All of my Strategy Trading models have a max holding period of 1-8 days except one, the 'BTD Index' model. This model generated an Entry signal for the EOD yesterday, Monday June 15th. The max holding period is 20 days. This model has the longest max holding period of any of my Strategy Models.
'BTD' stands for 'Buy The Dip'. The concept is simple: while in a Long Term uptrend, buy the Short Term dip. After a Short Term correction, the Longer Term trend should re-exert itself and send the tracking vehicle back up. This is the first Entry Signal generated for this model since December 2007.
What happens if the tracking vehicle (NDX: NASDAQ 100 Index) does not resume its Longer Term uptrend? Well that can suggest a Longer Term trend change (from up to sideways or from sideways to down). How do I protect myself from this scenario? A time based Stop. This is the only model that I have that does not use a price based stop. It's stop is based on Time, and if after 20 trading days the tracking vehicle has not reached my price target, then the Time Stop exits the trade. The price target is the Short Term moving average (middle red line in the charts above).
I believe the key to optimizing the potential profit from the overall concept is in how the 'Long Term' uptrend and the 'Short Term' dip are defined. This is one of the benefits of Systems Trading: all of the variables in the model are specifically defined. The Long Term variable is a longer term moving average (magenta line in the charts above), and the Short Term variable is the lower Standard Deviation band (lower red line on the charts above) derived from a Short Term moving average. The Short Term variable's standard deviation calculation is derived from a Bollinger Band.
The first chart is the current Entry Signal. The second chart shows numerous Entry and Exit Signals for this model from late 2007. I use the NASDAQ 100 (NDX) as the tracking vehicle, and the relevant e-mini future as the trading vehicle (NQU09).
Disclosure: Long the NQU09.
***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***
'BTD' stands for 'Buy The Dip'. The concept is simple: while in a Long Term uptrend, buy the Short Term dip. After a Short Term correction, the Longer Term trend should re-exert itself and send the tracking vehicle back up. This is the first Entry Signal generated for this model since December 2007.
What happens if the tracking vehicle (NDX: NASDAQ 100 Index) does not resume its Longer Term uptrend? Well that can suggest a Longer Term trend change (from up to sideways or from sideways to down). How do I protect myself from this scenario? A time based Stop. This is the only model that I have that does not use a price based stop. It's stop is based on Time, and if after 20 trading days the tracking vehicle has not reached my price target, then the Time Stop exits the trade. The price target is the Short Term moving average (middle red line in the charts above).
I believe the key to optimizing the potential profit from the overall concept is in how the 'Long Term' uptrend and the 'Short Term' dip are defined. This is one of the benefits of Systems Trading: all of the variables in the model are specifically defined. The Long Term variable is a longer term moving average (magenta line in the charts above), and the Short Term variable is the lower Standard Deviation band (lower red line on the charts above) derived from a Short Term moving average. The Short Term variable's standard deviation calculation is derived from a Bollinger Band.
The first chart is the current Entry Signal. The second chart shows numerous Entry and Exit Signals for this model from late 2007. I use the NASDAQ 100 (NDX) as the tracking vehicle, and the relevant e-mini future as the trading vehicle (NQU09).
Disclosure: Long the NQU09.
***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***
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