The Improved R2 Strategy: 84% Correct with Just 6 Rules (zz)

http://www.tradingmarkets.com/.site/stocks/commentary/editorial/The-Improved-R2-Strategy.cfm

http://www.tradingmarkets.com/free-tools/rsi-solver

In early 2005, we published the R2 Strategy on TradingMarkets
which quickly became one of our more popular strategies. The strategy was also
presented at "The Traders Expo" in Fort Lauderdale last year. In the "MoneyShow.com
Best Webcasts of 2006" it was voted the number one presentation in the "Best for
Traders" category. We recently updated and improved our research, leading
to this article that shares our latest findings with you.

What is the Improved R2 Strategy?

The Improved R2 Strategy is a simple six-rule Market Timing Strategy
which uses the 2-period RSI as its primary tool. Our research has shown that
there is little statistical evidence using the standard 14-period RSI. But, when
you shorten the period to a 2-, 3- or 4-period RSI, test results significantly
improve. By using the 2-period RSI as we do here, you can see back-tested
results of 84.31% correct in the S&P 500 Index going back to 1995 (12 years).


Here are the Rules:

The SPX is above its 200-day simple moving average (you can use any S&P 500 derivative product, including the SPYs, E-minis, etc).

Day 1 - the 2-period RSI is below 65. This tells us that the market is in a neutral to possibly
oversold condition.

Day 2 - the 2-period RSI closes lower than Day 1.

Day 3 - the 2-period RSI closes lower than Day 2.

Buy the market (SPX, SPY, E-mini, etc) on the close Day 3.

Exit when the 2-period RSI closes above 75.

Online stock books search engine and some stock books to download

Today I found a very good website to search for stock books online which are uploaded by others to online storage websites, such as Rapidshare, Hotfile, etc. It is

http://www.rapidsharemix.com/

Some of good stock books to download:

1. A Trader's Money Management System: How to Ensure Profit and Avoid the Risk of Ruin (Wiley Trading)

http://www.mediafire.com/?tmdkdxn51ml

2. The Psychology of Trading: Tools and Techniques for Minding the Markets by Brett N. Steenbarger

http://www.mediafire.com/?gpwtdzgrzeu

3. Trade Chart Patterns Like the Pros: Specific Trading Techniques by
Suri Duddella

http://www.mediafire.com/?fnqan3m3c8r5np3

4. The Master Swing Trader by Alan Farley

https://rapidshare.com/#!download|81p12|133053428|The_Master_Swing_Trader.pdf|7506|R~42718BF4A5FB41930B6C16D3DBFE4E2A|0|0

5. Investment Valuation 2nd Edition University with Investment Set by Aswath Damodaran

https://rapidshare.com/#!download|339p12|60162974|Investment_Valuation_-_Damodaran.pdf|3949|R~0|0|0

possible way to spot the market top

There are several ways to spot a potential market top. One way is to see the action of past momentum stocks. If the market tops, those momentum stocks should have wide range and started to break down or forming some header/shoulder, double top pattern. A lot of selling can be seen during past several days if market tops.

Look at the universe stocks with the liquidity condition, use MDT month ago to sort the stock list, then look at the action of the top 100 momentum stocks. At current stage, a lot of momentum stocks are holding very well and in some kind of sideway moves. They do not have any sign of breaking down. This indicates that currently market is in a pause stage lack of momentum. If there is a good upside thrust, market will continue going up.

Look at some charts for short squeeze

I think the following setup is also a good winning strategy. It is looking for short squeeze. The idea is that, the day before everyone wanted to short the stocks. Hence many traders held the short position over night. The next day, the market gapped up and had some good news. The stocks gap up next day and allure new buyers to buy. Then the short sellers had to cover which would push the stock price even higher. This situation can be happened at a double bottom case, or some level to form a higher low.

The following chart is CIEN. On 03/09, it traced back to 20MA on lower volume. I shorted CIEN from 03/09. The next day 03/10, the stock had a pullback. Yesterday it was very temping to hold the short position overnight. Then today CIEN squeezed hard to be up 7.34%. I had thought about this situation, because I saw the down volume yesterday is very thin. It looked to me that not much selling yesterday. Hence I closed my short position yesterday. CIEN can either dive hard today or squeeze hard. This setup always depends on the trader's risk management. You can be wrong, but correct yourself at no time.

Dark Liquidity

http://www.dark-liquidity.com/homepage.php

A very interesting site containing a lot of useful information about the trading. Definitely worth to take a look.

Back from Stockbee Bootcamp

I attended the Stockbee bootcamp for this weekend. What did I learn from this bootcamp?

I think it is the idea of range expansion. It includes breakout setup from a range, relex bounce from an oversold downtrend, bounce from support or moving average, and many others you can name. It assumes that if a stock breakout from some range on day 1, it will be likely to go same direction as the breakout direction in the next 2 to 3 days. The fundamental idea of each trading setup is simple. They can all be clarified as some form of range expansion.

How to earn money in stock market? I feel it is vehicle selection and risk management.

How can I improve my trading? All by myself.