Hey bonespur, Lowtrade and most tech traders using indicators insist on selecting one momentum, one trend, and one volume indicator to avoid multi-colinierity. LowT has posted about this before. Basically the concept is that you don't want three of the same signals making you think it's a good entry when really they are just all measuring one indicator. For very short term swing traders like you and LowT my setup may not yield too much advantage since generally you both wait for a close above breakout or at least an intra-day breakout on strong volume. My trading partner and i tend to hold slightly longer than you and lowT by entering a day or 2 earlier and hanging in a day or 2 later if the situation calls for it but we play far less trades. After using lowT's indicator setup for a year or 2, we now use one of John Lansing's setups. He has one of those pay for advice websites (which I don't subscribe to) but some of his ideas and experience (many years at a professional at an investment bank) helped my timing. He ignores the multi-colinierity rule and sets-up with 3 trend indicators. Aroon(20 day), William's%R (20day), and finally PPO with (interestingly an 8,24,8) (ie- 8,24day,8) setup. I have found that entering the same chart patterns most of us are playing but PRE-breakout in most cases with this setup allows us to buy the stock cheaper but then we usually need to wait several days for breakout. If you try it please paper trade it first. I find we get our money tied up longer than you and LowT so you may not like it but the plus is we are in at cheaper prices so losses are less.
I think the reason it works is because although missing a volume indicator we still consider the volume bars below the stock chart before entry much like lowT's volume staircase which he likes to see and also that Aroon is momentum and trend so all 3 indicators are still accounted for only now the Trend is weighted. Also the PPO as a 24 day setting is good at weeding out whipsaws. (We only enter when all 3 indicators become a buy.).
Go back and look at IDRA and you can see way I asked you about it. You can see that our buy point would have been about 4.75. Go back and check ZGNX when I posted you about the last few days of the year and you can see we got in early there as well (made 37%).
It may not work for your shorter term trades however since as you can see from the ZGNX example my cash was tied up for 3 or 4 weeks after I posted you.
Basically you'll make fewer trades with slightly higher gains and slightly lower loses but if you start paper trading it post me how you would have faired. I do better with this than using LowT's setup so I would like your perspective.
Final note that goes without saying: we still trade the chart pattern first, it's just that we jump in early(usually pre breakout)with this setup. We generally exit on a non winning trade if 1 - (2 of the 3 indicators reverse) or 2 - (there is a close below a bottom trendline (like in an ascending triangle or too deep a handle in a cup-n-handle etc.). You get the point.
Let me know if you have questions and post any feedback.
Thanks, con
