IndexSwing's short-term trend following

Discussion in 'Journals' started by IndexSwing, Mar 9, 2009.

  1. Today I made a deposit into my Scottrade account in the amount of $1,000.00 which I will use to trade $NDX options.

    Starting Balance: $1021.01

    Methodology:
    I will be using the prophet.net Java Chart of $NDX set to 5 days, 5 min, with MACD. I will enter long calls under the following conditions: The MACD has crossed above the zero line ( 12 EMA has crossed above 26 EMA) and price has broken out to the upside. I will enter long puts when the MACD has crossed below the zero line (12 EMA has crossed below 26 EMA) and price has broken out to the downside. Essentially I am looking for situations in which there is a great deal of momentum such that the trend in place will continue. Where I decide to take a profit is discretionary. If the trend fizzles out and the MACD crosses zero in the opposite direction of my trade I must immediately exit or move my stop to just below the current price.

    Additional Rules: 1) No overnight holds. 2) A physical stop order must always be in place although the stop price may be adjusted such that I stay in the position as long as the MACD remains on the "right" side of zero.
     
  2. Just waiting for funds to become available between 12-1 Eastern, at which time I plan to buy a call.
     
  3. Change of Plans: BTO 1 nduoa put @$8.50.
     
  4. STC @ $9 Balance: $1054.51
     
  5. Today was an excellent example of where the system I described works well. If funds were available I would have entered a call within the first half hour. As I sat watching the market and waiting for my funds to come online I expected to see a pull back that would provide a good opportunity for me to enter. Because the market just kept marching up without any meaningful pullback I felt uneasy about entering a call. When the market began to move down off of a higher high it looked like a classic temp top/start of a down move. So I abandoned my system and entered a put. I was expecting a larger move down, but luckily as the market began back up, I recognized that that was it and bailed out without taking a loss.
     
  6. BTO 1 nduok put @ $7.40
     
  7. STC @ $8.80 Balance: $1179.01
     
  8. BTO 1 nduoi put @$7.40
     
  9. STC @ $3.90 Balance: $812.51

    Complete violation of my sytem and trading rules. If I had followed my system I would have bought a call and done quite well.
     
  10. BTO 1 nduol put @$6.67
     
    #10     Mar 13, 2009