Monday, September 28, 2009

Using systemic trading models as an aid in discretionary trading

  • this summer's rally has seen 4 swing lows...they are highlighted on the above 'BTD Index' NDX chart with white circles: 6/23, 7/8, 8/17 and 9/2...
  • the last 3 swing lows, occurred on the same day or on the following day that the NDX closed below its lower bollinger band (yellow bar highlighting an NDX close below the lower red line)...this area around the level of the lower bollinger band has acted as support, and marked the general area of the swing low...
  • last friday's low was just above the lower bollinger band (lower red line), suggesting this 1690 area may be the general area of the current swing low for the NDX (NQ)...
  • while i did not add another NQ contract to my discretionary swing trade, i have been using the lower bollinger band level on the 'BTD Index''s NDX chart to help inform me of where a possible bottom for the NDX (NQ) may form...this potential swing bottom area has influenced the general levels where i will consider bidding for a 2nd and 3rd contract when building the size of my NQ discretionary swing trade...
  • i take the same view brett takes: systemic trading models can be useful inputs into the decision making process for the discretionary trader...
  • my overall trading plan contains both systemic and discretionary trading styles, and i believe i am a better trader for it...of course i still have a lot more to learn cognitively about both trading styles, as well as practicing to become more emotionally comfortable with the uncertainty of each trades outcome, but using the tools and bias's of both styles has made me a better trader...
Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

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