Stocks Trading Lesson 5 – Strategy 1 Enhanced – Retracement, Wait for pullback!

Last lesson was a strategy on trading using the direction of the moving average. If a long term moving average (50 or 100 day) direction is up one must buy stocks. If it is down one must short stocks.

The strategy can be improved. Add this as a qualifier to the moving average strategy.

“Buy a stock when the moving average direction is up” and “Wait for a pull back”

When the moving average turn upwards wait for a pull back. This point will be more favorable in terms of odds (see lesson 1 comparison to coin toss gambling). The idea is to buy the stocks when odds are most favorable to you.retracement