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Derek A. Barrett
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I buy established, good companies with strong management, solid balance sheets, free cash flow, growing earnings, and increasing dividends. This is a long strategy, which buys value situations, combining the fundamentals of Growth at a Reasonable Price, with Dividend Growth Investing. This style... More
My blog:
Fully Informed by Teddi Knight
My book:
Generate Thousands by Dr. Samir Elias
  • Using Thinkorswim Scan Tool With The 10-20-30 Strategy 6 comments
    Mar 8, 2014 5:18 PM

    Overview

    The 10-20-30 averages strategy, developed by Dr. Samir Elias, and practiced by Teddi Knight, is a great method for find Put Selling options candidates. Being a lead indicator, the strategy is a great tool for finding stocks which may have hit a technical bottom, which are often ready for a reversal.

    I personally have found this indicator easy to use, and combine it with RSI, Chaikin Money Flow [CMF], MACD, and Volume as a simple and easy to use system.

    Note: As a conservative investor, I throw out the "20 EMA", part of the strategy, as that to me is more of a "get ready but don't do anything yet" indicator. I wait until the 10SMA actually does cross below the 30EMA before getting ready to take actions.

    Thinkorswim has a powerful Scan system for finding a list of candidates.

    Using the Tool

    1. Login to the thinkorswim desktop application and click the "Scan" tab

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    2. On the right side, click the X buttons to remove all the existing Filters.

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    3. Click the "Add Study Filter" button

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    4. In the "Study" drop down box, select "Custom…"

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    5. Click the "Edit" button

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    6. Select "Study" in the drop down box

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    7. Choose "SimpleMovingAvg" in the "Lookup a study…" drop down box.

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    8. Now choose the following values in the Edit Condition box:

    Left column - under "Inputs", "length" should be 10
    Middle column - set to "crosses below"
    Right column -- drop down box, choose "Study", then Choose "MovAvgExponential"
    Right column - under "Inputs", "length" should be 30

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    9. Click Save

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    10. Your screen should now look like the following rule. Go ahead and click OK to save the filter.

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    11. Notice the Study you just created is now a part of your Scan

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    12. Now click the Scan button to populate your list!

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    13. The Search Results will now present all known stocks that meet your filter condition.

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    14. You can add additional Filters as well to your Scan, such as Volume indicators, or Corporate Actions like Earnings or Dividends.

    NOTE: If you would like to add a study you don't see on the initial menu (like RSI), check the "Custom…" menu at the bottom for more choices.

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    15. Make sure to save your Scan so you can use it later without having to redo all the steps above. Go to the Scan Query Menu and "Save scan query".

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    16. Later, you can load the Scan query from the same menu. Chose "Load scan query", "Personal", and then find your Previous Scan.

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    17. Finally, as a way to "audit" our results, I used the actual technical chart from Stockcharts.com, and sure enough, as indicated by the purple highlighted area on the right hand side of the graph, you can see where the 10SMA has indeed crossed the 30EMA.

    (click to enlarge)

    Themes: Tools
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Comments (6)
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  • avelinodesousa
    , contributor
    Comment (1) | Send Message
     
    Hi Derek.

     

    I set up scans for both "above" and "below" crossover.

     

    Also I have been making some trades using the B band alerts you helped me set up.

     

    Thanks and best wishes

     

    Avelino
    10 Mar, 06:27 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Hi avelinodesousa !

     

    Thanks for the great comment and very happy that it has helped out ! I like the 10-20-30 and Bollinger Bands trades as they are simple for me to follow and not too complicated.
    10 Mar, 07:53 PM Reply Like
  • Todd Renfro
    , contributor
    Comments (945) | Send Message
     
    Derek,

     

    Strange, Dr. Ellias' book has been coming up a lot lately for me. I read his book a few years ago, and suddenly people are commenting to my review on amazon.

     

    Anyways, I'll have to give this a whirl on thinkorswim...although to be honest, i didn't find my results with his method were greater than chance in the past.

     

    V/R
    TR
    12 Mar, 02:05 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Todd thanks for the comments! I've personally found the 10-20-30 works well for big blue chips (dividend growers mostly). I don't use it on the quick moving stocks, like the .com tech stocks he does in his examples (think those were a product of the times). For me, the blue chips are a lot more forgiving and offer a much greater margin of safety in case the trade goes against me, I have so many options to adjust, or if I choose to take assignment it's not so scary. Now taking assignment of a speculative biotech is a scary situation !
    12 Mar, 01:06 PM Reply Like
  • Rhema trader
    , contributor
    Comment (1) | Send Message
     
    What does this indicator help with Derek.Please explain.
    28 Jun, 09:27 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » It's a leading indicator which could mark a technical bottom for the stock. I always use it in combination with other indicators but this is one I send alerts to myself on.

     

    So (ideally), when the indicator hits, it might be a good place to go long the stock, or sell a put on it.
    28 Jun, 10:40 PM Reply Like
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