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Wednesday, October 17, 2007

Why I Called A Bounce


7 comments:

Prospectus said...

Stewie,

So on FXI was there a particular setup that you bought from? Yes, if you bought at 212 that looks completely non-obvious to me. But if you bought earlier in the day at 214, when it also wasn't obvious, you'd have a 4 point drawdown to live through. Do you look for any kind of strength when you enter?

Also, where was your stop / where you would admit you were wrong on your entry? I need help with all of these things X_X

Stewie said...

The reason why i wouldn;t have BOT at 212 is b/c the market was tanking and i didn;t see any buy signals given out by the price, MACD and RSI combo like it did at 2:30PM. I ALWAYS ALWAYS ALWAYS trade according to where i think the indices are headed. I will never buy a stock if i think the market will tank and i will never short if i think the market will rally. You are fighting the tape at that point and the odds are against you. When i see the price dropping and the RSI and MACD not confirming i get excited and wanna get long. Study the relationship between price, RSI and MACD on all timeframes and you'll be amazed how accurate this combo is. BUY when the rpice drops but MACD and RSI create higher lows. Leads to a reversal 90% of the time.

Stewie said...

for the FXI trade. My stop would have been 210.5 and i bot it at 212.5

Anonymous said...

Stewie, thanks for this analysis. I also felt a bounce was coming but did not think to use these indicators on the indexes for validation. -TVH

Stewie said...

that's the nice thing about trading. There are more one way to arrive at the same conclusion. Trading is an art, not a science.

Teddy DaRussian said...

this makes total sense - thank you for sharing this invaluable info!

Stewie said...

anytime Teddy.

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