Our Rules for the Investools Method

Rules for the Investools Method

• Intermediate Term trend following system

• Investing stocks in a bullish environment

What to Buy/Technical Setup

-F/E score 3.25+ -Minimum 30 Day Average Volume: 500k
-A/D 60+ -Minimum Price 12.50
-Group Chart: Neutral to Bullish last 2-3 months -Price Pattern 2.5+

Buy Signal/When to Buy

-The Intermediate Term Posture on $SPX must be neutral or bullish or the green line on market forecast must be pointed upward.

-Definition of Trend: Slope of 30 day MA

Entry #1: 3 Green Arrows in up trending stock

Entry #2: 3 Green Arrows and volume surge (150% of 30 day average volume) in sideways trending stock or an uptrending stock with at least 2 points of horizontal price resistance no shorter than 5 days in duration.

-Don’t enter buy order if stock is more than 10% above:
1. the 30 MA on 3 green buy signal (Entry #1)
2. the support level identified on volume breakout from sideways trend. (Entry #2)
-Enter buy order after the close as a limit order at the closing price the day of the signal…. leave limit order in for 3 days if not filled
-Ignore earnings… buy when the signals come
-Enter only the day arrow or volume signals are present

Money Management/How much to buy

-Risk Max 2% of portfolio per trade- amount changed only as positions are closed.
-Max 25% of entire portfolio in any one trade
-Use Margin

When to sell:

Initial Stop: 3% below low of last 2 weeks or most recent higher low. If a volume breakout above resistance in a sideways trending stock is present, 3% below old resistance, new support level.
Trailing stop: Use 3 and 3 rule. When 3 red arrows appear, raise stop to 3% below lowest level in the creation of the 3 reds or recent support

-Use Hard Stops entered with broker as market orders. On gaps below assume fill at open.
-Ignore earnings for sell decisions
-Never Move stop lower

Discipline/Routine

Check list after market close for new signals
-Enter buy orders on buy signals
-Move stops up on and 3 and 3 signals on current holdings
-Total results for any closed positions
-Inform group of actions