07-01-2008, 11:42 PM
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Junior Member
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Join Date: Dec 2007
Location: Northern Ohio
Posts: 10
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As far as your trading method goes it seems from what you have posted below that you have many of the ingredients for the recipe that you are going to use to trade, but are not quite sure how to put them all together.
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EXACTLY on target!
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1. The first thing from your post that it sounds like you need to figure out is what style of trader that you want to be. You say in your post that you guess that you should be a day trader but that you don't have the knowledge, skills, time, and nerves to do it correctly.
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I have learned that swing and long term is best for me at this time. Day trading requires more time, experience in quick analysis, which I currently don’t have.
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2. If you do not mind providing me with a few more details. I see that you have several indicators which you look at, but my first question here is are there any steps that you go through when analyzing a chart before putting the indicators on, or do you start with the indicators?
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I start with news, indicators, trends and prayer. <g>
I do believe that the price includes the news, but not the future news that can develop like a storm in the ocean, clear sky’s then a tropical storm before you can drop anchor!
So, I do try to read some about the company, some fundamentals like current P/E and Future P/E, Beta, and TRENDS. Being a swing trade I cannot watch these tickers every minute, so the trend for me must be up or I risk the possibility of the stock going down and not coming back up for a year or more. I’m currently hurting with two stocks now because of this.
Then there is the Fast Money/Cramer scenario, where we get the daily recommendations but after we buy the stock we ask, “Ok, what’s next !” Where is the exit point, how long should we hold, what is there thinking, one day, two, three, a month? These shows can seriously hurt people, not by what they say but what they do NOT say!
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3. I feel that it is important to know why you feel an indicator works the way that it does so you can better understand what it is telling you about the market, and therefore when it is appropriate to follow the guidance of an indicator and when it is probably not giving you the information that you need.
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Agreed, and the indicators I use are strictly from others recommendations and explanations, which I somewhat understand but not completely in all areas.
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With this in mind, would you mind providing a little more information on why you use EMA's, Bollinger Bands, and RSI with the settings that you have chosen? If its simply because someone told you to that's ok, just let me know and then we can break it down a little further from there.
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Using EMA’s vs MA was recommended on a blog that no longer is maintained, but The reason is because the Exponential MA reacts more readily to the recent price changes than the typical MA. When you have a crossover of the EMA (4,8,20) you have an indication of a trend, maybe very short but usually a POP of 5-8%. I’ve seen it many times in charts.
Bollinger Bands, I’ve learned that the candlesticks try to adjust always to the center, so once above the upper band the stock tries to correct, sometimes a very bullish/bearish trends the candlesticks will stay outside the BB’s. PCX and JRCC are good examples.
Another thing I’ve noticed with BB’s is during a consolidation, when the BB”s narrow their gap and price and volume stays the same, something big is about to happen. Consider BQI on June 8, 2008 to present; $4.60 to $8.60 in about a week.
RSI (4) is the strength of the buyers/sellers, being just one indicator to support a theorem of other indicators suggestion of a reversal of a trend. I like the 4 setting because it’s a little more aggressive for me to envision.
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My apologies for all the questions but from looking at these charts there were some very clear signs here that were missed, so I feel that it would be better for me to help you figure out what they were, than for me to simply tell you what I see.
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Agreed, and this is what is so frustrating. Its like part of the formula to the recipe is missing, and its written in a different lanquage
Thanks, sorry for the delay in responding.
Rich
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