Receive Alerts
Free

For One Week!
Stock PowerRatings
Use PowerRatings every day to find the stocks for tomorrow to focus on and the ones to avoid. Sign Up Now >>

ETF PowerRatings
Use PowerRatings to find the ETFS to focus on to build your portfolio for ETF gains.
Sign Up Now >>

Gary Kaltbaum Intraday Breaking Setups
Let Gary Kaltbaum send you timely emails to alert you when breakouts occur.
Sign Up Now >>

Kevin Haggerty's Professional Trading Service
Every day receive the best plan of attack for the next day's trading directly from professional trader Kevin Haggerty.
Sign Up Now >>
awards
TradingMarkets AS SEEN ON...
Yahoo! Finance (content partner)
Forbes.com (content partner)
AOL Money (content partner)
CNBC
Fox Business News
Bloomberg TV
Wall Street Journal
MarketWatch
Fortune
New York Times
Stocks and Commodities
Active Trader Magazine
Los Angeles Times
Futures Magazine
Barrons
Reuters
SFO Magazine
Investor's Edge
E*Trade Radio
Bloomberg Markets Magazine
Chicago Mercantile Exchange
Forbes.com
SFO
Registered Rep
FXstreet.com

How to Avoid Getting Whipsawed Near the 200-Day

By Larry Connors | TradingMarkets.com | May 21, 2009

More on today's Daily Battle Plan discussion on the 200-day moving average.


What is the rule of thumb for avoiding ETFs near the 200-day ma? Our research has found it to be 1.5% away from the 200-day moving average (2% can also be used). Therefore if an ETF is 1.5% within its 200-day, you will avoid putting on an initial signal. If you're scaling into a position, and let's say the first unit is 2.7% away and you buy, if the second signal moves to be only 1.2% away, you'll hold the first unit until the exit signal is triggered and not take the second signal as its within that 1.5% range.


I'd recommend you looking at a few charts for examples, especially from the past few weeks to further understand this.


Special Note on the New ETF Book: Our new book, High Probability ETF Trading will be released in digital format tomorrow (just in time for the weekend). If you ordered the book, you'll receive notice by email tomorrow how to download it. The hard copy of the book will be mailed to you as soon as it is back from the printers in late June.


The book has seven quantified ETF strategies in it and each strategy can be used to trade both on the long side and the short side of all ETFs. If you haven't ordered your copy yet and wish to, you can call 1-888-484-8220 ext 1 or click here. You'll be included in the group who will have access to the new book tomorrow.


This is from Larry Connors Daily Battle Plan which he publishes each morning. If you'd like to take a free trial click here, or call 1-888-484-8220 ext 1 to start your free trial today.



Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.



Want updates on our latest articles? Have something to say to Larry Connors or the staff at TradingMarkets? Follow Larry on Twitter at @Connors_TM and TradingMarkets at @Trading_Markets.

Original publication: May 21, 2009