Saturday, November 27, 2004

These are a few of my..

Here I'd like to list some of my favourite indicators

Natural indicators:
  1. Trendlines : On a daily or weekly chart
  2. Fibonacci retracement levels : To find long or short term support and resistance levels. These are especially important when trying to catch a stock that is on it's way up from a downtrend.
Artificial indicators:
Not in any order of preference, a weekly chart showing all three indicators.
  1. MACD histogram
  2. Momentum
  3. ROC
This is of course not the criteria for selecting but more of a confirmation to see whether the entry/exit point is correct. The way that I'd use them for example is this: For a long position, I'll try to initiate a position when all three indicators turn positive and get out of the position when two of them turn negative. Similarly, for a short position, I'll get in when all three indicators turn negative and get out when two of them turn positive.

Of course these dont take volume into account so that is something I need to monitor too.

There are pros and cons of using a weekly chart. The advantage is that I can get a good idea of the mid-term trend, while not being whipsawed by the daily price ups and downs. The disadvantage is that the stock price will usually drop a lot before I get out of a long position.

Another disadvantage is that they wont work well in "flat" markets. And that is another reason not to solely use these indicators.

Stock Screeners
There are a few custom screens that I use to find interesting stocks using MSN Custom Stock Screener. I'll post some of these at a later date when I figure out how to post custom screens. These will only work with Internet Explorer.

0 Comments:

Post a Comment

<< Home