Thursday, July 23, 2009

The MA crossover trade.

OK... in the Free Trading Videos chat room today somebody reminded me of a stock purchase strategy... the Moving Average crossover. I was able to tease the Finviz stock screener to produce a fairly nice representation of stocks in this category with at least minimal fundamental qualifications.

Here is the link

The goal is to buy when the 20 ma surpasses the 50 ma. Obviously, other MA combinations are also interesting, however, this is the best I can do today.

Yah yah... when to sell? One obvious answer would be when they uncross.

- This will obviously only work in a sustained bull market.
- Make sure the 50 ma is in an uptrend, or at least flat, when you buy.
- Make sure the SPY 50 ma is in an uptrend or at least flat when you buy, else, your poor trade won't have a chance... it will be counter the major trend.



Extreme Price change can invalidate the signal:

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