Many investors use the Short Moving Average Line (SMA) and Long Moving Average Line (LMA) as trading signals. Buys are indicated when the SMA crosses above the LMA and the position is held until the lines cross. Stock Filter will identify crosses of the SMA and LMA lines.

This strategy is based on the premise that once a trend has been established, it continues until it is broken. In a trending market, this strategy can be very rewarding. Consider the following chart:

A buy signal is triggered at point X and held until the SMA crosses the LMA from above (or a short sell is triggered). The next buy signal is triggered at point Z.

The settings for this query (and explanation of logic) are:

Volume Tab:

Number of shares traded > 200000 Used to eliminate thinly traded stocks. You can change this setting to match the exchange. Toronto exchange (TSE) may be lowered to 50000

Liquidity Tab:

Trading Activity 90%  Lookback Period 40 Days It's a good idea to use this setting in your queries, as it eliminates stocks that are not frequently traded. Use this setting if searching OTCBB and CDNX exchanges, as many of the stocks do not trade regularly.

Moving Average Tab:

Short Moving Average (SMA) 10 Days Long Moving Average (LMA) 30 Days SMA Crossover From BELOW LMA Short and Long term averages can be changed to suit your needs. Shorter time periods are more sensitive to price changes, but may lead to more whipsaws. Moving average lines that are too long may cause greater delays and reduce potential profits. Turn "On" SMA crossover from BELOW to search for buying opportunities, select SMA Crossover from ABOVE to search for selling opportunities.

Price Tab:

Close Price Greater  2.00 Can be changed to suit your portfolio level and trading style. During the learning and testing phase, it is a good idea not to be too restrictive so you can determine how the patterns develop.