Portfolio

Active Portfolio. Weekly value table and graph

1. Strategy

News:

Initially, our strategy was to use news trading in order to determine a short-term trend in a stocks price. After our initial investments in LNKD, TZOO, DMND, and NUGT plummeted, we quickly realized market news wasn’t enough. We decided to modify our strategy and implement technical analysis indicators to measure momentum, trend, and reversals.

Technical Analysis: We decided to modify our strategy and implement technical analysis indicators to measure momentum, trend, and reversals. Our goal was to find short-term trending stocks that we could make quick profits off of.

The Relative Strength Index (RSI) is a momentum indicator used to measure the internal strength of an individual stock through comparing the level of recent gains to losses. We applied this to our strategy because it signaled when to buy or sell and forecasted possible reversals.

The Exponential Moving Average Indicator illustrates the average price value over a certain period of time and places more weight on recent prices. It allowed us to identify and follow trends in the market through crossovers between two moving averages and crosses through price.

Moving Average Convergence Divergence (MACD): This is a momentum indicator and can be computed by taking the 26 day EMA and subtracting it from the 12 day EMA. If the MACD is above zero it means the short-term average is above the long-term average. The signal line is the 9 day EMA and serves as a trigger for buy and sell indicators. We used the MACD to spot trends and reversals—an upward cross above the signal line was a good buy indicator.

Target profit:

In order to maximize profits, we set a sell limit to exit our position if the stock’s price appreciated 15%. This ensured us that if a trend was successful, we would be able to profit off of it even if we are unable to track the stock that day.

Stop Loss: We set a stop loss at 5% of the stock’s price....