My strategy in trading futures is simple (K-I-S-S). The more strategies and indicators we use individually, the more likely we are to cherry pick for something to confirm our bias. Action junkie?
1) Using the 1-month chart for identifying big trends, I rely on the 23 and 30 Exponential Moving Average (EMA) as the set-up. Look for a 2.5% break above the 50 SMA, a lot of funds like to use this and it is nice to have their buying power. The 180 SMA is good for intermediate to long-term trend. And the reverse is true in shorting.
2) I look for everything to be confirmed by volume. Further, I should see light volume during consolidation phase, which means big money is not unloading positions.
3) I also like the RSI overbought/oversold indicator as a confirmation and warning signal.
This is a winning strategy used in speculating on junior exploration companies (e.g. oil, uranium, gold, silver). The strategy can be adjusted for many types of equities e.g. junior fertilizer companies.
1) BUILD POSITION: at $1.00, a good position to enter for junior companies if the shares structure are not too diluted (under 300,000 shares fully-diluted). Junior companies have a need to raise money, thus, issue a lot of options and/or warrants – investment tools which can be converted to shares. “Fully-diluted” share count accounts for both options and warrants, assuming that they will become common shares.
2) EXIT: 50% at $2.00. Let the rest ride until either $10 or the stock loses more than 25% on any given week. At the beginning of each week, I set triggers to sell-off any stock(s) that lose 25% on any given week. Setting automatic trigggers circumnavigates the human nature of emotionally holding on to favorite stocks.