Dean’s List, 3 favorite indicators and position management
Each night, I look at the Dean’s List to find the top ranked stocks or ETFs. These ETFs are always among the strongest ETFs in the market. I have found that it never pays to trade junk. I always look for strength, and the Dean’s List is where I go to look for strong stocks or ETFs.
Then, once I have identified a few strong candidates, I look at each of my three Position Trading (PT) indicators on the stock or ETF
- DMI
- The fast MACD
- Positive Volume
Before I take a position based on the on the Daily charts, I always want to have these indicators in my favor. A Buy signal is generated when all of the indicators turn positive. Most times the indicators don’t turn positive all at once. They usually turn in sequence, with the P-volume turning first. Volume usually leads price. You may have to wait several days for the indicators to turn.
I also check to see if there is a well-defined Hockey Stick pattern in place
And if the “stick” portion of the pattern is large. This will provide me with an estimated target for the move. Without a large stick in place, I’ll generally pass on the stock or ETF. I have found that trading stocks or ETFs without a Hockey Stick pattern in place is just a waste of time.
Then, I develop a watch list. If I see an ETF near the top half of the List, with 2 of the 3 PT indicators positive, with a Hockey Stick pattern in place, I’ll make note of it. If the third indicator is getting close to turning positive on the Daily charts, I’ll generally start to look at the stock on the 60 minute charts.
If all three indicators turn positive on the 60’s, I’ll buy my first position or half position based on the 60’s
This lowers the risk, by letting me step into a position. Then when all of the indicators on the daily charts turn positive, I’ll buy the second half of the position, giving me a full position.
I manage the position using these money management techniques
Exit half or a third of the position at the halfway point, placing a stop at the entry point. I usually wait until all three indicators turn negative before I sell all of my position, but there are times when I’ll sell when two of the three indicators turn negative, especially if the ETF made a nice move and I want to protect profits.
Then, separate and apart from this initial position, IF the ETF remains in an uptrend, and all the PT indicators remain positive,
I’ll consider adding a new temporary trade whenever the 2 period RSI Wilder goes into oversold territory, or below 30 on the daily charts
I will hold this temporary trade until either the PT indicators turn negative or the 2 period RSI Wilder becomes overbought, or above 70. The new temporary position is always managed as a separate trade using the 2 period RSI wilder or the PT indicators.
I call this having my cake (the original position) and eating it too (the temporary trade).
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.