Reblog: 6 Technical Indicator Signals Basics


Chart Courtesy of StockCharts.comChart Courtesy of StockCharts.com

Signals help traders filter out their opinions and focus on price action. These tools help capture trends in your own time frame.

  1. The 200 day SMA measures the long term trend. Price above long term bullish, prices below signal long term bearish.
  2. The 10 day EMA measures the short term trend. Price above short term bullish, prices below signal short term bearish.
  3. The MACD crossover can signal an intermediate swing trade.
  4. The Slow Stochastics crossovers can signal short term reversals in the trend.
  5. A declining ATR shows volatility decreasing and an ascending ATR shows volatility increasing. This is a signal to help calibrate position sizing.
  6. The RSI shows the risk/reward ratio increasing and decreasing. The 30 RSI favours the bulls risk/reward for entry and the 70 RSI favours the short sellers risk / reward ratio.

The magic of these trading indicators comes when you combine them to create your own trading methodology that fits your own risk tolerance levels and then trade your system with the right risk management and discipline.

The original article is posted by Steve Burns on newtraderu.com and is available here.


Reblog: 2 Moving Averages that Beat Buy and Hold


2 Moving Averages that Beat Buy and Hold

Most the investing establishment considers buy and hold investing the Holy Grail that always works out in the long term. For long term buy and hold investing your entry time frame matters, whether you got in at good prices and if you have time after bear markets to get back to even. NASDAQ buy and holders waited a long time from March of 2000 and buy and holders from 2007 also had to wait many years to get back to where they were. The most simple long term moving average systems can beat buy and hold by getting and keeping you in during bull markets and getting you out before big drawdowns. You are capping your downside risk and keeping your upside potential profits open by simply having an entry and exit strategy based on price action not opinions or predictions.

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