Dow Strategy - applying it to S&P and Nasdaq

[dazzam]

Hi Chaps,

I have a theroy for entering trades intra day on the DOw, it usually picks me up a minimum of 5 points a time. It is based on MACD, RSI and EMA in relation to the price.

I am wanting to go to Direct Acces and understand that the S&P and Nas are better for futures than the Dow. What I am wanting to know is would it be safe, I have checked and it does seem to be, to enter a trade on the S&P and Nas based on my theroy for trade entry into the Dow seeing as they seem to track each other on the intra day peaks and troughs.

 

[stevet]

i think you need to do a lot more homework

you can use another index to provide key imputs into your trading decisions - but you need to understand the actual index you are trading before you trade it

all the indexes can move together - but they are not locked together and can easily move in different directions and do all the time

and 5 pts profit expectancy on the dow would indicate that you have not actually traded and made this profit - but that you have paper traded - and paper trading is way way different to the real thing

 

[dazzam]

Hi Stevet,

NO I have been trading for while in reality and look to make 5 points on every trade and this has worked on all trades entered so far. I sometimes let it go past but if it pulls back I then get out of the trade. A little premature I know but I am comfortable with that level of profit. I usually get 2 to 3 indicators a day.

Thanks for the advice, I thought it would be more to it but just on my analysis over the last few weeks. It is only the intra day peaks and troughs that I look for, I am not interested in the long term trend.

 

[peto]

The Nas is the least corelated, the S&P falls somewhere between the two. If you're only trading between 1 or 2 contracts at a time (1 dow contract = $5 a point) why not just use YM, the dow future contract. The liquidity is perfectly adaquate during trading hours, spread is generaly 1 or 2 points which in % terms is about the same as the other futures you mentioned. Out of hours the dow spread is a lot wider on the YM. For larger positions the high volume s&p mini would be better.

 

[dazzam]

I was looking at using YM but on a previous thread people reckoned that it was better to use S&P so that was what swayed me.

 

[Bigbusiness]

If you are looking to make 5 points, what is your stop loss? A few weeks is a short period to test this out and at the moment there is little volatility.

 

[Skimbleshanks]

Don't let other people sway you - ever! If you have a strategy which works well on the Dow, then carry on trading it.

If you have never traded futures before, or indeed any indices, then I believe the suggestion is that ES is more liquid more of the time.

Once you have your system cracked on the Dow / YM then you may wish to paper trade another system to compare the two, but that's a lot further down the road.

 

[stevet]

dazzam

only you know your exact results - but if you are making 5 pts real easy and no problems - why dont you just bet more on each trade in the same way as you are doing it - you would be making more than most of 99.99% or others trying to trade the market

 

[rossored]

Dazzam -

I read the comment about YM being "just for people who used to SB the Dow" - by stevet I think it was ( sorry, steve if it wasnt you ) - and I'm sorry but I think thats a crock. ES and NQ are certainly more liquid, but you can trade YM perfectly well. Sure, most pros trade ES/NQ but that doesnt mean YM isnt any good.

ES and NQ move in a completely different way : try paper trading one of them and you'll soon see what I mean.

I trade YM daily, and I use an adaption of CM's strategy because the exact strategy doesnt work as well imo. You have to trade something that you KNOW your strategy will work on. That means paper trading until you're sure.

Good luck.

RR

 

[stevet]

rossored

it was me

and when you say most pros - you are right - 100% of them

and if most pros do it - perhaps there is a reason???

 

[rossored]

Yeah, my point exactly.

I dont class myself as a pro yet, clearly nor does dazzam ( no disrepespect intended, dazzam )

So I dont fancy getting my ass kicked properly by the big boys on ES when I'll get it kicked to a lesser degree on YM when it happens, as it does from time to time.

Dont be so damned argumentative!

 

[dazzam]

Thanks for all this info chaps.

I think I will stick with what I have and review the S&P and Nas. Rosso too right there is no way I am a pro but hopefully getting there. I made 25 points last week but only bet a measily £2 perpoint, so I think I may raise it to £5.00.

 

[eminem]

I was going to suggest (similar to others) doubling your stake. When you have achieved 5 points on the trade take off half of your new higher stake and let the other half run. If the other remaining half comes back to break even close the trade and wait for next signal. If it remains in profit trail a tight stop loss on it and take those profits when stopped out. That way you get what you would have had anyway even if the second half of the trade is scratched at break-even with the potential for more if the trade turns out to be a good'un.

 

[stevet]

rossored

and in quiet whisper

when you are trading - you want to know for sure you are trading with the pros - if you take a postion contrary to the pros - or when the pros have stayed out - you will get burned

the key is to take your position at the same time and with the pros and then let everyone carry everyone else along

the pros dont want to make money out of you - its the cash index which is the enemy - not other traders

 

[josbarr]

SOX Index is something to follow as well especially in NQ

 

[tradesmart]

daz,
if you get your entry right, you're gonna make money whatever index/account type you use (not trying to teach Gran'Ma to suck eggs here!!)

As implied/stated by others, it's mainly a case of taking your entry with the trend/flow.

If I get burned, it's mainly when I fail to identify a short term reversal within the trend; as happened on Friday - got caught wearing my bull hat when the bears stepped in!!

Putting things to rights today trading $INDU - short from 9825 on bear flag, now long from 9760 on rising RSI/ break of 100ma - (maybe a little bounce here?)

As josbarr says, watch the $SOX if you're trading the Naz/techs.

Regards, TradeSmart

 

[ChartMan]

All good stuff here Daz, but, without seeming rude, isn't 5 points on the DOW a bit on the tiny side? Are you being frightened out of trades because your stake size is too high? I would have thought that 25 points a move should be quite easy to achieve, or am I missing something? I'm not being defeatist, but I really do think you could/should be doing better.....

 

[dazzam]

Hi CHartMan,

It is just my entry point is based on certain things and at the moment all it seems to provide me is a usual guranteed 5 points, however on several occasions it has gone more then that. My stake size at the mo is only ever between £2 and £5 so not that scary.

I am trying to work harder on my exit strategy but I am happy with just making 5 points at the mo.

 

[stevet]

dazzam

anytime i have been brought a methodology that provided "guaranteed" trades - it always means a) it is being paper traded, and thats as far as it will even go or b) the profit potential is in the mind of the trader only

so you have done real well to find one the works in the real world

and whilst 5 pts is not a lot, as it is guaranteed, you still should be able to retire in a year if you just load up on the bet size

 

[dazzam]

Cheers Stevet.