1) Trading procedure
1.1) Define trend using this procedure
1.2) Define trade risk using this procedure
2) Define number of contracts traded
This program trades up to 5 contracts with the trend up or down using “option collars” that define risk on every trade and for the duration of every trading period.
- Up to 2 short-term positions, trade duration 2 to 10 days
- Up to 2 medium-term, trade duration 11-29 days
- 1 long-term, trade duration 30 to 90 days
- Total margin requirement is less than $15,000 USD or major currency equivalent as all positions are fully hedged.
2.1) Trade duration and number of contracts traded are determined by the opinion For example a weak trend would justify having 1-2 short-term positions, intermediate strength +1-2 additional medium-term positions, strong +1 for a long-term, total 5, all are collared, all have defined risk.
2.2) And relative strength increasing add positions, decreasing lighten up.
3) Profit objectives/risk levels are dependent on the trade duration,
Short term = 2 to 10 days
Medium term = 11 to 29 days
Long term = 30 to 90 days
And corresponding support -resistance levels and turning points
3) Trading parameters for short, medium and long-term positions.
3.1) Long-term trend, is the monthly price action above or below the EMA9 linked here? above = buy, below = sell.
Trade duration 30 to 90 days
In this example price action is above the EMA9 using monthly price action, the long term trend is higher but deteriorating, long term, long positions would be permitted if confirmed buy the overall average and long-term indicators linked below.
Does the overall average and long-term technical opinion linked here agree with the EMA9?
In the example the EMA9 was a buy, indicators a sell.
If the EMA9, overall average and long-term indicators all agree long term trades of 30 to 90 days in duration are permitted using defined risk strategy.
In the example above no new trades would be permitted, an existing long term trade would have been liquidated. (total long-term positions permitted per unit 1)
EMA9 using monthly data = buy
Overall average = 48% sell
Long term indicators = hold
3.2) Medium-term trend, is weekly price action, above or below the EMA9 linked here? above = buy, below = sell.
Trade duration 11 to 29 days
In this example price action is below the EMA9 using weekly price action the market is in a down trend, medium-term, short positions are permitted.
Does the overall average, and medium-term technical opinion linked here agree with the EMA9?
In the example yes
If the EMA9, overall average and medium-term indicators all agree medium-term trades of 11 to 29 days in duration are permitted using defined risk strategy.
EMA9 using weekly data = sell
Overall average = 48% sell
Medium term indicators = 50% sell
In this example all agree, overall average and medium-term indicators are equal too or below 50%, only 1 medium-term short position is permitted, when both the overall average and medium-term indicators are greater than 50.00% a secondary medium-term position is permitted, (total permitted per unit 2).
3.3) Short-term trend, is daily price action, above or below the EMA9 linked here above = buy, below = sell.
In this example price action is below the EMA9 using daily price action the market is in a short-term downtrend, sort-term, short positions permitted.
Trade duration 2 to 10 days
Does the overall average and short-term technical opinion linked here agree with the EMA9?
In this example yes
If the EMA9, overall average and short-term indicators all agree short-term trades of 2 to 10 days in duration are permitted using defined risk strategy.
EMA9 using daily data = sell
Overall average = 48% sell
Short-term indicators = 60% sell
In this example all agree, overall average is 48% sell, short-term indicators are 60% sell. You would already be short 1 contact in this example looking to add an additional short position when the overall average moves from 48.00% to above 50%. When both the overall average and sort-term indicators are greater than 50.00% a secondary short-term position is permitted, (total permitted per unit 2).
3) Summary
Define the trend using the EMA9
4.1) 6 month chart (daily data) used for short term trades (2 to 10 days)
4.2) 2 year chart (weekly data) medium term trades (11-29 days)
4.3) 7 year chart (monthly data) long term trades (30 to 90 days)
Set you profit objective and collar up your risk
4.4) Futures quotes
4.5) Options quotes
4.6) Support -resistance levels and turning points
If you have questions or comments send us a message or schedule an online review
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