Saturday, July 11, 2009

Deconstructing POT trade


For those of you who are unaware, POT had a significant move yesterday. And for those of you who caught the move, congratulations.

I am trying to determine what the traders who caught the trade in the morning saw before the move actually happened.

If you look at the image to the left you will see 2 lines going up and down. Those mark possible entry points if you were going to capture the entire move.

If I was to make this trade, I would have waited for the 7,30 SMA crossover to occur - confirmation signal. This would have occurred after the MACD crossover, the MACD dipping below center and the volume spike.

Sure I would have only captured part of the move. Can anyone provide tips to as to how to setup the trade ahead of time? Which indicators to watch?

Thanks!

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