Hi guys, I'm new at swing trading stocks. Can you please share with me what pair of moving average crossovers you recommend for swing trading? I'm looking to make 5-7% gains per trade (when I'm right). eg 23 and 30 day EMA crossover? Thanks
How long will you be holding positions for? What size is your stop (as a multiple of ATR or daily standard deviation)? GAT
3/8 works for swing trading except when it doesn't. It's the ma's used by Petra Hess. Of course that is only a small part of the process. What to buy, how much to buy, and when to sell must also be part of your plan.
%% 200/50 day ma,nWoptions; +200 period/50 period. Worked well on UPRO past 5 days; some caught part of that $40-50 move; i was in cash ETFs tech sector+ took a smaller profit. 50 week ma not hit very often; so use more than a 23/30 ema. Thats strange, UPRO is holding around 200 week ma/+.NOT a prediction/not bank insured; wisdom is profitable to direct...........................................................................Good question.
Remember that MA crosses, like any indicator, are indicators and not predictors. If you wait for a MA cross and buy, and due to micro price action and spread, start out with a small loss, and then the price drops (before the MA crosses back!) you can slowly bleed to death playing MA crosses. This should not be the basis of a strategy, but only a possible confirmation of a buy or sell signal. JMHO. Remember, BEFORE a shorter MA crosses above a longer MA, the price has to go up. The MA by its nature, lags the price. An earlier and more responsive indicator would the difference between the longer and the shorter, and the rate of change in the difference. I am not putting down MA crossovers. I nearly always have VWMA 3 and 6 on my charts. Area below the 3 is all green. Area below the 6 is all red. I set the colors and transparency for best viewing. When there is red showing, but the red part is getting narrower, sometimes I call it a buy signal, sometimes just a confirmation. By the time they cross over, if the market is very volatile it is too late, missed the boat. TBH I put a little more faith in Bollinger Bands than MA crossovers, and more still in recognized patterns that I have successfully traded in the past, than even my own custom MA crossover indicator. Not saying you can't trade the crossovers, but it is far from ideal and it won't make you a 5-7% winner. If ONLY, LOL! If you consistently make 1% daily then you are beating most of us. If you consistently make 0% then you are beating 90% of all other new traders. Thanks for bringing your money to the table. We appreciate your sacrifice. Just sayin. Here is a screenshot showing my thing. The slight advantage of VWMA is that Volume comes into the equation, and volume is nearly as important as price action for sustaining increase or decrease in a stock's price. As you can see if you mentally envision what is happening through the course of the time frame presented by the above chart, the lag can cause a potential winning scalp to be a loser. In a very choppy market, your timing will be way off, even using something like this. When trends are smooth and long-winded, you can trade this indicator with a reasonable degree of success. But expecting +5%+ is pretty unrealistic. For that sort of gain you want stocks with breaking news such as pharma or tech stocks with momentous announcements and some pattern such as the classic Bull Flag pattern or the similar ABCD pattern. Look them up cause I am not gonna write a book here and you should get it from a more seasoned and knowledgeable person. Most basic day trading books will give you these strats. When it is choppy you want to trade reversals. When it is choppy and the general trend is up, trading the bull opportunities will net you more than the bear setups, and vice versa. In sideways chop, you can combine long and short trades. Look at the CANDLES. See how they start to move BEFORE the crossovers? Why do you think that is? Because the price action comes first, and the indicators lag and are only based on the actual price action. So obviously looking at individual candles in the context of their neighbors, as well as general trends, volume, Standard Deviation, etc will give you a jump on the bleating, thundering herd. Do you want to take their money, or would you rather just let them take yours? If you are going to trade crossovers, it is imperative that you study different timeframes before making a buy or sell decision. The more different timeframes are in agreement, the more you can trust (or the less you will distrust) the crossovers and their signals. In the long run you CANNOT consistently make gains several times higher than the market movement, without assuming considerable risk. You CAN lose your shirt with high risk or low risk play, with the low risk style keeping you in the game longer. I actually had drinks with a casino manager once. No, no names. But he explained, and I am not entirely sure why he did, that the best bet you can make when there is a house advantage of any kind, is ONE big bet, not a string of small ones, with the lowest possible house advantage, and against high odds, not low, make that one bet and get out and never come back and gamble again. Statistically you will still be in there with all the other losers, but get screwed less. The house then has only one chance to take your money. High risk trading works the same way. The way to make it work is to get in and get out and never come back. But nobody does that. When you win big, you are hooked. You will be back at the table. You will not quit. And yes, the market constitutes a house advantage. All your expenses. Price creep, spread. Your own expenses such as data charges, screener, charting software, chat rooms, books, trading hardware, and the value of your time when you could have been gainfully mowing yards or pushing daiquiris out the drive thru window or flipping burgers LOL. So high risk is the way to make big gains, but for all the above reasons, in the long (or even in the short) run, it won't work for you. Without an edge, you are not going to make money. You will give it up to other traders. You will give it up in expenses. Don't bother trading if you expect a consistent 5% to 7% profit. Just try to stay in the green. That is lofty enough of a goal. Managing your risk and your money properly, along with an edge over the herd, will keep you at the table longer, maybe long enough to become a wise and wiley trader, maybe not. If you are one of the few, it will have you making a little money right away, not enough to get excited about, but something instead of nothing or a negative return. If you invest $10k now, and realize 10% return after taxes, in 30 years you will have turned that $10k into $174494. If you invest another $10k annually for the next four years then 30 years after the first investment you will have turned $50k into $727615. Do it for another 25 years and you end up with $1.8M, probably enough for a modest retirement. Even 10% a year with any consistency will be far from a sure thing, but way more chance of success than trying to make 5%/day. Which in 30 years would make you an umpty-gazillionaire BTW. Day trading is gambling. Nothing wrong with that. I do it and enjoy it. It has never made me rich. Investing is well, investing. In the bigger picture, it is more important, especially if you start young. Which I didn't and should have. At 16 I dropped out of high school because it was interfering with my work, and I was making more money than our family lawyer. If I had invested half my earnings then, instead of partying like it was 1979, which it be in another four years, I would be sitting pretty right now. I am certainly not hurting but I would have a lot more luxuries now if I had invested from a young age. Just the first 5 years of my adult life would have fixed me up good. I didn't know. Now, you do. Work and earn what you can, and live poor and invest, for a better financial reward than trying to trade for a living. Now you have heard the truth, for I have spoken. If you think I'm full of crap, well, your privilege. If you think you are smart enough to make a go of it and succeed at what you want to do, well no, it's not totally completely impossible, but it's not likely, either. Now you have been warned. So sure, learn about moving averages and what they can tell you and how you can tweak them to show you visually what is going on with a stock or other instrument. But you have to figure out an edge. If MA's were it, we would all be doing it and all winning and the only thing for it would be for the govt to print more money for us. No, somebody has to lose. Earnings from investing, come from growth, mostly. Earnings from trading come mostly from other traders. You can be a shark but if you are the smallest and youngest shark in the tank, you will become shark chow for the bigger, badder, more cunning and ruthless sharks. Don't go in the water without your edge. And forget about 5%. Make what you can.
SPY 1 hour chart from thinkorswim, MovAvgTwoLinesStrat, close,78,85,weighted moving averages, set on auto, 5% targets, no stops, 1 share SPY, 360 trading days
So a crossover strategy should be able to be easily back-tested. Can anyone show a consistent edge with one?