The TAZ Trader Blog
How One Simple Rule Can Make You a Better Swing Trader
You can dramatically improve your trading by following just one simple rule:
Trade in the direction of the market.
If the market is trending up, trade long positions. If the market is trending down, trade short positions.
That’s it. Just that one rule will make a big difference.
This rule is very easy to follow. Just use the 10 period simple moving average and the 30 period exponential moving average on the chart of the S&P 500…
If the 10 period moving average is above the 30 period moving average then you will want to be trading the long side. If the 10 period moving average is below the 30 period moving average then you will want to be trading the short side.
Most stocks will follow the trend of the market. So, it just makes sense to trade with the market – not against it.
Follow this one simple rule and you will rarely get caught in a market a sell-off like the one we just had!
| Print article | This entry was posted by Craig on June 29, 2010 at 4:45 pm, and is filed under Market Timing. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed. |
Is the Death Cross Bearish? Maybe Not…
about 1 year ago - 5 comments
TweetIf you’ve read any kind of stock market news lately, then no doubt you have heard traders talking about something called a “Death Cross” (or some call it a “Black Cross”). What is it? It’s when the 50 period moving average crosses below the 200 period moving average in the S&P 500. It just happened
Comments are closed.
about 1 year ago
I’ve read this several times in your past articles. But what to do when the MAs are flat? Should I go to a holiday from the money I’ve made?
Alexander Elder recommends using the 13 week EMA slope, and the 13 day EMA. They must go in the same direction. This is the first rule. And yes, they also can be flat. So?
about 1 year ago
Hi Craig,
I am confused w/the market timing,last Friday(06/25) VIX was 10% above the 10 ma (extreme condition) and S&P 500 was overbought according to W %R 3 ,so is it in this case we look for long setup? (even w/ a down trend for S&P 500)
Thanks.
(very nice new blog)
about 1 year ago
Hey, I just wanted to say thanks for all the articles! I found your website when I first started learning about the market. I loved the idea of your strategy but it just seemed to easy! Over the last 6+ months I’ve came to realize theirs no wrong or right strategy. You can make it as complex or easy as you want. Just follow your rules! That has led me back to your website. I just now found your olg blog and have been going through all the posts. I just wanted to say thanks for everything, it really does make a difference!!!
Keep up the good work, , Joe
about 1 year ago
Thank you very much for the nice comments, Joe!
about 1 year ago
Tony, make it simple and forget VIX and that whole bunch of exotic indicators you are using now. Just follow Craig’s advice and plot 10MA and 30EMA on your candlestick chart, note their relation to each other and then take action according to W%R3.
about 1 year ago
Thanks for your reply Zoltan,
I just have one more exotic indicator on my chart beside the 10 ma and 30 ema and it is the 200 ma.
actually ,i was referring to Craig’s statement for market timing w/vix “IGNORE THE REGULAR MARKET TIMING STRATEGY AND LOOK FOR A STOCK TRADE ACCORDING TO THE EXTREME CONDITIONS OF THE VIX” , we can see the example in the old blog very nicely done w/ARI and also the trade he made last Monday w/IDT (again an extraordinary trade on down week for S&P 500) since we can not short w/ an oversold W%R 3 on S&P 500 that was my question if we have to look for long when we have extreme conditions for VIX.
about 1 year ago
You don’t HAVE to use the extreme VIX signals. You can just use the regular market timing strategy. But, it usually pays to trade when the market reaches extremes.
Right now, the VIX has reached an extreme so this is bullish. In addition to that, we are at the end of the month which is usually bullish.
So, you could trade on the long side now if you find any decent setups.
about 1 year ago
Thanks again for the reply Craig.
about 1 year ago
Agreed Craig. Though you may not find a lot of pull backs into the TAZ give the current market conditions. Look for bullish reversal pattern like hammers, evening stars, piercing lines and bullish engulfing patterns.
about 1 year ago
Yep. I just ran and scan and there really isn’t a whole lot to get excited about. MOH has a nice swing trap, but the hourly chart doesn’t look that great. No sign of a reversal yet either.
Good time to take a vacation!
about 1 year ago
Hey Craig,
I just have a quick questions, when the 10 is below the 30 on spy and the market gets to oversold (like it is now) do you try and find 10 above 30 pulling into the tAZ longs for a short play or do you have another strategy you use?
about 1 year ago
If the market gets really oversold, then you can try to nibble on long positions. Or you can just stay in cash an wait for the next rally to short.
about 1 year ago
OH and I forgot to say..
Happy Fourth of July!!!!!
about 1 year ago
Hi Craig,
I am in the market since two years. I tried a tons of strategies but failed, failed and failed. Some time back i found your site and read it bit by bit many many times. I then tried your PRECIOUS SUGGESTIONS and I SUCCEEDED. Now I am a finding a GREAT OF CONFIDENCE IN ME. THANKSSSSSSSSSSSSS
about 1 year ago
Congratulations Jameel!
about 1 year ago
I like your site very much and what you say makes a lot of sense to me.
I do have one question.
You see the top in the spx in late april? How would following the taz rule have kept a me from going long when the spx made that last pullback into the taz?
I just want to see how you would have handled that.
about 1 year ago
Thank you for the nice comments.
You have to figure that at some point a trend will end. So, you may have had to take a loss on a trade or two in April. Losses are just a part of the game (a business expense).
You also have to figure that just because the market fell, it doesn’t necessarily mean that the stocks that you were in fell as well. You may have been able to get out with a small profit.
It wouldn’t be long before you figured out that you needed to switch from the long side to the short side.