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Strategies & Market Trends : Befriend the Trend Trading -- Ignore unavailable to you. Want to Upgrade?

To: callme who wrote (4009)	5/29/1999 9:16:00 PM
From: Dr. Stoxx	Read Replies (1) \| Respond to of 39683

BTTT RULES, part II: For some reason, timely.com is not working for me (anyone else having problems?), so I cannot post examples. But do your own work on any strong uptrending stocks (AOL, IBM, etc.) and see if you can pick out the best entry and exit points based on the previous post. BTTT SHORTS: I cannot yet reveal the system I am presently using to find shorting opportunities, because it is still too new and I do not have enough confidence in it to post it. Also, it so far is working out so extremely well (34% in the past 5 weeks of use) that I am tempted to keep it a secret and offer it later as a subscription...but I will continue to tell the thread what I am trading whenever it generates signals. The BTTT rules for shorting are as follows: a. Find stocks in a short-term to mid-term downtrend (3 weeks to 6 months). Practically speaking, I define a downtrend as the failure of a stock to put in a new high which also puts in a lower low. I consider DELL to be in a downtrend from mid-March, e.g., whereas CSCO is not. Ideally, you want to find something like AMZN and YHOO since their highs last month. Both have put in a series of lower highs and lower lows. In shorting we must use shorter time frames than our long trades because of the strength of the bull market. These parameters will change if the market itself changes. Again, hardrightedge has some great shorting opps. in their "bear hugs" section. b. When price rallies, this is the signal that a shorting opportunity is near. A trendline should be drawn connecting recent highs, and when price gets near it, stand by. Ideally, stochastics should be rising as well during the rally. A genuine BTTT shorting opp. with stochastics above 75 is ideal, but rare. More common is the "mini-sell" signal where stochastics rises to or near 50 (watch for Caroline's posts...she often comes up with "classic" BTTT sell signals). c. The trade is entered when %K drops below %D and begins to fall. In weak markets, this can be anticipated; i.e. a trade can be entered simply when %K turns down and before it crosses %D, but this is risky and a tighter stop should be used (the same can be applied to long trades). For examples, see the mid-May rally of AOL, which subsequently dropped 24%. Or see WCII in Sept. 98. It gave a classic BTTT sell signal (rare) and then proceeded to drop 57% (from 28 to 12...though right now it is showing a rather nice buy signal!). BBY gave a mini-signal on 5/24, and closed the very next next down $5 (10.8%...looks to be setting up again right now!). CPQ: a near-classic signal on 5/20, and it is now down 10%. Like the longs, I like to set a stop loss of between 8% and 15% (I usually use 10% on shorts) d. Exit the trade for all the same reasons as a long is exited, only reverse the stochastics signal. And one more point...TC.