As per the TQQQ strat mentioned on prior ideas , today we closed with a solid entry signal and I entered long in the final 10 minutes of the day at:
Entry $132.91
Stop at 127.77
Initial profit target set at 2R or $144.36.
//////// Strategy Note/Loophole to reduce risk ////////////
For this strategy , I take signals only on the close or within final 10 minutes. The main reason for this is to filter bad signals where we take back the ema's at some point but ultimately end up closing below the top ema, which is not a valid signal and we dont want too enter to early and be caught in this kind of situation.
However , a problem with waiting for the close , sometimes , is that we might take back the ema's early in the day and follow through with a 6% move up (for example). Since the strategy requires the close to enter , you would have missed out on that initial 6% move .... Then, when we close WAY up , you will have a signal to get long but now since the trigger day had such a nice move up, your stop set under the lowest ema may be risking too much, even though the strategy requires it ...
So, that's why I have added a pre-emptive day trade tactic to it. A day trade allows you to play the rally day and hopefully gain some early traction on profits. But, if you do enter it as swing, when you place your stop under the lowest ema or candle if applicable, you now have reduced your risk since you have some early realized profit to cushion you from your day trade .
Today that is exactly what I did prior to entering as a swing trade at eod which provided a profit of 1.65% . We opened above the ema's so that right at open gave us permission to play early as a day trade and I entered around 6:40 with a 0.5% stop. I scaled out of half at 1.5R and used a trailing stop on the balance on 15M chart which stopped me out of balance a bit later in the day .
///////// Trade Setup and plan going forward ////////////
The stop loss either gets placed under the lowest ema , or sometimes under the day's candle but only if the candle is lower than the lowest of the two ema's and it is your preference ( its a personal choice but I don't like to risk more than 5% on these trades though) The stop loss I set on this is VS the lowest ema) Stop loss is pre set and followed without question . Also , If we do get stopped out we wait for the next opportunity and we take it without hesitation.
If successful , I will scale out of half the order at 2R which in this case is $ 144.36, I have preset a sell limit order for this too so it will not be missed .
After I scale out of half, the next move is to use 21 EMA as a trailing stop on the balance .Personally, I like to have hard set stops slightly below the ema but you can also usually wait for a decisive close below thee 21 as another version that I know a fair bit of traders like to adopt .
*Note the EMA's used here are 10 and 21 .
///////////// Additional Considerations //////////////
That's pretty much it :) but I have some final points .
I like to scale out at 2R because based on historical testing , if/when there is a sideways and choppy year in the markets this tends to help us tend to get some breakeven results instead of losing liquidity 2015 was a great example of that when I back tested . I really try to keep the stops as tight as possibly while respecting the risk management rules because after that initial scale out we have a risk free trade which is important for my personal style . When the market is in a longer term sideways trend , if you still want to get active the tighter the stops the better because that will put your 2R sell point closer which of course creates a less risky trade for you ..
Entry signals are when the market takes back the 10 and 21 emas after losing them in a pullback . The market needs to take back both ema's to validate a long signal but it can do so through out multiple trading days . Some days, the market will take back both moving averages in one move , these are the days when we can base our stop on low of candle instead of the lower ema if we wish.
Entry $132.91
Stop at 127.77
Initial profit target set at 2R or $144.36.
//////// Strategy Note/Loophole to reduce risk ////////////
For this strategy , I take signals only on the close or within final 10 minutes. The main reason for this is to filter bad signals where we take back the ema's at some point but ultimately end up closing below the top ema, which is not a valid signal and we dont want too enter to early and be caught in this kind of situation.
However , a problem with waiting for the close , sometimes , is that we might take back the ema's early in the day and follow through with a 6% move up (for example). Since the strategy requires the close to enter , you would have missed out on that initial 6% move .... Then, when we close WAY up , you will have a signal to get long but now since the trigger day had such a nice move up, your stop set under the lowest ema may be risking too much, even though the strategy requires it ...
So, that's why I have added a pre-emptive day trade tactic to it. A day trade allows you to play the rally day and hopefully gain some early traction on profits. But, if you do enter it as swing, when you place your stop under the lowest ema or candle if applicable, you now have reduced your risk since you have some early realized profit to cushion you from your day trade .
Today that is exactly what I did prior to entering as a swing trade at eod which provided a profit of 1.65% . We opened above the ema's so that right at open gave us permission to play early as a day trade and I entered around 6:40 with a 0.5% stop. I scaled out of half at 1.5R and used a trailing stop on the balance on 15M chart which stopped me out of balance a bit later in the day .
///////// Trade Setup and plan going forward ////////////
The stop loss either gets placed under the lowest ema , or sometimes under the day's candle but only if the candle is lower than the lowest of the two ema's and it is your preference ( its a personal choice but I don't like to risk more than 5% on these trades though) The stop loss I set on this is VS the lowest ema) Stop loss is pre set and followed without question . Also , If we do get stopped out we wait for the next opportunity and we take it without hesitation.
If successful , I will scale out of half the order at 2R which in this case is $ 144.36, I have preset a sell limit order for this too so it will not be missed .
After I scale out of half, the next move is to use 21 EMA as a trailing stop on the balance .Personally, I like to have hard set stops slightly below the ema but you can also usually wait for a decisive close below thee 21 as another version that I know a fair bit of traders like to adopt .
*Note the EMA's used here are 10 and 21 .
///////////// Additional Considerations //////////////
That's pretty much it :) but I have some final points .
I like to scale out at 2R because based on historical testing , if/when there is a sideways and choppy year in the markets this tends to help us tend to get some breakeven results instead of losing liquidity 2015 was a great example of that when I back tested . I really try to keep the stops as tight as possibly while respecting the risk management rules because after that initial scale out we have a risk free trade which is important for my personal style . When the market is in a longer term sideways trend , if you still want to get active the tighter the stops the better because that will put your 2R sell point closer which of course creates a less risky trade for you ..
Entry signals are when the market takes back the 10 and 21 emas after losing them in a pullback . The market needs to take back both ema's to validate a long signal but it can do so through out multiple trading days . Some days, the market will take back both moving averages in one move , these are the days when we can base our stop on low of candle instead of the lower ema if we wish.
Comment:
Just want to note: We have a second signal right now that could be traded as we have crossed the 50SMA . I am already positioned for this trade but if I wanted to trade this I would initiate near close ( final 10 min of day ) and set a stop under todays candle . Really nice price action so far today btw..
Comment:
Have scaled out of half and updated stop loss on balance to a bit below the 21 Ema .
Comment:
Stop on balance moved to $135.45 vs ema
Comment:
stop adjusted 137.99
Trade active:
Just want to provide an update here .I like the look of the stop in it's current area and it would not be all that surprising to see a pullback as we challenge this area and so I have decided to leave some room to let the TQQQ make its next move and leave stop where it is , ideally I would like to see a pullback and higher low . Also, just want to add that I have noticed lots of negative sentiment on the direction of the market from quite a few participants, even Mark Minnervini is seemingly bearish. I am personally not concerned with this , Nov is historically one of the best months to be in SPY or QQQ and I would rather use statistical data over fear or "gut feeling" anyday . But that being said I love Mark M , guys a legend and usually is right . None the less , as I have said in prior ideas we don't need to know what will happen tomorrow to make $$ .
Comment:
stop raised to 147.61 , TQQQ still strong , nice moves, no sign of pullback so far ....
Comment:
stop raised to 155.21
Trade active:
Trying something a little different , ***this is not part of the primary strategy****, but I have taken a slightly smaller position of SQQQ as I am expecting/guessing we might have a shorter term move down . Some market leaders are also behaving poorly such as ASAN, NET , AFRM , and others . Looks like the leaders perhaps are forewarning of weakness in overall market , Those leaders noted are have all lost their 21 ema's in a big push down today which is a warning sign for me . So , if my guess is right and we do indeed see TQQQ make a move down , I will still make some profit through my SQQQ shares , but if I am wrong and the market continues up , I will still be hedged and will not be losing anything . The SQQQ position is smaller than the TQQQ position too so if TQQQ continues up I will be able to sell SQQQ and still be profitable , theoretically :) . This is a new twist on the strategy that still needs to be developed though . If it works well , I will probably work at writing it in for the future .
Comment:
Sold all the SQQQ a few min back for a 6.24% gain . May revisit if we lose 21 EMA on TQQQ, but all out for now .
Trade closed manually:
Sold the balance today 5 minutes before the close for a 19.47% gain on balance ( that puts overall result at +13.48 since we scaled out at 2R)
So that's a wrap . Hope you enjoyed the strategy , this was a great example but its often not as smooth as this trade went , expect to be wrong often if you decided to adopt a similar trading style. I almost would have preferred to have gotten stopped out a few times for this example so that people considering the approach could see the whole picture and not just a win . I think I will indeed add SQQQ to the strategy and its unrelated but I scaled into SQQQ twice today , once when we lost the 21 ema and once again on the weak close . The stop is below todays SQQQ candle for that . Very small starter positions too , not risking a lot . Best of luck on the trades , over and out for TQQQ publications as of now ;)
So that's a wrap . Hope you enjoyed the strategy , this was a great example but its often not as smooth as this trade went , expect to be wrong often if you decided to adopt a similar trading style. I almost would have preferred to have gotten stopped out a few times for this example so that people considering the approach could see the whole picture and not just a win . I think I will indeed add SQQQ to the strategy and its unrelated but I scaled into SQQQ twice today , once when we lost the 21 ema and once again on the weak close . The stop is below todays SQQQ candle for that . Very small starter positions too , not risking a lot . Best of luck on the trades , over and out for TQQQ publications as of now ;)
艾力克~