|
PureBytes Links
Trading Reference Links
|
Hi All:
Suppose you've done your fundamental and technical research, and decide to
buy MU Jan2002 leaps.
Here's one (out of many, many) way to time your long entry. (See attached
charts.)
1. Wait for the weekly indicators to turn "bearish":
- price to cross below moving average
- oscillator indicators to cross below either an oversold level or a zero
level
2. Wait for the weekly indicators to bottom out, i.e., not necessarily
crossing above the buy/oversold/sell
levels, but going towards those levels
3. Switch to daily chart and buy when one or more of these conditions are
fulfilled:
- price crossing above moving average
- oscillator indicator crossing above oversold level
- oscillator indicator crossing above zero level
(Of course you have to choose your own favorite indicators. The ones that
I have here are:
- Jurik JMA
- CT_Red Line (CycleTrader)
- smoothed entropy (modified from Clyde's entropy ela)
There's no guarantee that after your long entry, the stock will continue to
go up. It's very likely that the stock will fluctuate for quite a while,
or even go down for a long time.
You have several choices, and 2 of these are:
1. get out with a stop loss (which I don't do)
2. average down (which I do)
It's entirely up to you.
The risk of # 1 is after you've been stopped out, the stock goes quickly
and sharply higher, and you don't have a second chance to go in again.
The risk of # 2 is the stock keeps going down and down and down (either
some fundamental bad news about the stock or the whole stock market
collapses or whatever reason), and you'll lose in the end.
I'm sure some of you can think of better ways than I...
Regards,
Wong
Attachment Converted: "f:\eudora\attach\mu 06-16.gif"
|