You can take advantage of the fluctuations and the short-term trends of the market.
The strategy of taking advantage of volatility and that of momentum work opposite to each other. Select the fluctuation (volatility) or short-term trend (momentum) according to current market conditions.
When we've so many 3% fluctuations and the S&P stays flat, you can take advantage of fluctuations by buying at the dips and selling at the temporary ups.
Momentum is profitable by buying when the last n days is up by x% and selling vice versa.
Design tests using historical data from Yahoo!Finance and implement your strategy accordingly.
Volatility usually happens when market goes to the next phase of the market cycle and/or during times the investors are divided into two camps of market directions. Momentum works during the market rise to the top. Monitor the market peak and it will plunge very fast and steep. In most cases, use Stop Limit to limit the plunge.
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(c) TonyP4 2012. Written in 4/18/12. Last updated in 4/18/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
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