Im just about to finish school and am trying to create a simple system to trade medium term. At the moment i am looking at using 3 exponential averages, a 5 day, a 20 day and a 120 day. I would use the 120 day to determine the overall direction of the market and when it is heading up i would use the 5 day line crossing upwards over the 20 day line as a buy signal. I would use a stop loss of about $200 and use a trailing stop loss of about 8% to determine when to exit a position. To keep the system simple and not have to worry about liquidity i would trade on the larger stocks only. Any profit i gain would be pyramided into creating more capitol to trade.
How does this plan sound as a starting point to trading? Are there any obvious flaws that i cant see?