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How are your money management skills these days? Here's a real test for you:
Over the past 10 months, MTXX has been bouncing up and down between roughly 14 and 19. One of the first signals that the stock is about to start moving higher again has been when it penetrates its lower Bollinger Band (blue arrows). While extremely risky by themselves, those signals have often been confirmed by MACD Histogram crossovers within a couple of days (red arrows).
By practicing good money management skills (tight stops, well defined exits, etc.), agile traders may be able to take advantage of MTXX's recent history now that it has gone and done it again (green arrow). The rest of us can watch with interest to see if history will repeat.
Over the past 10 months, MTXX has been bouncing up and down between roughly 14 and 19. One of the first signals that the stock is about to start moving higher again has been when it penetrates its lower Bollinger Band (blue arrows). While extremely risky by themselves, those signals have often been confirmed by MACD Histogram crossovers within a couple of days (red arrows).
By practicing good money management skills (tight stops, well defined exits, etc.), agile traders may be able to take advantage of MTXX's recent history now that it has gone and done it again (green arrow). The rest of us can watch with interest to see if history will repeat.
Why not just use the MACD crossover alone? The BBs act as a warning that a trade might be coming up, but the MACD histogram does that, and maybe a little better when they start shortening up. I admit I've never really understood the BBs. They seem to be most useful when they narrow up. That seems to be a pretty good warning something is going to happen. A matter of preference I suppose.
Posted by: Mark Dobbins | March 18, 2009 at 08:15 PM
Mark: the more signals you get for the same event, the more reliable it is...
Posted by: Richard Gosselin | March 19, 2009 at 07:37 AM
Hi Richard, thanks for the response. That certainly makes intuitive sense and you often see anecdotal references, too. I wonder if anyone out there knows of data that shows it's true. Any links to articles or studies? I always worry about selective perception.
Posted by: Mark Dobbins | March 19, 2009 at 04:23 PM