Tuesday, July 29, 2008

Stock Alerts in Action

I've set up a sample portfolio on Wallstreetsurvivor.com under the username "Zignals" to test a strategy similar to the 2% gap stock alert.

[1] Scanned for stocks which gapped 2%

[2] Eye-balled the four best candidates and entered a hypothetical trade

[3] Created a Stocklist on Zignals.

[4] Set two alerts:

  • One that alerted on a 3-day EMA cross below a 5-day EMA

  • A second that alerted on a 1-day loss of 5%

    The first alert provides a sell signal. The 2% breakout gap on which the trade is entered will provide a boost of strength to the fast moving averages. When the momentum fades the more responsive of the moving averages (3-day EMA) will drift below the slower (5-day EMA).

    The second alert is a fall-back for a stop price; we would look to exit if the stock made a 1-day drop greater than 5%.

    We will adjust strategy as appropriate, altering the buy/sell triggers to suit market conditions.

    Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website