Thought I might add this here, as I'd put it up on another site...

Thought I might add this here, as I'd put it up on another site in response to a post from Dascore:

If trading, it is important to understand and backtest the indicators that you are using for the stock for entry, and also have some straightforward method for choosing an exit point as well.

One that backtests OK for me is to use the Twiggs Money Flow indicator from the Incredible Charts package.

The signal is simple - an upwards trend where the trendline crosses the "0" marker in the money flow and the exit is a rolling 20% stop loss (so stoploss is at 80% of what the highest price has been since purchasing).

Over the last two years this gives the following entries and exits accompanied with a full return if you stuck solidly to it:

Starting money $10,000
Entry date Entry price Highpoint Exit date Exit price Gain/loss Rolling over investment
10/11/2006 0.041 0.086 16/11/2006 0.069 67.80% $16,780.49
13/12/2006 0.13 0.148 20/12/2006 0.116 -10.77% $14,973.36
17/08/2007 0.102 0.153 10/09/2007 0.120 17.65% $17,615.72
17/10/2007 0.203 0.395 13/11/2007 0.316 55.67% $27,421.51
12/05/2008 0.175 0.265 26/05/2008 0.212 21.14% $33,219.20

See the graph below for the points of entry. Interestingly, the points are often broadly close to yours Dascore using a completely different method.

Judging by the current graph, if the uptrending Twiggs money flow keeps going, it will cross about next Tuesday as the entry signal.

I'm interested to see how it goes (I don't actively trade CVI).

Thanks for all your efforts Dascore - great reading.

One of the interesting things is to use different indicators to the rest of the traders - and this on its own can give you an edge - you are not then competing with a whole bunch of people for entry or exit of a stock based upon moving average cross overs or other normal indicators.

Cheers