I am trying out a new stock trading system that I recently developed. It is hardly original, but it keeps me from trusting my gut, and today I took my first profits.
It is a pretty simple system. A buy under two conditions: 1) the stock price trades above the lower Bollinger line for a whole day after previously being below or crossing it, and 2) the stock price is above the 60-point exponential moving average on a 10-minute chart. I sell under two similar conditions: 1) the stock prices has traded below the upper Bollinger line for a whole day after previously trading above or crossing it, and 2) the stock price has fallen below the 60-point EMA on a 10-minute chart.
I tried the system on SMH this week. I bought at 35.15 on Wednesday and sold today, when the price dropped below the 60-point EMA at 36.75. I might have short changed myself. It looks like there might be some rally left in SMH, but I managed to whittle a 4.5% return out of it. Not bad for less than a week, I’d say.