My Technical System
I am still a learner with an "L" on my back, but here is a description of how I trade my portfolio.
I consider that I’m an active 80% technical/ momentum investor and at times 20% based on fundamentals.
This technical system was design with me networking (my secret to learning quickly) with another member of AIA. It has been running since late 2017 and has great results.
My targeted capital return is 12% per annum. Since late 2017, the system has achieved a 110% return on capital.
In October 2018, the first correction since the system began, I developed a method to take advantage of a market recovery faster than the pace the market begins to recover. So, with the 2020 correction and recovery, I was prepared and took advantage, in effect turbo-boosting my portfolio.
But remember it is all about interpretation and we all interpreted differently
Software I use "IC-Investor" - Great value for money (their assistance is first class and you own it).
Investments "ASX300" (consists of ASX200 plus 100 small to medium stock selected by Standard & Poor's they review twice a year), there's well over 2,000 stocks in the ASX. I also use the "ASX300" Weekly Chart, with my different settings as a market barometer /great warning of looming trouble or potential warning reversal of market conditions.
My Chart Setup
- Weekly 220 (4+yrs history)/ Bar chart (Less market noise)
- EMA (Esperdential Moving Averages)
4 & 7 represent "Traders" (short term)
30 & 45 represent "Investors" (long term)
[These EMA's represent four active parties in the stock market]
- PPV (Percentage Price Volume), strength of money
- RSI (Relative Strength Index), strength of momentum plus divergence signal?
- MACD (Moving Averages Convergence Divergence) momentum indicator
- Support and Resistance lines (Important to my system)
Note: There are two types of investors in the stock market; Technical and Fundamentalist and they cloak themselves as either Traders or Investors. If all agree on a stock I am interested.
Example Chart (ASX:ALQ)
Read the Chart - My Interpretation
Have a GOOD look at your charts, there's valuable messages in the charts - Colin Nicholson
- MACD(Red) has cross over horizontal line (X/O point), I give another week draw vertical line UP through chart graph = positive momentum. Also notice that PPV & RSI are going UP plus the EMA 4 & 7= traders, are going up plus increasing the gap between them (they are the ones who are creating UP trend). EMA 30 & 45 = Investor. I am thinking do I get involved or not?
- At this point, if I'm interested, I check if it’s the type of stock I require in my portfolio and may check via the fundamental's.
- I'll add this chart to my "Watch list" folder.
- 8+ weeks the trend had broken through "Resistance A" (as the trend continues UP. Resistance can be use as Support if selected) and note an interesting point, EMA30 & 45 are becoming interested in the trend, plus they are now trending UP and gaping (Investors entering the trade).
- The Chart is moved into my "Target" folder. The Trend is approaching the next "Resistance line B" (formed early 2020). All the EMA's (Traders and Investors) are supporting the growing UP trend, RSI, PPV & MACD also support the trend.
- Now waiting for the UP trend to break through the "Resistance line B" at the close of a trading week Friday.
- If and when that happens I pre-plan by using my "Trade Planner" on my Software system.
Action is taken if/when the UP Trend continues into the following week above "Resistance line B", on to Wednesday to confirm breakthrough of the "Resistance line B".
- I complete my "Trader Planner" (Buy price, Target Price = return on Capital, Stop Loss position = protect Capital and Quantity).
- I actioned on that Wednesday p.m. (2+days confirmation).
TIME on My Technical System
Week 1 (15min)
- Check my portfolio for stocks that have fallen through Stop Loss position (action).
- Check stocks that have reach their "Profit target". Decide to SELL or let the Stock continue (check the Chart: Are all parties & supporting Indicators = happy? Let it run).
Week 2 (30min)
- Scan for potential Stocks in the ASX300, using IC-Investor program.
Average time is 2.0/ 2.5hrs per month.