1. Use moving average crossover strategy.
• Buy when its 50-day simple moving average crosses above its 200-day simple moving average.
• Sell when the short 50-day SMA drops back below the long 200-day SMA.
2. Use RSI (Relative Strength Index) to measure of short-term momentum that varies from zero to 100.
• Sell or short “overbought” stocks when RSI is above 70.
• Buy “oversold” stocks when the RSI drops below 30.
3. Look for historically bullish and bearish patterns in stock charts that serve as signals of when to enter (buy) or exit (sell) a stock.
4. Utilize related patterns of head-and-shoulders, flags, wedges, cup-and-handles and double/triple tops and bottoms. Gradually step up to these more complicated patterns as you learn how to trade.
5. Set stock screeners. Set low P/Es, positive EPS growth. Set a price to immediately eliminate thousands of stocks. For example, set a price of $100 to exclude all stocks priced over $100.
6. Research sectors and industries. Look for strong sector and industry groups if you want to go long (buy), and weak ones if you want to go short (sell).
7. Study momentum to identify strong up-trending stocks for potential longs and weak down-trending stocks for shorts.
8. Use moving averages:
• Moving averages eliminate noise (a lot of noise) and smooth out the day-to-day price movements.
• Use them to act as support and resistance levels.
9. The long and short of stock trading:
• For longs, buy stocks when short-term moving average trend above long term average.
• For shorts, do the opposite – sell when 20 days crosses below 100 day moving average.
• For liquidity, look for stocks that trade at least 200,000 shares a day.
10. Scan charts for good entry (buy) points:
• For swing trading, look for breakouts in the direction of the trend (new highs and lows) and pullbacks.
• Skip the first new high and enter on the second new high (for confirmation) after the stock has traded sideways for a few days.
• For shorts, sell on the second new low after a few days of sideways movement.
• Look for pullback and gap downs. Buy when the stock starts to correct.
• Buy into that short-term weakness on the longs, and sell into that short-term strength on the shorts.
12. Use stochastic oscillator to compare where a security’s price relative to its price range over a period. Values range from 0 to 100:
• Readings over 75 indicate that the stock may be “overbought” and overextended on the upside.
• Readings under 25 indicate that the stock is “oversold” and overextended on the downside.
Of all these strategies, one works best for me: discipline. Don’t let emotions ruin your trades. Don’t fall in love with particular stocks. Focus only on $$$. Fall in love with gains – realized gains.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation.
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He retired after 50 years of defending taxpayers audited by the IRS, EDD, BOE and other governmental agencies. He published a book on “How to Avoid or Survive IRS Audits” that’s available at Amazon. Readers may email tax questions to [email protected].
The opinions, beliefs and viewpoints expressed by the author do not necessarily reflect the opinions, beliefs and viewpoints of the Asian Journal, its management, editorial board and staff.
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Fr. Rodel “Odey” Balagtas is the pastor of Incarnation Church in Glendale, California.