Chart Checklist
for beginners. Regarding the use of this page–
As informative as this is, it is precisely the reason
you need a coach. Use a format similar to what
you see below until you can create your own checklist
using the indicators and rules you know work for your
style of trading. This is one of the things I will teach
you.
What keeps you up at night?
You want to make money but not lose
money, right?
Can
you stop thinking get-rich-quick long enough
to learn from a coach?
The more you have checked off,
the more favorable the odds are.
Why is this important?
What is the Trend?
Uptrend, i.e., higher highs and higher lows? Are the 20
& 50 day Mov Avg both rising? Is the 20MA above the 50MA?
Trend
shows interest. Pull up
charts on the S&P-500
(SPX), the sector
chart of the stock you're interested
in
and the stock
chart all at the same time.
Are they all
going in the same up trend?
What are the Indicators
telling you?
Is the Stochastic low & crossing upward, at or above 20? Is the MACD low but rising, crossing above "0"
Is price hitting the upper or lower Bollinger band?
Are stop & reversal points (SAR) being hit?
Is the RSI crossing?
Is the Advance Decline line rising? Is there an
indicator divergence?
Use the indicators to confirm
the current trend.
Add as many indicators as you
want but be consistent in your usage of them. Use the same
settings for at least 60 to 90 days before deciding they must be
changed.
Where is the Price?
Is the price above a flat
or rising 200-Day MA? Is the price above a rising 50-day MA? Is the price is above a rising 20-day MA?
Shows
strength and increasing strength of the trend.
What is the chart Pattern?
Is there a reversal or
continuation pattern formed, i.e., ascending triangle, head &
shoulders, cup & handle, etc.? Is there a formed or
forming setup like a long base or
long pullback?
The presence of a
bullish chart pattern adds to the odds of a renewed move to the upside.
What is the Volume telling
you?
Are the volume
characteristics increasing on rallies and decreasing on pullbacks? Is there evidence that traders are in the grip of fear, possibly
signaling volume capitulation?
Volume is
the sentiment of the traders in that stock.
When volume increases on rallies and breakouts, the dominant sentiment
is usually bullish.
What
is the appropriate ACTION in this trend?
Is
there a SETUP? Is this a bullish pullback setup? A continuation or reversal pattern
setup?
Differentiate,
if possible, the candlestick reversal pattern from the longer term, more
powerful continuation or reversal pattern.
In a downtrend, i.e., lower highs and lower lows?
Are the 20 and 50 day Moving Averages both falling?
Is the 20MA below the 50MA?
Trend
shows interest. Pull up
charts on the S&P-500 (SPX), the sector
chart of the stock you're interested in
and the stock
chart all at the same time. Are they all
going in the same down
trend?
What are the
Indicators telling you?
Is the
Stochastic high and crossing downward, near or towards 80? MACD high but falling, crossing below "0"
Is price action hitting the upper or lower
Bollinger band? Are stop & reversal points (SAR) being hit?
Is the RSI crossing?
Is the Advance Decline line falling?
Is there an indicator divergence?
Use the indicators to confirm
the current trend.
Add as
many indicators as you want but be consistent in your usage of
them. Use the same settings for at least 60 to 90 days before
deciding they must be changed.
Where is the
Price?
Is the
price below a flat or falling 200-Day MA?
Is the price below a falling 50-day MA?
Is the price is below a falling 20-day MA?
Shows
strength and increasing strength of the trend.
What is the
chart Pattern?
Is there a
reversal or continuation pattern formed, i.e., descending triangle, head
& shoulders, flag, etc.?
Is there a formed or forming setup like a short base or
short rally?
The presence of a
bearish chart pattern adds to the odds of a renewed move to the downside
What is the
Volume telling you?
Are the
volume characteristics decreasing on rallies and increasing on
pullbacks?
Is there evidence that traders are in the grip of greed, possibly
signaling volume capitulation?
Volume is
sentiment of
traders in that stock.
When volume increases on breakdowns, the dominant sentiment
is usually bearish.
What
is the appropriate ACTION in this trend?
Is
there a SETUP? A continuation or reversal pattern
setup? A bearish rally short setup?
Differentiate,
if possible, the candlestick reversal pattern from the longer term, more
powerful continuation or reversal pattern.
