The stock pickers heaven are of course the U.S. markets. But is it necessary to pick stocks at all? Instead of monitoring the stock market for interesting buying chances to pop up, one could just follow a handful of stocks. A trading signal is then not a zone with current or local short-term pressure that allows for a trading style with a stop loss. Trading would be done by switching between long and short holdings of a given stock.
These switches require very different trading signals. While the former trading method waits for some positive score and has a limit that should be reached before a trade is initiated, the switching system would be much more trigger-sensitive and therefore reverse earlier a position.
In its extreme form there could be an oscillator system that reverses from long to short or vice versa on the smallest dip crossing the zero line. Such a system would need an additional time lag causing mechanism that ensures that there is a hysteresis. Otherwise the oscillator would jitter near the zero line killing the trader with the slippage or by zigzagging him who wanted to be a swing trader or trend follower.
Important is the right preselection of stocks. Here fit the ETFs favorably into the trading puzzle. They are enriching the American stock markets by many independently moving instruments. Mixing them into the blend of selected stocks will assure a technical diversification that should produce gains more steadily.
At the end the good old question is still unanswered. How to get this zero-line-adverse-oscillator that will follow stocks with smooth swings and produce during any upturn and downturn on average a fine gain?
The straight answer would be of course to use a software system with backtesting capabilities and then find the stocks that “worked”. Repeat this procedure regularly and you have always a set of fresh monster waves that you can ride.
Another approach would be to simply produce ordinary trading signals and on the occurrence of a new one just switch out of another position that looks weak to you, somehow. It doesn’t matter that the selling signal for the wave that is slowly running down the shore is the buying signal of fresh crest approaching on the horizon.
In fact it can be an elegant solution to the problem that the buying or opening signal is almost always the better and stronger one. E.g. selling because your stop got hit is essentially no signal. It just assures that you limit your losses or that you filter out trends that stopped to be a trend in the moment you bought them.