A trader/investor (TI) can learn a lot from charts. By tracking (every trading day) a six month chart and four important technical indicators:
- chart trend – look at the 13 day, 50 day and 200 day exponential moving averages (ema)
- Force Index (Read “Welcome to my Trading Room” for more information)
A TI can develop confidence when placing trades.
Some investing adages that the TI wants to remember include “the trend is your friend”, and “bulls make money, bears make money, and pigs get slaughtered”. On a very short term basis (one to two days holding), the Direxion 3X leveraged vehicles are good trading vehicles in a bullish, bearish or neutral environment. The Direxion 3x use leverage and are prone to value/time decay, and should not be used for buying and holding, only trading.
- Invest about 75% in equities and the remaining 25% in money market accounts or cash for trading and portfolio downside protection; this will allow the TI to trade bullish, bearish or neutral (specifically alpha neutral – explained in a future post)
- Of the 25% in money market or cash, trade about 33% based on the trend using Direxion 3X leveraged vehicles.
Using a two – three day change in slope of these indicators, the TI can trade based on whether indicators are bullish, bearish or neutral, as the following chart example shows. To discuss, send me an email at:
Email – email@example.com