Trading Strategy #001

Finding The Golden Triangle

The entry signal.

The entry signal is in two steps: – The first price confirms, then volume confirms.

a. Price confirmation: Price drops to or below its SMA and then closes above it on the same day or later. If the price doesn’t close above the SMA within three weeks, I turn my attention to higher-probability stocks.

b. Volume confirmation: On the day price confirms or on a later day, when price closes higher than the day before (an up day), look for convincing volume greater than its 50-day SMA. By convincing, I mean volume should be above the SMA and above the volume of recent days. We’ll look at a convincing example in a moment.