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I like to see On Balance Volume, with a 20-day MA of OBV displayed,
to be in-synce with the other indicators. In other words, if the
price is beginning a new uptrend, OBV should be improving
considerably and likely penetrating its MA.
Also, for LONGS, I like to see 2X+ average volume to occur as the
price is breaking its 20-day MA. This adds "credibility" (for lack
of a better word) to the uptrend.
I also place a limit order just above the previous day's highest
high...if the trend continues, my order gets filled. If the market
has a bad day or whatever, then my order does not get filled. For
example:
I observe ABCD company stock just pierced its 20-day SMA on 3 times
average volume. RSI is improving and OBV is improving. An
industry/sector check shows that this stock is in a top performing
sector. I observe that its daily range is one dollar every day.
Today its highes high was 21.00.
I place a BUY STOP MARKET order for 21.50 for tomorrows day. If the
stock indeed is going up strongly, my order gets clicked thru and
filled. If not, then life goes on.
Please note that this trading methodology tends to work best with a 1
to 3 month time frame.
Furthermore, while I DO NOT use PE's, profits, etc as fundamentalists
do, I do look at the "overall picture" and take that into
consideration. If stock 1 and stock 2 both technically look like
good shorts, but stock 2 had FBI subpoenas served on them for
securities fraud this morning, and their CFO committed suicide today,
well, stock 2 is my short.
good luck!
** 20-day figure represents 5 days X 4, or one trading month, and
seems to be the best overall general purpose time setting. You can
use and try whatever you want, but after 10 hours of playing with
MAs, dont be surprised if you email me and say "huh, the 20 day seems
to work best"
!!
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