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RS Line and Recent High in thinkorswim

One very helpful gauge within MarketSmith is the RS Line, which represents a stock’s performance versus the S&P 500. As growth traders, we look for an upward trending RS Line.

In addition to MarketSmith, I also use thinkorswim, as I can write scripts to customize the charts, do back-testing and otherwise tinker with the UI. I thought it might be a nice addition to my workspace to show an RS Line indicator.

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Position Size Calculator for thinkorswim

A position size calculator can help you focus on fundamental and technical analysis without getting bogged down in repetitive tasks such as determining the number of shares to buy and the resulting position size. Let me explain.

Before I enter a trade, there are a few things I always know up front: how much I am willing to risk as a percent of my equity, where my original stop will be set, and my first target to consider taking profit (full or partial).

As far as a stop, based on my research of previous chart patterns as well as my own trades, I often find that a break of a moving average is a good place to consider a stop.

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How to Use Average Daily Dollar Volume

One way to reduce volatility in your portfolio is to focus on stocks that have an average daily dollar volume of at least $20 million.

In this post I’ll show you how to calculate the average daily dollar volume and how to sort lists in MarketSmith based on the 50-day average daily dollar volume.

There is nothing magical about $20 million. What’s important to take away is that stocks with a lower average daily dollar volumes may have more volatility and are typically thinly traded.

How you choose to determine what is a good baseline, depends on your investing style and risk tolerance.

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How Mark Minervini Uses His Trend Templates

One of the most viewed posts on this site is Custom Screens From Mark Minervini’s Trend Templates.

Given the current state of the market, this is an ideal time to revisit the trend templates. What follows are a few quotes from Mark Minervini on his thought process and how he incorporates the templates into his own research routine. The information is based on an interview with Mark that appeared in a previous edition of MarketSmith’s Q1 Stock Guide.

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What is a Vertical Violation?

Given the sharp correction in the Nasdaq over the past two days, this post seems timely…

Based on his own research and market analysis, Chris Gessel noticed something unique about a specific type of market correction. After further study with Justin Nielsen, they found that a significant break of the 50-day and/or 200-day moving averages often lead to a period of under performance, which could include a continued decline, an extended period of volatility and/or failed follow through days.

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