short stocks as well, or just ride them up? Thanks again.

I would be careful relying simply on technical analysis. You should also be sure to check their fundamentals and earnings surprises, recent news, etc. to validate your chart interpretation. But that sounds like a great approach to identify potential candidates for further research.

I didn't mention it, but I usually use Zacks #1's.

Nomadamon - I agree, be careful to only follow 1 type of information. Overall, I believe sector selection is 85% of the battle and 15% actual stock selection. However, within that stock selection momentum is critical to succes.