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Monday, March 22, 2010

Lets Keep It Simple

Moving Averages are one of oldest TA tools that many have used successfully in their investment. It is simple and easy to understand and easy to execute. Schwab does not allow you to execute conditional orders based on moving averages. So big bloody deal we do it manually. Many of you have heard of 50, 100 and 200 period mvg avg. I thought since each stock is different how can I apply the same mvg avg to all and be satisfied with it. So we have DOMA. It is Dino's optimized moving avg. You start with 50 period and adjust it up or down until you find where the ETF only crosses mvg avg the lease amt of times. This is not science. This is your comfort level. If you trade a lot ( WHY) you choose a short time frame and create a DOMA and you want to increase your profits and do not want to trade a lot ( right answer) you choose a longer time frame and create new DOMA. Buy when ETF goes thru to upside and sell when ETF goes down thru it. I take my profits when I see them

Another simple picture I keep in front of me is a daily chart. What happens to me is I get caught up in the moment in the news and the blogs and the chats I loose focus on where we are. A daily chart over a longer time horizon keeps me stay focused. These channels are extremely easy to create join the tops get a line; move the line so one end touches the low. draw the top line again (FSC does not draw parallel lines ). Looking at it today tells me we are due for a pull back. IMHO we should hit the bottom of the channel and make another attempt; fail ; and go thru the bottom of the channel for the pull back.

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