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"The genius of investing is recognizing the direction of a trend not catching highs and lows." - John Bogle, the founder of The Vanguard Group
Source: http://financialedge.investopedia.com
The Problem
Volatile equity markets have been eroding investors capital and their confidence with successive market downturns. Traditional safe havens have either themselves seen downturns (e.g., real estate), become subject of rampant speculation (e.g., gold), or offer little return (e.g., Bank CD accounts).
Todays Goal
Identify a method that allows us to
1. Pursue stock market appreciation while... 2. Avoiding significant capital draw downs.
Todays Agenda
The nature of trend following. Review of recent bear markets and market corrections. Overview of the Rahul Mohindar Oscillator (RMO) trading system. Use of the RMO to protect capital.
Todays Agenda
The nature of trend following. Review of recent bear markets and market corrections. Overview of the Rahul Mohindar Oscillator (RMO) trading system. Use of the RMO to protect capital.
Trend Trading
The objective of Trend Trading is to adopt a directional position in the market, consistent with the prevailing trend. Trends can last months, even years. A trader wants to enter the primary trend at a point of relative safety, then ride it for as long as is practical.
Todays Agenda
The nature of trend following. Review of recent bear markets and market corrections. Overview of the Rahul Mohindar Oscillator (RMO) trading system. Use of the RMO to protect capital.
Source: MetaStock
Source: MetaStock
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Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Todays Agenda
The nature of trend following. Review of recent bear markets and market corrections. Overview of the Rahul Mohindar Oscillator (RMO) trading system. Use of the RMO to protect capital.
Rahul Mohindar
RMO = Rahul Mohindar Oscillator
Rahul Mohindar is a well-known trader in India and a featured commentator on CNBC and CNN in India. Equis acquired rights to the RMO and it is now included as one of the standard systems that is included with MetaStock.
RMO Template
Source: MetaStock
RMO
Source: MetaStock
RMO
Above Zero Line = Permission to take Bullish Trades.
When SwingTrd2reflect the long-term it These indicators Trade 2) is pink and SwingTrd2 (Swingand SwingTrd3 cross represents a change in the strength of and medium-term Trade SwingTrd3 (Swing trends.3) is purple. the trend.
Source: MetaStock
RMO Template
Source: MetaStock
RMO Template
Source: MetaStock
ST2 just crossed above ST3. Buy above the high of the current bar.
Source: MetaStock
Trade Entry
Bullish Trade Set-up
Enter on the next bar after all three rules are satisfied. The entry is made one tick above the prior bar's high.
Source: MetaStock
Trade Management
If you get a arrow in the opposite direction, check your trends
Rule Of Thumb: If both the primary and intermediate-term trends remain consistent with your trade, stay in it.
If you get a second trigger signal in the direction of your trade, do not add to the position. Instead, move your stop higher or take other action to protect your gains.
Todays Agenda
The nature of trend following. Review of recent bear markets and market corrections. Overview of the Rahul Mohindar Oscillator (RMO) trading system. Use of the RMO to protect capital.
Underlying Philosophy
The vast majority of stocks will follow the primary trend of the broad market. An investor and/or trader will have the greatest probability of success when trading with the broad market trend. So, what if we use the RMO to identify the broad markets primary trend and avoid trading against that trend?
If the primary trend of the SPY is bullish we have a green light in our portfolio to get long stocks. If the primary trend of the SPY is bearish we must exit or protect our long stock positions.
July-August 11 Sell-Off
Source: MetaStock
July-August 11 Sell-Off
Source: MetaStock
July-August 11 Sell-Off
Source: MetaStock
July-August 11 Sell-Off
Source: MetaStock
July-August 11 Sell-Off
Source: MetaStock
July-August 11 Sell-Off
Source: MetaStock
July-August 11 Sell-Off
Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Source: MetaStock
Offense or Defense?
Remember, its not about trading the SPY Its about identifying when to play offense and when to get on defense. When the primary trend of the broad market is bullish Play Offense! When the primary trend of the broad market is bearish Get on Defense!
Special Links
Learn to Trade the RMO with Options:
http://www.theoptionclub.com/rmo
MetaStock Prof.
$1,395 $1,295
http://www.theoptionclub.com/metastock/