An Early Warning System, Part 1 by Mike Slattery
Irrational human behavior influences stock prices, and this behavior can lead to predictable outcomes. Here’s a trading system that takes advantage of overreactions in the market, which could give you a trading edge.
I discovered what I call my early warning system after combining two indicators of different origins. The first stemmed from the type of hyperbolic promotion that all individual online retail traders have received at some point: “We’re going to make you wealthy beyond your wildest dreams.” This pitch capitalized on an old and well-established trading convention of entering a stock in a long-term uptrend after a short-term drop below a medium- or short-term moving average ...