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[the player] 07/4/2002 18:49

r.d.,

I must have drunk too much last night! Forget what I said about the Fib being upside down!

Doh! ;-)

TP

[r.dryden] 07/4/2002 13:14

TP,
I see what you mean - you looked at the second chart and I think
the lines there were drawn based on the Septembet High and Low.
That was something I had on the chart when I was looking at jimmylaw9's
momentum indicator.

r.d.

[r.dryden] 07/4/2002 13:06

TP,

My Fib lines could well be upside down!
I've only just started experimenting with them at
Luthors suggestion. Any further suggestions greaty appreciated!

I'll check out your analysis.
What I like about the Fib lines is the fact that one now
has a concrete target and stop loss and as you mention a way
of calculating risk/reward.

Rosylee, I do sometimes use the system tester but I prefer
the 'Expert' as you can write in your trading rules and indicators
so that when you look at Expert commentary you have you observations
to hand based on the current info.


r.d.

[luthor] 07/4/2002 11:52

rd/rosylee,

Sorry, but that part in paragraph 2 which says '.....RSI, and Stoch are oversold........' should read '........RSI, and Stoch are overbought....'

Lex

[luthor] 07/4/2002 11:40

rd/rosylee,

Selling should not be a problem if you use the Fib levels as the basic frame work within which to trade. Before you enter a trade you know your exit point (close to a Fib level) and hence the potential profit margin. Your stop/loss should be just below the Fib level below which you have entered the trade. I don't know if this is clear, but here is an example (hypothetical).

Consider going long, say, close to and above the 38.2% level with a target price at or around the 50% Fib. Your stop/loss should be placed just below the 38.2% level. The only time you need to worry then is at these levels. If the price tends to hover around these levels watch the chart patterns (candlesticks, RSI, Stoch and Volume) to get clues on what is happening. If you see at, say, the 38.2% level the RSI, and Stoch are oversold and the volume seems to be high don't wait for other clues get out and look elsewhere to trade.

Remember, your profits on any trade are governed strictly by what the market is prepared to give up - and when it gives you a few percent take it or else it will soon take it back.

Hope this helps

Lex

[the player] 07/4/2002 10:47

r.dryden,

I can't understand your use of the Fib grid on the ARM chart. To my eyes it looks upside down, but I could be wrong. Another thing is that, while it starts at the September low, it doesn't reach the December high. Why not?

As for ARM itself, there is strong bullish divergence between various indicators. MACD Histogram has just ticked up and there is the possiblity of a perfect double bottom forming with the February 22 low @ 255p. Reasonable risk/reward as Timeliner says.

Any long placed should have the stop just below this low, IMHO.

Good luck.

TP

[timeliner] 07/4/2002 01:53

Regarding buying in a downtrend.

I went long ARM Friday mainly because the share had retested support the previous day (previous low point on 22 Feb at 255p. The high volume, low RSI supported the bull case. I also use Fib to set targets and as such it seemed a good risk/reward trade with my stop at 255p.

[r.dryden] 07/4/2002 01:12

Rosylee,

I sympathise with your 'when to sell' challenge.
I think it has more to do with the psychology of trading
than anything else. It is my biggest problem with trading at the moment.
I hate to cut my losses when a trade goes against me (which is more often the case). I am learning to make the sell decision before the trade, based
on a stop loss indicator and then sticking with that decision no matter
what. Dealing with this problem has been keeping from trading a lot lately.
One trailing stop indicator I am experimenting with at the moment is the Metastock Parabolic SAR. It is one of the standard indicators supplied as I expect you know.

r.d.

[r.dryden] 07/4/2002 01:01

Lex & Rosylee,

What I've noticed with stoch & rsi oscillators is that it is sometimes
useful to check where the price was when they were previously ob or o/s.
The PRU is currently oversold at a price lower than when it was previously
oversold, indicating that a lower peak could be forming.

Read up on the 'valuewhen' function in the manual.
You can use it to plot support & resistance lines on the price chart
that show you where an oscillator was o/b or o/s previously.

Something like this: valuewhen(1,cross(rsi(14),70),c), which says
plot the closing price the last time the rsi(14) crossed above 70.

You do it in the indicator builder and plot it like any other
indicator on your price chart. You then get some idea on the price chart
of falling or rising support and resistance.

I shall be watching the PRU with interst on Monday.

r.d.

[rosylee] 06/4/2002 22:33

Lex
You have partly answered a query I posted on the weekend chat thread, about when to sell. I have spent hours/days/weeks with metastock changing indicators and putting them together in various combinations and getting good at knowing when to buy, but never really considered volume; it just sat as a histo below the price, will now incorporate your RSI and stoch with vol. I let profits go by hanging on too long or sell too early.

rosylee

[luthor] 06/4/2002 20:10

Hi rd,
First of all I use the histogram version of the volume so that I can compare the volume for each previous day's tick. This tells me the relative size (height of histogram) of the volume. If the volume chart is superimposed on the RSI you can tell when the RSI is oversold and the volume is large (compared with the week, say).

Each chart gives a stand alone signal. So an ideal situation is where the RSI is oversold with high volume. The Stoch. is oversold, the candlestick chart gives the appropriate signal and the share is trading close to the FIB levels. Of course this works the otherway as well when the RSI, Stoch are overbought and the stock is close to a FIB resistance level. My example of PRU (see 11 above) is close to that as described. It will be interesting to see what happens on Monday

With regards to the Metastock code, I've only recently got hold of Metastock and I haven't worked out yet how to get the code.

Hope this helps.
Lex

[rosylee] 06/4/2002 19:57

On Balance Volume - OBV is very useful, I use it with a 10 ema (on indicator, not price)and only consider buying if OBV is going up.

A 50 day ema on the volume gives me a rough and ready benchmark.

[r.dryden] 06/4/2002 18:48

todayistheday,

I've tried your signal on ARM but I must have
misunderstood. As far as I can see the stochastic
always precedes the macd signal.
About the macd - do you consider a signal to be
when it crosses above zero or when it crosses above its
ma?
Can you give me an example of a stock and the date?

r.d.

[r.dryden] 06/4/2002 18:43

Luthor,

I use Metastock as well.
How do you determine what volume to act on?
Do you put an ma on the volume or measure
a %age rise?
Do you code any of this in an expert?
If you do - care to share the code?

r.d.

[luthor] 06/4/2002 15:16

rd,

Your chart of ARM is impressive, but don't forget VOLUME. (Look at the graph of PRU and follow the volume. I don't know if your software can do it but with Metastock one can have several charts in the same window. Try plotting Volume and Stoch. together. I think that volume v. important and I use that before I pull the trigger on a trade. So I sometimes miss some winning trade, but as Lionpress says, I am buying into a down trend and must be v. careful.

Regards Lex.

[luthor] 06/4/2002 14:54

Hi rd,
Yes, we are talking of synchronisation here. No one chart signal gives consistent results.

The PRU chart is a good example. Yesterday the candlestick pattern gave a Doji, the RSI and Stoch were both oversold and it's not too far off the 100% FIB level formed by the high at 750 on 18th March and the low of 630 formed around 25th Feb.

My current Long is becoming increasingly precarious. Level 2 on Monday will give a clue on when to exit this position. With the formation here of a double bottom I was hoping for it to reach the Dec. high of around 830. But the signs are not too good and it is possible for it to retrace to 720, so depending on level 2 I might close and reverse.

Regards Lex.

[r.dryden] 05/4/2002 22:37

jimmylaw9,

I see what you mean though.

[r.dryden] 05/4/2002 22:32

jimmylaw9

How do you draw a trend line on the ADVFN charts?

r.d.

[jimmylaw9] 05/4/2002 22:27

Without doubt a major winner for me personnaly is a break of momentum trend lines either up or down. Example use a three month chart on advfn draw a trendline over momentum (select 10 period) peaks for downtrend or troughs for uptrend. When there is a trendline break the price line usually follows. Used with other factors such as volume it is even more accurate.

[r.dryden] 05/4/2002 22:24

todayistheday,

That might be doable in Metastock.
I'll give it a try and get back to you.
Any particular stocks?

Which rsi time period do you use?
Here I go again with my questions.

r.d.

[r.dryden] 05/4/2002 22:15

lionpres,

If you look at the chart in my previous post
you will see that Luthor DIDN'T trade the
previous signals because the rsi & stoch weren't in sync.

Well, that's my guess anyway.

r.d.

[r.dryden] 05/4/2002 22:11

Luthor,
I've been trying out your idea and I'm impressed.
I've never really bothered with the Fibonacci
as it seemed too complicated.
But you got me interested enough to try again.
Trouble was I was looking at the wrong side of the slope.
Couldn't figure out how to calculate the levels when the
top hadn't been reached.

I'll try it on the other stocks you mentioned.

r.d.

[todayistheday] 05/4/2002 20:22

Do yourself a favour and test trading using buy signals which are triggered by the MACD osc BUT only when confirmed by a Stochastic which reaches the >20 line before the price has moved no more than 10% between the 1st and 2nd indicator.

Its a corker!

[lionpres] 05/4/2002 19:25

Lex,

Could be useful. However the one major problem I have with your example is that you are buying into a down trend (breaking all the rules). How much better it would be if the stock was trending up!

[luthor] 05/4/2002 16:13

No problem, r.d I'm afraid I do not know how to post chart examples, but I think I can tell you what I do.

I use Metastock software.
Use the default rsi and stochastic. These are Time periods for %K is 5 and that for %D is 3.
For volume, I use histogram. This gives the EOD volume for each point on the chart.
Metastock gives a Fib as standard, but it is easy to calculate - whatever time period you'r using, take the lowest low for that period and subtract that from the highest high; half that distance is then the 50% Fib, 38.2% of the distance is the 38.2% Fib, and so on.

As an example, look at ARM over a six months period, say. On week ending 25th Feb. ARM was at a low (265) and RSI and stoc. were oversold with high volumes - that was the signal to buy. I closed out in the middle of march when a 'Dark Cloud'/hammer pattern developed. A similar pattern (oversold RSI and Stoch/high volume) emerged after yesterday's close. I use the 38.2%Fib (295) as the target price with a stop/loss at 255.

Hope this helps.

Regards Lex.