Sunday, April 11, 2010

The system

I wanted to answer this for those who read my blog and to put it on paper what my trading system is.  What am I guided by?   I will talk  about FAS  here but I use the same for TNA and occasionally BGU. 
Overarching rules are:
1. I only trade ETFS mostly FAS and TNA.  2.  I only have one position open at any time  3.  Never enter an order to buy without predetermined (e.g. DMRM)  stop loss.
The trades:
1.  DOMA 77 on the hourly:  When price after being in a down for a while (time wise)  crosses this DOMA line I buy.  This is my longer term trade and I sell when I get a cross on the down side.  I have been letting these trades stay open for while 6-10 weeks.  I sell these after a very good profit say 25% or more. The conditional stop on this is DMRM on spx  which is 1.9 - 2%.
2.  Doma 77 on the 15 min chart: When price after being in a down trend for a while , crosses this line on a upward move  I buy.  This is my short term trade.  I will sell these if I get a DMRM of 3.2%  or a DOMA cross on the down side.
3.  DMRM :I buy when the DMRM is met which is at 3.2% for FAS.  ( price moves 3.2% from the the recent low) The buy is a a stop buy progressive 3.2% good till canceled. This is usually in conjunction with (2).  I will do (2) or (3) rarely (2) and (3).  I sell when I see a little profit or DMRM or 15 min DOMA cross.
4. Envelopes:  I buy when price hits the very bottom of envelope.  Hoping to catch the exactly low.  This is high risk and when it is hit precisely it makes me feel like a million. Stop is very tight about 1.5% below the line. 
5.  Dino's KOD:  I trade this religiously and every chance I get.  When FAS establishes the low for the day within 5 minutes early in the morning  and irrespective if it closes positive or negative for the day I buy at close and sell within one  to 7 days.  It is a high probability trade.  stop is set to starting days low or DMRM.
I do not trade all these simultaneously all the time.  (1) is on its own track and Only one of 2,3,4 is active at any given time. (5) is my pet so I trade it almost always.  I gave a matrix for DMRM a few days ago.  I have mentioned KOD a number of times and shown you the results.  The 60 min chart shows we have only traded 3 times this year.   System that  is presented without showing exact results is just an theoretical exercise.  After all I am not here to get a Phd or win a fictitious money contest.  I am still bullish.  The market is showing some signs of weakness.  The moving avg line needs to get very close to actual price.   BUT I will wait.  I short nothing before its time.  .   

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