Cut your losses early and let your profits run
- Monitored companies belong to the investment universe.
- Stock price must have reached a recent 52-week high.
- Stock price must be above its 20-day moving average.
- 20-day moving average must be above the 20-week moving average.
- 20-week moving average must have a positive slope.
- Wait for a price pullback: a retest of the 20-day moving average.
- Stock is bought above previous day's high, 1 to 3 days after that retest.
- If dynamic is too weak to take previous day's high, stock is removed and replaced by another stock.
- When price hits the 20-week moving average, a stop will be set a little under that week’s low.
- Stop is removed when stock hits a new high.
Transaction is closed when stop is hit.
IPGP: sold 10 months after purchase when it moved under previous week's low after a retest of the 20-week moving average. Recorded gain: in excess of 60%. This shows how some stocks can become very directional in some period of time.
TRADING SIGNALS - long trades only -
- Monitored stocks belong to the investment universe.
- A retest of the 20-day or the 20-week moving average usually leads to a great trading opportunity as a price reaction is likely to occur at these level.
- An optimized oscillator must be oversold which increases the likelihood of a price bounce.
- “The stock of the day” signal can occur for a stock that is already held in investing signals. It is usually a good re-entry point.
- Stocks which report earnings in coming trading days are not considered as price can be hurt by an adverse news.
- A target price is defined.
- An initial stop-loss is usually set under the recent low-price pivot.
Stop is adjusted under previous day's low when:
- Oscillator makes a bearish reversal.
- Oscillator makes a new bullish reversal.
- Price hits the 20-day moving average.
Trade is closed when stop is hit.
NANO: bought after a successful retest of its 20-day Moving average. Sold 7 days later with a gain of 4.2%, under previous day's low following a momentum decrease.