Things You'll Need:
- Computer with internet connection
- Online trading account
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Step 1
Go to www.stockcharts.com and select 3 technical charts: RSI, EMA and MACD. For this specific example, we will take GE stock for illustration purpose. Cut paste
http://stockcharts.com/h-sc/ui?s=GE&p=D&yr=0&mn=7&dy=0&id=p48913501859
for other stock, change GE to other stock symbol -
Step 2
For a BUY to occur make sure all three criteria are fullfilled. That is RSI over 50, EMA(5)(blue line) is over EMA (20) (red line), and MACD is positive (black line over red line). Don't take any action if all three criteria are not met. In this example event 'A'& 'C' signals a BUY as all three criteria are met.
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Step 3
For a SELL it is the reverse. Make sure all three criteria are fulfilled. That is RSI under 50, EMA(5)(blue line) is under EMA (20) (red line) and MACD is negative (black line under red line). Don't take any action if all three criteria are not met. In this example event 'B'& 'D' signals a SELL. You can gain if stock goes down, by shorting the stock. That is, sell first even before owning it
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Step 4
Notice event 'E'. Even though MACD is in positive (black line just crossed red line), it is still not supported by EMA and RSI as they have not crossed criteria lines. So it is still a 'no action' yet. So if you are short (sold before owing it), hang on to it until the three indicators meet the BUY criteria.
