Day Trading the Dow Jones

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Article
Intermediate
18

Martin Shoebridge

06 Jan, 2005

in Indices and 2 more

Introduction

The strategy detailed in this article was written almost two years ago and has been available on the forums throughout that time. Since then, there have been many members of Trade2Win who have commented on how it has improved their trading. Even today, two years on, the rules devised are still valid. There have been new "discoveries"- the magic 32 and 64 to name but one, and yet there are still mysteries that have to be resolved.

Even so, this document will probably stand the test of time, which is to help newbies get a feel for trading the Dow, and at the same time, stay in the game by way of capital preservation. It has given me great pleasure in receiving thanks from many members. Truly gratifying. This is just the beginning, do not despair, there IS light at the end of the tunnel. If this instills some enthusiasm in your loins, you could do worse than reviewing all of the Dow Intraday threads from the archives of T2W where you will no doubt come across more gems from time to time.

The strategy is based on a spread betting system. It can, with experience, be tailored to make it suitable for trading mini-sized Dow futures.

The Strategy

This strategy utilises several technical indicators in order to gauge the correct moment to enter the market:

The 100 EMA is a 100-minute Exponential Moving Average. Trades are entered and / or closed depending upon the crossing of the 100 EMA by the price.

RSI is Relative Strength Indicator. RSI was developed by J. Welles Wilder in 1978, and this indicator is one of several indicators called “oscillators” because it varies between fixed upper and lower limits. Very basically, "buy" (or long) signals are considered to be readings of 30 or less (the instrument is considered oversold) and "sell" (or short) signals are considered to be readings of 70 or greater (the instrument is considered overbought). However, depending on the analyst and price volatility, there are various other qualifiers and nuances that can be incorporated into a signal. For example, in very volatile markets, the bounds of 20 and 80 might be used to judge oversold and overbought conditions. Additionally, the settings for RSI as specified in this article are for those analysts using a 1 minute chart. If you choose to trade at a higher timeframe, you may need to adjust these settings - but I have not focussed on using the strategy on such timeframes and cannot therefore comment on its effectiveness.

CCI is the Commodity Channel Index. This measures the position of price in relation to its moving average. This can be used to highlight when the market is overbought / oversold, or to signal when a trend is weakening.

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Re: Day Trading the Dow Jones

Thank You Martin!
I have been investing in day trading for a whice now. Also, have faced few losses at times but still in the learning phase.
I also found few more intraday trading tips here http://www.angelbroking.com/intraday-trading/tips-strategies.

Jul 13, 2016

Member (1 post)

Wonderful piece of work Martin!Please carry on from here, Paul.

Sep 21, 2008

Member (6 posts)

If you guys want to trade the Dow, Look for a strategy that trades the first hour of the day..ie Pull backs. All the years I have been trading the Dow intraday. I look for exhaustion and fade it.Ho and dont be gready. I only take 15 to 20 points out of an exhausted move.

Aug 09, 2006

Member (1105 posts)

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