(c) Dreamtai Stock Trading Software
One of our member had asked a question if a Red bar means to Sell the stock which you had purchased before or does it means to Short Sell the stock.
The answer is that the trading strategy you follow depends on the trend.
How do you define a Stock Trend ?
Here I am showing three example charts by which you can visually determine the trend of a chart.
1. For an Uptrending Chart, the twenty day moving average ( the blue dotted line in DreamTai Stock Trading Software ) is sloping upwards and the price bars are MOSTLY above the moving average line.
For this stock, you can either go long ( buy the stock) when Dreamtai gives the Green buy signal or stay away from it. But , do not try to SHORT SELL this stock ( even if you see a Red SELL signal), because the overall trend is up.
For an uptrending stock, a Red Sell signal in Dreamtai means sell existing long positions in the stock. It does not mean that you have to Short Sell the stock.
2. For the DownTrending Chart, the twenty day moving average ( the blue dotted line in DreamTai Stock Trading Software ) is sloping downwards and the price bars are MOSTLY below the moving average line.
For this stock, you can either go short ( Short Sell the stock) when Dreamtai gives the Red Sell signal or stay away from it. But , do not try to BUY this stock, because the overall trend is down.
For a downtrending stock, a Green BUY signal in Dreamtai means to cover existing short positions in the stock. It does not mean that you have to Buy the stock.
3. For the Sidewards Chart, the twenty day moving average ( the blue dotted line in DreamTai Stock Trading Software ) is flat and the price bars are MOSTLY oscillating around the moving average line ( the blue dotted line in DreamTai Stock Trading Software )
This is the most dangerous chart. Many Traders have taken huge losses trying to predict top and bottom for this type of market.
The best strategy is to stay away from this stock.
Go and search for some other trending stock. There are hundreds of stocks to trade.
So, when you select a stock for trading, be sure to select a trending stock ( Up trending or downtrending ) and base your trading strategy upon that.
(c) Dreamtai Stock Trading Software
