Our company founder and stock market legend, William J. O’Neil addressed an IBD Meetup  in Newport Beach, CA last week and his message was clear. The biggest edge you can give yourself in investing is using charts and sticking to a rules-based system. Given that MarketSmith is flexible enough to support a wide variety of investment strategies, it’s important to clarify that the edge provided by a system will only exist when that system is sound and time-tested.

Mr. O’Neil went on to explain that the system he founded and uses was developed based on historical precedent analysis – his study of the common characteristics identified among many of the winning stocks over the last century. It was only through extensive research and observation that he was able to develop stock picking parameters,  buy and sell rules, and even a market timing system. More on historical precedent analysis for today’s investor in our last webinar Conducting Historical Analysis Today for More Successful Results Tomorrow.

When using MarketSmith, keep in mind the necessity of using a rules-based system. Use any investing strategy that works for you, so long as it is time-tested, proven and produces an edge for you. We believe anyone can make money in the market. All you need is a sound strategy and a good tool, like MarketSmith.

We are interested in hearing what strategies our members are using to make money in the market. How would you describe your investment strategy? Growth, Value, GARP? Please let us know.

Best Returns,

The MarketSmith Education Team

Nothing but CANSLIM for me!

Although I was a long time canslimmer up till 2000...Even using Dailygraphs before IBD started...I evolved into a swing and starting in 2004 a day trader....To be honest I was about to cancel Dailygraphs but I waited until the new version was going to be released...Took a long time but glad I waited....Without going into details of the scans I use at marketsmith I'd like to say that I find 3 scan criteria extremely useful in setting up my lists which I then export to my  lists at Stockcharts.com where i run technical scans. The 3 criteria that I find most helpful are Relative Strength (3 months), Up/Down Volume and RS LINE New Highs. I have not looked at all the public scans here but of the ones I have looked at I don't see anyone using those criteria...I also use some other criteria for some of my lists and I also use some of the Report Lists...So far even though it may not be marketsmith's intention to help traders like me I have found the new scanner extremely useful...Thanks, Doug

I used to be all about penny and sub-penny stocks. I've had some success but I've also been burned pretty bad on BB's and Pink Sheet stocks. Since I've been using MatketSmith I've been steered away from what my product coach calls "non-investment grade" stocks. CANSLIM is interesting and I think I'm starting to figure it out.  

@coreymakinmoney, welcome to the light. what types of strategies did you used to employ when you were trading BBs and the pink sheets? There's typically not a whole lot of data out there regarding them...

@douggregory2000, what types of things do you look for when you're daytrading? is it purely technically based or do you pay attention to fundamentals as well since you may not hold positions overnight?

I day trade several ways....

I generally have lists of stocks that meet certain criteria here and move them over to lists at stockcharts. I don't use the fundamental scans much however I do use criteria that would indicate strong recent movement....

On those lists at stockcharts I run various technical scans on a daily basis...Primary criteria includes ADX 7, MACD 2,13,12, TRIX 3,2 and RSI 14....

At that point I have narrowed down my lists to strong recent movers w/ upward trending technicals on a daily basis....

When the market opens I usually watch for the first 1/2 hour and select those that are moving on volume. I move those to my streamer and set up individual chart windows on the ones I want to concentrate on. I also check news on some and check the 60 min charts on some....

I prefer those that have moved up strongly the first 20 to 30 mins and then pulled back. I wait and watch to see which ones look primed for a subsequent move. When It comes down to it I'm only concentrating on a few at a time...Invariablty I miss the best ones....

For scalping I will also watch the Time and Sales. Ideally I look for stocks on a one minute chart where the +DI > -DI and ADX 7 is heading up, TRIX 3,2 crossing up through the 0 line, RSI 14 headed up preferably over 60 and MACD 2,13,12 above 0. After a scalp type buy I will hold until the TRIX 3,2 or ADX turns down...

I did this yesterday w/ TTM...I made .14 sh...I sold on what I call...the "Blip"... which was when the technicals except the ADX line briefly reversed...I already knew that the 60 min chart was not where I would like to see it for a longer day trade so I just took the money and ran...On other stocks I go in w/ the intention that it will be a day trade which could last 15 mins, 30 mins or whatever...In these cases I will pay attention to the 60 min chart and the overall technical picture including support/resistance along with the market action and in some cases the RealTime group chart which I get via Vectorvest....But time was running out anyway and even if I did like the 60 min chart I would've sold that late in the day...Nothing worse than a day trade turning into a swing trade...Unless of course it turns into a long term investment...lol....

There are various factors that determine when I sell day trades and it is a bit much for me to type all the variations....

Anyway, unless it is a news play which are very quick trades just trying to pull out whatever I can get in a minute or less...I know that the stocks I'm watching meet the criteria I've selected here at MS which imo are recently strong, the daily technicals are good imo and the one and possibly 60 min charts are favorable imo....

There's a lot more to it but thats how many of my trades go in a nutshell...Best, Doug...

PS: Here is a 1 min chart of where I bot/sold TTM...you can see the blip on the technicals I mentioned above. Actually all you see are where the technicals ended the one minute periods but in R/T I saw it earlier in that minute and sold near the top of the minute....

Also, one may look at this chart and say "What the Heck...Who needs all those indicators"? It is true...I don't need them all...But I have them up there just for a quick glance overview...You get used to seeing all that Voodoo mumbo jumbo as I call it...But when I'm trading I concentrate on just the 2 technical overlay boxes under the price chart so it isn't really all that complicated....

http://img689.imageshack.us/img689/1687/ttm.png ...Once the chart opens you may have to click it again for a clear view

One more thing I'd like to add...I have a lot of little Investment sayings to live by...My main one is "Trade What's happening...Not What You Think Is Gonna Happen"...But there is another one that I don't trade by but is a good idea for many including Canslimmers..."Buy The Best Fundamentals When the Technicals Are Right"...Happy T-Giving To All...Doug