Market Wizard Linda Raschke’s Technical Trading Rules
- Buy the first pullback after a new high. Sell the first rally after a new low.
- Afternoon strength or weakness should have follow through the next day.
- The best trading reversals occur in the morning, not the afternoon.
- The larger the market gaps, the greater the odds of continuation and a trend.
- The way the market trades around the previous day’s high or low is a good indicator of the market’s technical strength or weakness.
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10 Reasons moving averages work as trading tools.
- Moving averages filter trends in different timeframes.
- Moving averages can create entry signals at the beginning of a trend.
- They can be used as exit signals when price dips below them.
- Moving averages can be used as trailing stops so you can exit with profits when a trend starts to bend.
- Moving averages can be used in crossover combinations for slower signals.
- Moving averages can help filter volatility.
- You can do historical back tests of price action to develop price action trading systems using moving averages.
- Moving averages are reactive technical trading tools not predictive.
- When price falls below and then breaks back over a moving average it is a great signal for a potential reversal.
- Moving averages are better gurus than talking heads on financial television.
Moving averages have a place in any trader’s or investor’s strategy. They are my favourite filter for price action.
The original post is written by Steve Burns, appears on newtraderu.com and is available here.
