1. MACD - moving average convergence divergence
Combination of 2 moving averages - a fast one and a slow one - and how they interact (converge & diverge)
Use slightly faster and more responsive model - "8-17-9" instead of 12-26-9. This searches for stocks that are going to move up rapidly in price, this more responsive MACD captures more of the upward moves and makes more money.
Beginning of a mountain, time to buy. Beginning of a valley, time to sell.
2. Stochastic
Can be viewed in either a "fast" mode or a "slow" mode. Moderate speed is preferable to avoid being whipsawed in and out all the time (false signals). Use 14-5.
Buy line crosses up, buy. Buy line crosses down, sell.
3. Moving Average
By setting it to a fast speed, it syncs up better with the other two Tools. Use 10-day MA.
When price line crosses above moving average line. When the price line crosses below the moving average line, sell.
In Summary:
Wait for all 3 to give the signal. The way we configure the Stochastic often makes it the early-warning signal.
The only way to make money with certainty in any kind of investment is to buy it well below its value.
These tools will get us out of a stock before it crashes, because the big guys almost always get an early hint that things aren't going to be so good, and start selling.
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2 comments:
Over what time frame do you use? With the above settings I have sell signals for the daily and weekly charts, but not yet for the monthly. Meanwhile, the price continues down as I sit in it. Am I justified waiting on the monthly?
3 months, 1 day settlement.
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