Dow Intraday Strategy - 10/20 pts target

dpfuller

Junior member
40 0
Morning all,

I've been playing around with various moving average strategies over the last few weeks with a view to developing a simple intraday strategy that will return 10-20 points on each trade. The DOW seems to be the obvious market given the large daily range and good volatility.

So here goes, I'm using ADVFN streaming charts for my signal (30 minute chart) with the MA Envelope overlay (5 period, deviance 0.3). I avoid any trades around data announcements and generally do not enter within the first 30 minutes.

Once the trend is clear as dictated by the direction of the MA, I wait for the price to head towards the upper or lower channel and then pullback to the MA. I enter when the price continues in the direction of the trend towards the upper or lower channel and aim for 10-20 points (target dependent on the size of the preceding price bar).

I've not been able to back test this but looking through the last few weeks charts it certainly looks promising. The obvious place for a stop seems to be just below the MA but am open to suggestions.

All suggestions/comments are welcome.
 

counter_violent

Legendary member
10,514 2,784
Pay particular attention to price when it involves these three numbers 100's 64's and 32's.
Consolidations and bounces are more prevalent around these areas.

good luck

C V
 

ChowClown

Senior member
2,732 56
Hi,

What period MA are you using to determine the trend? It seems a reasonable method (haven't backtested) and coupled with basic candle/price action thrown in, it seems as likely a plan to succeed as any other, although can you tell me why your using MA envelopes, they seem a bit redundant in the method described? I'll take a look at this against GBP/USD (larger daily range and more volatile than DOW). I have been forward testing a similar but automated MA method on GBP/USD since Aug 2005 and the results so far are encouraging for a steady 'pension pot' method, nothing remarkable.

Simple methods always seem the best for long term performance; it's the patience and discipline to trade 'em that gets me in the end and automation helps.
 

dpfuller

Junior member
40 0
Thanks CV - will look out for them, have always been cautious around 100s but wasn't aware of the others.

Aln - I'm using a 5 period moving average, with 0.3% deviation from this to create the upper and lower channel lines.

CC - Agreed the envelope isn't key to this although it does help with a potential price target. I totally agree that patience and discipline are key here, the benefit is that there are numerous signals throughout a trading session and once in you tend to close out within the next bar so don't need to screen watch all day. I stuck with the DOW because it's where I've had success in the past, i've not looked at currencies before but they're certainly on my radar for the future. I wasn't aware that GBP/USD has a larger daily range and is more volatile than DOW - so thanks for the tip.
 

ChowClown

Senior member
2,732 56
...boring afternoon at work, so added standard momentum to your setup on today's 30 min cable chart. 2 trades, 1 this morning after the London open and one from the US session reversal stopped out during the 17:30 candle. ..just noticed initial stoploss on am trade should have been just under previous candle.

Thanks for the food for thought.
 

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leovirgo

Senior member
3,161 156
dpfuller

I wouldn't rely on 30mins chart alone. As it is a scalping system, I would use smaller time frames like 5min or 1min chart for precision entry. The use of oscillators and momentum indicators will give you nice entries. It's not too difficult to collect 10-20 points from DOW. The only thing you will need is 'patience'. Good luck.
 

dpfuller

Junior member
40 0
leo,

thanks for the feedback. I'm trying to avoid over complicating my strategy with too many indicators initially. But taking on board your advice I'm trying a 30 min chart to determine trend (again using a 5 period MA) and then taking my signal from a 5 minute chart but only in the direction of the 30 minute trend. The entry would be on a pull-back to the 5 period MA in a 5 minute time frame. This looks encouraging so far and gives more entry points but with smaller profit targets. I'll post a chart example later.
 

leovirgo

Senior member
3,161 156
dpfuller said:
leo,

thanks for the feedback. I'm trying to avoid over complicating my strategy with too many indicators initially. But taking on board your advice I'm trying a 30 min chart to determine trend (again using a 5 period MA) and then taking my signal from a 5 minute chart but only in the direction of the 30 minute trend. The entry would be on a pull-back to the 5 period MA in a 5 minute time frame. This looks encouraging so far and gives more entry points but with smaller profit targets. I'll post a chart example later.

Here is the chart for yesterday. There are two clear entries- one Long and one Short, each netting a minimum of 30points. The short trade can use trailing stop to capture maximum down move (total decline 100 points). As you want a simple sysytem, this is the plain version and quite similar to the system I am using everyday. I am using Bollingger Bands in 30min chart.

Again, the key here is to have 'patience' until there is a clear signal.
 

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dpfuller

Junior member
40 0
Thanks, great charts. Do you generally wait for a pull-back to the 12 period ma in the 5 min chart before entering or just look for a break of it?
 

leovirgo

Senior member
3,161 156
Usually, stochastics cross over/under when the price breaks 12MA in the direction of the 30min trend. Set stop a few points above/below 12MA. It works in a ranging stable market. Not for volatile news time and high powered break outs.
 

Chorlton

Established member
693 48
leovirgo said:
Here is the chart for yesterday. There are two clear entries- one Long and one Short, each netting a minimum of 30points. The short trade can use trailing stop to capture maximum down move (total decline 100 points). As you want a simple sysytem, this is the plain version and quite similar to the system I am using everyday. I am using Bollingger Bands in 30min chart.

Again, the key here is to have 'patience' until there is a clear signal.


Hello LeoVirgo,

Can I ask why the chart @ 10:30-10:40 is also not a trading signal?

Just curious.....


Many Thanks,

Chorlton
 

leovirgo

Senior member
3,161 156
Chorlton said:
Hello LeoVirgo,

Can I ask why the chart @ 10:30-10:40 is also not a trading signal?

Just curious.....


Many Thanks,

Chorlton

Hi Chorlton

Yes, it was a valid signal. It penetrated above the longer MA line and that made me cautious. The second signal was better as it was a clear rejection from the longer MA line. Hope this helps. cheers...
 
 
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