Today I’ve learned how to use the momentum oscillator “Rate of Change” or ROC in whipsaw stock movements. You need to pay attention when it becomes positive and crosses the zero line and then you need to watch if the price crossed its MA. The key point is to use the same time period as for the MA as for ROC. I am not a day-trader and my strategy is short-term (up to 1 month), so since there are approximately 250 trading days in a year/15 days in 6 months/63 days in a quarter/21 day in a month - I used 21 day as a setting. (Number of days are taken from Internet)
I think this tactic will work the best with penny stocks, as you can increase your trading volume in order to mitigate broker’s fees since the cycles are very short in their nature.
Trade closed manually
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Today I closed my position (with tiny profit) on this stock. My logic? Well...even yesterday I've learned the ROC oscillator, when I open my position I didn't know much about its use. Later on, during the stock's whipsaw analysis I've realized that i can be stuck with it for days, perhaps up to 1 month even. Today, during the the trading session I saw no upper movement, but instead - strong resistance at 1.94-1.95 (I entered at 1.91 and sold at 1.94 minus broker omissions). Today the company announced coming dividends payout + it's Friday and no strong upper movement = I think on Monday this stock will decline, so I wanted to eliminate possible loss. It's better to have $5 in a pocket, instead of a **ck in hands.