Hello Stefan,
Wow, I don't know where to start..... First off let me say your post was excellent... I think that giving examples is the best way to illustrate a point or ask a question.
Now on to the good stuff. Selecting the TYPE of stocks for your database is by far the most important thing you can do to stack the deck in your favor!!!! We are always trying to catch the trend and an important part of that is catching the stocks that are trending....
Quotes Plus is GREAT at helping us do that because of it's great ability to scan for almost anything.
The first thing you must do is decide what type of stocks you want to trade. If you like stocks under say $25 dollars then that's your first criterion. If you want strong stocks I suggest you look for Relative Strength (RS) and Earnings Strength (EPS) both above 70 or 80. If you want to only trade the strong industrial segments then you would scan for them. If you think the big boys will dominate the profits then you scan for them. Investor's Business Daily should help you with this. If you do not want to get it everyday, try to pick up the Friday edition.
How do I do it? I use Quotes Plus, MSWIN and GET as my primary scanning tools so I create multiple MSWIN directories. Each Directory will contain different types of stocks. One has the Forbes 200 small Companies. Another has around 200 stocks with RS & EPS above 80. A third contains the Dow 30 plus some big movers that direct the S&P 500 like Microsoft, Intel and the like. I then have another directory that only contains my current holdings and one or two favorites I like to follow. When I run my explorers each night I run them against ALL my directories. I can easily sort the results by directory and pick just the type of stocks I want to buy AT THAT TIME....
I believe the Market is ever changing and to succeed you need to be flexible. If Mr. Market wakes up this morning and decides he likes big caps and will continue to like big caps for the next two months I want to be in big caps for the next two months. If after that Mr. Market decides to give the little guys a chance for two months I want to switch into the little guys for the next two months.
Remember, the synonym for stubborn in Market talk is POOR!!!!!
Now on to other things.... When I'm looking at the charts and StochRSI (14) gives me a buy but Dahl is moving down I move on... My system tells me that all or most of my indicators must be in sync so I must also be in sync with my system. Yes, I will miss many good trades BUT, I will also miss many bad trades...
Yes, if StochRSI (14) says buy and Dahl is moving up BUT is under 0 I will consider that a good signal... Why??? Well if all you guys out there that have WOW or MSWIN were to start running system test in the following manner you would understand:
Run a system test on say IBM with only StochRSI (14) as your buy and sell. Buy when StochRSI (14) crosses UP THROUGH 30 and sell when StochRSI (14) drops DOWN THROUGH 70. log your results and then run a second system test using StochRSI (14) as your buy along with Dahl above 0. This means that you will only buy when StochRSI (14) crosses UP THROUGH 0 AND Dahl is ABOVE 0. Leave StochRSI (14) as your sell. Now log these results... Is there a big difference??
Now repeat the same exercise on another 100 or more charts and let me know your findings... That is what I have done and my results tell me that in fact, StochRSI (14) along gave me better numbers.
WHY? well remember what Richard is always saying.. You buy when you get the signal, not a week later. Dahl is a great indicator BUT it is not intended to tell you when a stock is good to buy. It tells you when IT THINKS a major move might be starting. You may get the StochRSI (14) signal when Dahl is starting it's move DOWN which would not help you make money.... That's why I look for Direction from Dahl...
Did that make sense??? I hope so because it's very important. Many of these indicators do not work together the way they would seem at first glance. I have tried for many months to get DNS and StochRSI to work together and could never do it. StochRSI is giving me different signals then DNS and Dahl. It's when I started looking at DIRECTION that they started to blend.
As far as FIB and GANN, they are trying to show you Support & Resistance. If you get a buy on a stock and you see major resistance right ahead you might not want to buy that stock right away. Once you see the resistance taken out you might then want to jump in.
Please remember that many people do not look at FIB & GANN on the way in. There are others who would not think about a buy without it. Many others use then ONCE they are in the stock to help determine the length of time they stay in the stock. They are more tools for the toolbox...
Did I cover it all???
If not please let me know and I'll try to get the fingers moving again..
Remember, Cleveland is coming so start getting prepared!!!
Dave Evans |
