Top Advisors Corner

David England: Should I GoPro?

David England

David England


Today I answer: “Using your technical analysis tools, were there buy signals for the recent run with GoPro?” Let’s review one of my trading systems before looking specifically at GoPro.This system is highly effective at giving profitable trading buy and sell signals. Remember, nothing is 100 percent. 


Per the chart, my trading buy signals hit when three conditions occur. First, the price must cross up through the blue signal line and green trend line. Finally, the bars in the middle (momentum indicator) chart must cross from negative (red) to positive (green). In reverse, “Where is the system sell signal?” I do just the opposite and wait for the price to close and stay below the blue signal line and trend line plus I want red bars (momentum indicator) to confirm an incremental sell signal.

At (A), a system buy signal at $47.16 was confirmed when the price 1. Closed above the blue signal line.  2. Closed above the green trendline. 3. The green bars turned from red to green-I like to see three green bars increasing in size. The icing on the cake was above average (buying) volume-lower box.

Since the buy signal hit at point A, the price is now up 98.68 percent or $46.54 as of the writing of this column. Where will it go from here? Remember, those who used my system and entered at $47.16 have not made a penny until their long position is sold. Gains do not equal profits. Smart traders will incrementally take shares off the table to lock in their profits. 

Watch the price if it drops under the current trader’s line-in-the-sand at $85.89--where many institutional traders will have protective stops. Traders, unlike investors, are not into buy and hold to see where the price will be in the years to come. 

To answer additional questions, the middle box represents institutions’ action--buying and selling. I hit the mute button on what the “paid hacks” say and have learned to watch what they do instead. Price will not go up with conviction until the institutions buy in. Note what happened to the price after the third green bar. 

I have taught many students these buy and sell systems--you can learn as well. You have heard me state, “It is not being in the market that is important, but what you are in and when that is.” From a personal standpoint, learn which indicators give the best signals under different scenarios. In addition, which indicators give the best signals for buying and which for selling? Of course, this is not an open call to buy or sell GPRO, but data for educational purposes only.

To follow my risk management rules, one should consider using only 5 to 10 percent maximum of their total asset value for trading. Most people will not invest the time and effort to learn how to trade successfully year after year. I have other conservative strategies to obtain that objective.

If you would like to see this strategy with your security simply send the symbol, and I will try to work one into a future column.
Plan your work, work your plan and learn to share your harvest!

David England, 

Source: davidoengland.com