Well known Profitable Strategy "re-issued", user not NUT (yet!)

Discussion in 'Strategy Development' started by miniFORTUNE, Feb 17, 2007.

  1. Here it is. Nothing to gain, nothing to lose. Hope it will help those looking for constructive ideas and entertain those that trash threads. No need to prove that this strategy is profitable nor that I’m not NUT (not yet!).

    • STUDY: MACD (12,26,9) A venerable and proven study.
    It gives 3 lines: 0 line, fast moving line and slow moving line (the average “9”).
    • INSTRUMENTS: For LONG positions: Equities, a selected list, like the Dow 30 or 25 most actives etc.. For SHORTS: ETF’s like SPY, DIA, QQQQ, or better yet the new ones that mirror the opposite : Long SDS instead of shorting SPY. Long DOG instead of short DIA. Long QID or the ultra PSQ instead of shorting QQQQ or a basket of active stocks that do not pay dividends . You do not want to short equities that pay dividends, it is a hassle. The overall market trends up or down and you should be willing to go long or short. With a small basket of equities you can review them daily in few minutes. No need for tips, MAD MONEY, or pouring into financial statements. Dow stocks for example are solid companies, only that the price of their stocks move up or down.
    • CAPITAL: At least $30,000.00 to make it worthwhile and avoid the Professional Day Trader rule.
    • BROKERAGE HOUSE: One that charges $ 1 per 100 shares since most of the time you will be trading one, two or 3 hundreds shares. (No endorsement but three well known: Trade Station, Interactive Brokers, MBTrading)
    • HORIZON: Days to weeks for holding periods. Frees you from staring at your laptop the whole day.
    • LONG ENTRY: When MACD fast moving line crosses above slow moving line (average) and BOTH ARE ABOVE THE ZERO LINE. Applies to equities and SDS, DOG, QID, PSQ. If fast crossed slow already below the zero line go Long when fast line crosses above the zero line .
    • LONG EXIT: REAL STOP with the Brokerage House (no mental stops) or reverse cross of the fast MACD line below the slow one, whichever occurs first. The stop is the lowest low of the last 3 days.
    • SHORT ENTRY: When MACD fast moving line crosses below slow moving line (average) and BOTH ARE BELOW THE ZERO LINE. If fast crossed slow already above the zero line go Short when fast line crosses below the zero line.

    • SHORT EXIT: REAL STOP or reverse cross of the fast MACD line above the slow one, whichever occurs first. The stop is the highest high of the last 3 days.

    In essence the idea is to hold long positions when the MACD fast line is above the slow moving line and both are above the zero line, and hold short positions when the MACD fast line is below the slow moving line and both are below the zero line. Losses are very common but small. Gains are very common too, but some times very substantial. That is why I use the exit moving stop rather than target exits. Shorts move nicely too. You should have seen QQQ when moved from over 120 to less than 19. (on those days it only had 3Q’s) Obviously not in one trade, many of course. But we had the Yahoos, Double clicks, Rambus etc.
    By the way, as of this posting Friday Feb 16 they are 13 Dow stocks that meet the LONG criteria. MCD, HON, GM (Yes! GM), HPQ, CAT, DD, INTC, BA, AXP, HD, PG AA, VZ.

    Best!
    mF
     
  2. I wouldn't call scratching out $100,000 after sitting infront of the screen all teary eyed for the whole day... a "PROFITABLE STRATEGY"

    You guys are a JOKE.
     
  3. Interesting strat. Thanks for the thread.

    Ripley. Who said anything about losing 100,000$?
     
  4. its called OPPORTUNITY COST of your own LIFE.

    Have you heard about that one?
     
  5. nope. im going to go watch t.v now.
     
  6. That was gold...