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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: feewaybill who wrote (7424)	1/2/1998 10:42:00 AM
From: David R. Evans	Read Replies (2) \| Respond to of 12039

Hello Bruce, Yes you can..... I always say you must know when you are going to sell a stock before you buy it. By this I mean you must know WHAT will tell you to sell. Now in many cases I have a checklist of sells that I go through and decide based on what Mr. Market is telling me when to sell. Example: I'm in say IBM and I'm watching it every night. In GET I have a screen that has price and my MACD (8-17-9) and Richard's MACD (13-34-89). I also have Optimized Parabolic SAR (OPS), and my 5-13-40 EMA's. In MSWIN I have my favorite screen with StochRSI (14), StochRSI (8-5), Dahl, DNS, On Balanced Volume with it's 40 SMA, and Insync. As soon as one of them give me a sell I need to take a real close look at the other indicators and decide what I want to do. In most cases it's either StochRSI (8-5), OPS, or MACD (8-17-9) that will be first. If I have a nice quick run and Mr. Market can't seem to make up his mind about direction I may jump the train right there and move on to better game. If, on the other hand, I feel good about things and Mr. Market seems in a good mood I might hang on until one of my other indicators tell me the train ride is over. Now there are a few things you must decide BEFORE you try this method. First you need to group your indicators so they can be used to their full potential. This exercise will also help you to really get to know your new found friends and get an idea of how they work. OPS, StochRSI (8-5) and MACD (8-17-9) tend to run around the same length of time so I group them together. Why? So when they start giving me sell signals one after the other I do not panic. I know that they are working close together so in many cases they will give me signals in repetition. Now I review my remaining friends and decide that StochRSI (14) and MACD (13-34-89) might be close friends so I might group them together. Let's call them medium term. Dave's New System (DNS) & Dahl would be grouped together and I'll call them my longer term friends. Now I can build a synchronized system of sells that make sense. As soon as one of the Short term sells are given I spring into action and take a much closer look at the charts. If I still like what I see I MIGHT decide to stay in a little longer until one of the MEDIUM signals is given. Now I can watch and review when another shorter term sell is given because I'm expecting it. This second sell may convince me to jump out OR it may just get me into my next level of stock alert. When the second (Medium) level of sell is given I need to take a much closer look at the charts and decide my course of action. Should I sell or should I stay. When I'm at this level of study please note that you are still looking at ALL your family of indicators, not just the longer ones... You need to look at the StochRSI (8-5), OPS, and MACD (8-17-9) to see if they are still saying sell or having a change of mind. Once you have made your decision you must stay firm. The worst thing you can do is sway back and forth because you will find yourself selling when you should be buying and buying when you should be selling. OK so you are sailing along in phase two of your journey when all of a sudden StochRSI (14) drops below 70 telling you to jump ship. Now what??? Well you have two courses of action at this point in the game. You could sell at the open of trading the next morning OR you could review the charts again and decide to hang on. Now why would you want to hang on to a stock when you just got a sell from a very reliable indicator? Well, maybe you feel real good about the Market and just have one of those feeling about where it's going to go. That sounds all well and good but please remember that those feeling are responsible for making more people poor then the Democrats. NEVER trade on feelings alone. ALWAYS check the charts. If the charts do not confirm your feelings throw your feelings out the window... or give them to an ex friend. OK so you check the charts and sure enough StochRSI (14) is saying sell. Now you look at StochRSI (8-5) and it is actually starting to turn UP!!!!! That encouraging so you look closer and find that Dahl has crossed up through the 0 line and DSN is above 5 and looks fairly strong. Now you really have a decision to make. In most cases a sell from StochRSI (14) will provide at least a short term down trend. You must be prepared to give up some of the money you've just made. If, after considering everything in a rational way you decide that Dahl will now be your guiding light then buckle up your seat belts and ride it home. You have just rode your system from the initial buy into a longer term hold. That's how you can use one system for all purposes. Never buy a stock "KNOWING" that it will be a long term hold.... Let the stock AND the Market tell you that. You are there to intrepid what the Market is saying, that's all. Another thing to think about when switching from short to medium to longer is each step will give back a little more at the end. You may see a 20 point gain turn into a 10 or 15 point gain using Dahl because it will try to keep you in as long as it can. On the other hand, using the short term indicators on the same stock may only get you 2 or 3 points but in a much shorter time frame. Did I cover everything??? Probably not but your feedback will help me get the rest. Does it make sense??? Remember, a system like this is not for everyone. There are people out there who MUST sell at the first signal because they will use a system like this to justify their procrastination and still turn winners into losers. You MUST be truthful to yourself or you are destined to lose.... Let me know if this helps.. Dave Evans