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Registered User
Joined: 7/26/2005
Posts: 109
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I need help from the trend investors.Tired of making bad
decision. I was so impresseb by the letter from Sir Emerald Isle in the Worden report on 01/24/06. I liked how he bought on the 10/20 ma on high volume on under valued stocks and sold on the 50/100 ma on high down
volume.
Can anyone comment on this style of investing.
Trend investors tell us your secrets.!!
(Does a trend investor ever use stops)!!
Thanks
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Registered User
Joined: 12/8/2004
Posts: 1,301
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Sure trend investors use stops. In a good market you can be pretty loose with your stops so there is no way to get stopped out. In a market like we are in today, the stops have to be tighter to protect your profits. This is why I believe we well have a LARGE DOWN DAY or days. A lot of money was made last 3 years. There is no way institutional investors are going to allow themselves to lose the profits they have already made. Their stops are tight, and one flinch will cause an avalanche.
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Registered User
Joined: 10/6/2005
Posts: 5
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Ah. If only would someone show us the location of the Holy Grain 
The idea of trend-following systems is to get you on the right side of a trend that you'll be able to ride hopefully for a long time. The cost of that is that most of the time markets go sideways. Thus you will get whipsawed quite often and majority of your trades will be loosing ones. It is very painful to trade that way and it sounds easier said then done. As a starting referecce - one popular breakout system is called Turle system, google for original turtles trading rules or smth like that and you'll find it.
Various techniques could be employed to improve selection of securities as well as entries and exists (for example, CANSLIM fundamental screen is a good one; Value Line screens is also something that works for me). The idea is to maximize probability of success. Personally I don't believe trading on technicals alone is as effecitve as mixed approach. The latter however requires a lot of "homework". In turn trading on fundamentals alone could be a total disaster (from my thankfully some while in the past experience). One remedy is to specialize on some group of securities (may be related to your day job) and trade ETFs or for the rest. Say you may understand technology stocks and then you augment that with going with the long-term flow on sectors that are moving using etfs (so to shield you from whimps of individual stocks you know nothing about); so you divide your portfolio and trade few stocks you can understand and the rest you can be say long gold and Japan and short oil (hypothetically speaking, not actual trading advise). You'll have to experiment and find what works for you.
There're some excellent books out there that helped me a lot. Here's what comes to mind at the top:
Victor Sperandeo's Trader's Vic - Methods of a Wall Street Master
Trade Your Way to Financial Freedom by Van Tharp - absoutely excellent reading on trading systems
Practical Speculation by Victor Niederhoffer
The new market wizards
and of course O'Neil's How to make money in stocks (while immencely useful - I find it a bit simplistic)
hopefully this helps somewhat,
good luck,
Ruslan
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