For those of you who havn't read ENTRIES AND EXITS, the concept of the book is based around 16 traders, each who appear to be close friends of Dr. Elder's, showing two trades each, a winner and a loser. Dr. Elder's analyses each of the trades presented in the book too, telling what he thought was wrong / right with each one. He stops short of showing two of his own trades and subjecting them to a similar analysis.
He seems to favour stocks that have been "beaten up" and are now tracing a bottom and turning up. Then essentially trend following until his technical signals tell him to exit. He seems to want to short stocks trading at all time highs, especially if the technical picture supports that action.
I had success recently with the stock au:OMH - it appeared to be trending up after recently falling quite low. I exited when the price rose very high above the moving averages - this is something Dr. Elder advocates, in a sense you are selling "above value", and are then free to enter when the price recedes back to the moving averages.
I'd be interested to hear the factors that have a bearing on your approach to the markets - do you scrutinise the big indexes - DJIA, etc, regularly, when forming your overall picture of bullishness or bearishness, or do you strictly look the charts of individual stocks? What about sectors?
I don't really look at fundamentals much past the market cap and PE ratio. I kind of like mid-caps, around 100-400m. I figure they can grow faster than say a 2000m company.
Do you guys keep diaries of individual trades, I mean, print-outs of your charts, comments on what made you buy, etc, etc?
I have started doing that, but it is much more time consuming than I ever imagined, I mean to really mark up and fully annotate a single trade. I guess it makes me much more thoughtful about the stocks I am buying. If I can't write down my rationale for buying a stock, maybe I shouldn't be buying it! It has definitely made me less impulsive.
