A simple Stock strategy to trade with edge!
A simple, profitable strategy.
If you’re struggling to trade profitability and searching for the ‘Holy Grail’ of trading strategies, then you’re in luck. I’ve got it for you….
DON’T SHORT STOCKS!
Well, that’s it in a nutshell. I will elaborate, but please read on because this was a game changer for me. It sounds too simple. Honestly, my win/loss ratio has improved, and my hairline has stopped receding.
The simplistic rationale for long only
1. Just look at the S&P500 chart since 2010. It is statistically impossible to lose money if you only buy.
2. People want to buy stocks! It’s just a fact. Everyone in the world is investing in stocks, whether it's for their retirement, their children's ISAs, speculating through the 30 apps on their smartphones, or visiting their local bank, with the aim of beating inflation and outperforming savings accounts.
3. During the most significant event of my life, the infamous COVID-19 pandemic, the S&P500 experienced a 30% decline, causing the world to stop, businesses to close, and a sense of impending doom! The S&P is now up 60%, reaching an all-time high!
4. The buy-only mentality, when combined with simple technical analysis, can eliminate 50% of trade ideas, clear your mind, reduce 50% of stress, and, as stated in Point 1, enhance your edge.
5. Most importantly, stocks are an appreciating asset; they want to go up. A company's entire purpose is to grow!
Okay, so that’s a really simple rationale. I get that some stocks do go down during market corrections or natural ebbs and flows; we want market pullbacks. We could go into boring stats like volatility and liquidity, etc., but the key point is that stocks go up! I can’t emphasise this enough.
The simple strategy
My strategy applies to stock indexes (US500, US100, etc.) as well as individual stocks; however, indexes are easier, in my opinion. I would recommend sticking to well-known stocks that fit this complex filter. Is it likely to fail? Here are some recent stocks I have traded using this filter. McDonald's (MCD) and Go Daddy's (GDDY)
We've already decided to focus solely on long-only trades, so how do we begin? We chase momentum using thesecomplex, simple technical tools.
1. The daily price must be above these simple moving averages (SMA): 20, 50, 100 = momentum!
2. 4-hour price above these simple moving averages (SMA) of 20, 50, 100= short-term momentum.
3. Avoid trading at major resistance levels.
4. Enter trades on a 4-hour chart; don’t over-analyse.
5. Take profits.
To fine-tune an entry, you can apply this extremely simple framework to any existing TA skills, candlestick patterns (bullish engulfing, ABC pullback, pinbar, etc.), or market structure.
Here are some examples of trade entries on MCD, GDDY, and SPX. Follow the framework and keep your trading simple.
If you’re struggling to trade profitability and searching for the ‘Holy Grail’ of trading strategies, then you’re in luck. I’ve got it for you….
DON’T SHORT STOCKS!
Well, that’s it in a nutshell. I will elaborate, but please read on because this was a game changer for me. It sounds too simple. Honestly, my win/loss ratio has improved, and my hairline has stopped receding.
The simplistic rationale for long only
1. Just look at the S&P500 chart since 2010. It is statistically impossible to lose money if you only buy.
2. People want to buy stocks! It’s just a fact. Everyone in the world is investing in stocks, whether it's for their retirement, their children's ISAs, speculating through the 30 apps on their smartphones, or visiting their local bank, with the aim of beating inflation and outperforming savings accounts.
3. During the most significant event of my life, the infamous COVID-19 pandemic, the S&P500 experienced a 30% decline, causing the world to stop, businesses to close, and a sense of impending doom! The S&P is now up 60%, reaching an all-time high!
4. The buy-only mentality, when combined with simple technical analysis, can eliminate 50% of trade ideas, clear your mind, reduce 50% of stress, and, as stated in Point 1, enhance your edge.
5. Most importantly, stocks are an appreciating asset; they want to go up. A company's entire purpose is to grow!
Okay, so that’s a really simple rationale. I get that some stocks do go down during market corrections or natural ebbs and flows; we want market pullbacks. We could go into boring stats like volatility and liquidity, etc., but the key point is that stocks go up! I can’t emphasise this enough.
The simple strategy
My strategy applies to stock indexes (US500, US100, etc.) as well as individual stocks; however, indexes are easier, in my opinion. I would recommend sticking to well-known stocks that fit this complex filter. Is it likely to fail? Here are some recent stocks I have traded using this filter. McDonald's (MCD) and Go Daddy's (GDDY)
We've already decided to focus solely on long-only trades, so how do we begin? We chase momentum using these
1. The daily price must be above these simple moving averages (SMA): 20, 50, 100 = momentum!
2. 4-hour price above these simple moving averages (SMA) of 20, 50, 100= short-term momentum.
3. Avoid trading at major resistance levels.
4. Enter trades on a 4-hour chart; don’t over-analyse.
5. Take profits.
To fine-tune an entry, you can apply this extremely simple framework to any existing TA skills, candlestick patterns (bullish engulfing, ABC pullback, pinbar, etc.), or market structure.
Here are some examples of trade entries on MCD, GDDY, and SPX. Follow the framework and keep your trading simple.
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