Simple Idea

clipped from blogs.wsj.com A Simple Way to Beat Hedge Funds Like the 4×2 system. I’ve traded this system for years, and even though it has no fancy chaos theory, it works. Basically, if a stock falls in price for four days in a row (for instance, after a bad earnings report) chances are the selling is done. Within four days, everyone’s seen the news, everyone’s had a chance to sell and most of the sellers have probably already sold. Common sense: Buy then. As an exit, wait for two up days in a row. By then, people who bought low will be willing to take profits. Let’s see how this idea has performed historically. Rule of the 4×2 System: Buy: If a stock goes down for four days in a row, buy at the close of the fourth day. Sell: If a stock you own in the 4×2 system goes up for two days in a row, sell at the close of the second day.