I would like to share the steps that I take to filter out the symbols for use in trade by PF strategy.
1. I apply the settings one by one on the symbol for 1%2 and then 1%3. In addition, updata software has an indicator
called P&F Trend Oscillator which I also plot as a line. The objective here is to visually see the chart if the PF osc
indicator is above Zero line (meaning the PF trend is UP) and I see signs of strong support only (both external/main and internal ones).
In the market I trade, there is NO short sell but only go long, hence I need those stocks where the trend is UP and shows price actions
touching the support lines.
2. At this point, if I have filtered out a good candidate(s), I then tweak the box size (only using %age and not fixed size) and the reversal,
in hope of seeing a stronger main 45 angle support that runs from the start until the current time.
The data I have from esignal for my market Tadawul is only 1 or at most 1.5 years old, so am looking for a main support that runs from the start.
Of course, i will also draw manual res and sup lines where applicable to see how price bounces off from the support and how the resis is held up.
I do not draw horizontal support as I used to do that only for Candles chart or line, DO WE need horizontal support in PF? Isnt double botton
or double top is tellins us the break of the support and rest respectively, do we need to draw a hor-line?
I am using only clear buy and sell signals which are double/triple top, double/triple bottom so the 45 support/res line is enought for me.
However lately I have read some other patters, one is Shakeout (page 85 of Dorsey book), I have also created a
scan using updata prog language to scan the symbols and filter out where the shakeout happens, will watch out for it now.
There is however another strategy that I used on paper, which is to scan the symbols again using the code, to find where the price is very close
to the 45 line and then identifying that this could be a reversal if price indeed touch and bounces off that support. It nice and so far it works in
3 out of 4 cases. The fourth case it became a lost trade, because the price pierced thru the support.
I think drawing Horizontal support can be useful if the prices bounces off from such a support (atleast 3 touches), never tried or plotted it
but will do now.
3. After step 2 above, I look at those stocks which made it thru step 2(able to draw a strong main support), I evaluate the success of previous
price targets, How many have been achieved and how many double top trades ended up successful.
Is there anything I missed out or needs to be corrected?
Questions:
1. There have been some symbols which make the perfect trend , support and indeed a buy signal as double top. However I found that the stock moves
so slow that the double will remain there appeared in say nov and price kept playing with the buffer of reversal, until say in march you see
price either moving up or down. How can we use any tech indicators to know that such stocks are so less volatile that its not wort htrading with
because your money is blocked for extended period of time. Volatility is subjective to the underlying market, so how can i evaluate the stock
based on an indicator (if there is one) that i should inclide thise in watchlist?
2. Lets say you have see a double top becoming quite successfull, price went all the way up and no resis in sight. Now the price then retraces down
only a few boxes and then immediately goes up and again create a double top. What would you do? First of all you noticed the stock too late in the
first place when it made a pol of X after the double top and you fear this is like an over bought condition so you did not enter.
So if the price turns (very short pull back) and join the main trend again, should i ENTER long?
In short if everything goes fine as per pf rules, how do we check the strength of the chart that it wil show activity soon
I attached charts for ref
