January 25, 2005
Buy stock on pullback
In my opinion it's always better to buy a stock in an uptrend than to buy one in a downtrend.
One strategy that is well known, but I personally never tested it, is to buy dip on uptrend.
Buy on a pullback while stock is trending up, is one common strategy used by many traders over the world.
This strategy can be modeled in Trade-Ideas and I will start back-testing it soon.
To make sure stock is in an uptrend, we can use filter that deal with 50 day moving average.
Stock price above 50 day moving average filter stocks that are trending up; you can also add by how much percentage the stock price is above its moving average; after adding this filter we want now a stock that pullback; so we can use stock running down alert for example.
Stock running down intermediate alert is not appropriate here, because we want the stock to make a quick pullback and RDI (Stock running down intermediate) focus on longer term fall.
Very important: Stock running down must be used with a tight stop loss.
Note: Instead of using stock running down for short position, we created here a strategy that uses it for long position.
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Buy stock on pullback @ Day-trading.in