Discussion in 'Trading' started by paulus, Jun 23, 2003.

  1. paulus



    as a fairly new trader (7 1/2months) i was wondering whether people could help me with an overview of all the possible means
    (indicators) one could use to measure momentum; with reference
    to using it in an exit-strategy.

    kind regards,

  2. hwaxen


    Generally you construct two momentum indicators, a short and a long. In my work I use an 8 day and a 12 day. Sell signals usually come when the short term indicator falls below the long term indicator when both are in over bought territory. The idea of over bought is specific to the vehicle you are trading and it is also dynamic. You will need to track your indicator awhile to get an idea on what is an over bought reading on the vehicle you are trading.

  3. Sort of a difficult request because of the way the market works.

    If you get to the place where you understand that an exit strategy in the market is not a choice at all times, you will see what I mean.
  4. paulus


    thanks hwaxen;

    could you elaborate your statement Jack Hershey, please ?

  5. bubba7


    Hi paulus,

    I am on a different machine than my first post to you.

    Momentum is not usually related to exit strategies when a person has more than exiting options.

    Momentum is most useful for reversal strategies and market pace change considerations. No one exits under just pace change considerations unless they are plagued by a hair trigger mentality.

    Hwaxen does not recognise these things either.

    So if you want to shape up a little consider doing the following:

    1. Recognize that there are two market moduses. You only recognize the enter/exit modus at present. The other one is the reversal modus.

    2. Complete the other half of your approach that is missing. Read around and you will see two themes here that showwhat it is like to have only a half strategy such as yours and hwaxen's. You see two things: early exits and a non neutral bias in trading. The non neutral bias is a drag if you want to get rich sooner than later and if ever. further, the non neutral bias is severe in how it restricts the % of time a person is in the market making money.

    It is bad enough to always be using a entry/exit only modus, but even more potential market time is lost with a non neutral bias. the hair trigger exits made by many methods (looks like hwaxen is included too) cut into possible profits.

    3. You are sacrificing a big money making part of your investing by leaving if the market goes through downward momentum shifts that you guys interpret as exit points. you are simply seeing a trendloose money velocity and still keeep making money. It is another aspect of the hair trigger plague around here.

    4. On fair momentum going to lower momentum their are also good possibilities for reversing and making money when IT trends are still in channels and it appears that a price decline means exit. It means reverse as the traverse across the IT channel proceeds and then as the traverse ends, reverse back into the channel trend. This way momentum is used to continually make money and also be sophisticated enough to maintain a neutral trading bias.

    There are lots of steps inl earning to put stuff together. Unfortunately you are not doing that at this point. On the other hand you thing you got good advise from one person and not from another. you have to things to do additionally now at this point. Sift through whatever you base you views on now thoroughly and then do it again twice more. You are going to be amazed at what you can drop out of your picture.

    Once you get the smudges eliminated you can begin to add stuff slowly to develop a strategy for each of the two basic market modes. You will immediately be able to differentiate between trend strategies and change strategies. The trend stuff is money making during trends the change stuff is during money making during change. That sounds simplistic. There are three types of trends and two types of changes. Right now you are sitting in a place trying to find out how to exit a long trend. Somehow you got to a point where momentum is in your sights. Time to go back to thedrafting board and set up a way to begin learning about the market.

    Jack hershey.