I use the MACD and Stochs to identify divergences and overbot/oversold scnarios. Also, because they are so widely watched by the major money, I know that they will be getting in when I do. I use an MA as a trigger when the price crosses it. I do not use crossing MA's for triggers. Using an MA as an entry trigger gives me a precise number that identifies whether I am right or wrong. Coincidently, I like to exit with the price crossing the MA also if the move has been steady. But when a significant extension develops, usually secondart to some form of parabolic move, I will take the profit there because of the two observations I described earlier. Why would a guy who has made 10MM be here, and instead of learning from us, he should teach us. I don't mind sharing, but don't try to be sneaky about getting info from me. Of course, all I really know is....
Tips are for dips. And patterns? Patterns shmatterns. There are only half a dozen or so patterns, all the small variations are just that- small variations. Forget patterns. Think in terms of diminished supply and sated demand. Base your decisions on logical rules grounded in what you know, not what you may have read or heard. If you don't understand it, can it. To get it right you must have all the pieces in place. The engine must be complete and fully tuned before it will run. I've been inspired by that worldchampion guy to answer the rest of your question with a half riddle. Think hard about these three concepts and how they relate to trading: the cheetah the venture capitalist the leveraged buyout
when i look at that picture (see "extremes.jpg"), here's what i'm thinking..but not smart enough to actually trade: in relationship to the 5sma, it could be calculated that when that stock gets x away from the 5sma, there is a good chance it is going to revert AT LEAST back to it's 5sma. i guess you could calculate all those zones in the yellow circles and find out how far each area is from the 5sma. if the stock is at an extreme below the 5sma, buy....if it is at an extreme above the 5sma, short it. i haven't thought about it too much, but you could exit the trade on the first close back above/below the 5sma. i'm too stupid to figure out how to do this, but i think it's a good idea. as i've said before, can someone who makes money tell me if this is a good idea or not. thank you
Gordon, here's the problem with MA crossover systems: they're after the fact and a trailing indicator. Why not get short after you've made a lower low and a lower high? The MA won't print like that until it's history. Ever notice how indicators in general look so great in retrospect, but in the heat of battle they're woefully lacking? Momentum may be better for you. Better yet, trade order flow. I'm afraid that a MA crossover system will eat up so much in the chop that by the time you catch a true break, you'll be exhausted emotionally and financially.
bone, i agree with you on crossovers. i've experimented with crossovers in the past and i don't like using that method either. if you're referring to the picture of the downsloping 5 and 20sma, i was not suggesting that you short when those 2 mas crossed. i would say that while those 2 mas were sloping down, you could basically short each close and cover at the next close. a few times you'd get a loss, but the gains would definitely outweigh the losses. bone, i'd also like you to look at picture 2 called "extremes.jpg" and read what i wrote about that in the post after it.
What timeframe are these bars? Are you planning on fading these 'extremes', or following along with the new high or low against the last bar?
that is a daily chart...and i would be fading. like i said before, if the extreme was above the 5sma, i would short. if the extreme was below the 5sma, i would buy. p.s. i love the quote.. "bone (this is an alias)" lol