Sunday, March 26, 2006

Trade setup for NQ


I'm using MAC-Daddy and MA crossovers to help guide me in the right direction, but I will be entering trades off of price channel breaks, making me a breakout range trader. This is the only strategy that I see has the highest probability of capturing the move before its over because MACD and MA crossovers only tell you what way the index has turned after the fact, in which case the majority of the move has already occured, unless your lucky and its a volatile day in which the trend continues in one direction without getting choppy.Here is an example chart with entry points, the exit points are done with trailing stops. The NQ trades in 0.50 increments, once I get 1 pt up, I'll set the stop below the current price by 0.5, assuring a 0.5 profit. My goal is 1-2 pts per price channel break, and this is attainable, beacuse most price channel breaks move at 0.5-4 pts per move. With price channel breaks I'm only catching 25-75% of the move, but it gets you in quicker then any other indicator will. Most indicators get you in when the price has already moved 75-90%. For less volatile trading a 2pt stop loss can be used. For volatile trading, like at the open or when bond markets are closing a 3pm EST, a 5pt stop loss may want to be used when the trade is placed.
free stock charts from ADVFN.COM

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