Friday, January 16, 2009

John J Murphy on trend and his rules for Stock Trading.

Murphy stated "The importance of trading in the direction of the major trend cannot be overstated.The danger in placing too much importance in oscillators, by themselves, is the temptation to use divergence as an excuse to initiate trades contrary to the general trend.This action generally proves a costly and painful exercise.The oscillator, as useful as it is, is just one tool among many others and must always be used as an aid not a substitute for basic trend analysis".
Murphy's Rules.
1 ) Map the trends .Daily to intraday charts.
2 ) Spot the trend and go with it.
3 ) Find the high and low price, Support and Resistance.
4 ) Know the retracements, 38,50 and 62 percentages.
5 ) Draw the trend line.
6 ) Follow the averages, 4 and 9, 9 and 18, 5 and 20.
7 ) Learn the turns RSI 9 OR RSI 14.Daily signals can be used to filter the intraday charts.
8 ) MACD
9 ) Trend or not trend . ADX or Trend Line.
10) Know the confirming signs.
11) Technical skill is improved with experience.Practice the skills as much as possible in real
time and demo.

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