Thursday, March 29, 2012

Learning to Use Something Besides Feelings with My Stock Trading

Awhile back with Garmin and Crocs and so many others I traded for the most part on feelings, headlines, and momentum of the stock. When the music stopped a couple of years back I realized I wasn’t as smart as my account balance lead me to believe. As I have reminded myself over and over, at least I didn’t run it to zero. It has taken me sometime to mentally be ready to start trading stocks again. But, stock trading is what I like to do. It is what I have always liked to do. I would do it full time, if I could roll up a big enough pile. Which is now the plan.

New Trading Rules

Before coming back I knew I needed something more concrete than feelings and headlines to trade on. My new guidelines are pretty simple.

1) All companies must be paying a dividend. If my timing is wrong and I have to sit on a stock I want some money while I’m sitting.

2) Companies need positive earnings. I know there are ways companies play with the numbers. I still want to see pluses not minuses.

3) The slow stochastic needs to be showing oversold or close to it. I have been learning to use this and hope to get a better feel as time goes on. So far it has helped keep me from chasing entry points.

4) Stock needs to be below their 200 day SMA. This seems to go against most books I have read the past two years. Most that I have read talk about following the trend, only buy when above 200 day, sell when it cross below. Don’t get me wrong I don’t want the stock to be trending down or falling off a cliff below the 200 day. I’m not looking to catch fall knives if I can keep from it. I want to find ones that have already dropped, stabilized (I hope) and are working on a comeback.

All of these rules are a work in progress. So far together they have kept me from chasing entry points especially the past few months with this big run up. Right now not a whole lot has caught my attention lately. So now I am learning to wait and do nothing, which is hard but that is for another post.

Well that’s it for today. Here’s to getting yourself some trading rules that you can lean on and as always keep an eye on your everyday money.

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