How to Trade - Steps #1 through #4 ---------------- #1 - Calculate the Trend - Up or down #2 - Wait until a low-risk time to enter #3 - Calculate how much to trade (fix your % risk to the distance to the stop loss order) #4 - Know when you need to exit (3 average true ranges, 3rd range upon entry, CCI readings +100/-100)
GM is in a long position using this handy methodology:
So, #1 - Track "Range Movement" and if it hits a 60-day high or low, that is the trend.
#2 - Then buy turning up from oversold in uptrends. I use 21-day CCI under -100. Or sell turning down from overbought in downtrends. I use 21-day CCI above +100.
#3 - If you have $100,000 in your account, risk 1% per trade (one possibility, but I'd suggest 1/2%). Buy or sell enough stock to lose the proper amount of your portfolio if the stock hits your stop loss. If you risk $1.00 per share, then you'd buy/sell 1000 shs.
#4 - Exit: Target the opposite end of the CCI spectrum. Buy @ -100, sell at +100 on CCI(21). Sell @ +100, Cover @-100.
Comments
timwest
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GM cci now exceeds +100, exit 6/5/2014 market on open.