How to find the right Stock to Swing Trade MA CCI
First of all, there are lots of different methods to finding a good stock to swing trade and from time to time we like to discuss various options.
One our favorites is using two simple moving averages to determine a trend and the Commodity Channel Index (CCI) to pick entry points.
Depending on whether you prefer using options in swing trading or buying the stocks themselves you could use these two indicators to trade long or short in the market.
We trade options both directs but prefer to look for long entries if we are buying the actual stock because we want to focus on stocks in the $2.00 to $15.00 range since those give us the most shares for the money. There are other things to look at like overall volume in defining a strategy but today we are just talking about the indicators.
You could use a number of different moving averages, we prefer to identify a little bit longer term trend so we use the 20 day and 40 day moving averages on the daily chart.
If the 20 day is greater than the 40 day we look for a long entry or an option strategy taking advantage of a move up in price. We use the CCI index to find an entry point. If the CCI is less than (-100) in an uptrend we look for an entry based on candles and price action.
If the 20 day is less than the 40 day we look to short the stock or use an option strategy to take advantage of a move down. Again, we use the CCI index to identify an entry point. In a down trend if the CCI is greater than (100) then we for an entry point based on the next couple of candles and price action.
Many times by just looking at a chart with the MA’s and CCI plotted you can see just how well a security is predictable using this strategy.
Just remember a securities price action can change at any time, especially if there is news or earnings. What out for those things, they can really mess a swing trade up even for the best of us.
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