Registered User
Joined: 8/11/2005
Posts: 26
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Looking for advice on when to stay out versus when to go in fully margined? I like to swing trade and buy on pull backs and hold for about 2 weeks. Lately the market has been choppy and I've been getting stopped out on most trades. So I wanted to ask how do you decide when to stay out and when to use margin?
Thanks in advance!
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Registered User
Joined: 12/8/2004
Posts: 1,301
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I have found the following to be very successful.
In you Worden Market indexes look at the Russell 3000 index. (RUA-X)
In your second window plot a standard MACD 12,26,9) (I prefer exponential averages getting into the market and simple averages getting out).
When macd intersects with its average from below the zero line in the russell 3000 I begin to look for stocks.
Everyone has their own methods for picking stocks, divergences etc., but I never buy any stock below three dollars, and I never buy a stock below its 150 day moving average. In fact, I actually scan for stocks where the 50,150, and 200 day moving averages are pretty close(consolidating).
If there are no stocks that I like which have been consolidating and still above their 150 day moving average then I look at risk vs reward on every stock. I compare the current price to support and resistance. If there is substantially more up side than down, I buy the stock.
I then pick a stock whose MACD is definitely in an upswing. Most stocks can't last more than 2 to 3 months without crossing their averages. It is actually preferable to pick a stock which meets my other requirements, AND has a very similar macd pattern as the russell 3000 at that particular moment in time.
I purchase the stock and sell it when the STOCK macd crosses its average again. I do this with all stocks and I do not make new purchases unless the russell 3000 macd is still on the rise.
I have found that this method doesn't leave you out of MAJOR market moves. You will get some false signals, but not very many. You will normally get two or three good runs during the year.
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