Stocks & Commodities Traders Tips Archives - Page 2 of 2 - AIQ TradingExpert Pro

16/05/2019 Stocks & Commodities traders tips Archives - Page 2 of 2 - AIQ TradingExpert Pro
Back to Basics with MACD (Part 2)

April 7, 2016 back testing, EDS, Stocks & Commodities traders tips, technical indicator
In this article I detailed one relatively “simple” approach to using the MACD
indicator to identify potentially bullish opportunities. In this piece we will look at
one to actually put those signals to use.
The Limited Risk Call Option
One possibility upon generating a bullish signal as described in the last article
is to buy shares of the stock/ETF/index/etc in question. Not a thing wrong with
that. But there is a less expensive alternative.
Figure 1 reproduces Figure 1 from the last piece showing ticker XLF. Let’s look
at the signal generated on 2/12/16.
Figure 1 – Ticker XLF (Courtesy AIQ TradingExpert)
One alternative that I like is to use the “Percent to Double” routine

at www.OptionsAnalysis.com to find an inexpensive call option that has lot of
upside potential. The input screen with a few key input selections highlighted
appears in Figure 1a (if it looks intimidating please note that a reusable set of
criteria can be captured in a “Saved Wizard”, which appear towards the lower
right of of Figure 1a. Once a set of criteria is saved it can be reused by simply
clicking on the Wizard name and clicking “Load”.)
www.aiqeducation.com/category/stocks-commodities-traders-tips/page/2/ 1/11
NOTE: My own personal preference is to consider options that have at least 45

days left until expiration (as time decay can become a very negative factor as
option expiration draws closer).
Figure 1a – Percent to Double Inputs (Courtesy www.OptionsAnalysis.com)
Figure 1b displays the output screen.
NOTE: For my own purposes I like to see a Delta of at least 40 for the option I
might consider buying (nothing “scientific” here. It is just that the lower the
Delta the further out-of-the-money the option strike price is. I prefer to buy a
strike price that is not too far from the current price of the stock; hence I look for
a Delta of 40 or higher). With XLF trading at $20.49, in Figure 1b I have
highlighted the 2nd choice on the list – the April 21 call – which has a delta of
43.
Figure 1b – Percent to Double Output (Courtesy www.OptionsAnalysis.com)
So a trader now has two alternatives:
*Buy 2 Apr 21 strike price XLF calls for $70 apiece ($140 total cost; 86 total
deltas)
*Buy 86 shares of XLF at $20.49 apiece ($1,760 total cost, 86 total deltas)
Figure 1c displays the particulars for buying a 2-lot of the April 21 call for a total
cost of $140.
Figure 1c – XLF Apr 21 call (Courtesy www.OptionsAnalysis.com)
By 3/18 the shares had gained 11% and the Apr 21 call had gained 143%. See
Figure 1d.
Figure 1d – XLF Apr 21 call (Courtesy www.OptionsAnalysis.com)
Summary
Obviously not every trade works out as well as this one. Still, the key things to
remember are:
*The option trade cost $140 instead of $1760
*The worst case scenario was a loss of $140.
Something to think about.
Chief Market Analyst at JayOnTheMarkets.com and TradingExpert Pro client

http://jayonthemarkets.com/
Back to Basics with MACD

April 4, 2016 back testing, EDS, Stocks & Commodities traders tips, technical indicator
One danger of getting “way to into” the financial markets is that you can find yourself
progressing into some needlessly complicated stuff (“Hi, my name is Jay”). I mean it is
only natural to wonder “hey, what if I divided this indicator value by that indicator value” and
such. But once you start finding yourself taking an exponential moving average of a
regression line with a variable lag time, well, you can find yourself “a tad far afield.” (Trust
me on this one). Which leads us directly to:
Jay’sTradingMaxim #44: Every once in awhile it pays to remember that the end goal is
simply to make money. The more easily the better.
So today let’s go back to a simple “basic approach.”
The Bullish MACD Divergence
We will define an “asset” as any stock, ETF, commodity, index, etc. that can be traded on
an exchange (and for my purposes, there should be a liquid market for options on that
asset).
Step 1. An asset price falls to a new 20-day low and the MACD value is less than 0.
Note the MACD value on this date.
Step 2. Not less than one week but not more than 2 months later:
*Price closes below its closing level in Step 1
*The MACD indicator is above its level at the time of Step 1
Step 3. The next time the daily MACD indicator “ticks higher” a buy alert is triggered
Can it really be that simple? The Good News is “Yes, it can.” The Bad News is that “It isn’t
always.” To put it another way, like a lot of trading methods it can generate a surprising
abundance of useful trading signals. However, there is no guarantee that any given signal
will turn out to be timely. In other words:
This method gives you a good guideline for when to get in, but:
*It may be early at times (i.e., price will move lower still before advancing)
*It will at times be flat out wrong
*You still have to decide when to exit the bullish position.
*Call options are useful with this approach as it allows you to risk a limited amount of
capital.
Examples
Figures 1 through 4 highlight some recent examples using this method. Note that the
charts show only entry points. Exit points are “a separate topic”.
Figure 1 – Ticker XLF (Courtesy TradingExpert Pro)
Figure 2 – Ticker WMT (Courtesy TradingExpert)
Figure 3 – Ticker AAPL (Courtesy TradingExpert)
Figure 4 – Ticker GDX (Courtesy TradingExpert)
As you can see, some signals were quite timely while others were quite early. For the
record, I started getting bullish on gold and gold stocks early in 2016 based in part on the
multiple alerts that appear in Figure 4.
Chief Market Analyst at JayOnTheMarkets.com and TradingExpert Pro client
http://jayonthemarkets.com/
ADX Breakouts
March 26, 2016 back testing, EDS, Stocks & Commodities traders tips, technical
indicator,trading strategy
The AIQ code based on Ken Calhoun’s article in the March 2016 issue of Stocks and
Commodities, “ADX Breakouts,” is provided at www.TradersEdgeSystems.com/traderstips.htm.
Since I mainly work with daily bar strategies, I wanted to test the ADX concept from the article
on a daily bar trading system. So I set up a system that buys after a stock has based around
the 200-day simple moving average (Basing200). Basing200 is coded in the system as:
The stock closing above the 200-SMA only 19 bars or less out of the last 100 bars, and
The stock closing greater than two bars above the 200-SMA in the last 10 bars.
For exits, I used the following built-in exits: a capital-protect exit set at 80% and a profit-protect
exit set at 80% once profit reaches 5% or more.
I ran this system on the NASDAQ 100 list of stocks in the EDS backtester over the period
12/31/1999 to 1/11/2016. I then ran a second test on the system using the ADX filter (ADX must
be greater than 40 at the time of the signal to buy). I used the same list of stocks, exits, and test
period.
Figure 8 shows the first test without the filter: 883 trades, 1.84% average profit per trade, 1.51
reward/risk. Figure 9 shows the second test with the filter: 151 trades, 2.12% average profit per
trade, 1.66 reward/risk.
FIGURE 8: AIQ, WITHOUT FILTER. Here are the EDS test

results for the example system without the ADX filter.
FIGURE 9: AIQ, WITH FILTER. Here are the EDS test results for
the example system with the ADX filter.
Although all of the key metrics are better with the filter, there is a significant reduction in the
number of trades. In fact, 151 trades would not be sufficient for a trading system over this long
test period. If one wanted to use the filter, then the list of stocks would need to be increased to
about 2,000 stocks.
!ADX BREAKOUTS
!Author: Ken Calhoun, TASC March 2016
!Coded by: Richard Denning, 1/11/2016
!www.TradersEdgeSystems.com
!NOTE; THIS SAMPLE SYSTEM IS FOR

!DAILY BAR TESTING OF ADX FILTER ONLY
SMA200 is simpleavg([close],200).
HD is hasdatafor(250).
Above200 if ( [close] > SMA200 ) .
Basing200 if CountOf(Above200,10) >2
and CountOf(Above200,100) 200.

ADXhi if [ADX] >= 40.
BuyADX if Buy and ADXhi.
This code and EDS file can be downloaded

from www.TradersEdgeSystems.com/traderstips.htm.
—Richard Denning
info@TradersEdgeSystems.com
for AIQ Systems
Higher Highs and Lower Lows

March 10, 2016 EDS, indexes, Stocks & Commodities traders tips, technical indicator
The AIQ code based on Vitali Apirine’s article in February issue of Stocks and Commodities,
“Higher Highs and Lower Lows,” is shown here.
The code provided computes the indicator values for the HHS and LLS indicators as well as
allowing us to plot the indicator on a chart.
Figure 8 shows the indicator on a chart of Align Technology (ALGN).
FIGURE 8: AIQ. Here, the HHS and LLS indicators are shown on a chart of ALGN.
EDS code is shown below.
!HIGHER HIGHS AND LOWER LOWS
!Author: Vitali Aprine, TASC Feb 2016
!Coded by: Richard Denning, 12/09/2015
!TradersEdgeSystems.com

Stocks &amp; Commodities Traders Tips Archives - Page 2 of 2 - AIQ TradingExpert Pro

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Stocks &amp; Commodities Traders Tips Archives - Page 2 of 2 - AIQ TradingExpert Pro

Transféré par

Droits d'auteur :

Formats disponibles

16/05/2019 Stocks & Commodities traders tips Archives - Page 2 of 2 - AIQ TradingExpert Pro

Back to Basics with MACD (Part 2)

The Limited Risk Call Option

Figure 1 – Ticker XLF (Courtesy AIQ TradingExpert)

One alternative that I like is to use the “Percent to Double” routine

NOTE: My own personal preference is to consider options that have at least 45

Figure 1a – Percent to Double Inputs (Courtesy www.OptionsAnalysis.com)

Figure 1b displays the output screen.

Figure 1b – Percent to Double Output (Courtesy www.OptionsAnalysis.com)

So a trader now has two alternatives:

Figure 1c – XLF Apr 21 call (Courtesy www.OptionsAnalysis.com)

Figure 1d – XLF Apr 21 call (Courtesy www.OptionsAnalysis.com)

*The option trade cost $140 instead of $1760

*The worst case scenario was a loss of $140.

Something to think about.

Chief Market Analyst at JayOnTheMarkets.com and TradingExpert Pro client

Back to Basics with MACD

So today let’s go back to a simple “basic approach.”

The Bullish MACD Divergence

*Price closes below its closing level in Step 1

*The MACD indicator is above its level at the time of Step 1

*It will at times be flat out wrong

*You still have to decide when to exit the bullish position.

Figure 1 – Ticker XLF (Courtesy TradingExpert Pro)

Figure 2 – Ticker WMT (Courtesy TradingExpert)

Figure 3 – Ticker AAPL (Courtesy TradingExpert)

Figure 4 – Ticker GDX (Courtesy TradingExpert)

FIGURE 8: AIQ, WITHOUT FILTER. Here are the EDS test

!NOTE; THIS SAMPLE SYSTEM IS FOR

and CountOf(Above200,100) 200.

This code and EDS file can be downloaded

Higher Highs and Lower Lows

!HIGHER HIGHS AND LOWER LOWS

!Author: Vitali Aprine, TASC Feb 2016

!Coded by: Richard Denning, 12/09/2015

Vous aimerez peut-être aussi

Stocks & Commodities Traders Tips Archives - Page 2 of 2 - AIQ TradingExpert Pro

Stocks & Commodities Traders Tips Archives - Page 2 of 2 - AIQ TradingExpert Pro