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[QUOTE]Originally posted by wdcisco: [QB] First the credit of this concept goes to freto38 off ihub.... "do elaborate on the concept of a pincher play?" No prob...I thought it was widely known..Let me try to explain : A pincher occures when the Percentage Price Oscillator (PPO)and the Average Directional Index (ADX)(ppo/adx) curve in and pinch; hence the name "pincher play" ;) A key here is the Relative Strength Index (RSI) always look for a 30/30 cross and the 200ma crossover...BUY SIGNAL! I am still learing about the pincher as well...so heres is some stuff about it off ihub. REMEMBER - Always look for confirmations...don't just jump in with a couple of grand and get left holding the bag!!!!!!!!! Check for Volume, Volume, Volume, ALWAYS your RSI, and never trade with more than you can afford to lose!!!! I don't know how many times I have seen people put all of their eggs in one basket and LOSE IT ALL!!! INCLUDING MYSELF! Paper trade them please, at least until you get the hang of it. That goes with any type of DAY, SWING, ETC ETC ETC Trading styles!!!!!!!! Ok, now that has been covered, there are THREE key indicators for this set up. The PPO, ADX, and RSI (using periods of 2 and 5). Before you even think about anything else, the first thing you need is "the pinch", which is when the PPO Line and ADX Line (both labeled in chart beneath) pinch together. When this occurs (purple circle on chart), you start to look for an entry point... Option 1 is for the traders with higher risk tolerances... meaning, they get "the pinch" but have no other 'confirmers'... this option is represented by the vertical yellow line below. Option 2 is for traders who don't want to "walk the line" as much... this option is represented by the vertical pink line... as can be seen, this option requires the RSI(5) and RSI(2) to both have crossed 30 (in this example, the RSI(2) had already crossed, so we were just waiting for the RSI(5) to cross 30)...as can be seen below, the RSI(5) breaks 30 and its TIME TO BUY!! Even if you would have waited to the last possible second at bought at Option 2's closing price ($6.77), you would have had the potential to make 36%... ** IMPORTANT ** These set-ups have heavy resistance at the Parabolic SAR and if they break the Parabolic SAR they usually get knocked down by the 20MA. In other words, look to take some profits around the 20MA. Important Steps For Trading Pinchers 1.Study the ADX PPO pincher charts. 2. Find the major MA's 20,50,100,200 3. Find the RSI's and aways look for a 30/30 cross on these. It's a buy signal "for a ADX PPO pincher" to confirm this is a buy signal, look on a 15minute chart with a 200MA. It must cross the 200MA, so the 30/30 rsi's cross with conjuntion of a 15min. 200MA cross is the pincher buy! NOTE: on subs below a penny, wait for Parabolic SAR or 20d break an hold as a buy signal..if they back off the Parabolic SAR sell note: if the RSI14 breaks 50 the PPS will more than likly go higher! 4. Find the Parabolic SAR. Iis it below or above the 20MA? If the Parabolic SAR is below the 20MA, buy as it crosses the Parabolic SAR and if it does not break and hold the 20MA, sell. If they back off the Parabolic SAR sell 5.It holds the 20MA, then its a turn chart and the 50MA will be up next. Sell if it backs off the 50MA. 6.If it holds the 50MA It will begin an uptrend most likely then your next resistance point is the 100MA. If it backs off 100MA sell. 7.If it holds the 100MA, up next is the 200MA. Sell if it backs off the 200MA. 8. If it holds the 200MA DO NOT let it fall below the 20MA and take some profit. 9. Never buy back until it breaks an holds 20MA 10. RSI14 break of 70 to 90 is a sell by ajcmstocks: [IMG]http://i176.photobucket.com/albums/w197/ajcmstocks/snapshot-15.png?t=1188855674[/IMG] Let me know what you guys think? [/QB][/QUOTE]
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