Here we are at the weekend once again, a time when you lucky types get a looksee at all the charts whether there was action or not.
Background: This exercise is a continuation of the trading exercise that was started in my Basic Trading book using only 5 symbols and a simple trading method. This exercise will continue until 2020 expires. The portfolio started at $100,000. It currently sits at $138,720.10. Trading a theoretical portfolio as opposed to real money will of course draw some catcalls as not being realistic. Since I use “stop-buys” and usually indicate here ahead of time, it does not deserve criticism. I would deduct maybe 5% for slippage that can occur in real life just to silence the critics. I will do this at the end of the year.
I go through the trades as they occur to demonstrate our simple system. You can always look at previous dates if you are keen.
Let’s start with the S&P 500: SSO = UP SDS = DOWN
The symbols are ETFs(exchange traded funds) that act as proxies in the stock market. I do this so that everyone, regardless of what kind of account they have, can use them.
We look at the symbol that looks closest to a trade. If the one we look at looks like it is heading down, then we look at its inverse, that way you are always buying long and never shorting. By the same token if the S&P 500 is going down, we get a buy signal in the SDS, we will make money as the S&P goes down – how good is that.
We have no trade here. You can see that our moving averages are saying, ” what are you waiting for”, I am saying that we are waiting for a CLOSE above the resistance level represented by the black horizontal line. When and if that happens, we shall spring panther-like into action.
Gold: UGL = UP, GLL = DOWN
We do have an open position in UGL. You can see where we had a close above resistance and then we placed a stop-buy just above the high of the candle that did the closing. As with all our trades we have a protective stop-loss in place. Due to the volatility in the market place we are using trailing stops.
Oil: UCO = UP, SCO = DOWN
We are not quite there as far as the moving averages go, but we do have an exception that we have used before and if that occurs again, it will be explained here.
For now our biggest impediment is a zone of resistance created by a “rising window”. If we get a CLOSE above the upper line we will put in a stop-buy just above the high of the candle that did the closing – assuming our exception is in play.
20 year treasuries: UBT = UP, TBT = DOWN
We have an open trade in UBT. You can see that the price and the red trigger line (8 exponential moving average) were in position above the other moving averages and the resistance line was vanquished per our process.
The trade is with the markets now.
Dollar Index: UUP = UP, UDN = DOWN
The Dollar Index represents a battle between the U.S. dollar and a basket of global currencies.
If the price rises it means the U.S. dollar is gaining strength and if the price goes down, it means the basket is getting the upper hand.
The UDN represents the basket gaining strength. It has quite a way to go before we believe that an up trend is in place.
That is everything for our Round UP. If you have any questions, etc, please drop me a line: firstname.lastname@example.org