Model Portfolio jnavin:JMF

I'm a technical analyst and place trades on the basis of chart patterns. Repeatable patterns can be discerned and are tradeable as long as careful money management is practiced. I only trade stocks. I do not trade futures, options or anything else.

I look for certain mathematical relationships in price structure. Fibonacci math plays an important role in my work. Once I've discerned that a tradeable pattern has emerged, I look to other technical indicators to confirm or negate the analysis. This includes volume and price-derived indicators such as stochastics, moving average convergence/divergence and relative strength. I only take a trade when I see a clear pattern based on all of the indicators.

I spend most of my time identifying possible trades and compiling daily and weekly lists of those situations that seem to be the strongest. Once I've identified a group of such stocks, I go through the list and carefully analyze each one. Most days, I find nothing tradeable. When I find a situtation that fits my criteria, I don't hesitate to make the trade.

I pay close attention to support and resistance levels. It's crucial to evaluating risk and reward in this kind of trading. I never take a trade without first deciding at what price level I get out if it moves the wrong way. I have a precise stop loss for every position. I seldom allow a single trade to go the wrong way for more than 5% -- if I'm wrong, I quickly get out.

My timeframe for in and out of a trade is 3 days to 3 months, sometimes longer. I only enter market orders -- I don't waste time on tiny fractions. This is not statistical arbitrage.

I have a daily checklist of questions that I answer before making any trades. Here's the checklist:

1. What is the direction of the market as a whole?
2. In which direction are the individual market sectors moving?
3. What are the monthly and weekly charts indicating?
4. Are the long-term, intermediate-term and short-term trends moving in the same direction or not?
5. What are the key support and resistance levels?
6. What are the key trendlines and channels?
7. Is volume confirming or diverging from price?
8. What are the price levels of the Fibonacci retracement zones, especially the 33%, 50% and 66% zones.
9. Where are price "gaps" located, if any?
10. Has a major reversal pattern emerged?
11. Has a continuation pattern continued or stalled?
12. What are the price targets of existing patterns?
13. What directions have the moving averages taken?
14. Are the oscillators entering into or coming out of overbought or oversold conditions?
15. Have divergences from price appeared on the oscillators?
16. Have sentiment indicators reached extreme levels?
17. Can a clear Elliott Wave pattern be discerned?
18. Which key cycle top or bottom is close?
19. Does the point and figure chart confirm or diverge from the candlestick chart?
20. Are there any trend-indicating candlesticks?
21. Are there seasonal considerations?
22. How confident am I to take this trade?
23. What percentage of total assets should I commit?
24. What is my stop loss if the positions moves in the wrong direction?
25. What is my price target?
26. What is the time frame beyond which I call into question the wisdom of the trade?

Posted by Marketocracy at 4:21 PM | Permalink