The Swing Traders Bible by Matthew McCall

Author:Matthew McCall
Language: eng
Format: mobi, epub
Publisher: John Wiley & Sons, Ltd.
Published: 2010-05-10T14:00:00+00:00

The 200-SMA

Why moving averages? The simple answer is that moving averages—especially the 200-SMA—are a great way to determine if a stock is trading substantially off its mean. And as descriptive statistics prove again and again, everything always returns to the mean; it’s only a matter of how long it will take. As a general rule of thumb, when a stock, or index, begins to trade around 20 percent, or more above the 200-SMA, put it on your radar for a reversal.

Stochastics

As a general definition, stochastics indicate overbought (and oversold) stocks by measuring the close prices in relation to the highs of the day. When prices continually close at highs, intuitively we know the stock is moving higher. Thus, as stochastics near the top of the range, we can assume that buying momentum has been stronger than normal and that the stock may be entering overbought territory. It’s important to note that we are not using stochastics as an “indicator” of trade entry, rather, we are using stochastics as a guidance tool to attempt to find some indication that the stock, ETF, or index is nearing the top of the range.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.