J. Ross

One must never speculate based on assumptions. The use of technical analysis is absolutely necessary. I always use technical analysis to test my assumptions about the future possibilities in the stock market movements.
Investing without emotions is very difficult, therefore, it is important that you trade with a number of rules. To accomplice this, I use a number of techniques. One of the techniques is from Joe Ross.

Joe Ross and the Market Trend

The theories of Joe Ross are simple and very effective. The investor who is able to use the basis of his methods, will make profits. Joe Ross follows the trend. Anyone who starts trading will hear this slogan :‘the trend is your friend’ but how can you find this trend? To find a trend, we have to look at the lower-lows or higher-highs, both are important turnaround times. The following chart shows both. Ross called them the 1,2,3 High or the 1,2,3 Low.

Low and high of the trend and the Ross Hook

The trend follows ever higher or lower points in the trend. Joe Ross used the Bollinger bands and also the moving average of 20 and 9 days to find the trend. Both are important, the framework within a trend has been able to move. He calls these higher or lower points the Ross hooks (RH).

The following chart shows the trend from March 2009 to June 2009. The 20- Moving Average provides support for the course in this chart and therefore more and more waves arise. In June we saw the course come under the 20-Moving Average, a sign that the trend is to going to turn around.

Ross hook

Joe Ross and Moving Averages

The theory of Ross is also another way to make trading easy. The following chart shows various Moving Averages (MA). Each time the three lines (4, 9 and 20-MA) crosses, a sell or buying point has been made. The trend, as indicated below, shows us the sell or buy opportunities.

Use of the rolling average

Technical Analysis

Of course the ‘classic’ technical analysis also makes sense. The lines around the trend provide a good insight into the future. During the same period as in the preceding charts, you can see, once again the same chart, but from the point of view of the traditional technical analysis.

Trendlines and technical analysis