Technical Trading Strategies

In this section I would like to review some common technical trading strategies provided by http://www.stockcharts.com, and monitor their effectiveness at predicting the market, finding support and resistance, and determining enter and exit strategies. We will be using the John Murphy’s Ten Laws of Technical Trading also provided by http://www.stockcharts.com.

 

  • John Murphy’s Ten Laws of Technical Trading:

1)Map the Trends

2)Spot the Trend and Go With It

3)Find the Low and High of It

4)Know How Far to Backtrack

5)Draw the Line

6)Follow That Average

7)Learn the Turns

8)Know the Warning Signs

9)Trend or Not a Trend?

10)Know the Confirming Signs

For a complete breakdown of these rules please visit: http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:john_murphy_s_ten_laws

 

  • The indicators/strategies of interest include:

CCI Correction – A strategy that uses weekly CCI to dictate a trading bias and daily CCI to generate trading signals.

CVR3 VIX Market Timing – Developed by Larry Connors and Dave Landry, this is a strategy that uses overextended readings in the CBOE Volatility Index ($VIX) to generate buy and sell signals for the S&P 500.

Gap Trading Strategies – Various strategies for trading based on opening price gaps.

Ichimoku Cloud – A strategy that uses the Ichimoku Cloud to set the trading bias, identify corrections and signal short-term turning points.

Last Stochastic Technique – A simple trading system based on a special version of the Stochastic Oscillator.

Moving Momentum – A strategy that uses a three step process to identify the trend, wait for corrections within that trend and then identify reversals that signal a end to the correction.

Narrow Range Day NR7 – Developed by Tony Crabel, the narrow range day strategy looks for range contractions to predict range expansions. Advance scan code included that tweaks this strategy by adding Aroon and CCI qualifiers.

Percent Above 50-day SMA – A strategy that uses the breadth indicator, percent above the 50-day moving average, to define the tone for the broad market and identify corrections.
Pre-Holiday Effect – How the market has performed prior to major US holidays and how that can affect trading decisions.

RSI2 – An overview of Larry Connors’ mean reversion strategy using 2-period RSI.

Sector Rotation Based on Performance – Based on research from Mebane Faber, this sector rotation strategy buys the top performing sectors and re-balances once per month.

Six Month Cycle MACD – Developed by Sy Harding, this strategy combines the six month bull-bear cycle with MACD signals for timing.

Stochastic Pop and Drop – Developed by Jake Berstein and modified by David Steckler, this strategy uses the Average Directional Index (ADX) and Stochastic Oscillator to identify price pops and breakouts.

Slope Performance Trend – Using the slope indicator to quantify the long term trend and measure relative performance for use in a trading strategy with the nine sector SPDRs.

Swing Charting – What Swing Trading is and how it can be used to profits under certain market conditions.

Trend Quantification and Asset Allocation – This article shows chartists how to define long-term trend reversals as a process by smoothing the price data with four different Percentage Price Oscillators. Chartists can also use this technique to quantify trend strength and determine asset allocation.

For a complete breakdown of these strategies please visit:  http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies

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