The Strat VS Technical Analysis with Dede Edwards 

Thu Jan 21, 2021, 02:04 pm | by Alexis Jurcak | No comments

This webinar’s guest features Dede Edwards, consultant turned expert trader. She began her journey in the mid 90’s while working at a local sheriff’s department. One of her co-workers brought in the Wall Street Journal and expressed to Dede he was looking at top stock picks. This caught Dede’s interest, so her and a friend pooled together $500 to see if they could make money trading. After this failed attempt, she continued her education and started her professional career as a consultant, one of her positions included one of the big 4 accounting firms. During her years working, she always found herself drifting back towards her passion for trading. She attended a seminar with Steve Nison, where she learned about candlestick patterns. A few years later, after being on medical leave, she decided she needed a new plan of action. Her trading career began again after finding Rob Smith’s virtual trading room. 

Overview of Dede’s Trading Strategy

Dede likes to trade on longer time frames to see broadening formations in order to catch reversals. Due to her background in technical trading, she had to do some adjusting while getting started on The Strat route. The Strat is a lot about studying stocks and patterns, and less about the usage of indicators. Her suggestion is to start with a clean chart, look at videos, and price actions on stocks you’re following and see if you can identify any moves with inside bars or outside bars and broadening formations. 

Average Daily Range: 

An important indicator Dede uses while trading is average daily range. These are plots on your software that calculates the difference between the high of the day, the low of the day, averaged over a period of time. She uses the script CD_AVerage Daily Range by cristian.d. The benefit of using this is it helps define the momentum of the trade. 

She also uses a CCI Index, which can be found on any charting platform. This indicator is important because it tells you the momentum of that trade for each candle. This unbound indicator is great to use because it’s dependent on the strength of the trade, unlike other indicators. She also uses the CCI Index as an entry/exit signal on top of using it to determine the momentum and trend. 

Drawing Trend Lines: 

When she starts her days she likes to draw her trends on four hour charts. She starts on the high of the day to the middle of the day. To see how far that stock is going to go, she draws her trend line from the top of the middle of the day to the high of the previous day. The yellow dots represent the top of the range for the new day and the white dots represent the bottom of the new daily range. If a stock trades below those white dots and she’s given confirmation from her CCI she’s shorting the stock.

Time Frames

Time frames can be a very important part of trading and also a very confusing aspect for many of those starting off. A viewer asked what Dede’s position was on what is the “correct” time frame to use when using The Strat trading strategy. She says sometimes it depends on your risk tolerance. As a beginner it may be hard to look for signals on smaller time frames and then expecting those moves to happen at larger time frames. It also depends on how your ability to sit and monitor your charts throughout the day. But, no matter the time frame, also be prepared with an exit strategy and know your risk management.

Four Hour Reversal Strategy: 

Dede uses a 3-2-1 strategy and waits to see if there’s a reversal as her Strat trading strategy. She says sometimes it’s hard to get into reversals mid-day when the previous day was very strong, so be cautious of that. When she’s viewing her patterns on the five minute bar the CCI comes as very handy too. When looking at the CCI she waits to see if it’ll go below -100 to determine her entry. The CCI is important to look at because it’s needed to see the momentum change. She waits for the flip on the four hour and looks at the price action on the hour to come inside the CCI. 

How Many Stocks Should be on a Watchlist

Dede has two different watchlists, a go-to list and a swing list. Her go-to list has around 15-20 stocks and they’re rotated if some stocks are out of favor. On her swing list she has around 50-60 stocks. Not all of these are scanned by her, but instead, are scanned using Trend Spider Her scanning process begins early by looking at multiple different news sources, including Benzinga, to see what’s moving. 

When looking at the different news sources she identifies gappers and futures and then scans. She also suggests understanding various time frames to see if the trade is good to be in as well as seeing if broadening formations are well defined. 

Final Thoughts

Dede represents yet another perfect example of how many traders began their journey with different career paths in mind. Many traders find themselves using trading as a second source of income or some type of hobby, however, the more they trade the more they realize they can make this hobby into a career. Self-teaching yourself to become a trader is something anyone can do if they have the drive to do so.

Using platforms like Benzinga Pro can help you further succeed in your trading career, try it for free today, and see where it can take you in your trading journey.

Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. Benzinga Pro is for informational purposes and should not be viewed as recommendations. Benzinga Pro will never tell you whether to buy or sell a stock. It will only inform your trading decisions. You can find our full disclaimer located here.