Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

The Straddle Trade Stock Market Brief

Stock-Markets / Stock Market 2017 Mar 16, 2017 - 05:43 PM GMT

By: Christopher_Quigley

Stock-Markets

Day Trade the News with Straddle Trades.

As part of my trading system I have 7 day trading strategies that I utilise. One such strategy employed is the straddle. This strategy I use to:  “trade the news”. (I list all the other 6 strategies below for review. Over the next few months I hope to explain each in greater detail and provide examples of their technical set-up and actual execution).


The Straddle Trade.

The straddle trade strategy takes advantage of major market moving news events. It involves placing a long and short trade simultaneously.  Once the trend is identified, following news release, the negative side of the trade is closed (or allowed stop out) and the positive side is allowed to run until technical break down occurs or profits are banked by personal choice.

Up to two years ago I always used options to execute such trades but with the brilliant development of state of the art trading platforms I not use spread betting instruments. Spread betting has the added advantage that profits are tax free. I have opted for the IG Markets platform, but there are many other excellent platform providers to choose from.

Straddle Trade Execution.

Place the straddle trade near the close of the trading the day before the major news announcement.

Normally I place a 10 Euro “bet” on the Wall Street DFB (Daily Funded Bet). This is the financial instrument IG Markets uses to track the Dow Jones Industrial Average. This means that for every point move in the index I will win or lose 10 Euro. If I reckon the trend is going to go up I BUY the DFB. If  the trend is expected to go down I SELL the DFB. I normally use a 200 point sell stop, which means my maximum loss on the trade will be 2,000 Euro.

Depending on the announcement (the market may take a day or two to “filter” the news) I close the loosing position or let it stop out. I stick with the winning trade until I see a technical breakdown happening. This allows me stay with the momentum trend, which regularly follows such events, as long as possible. (Trading rule 3: “Cut your losses early, let your winners run”).

For Your Straddle Diary.

For those of you interested in such straddle trades, please note the following 2017 major news events:

FED Meetings:  May 2-3, 2017.

                             June 13-14, 2017.

                             July 25-26, 2017.

                              Sept 19-20, 2017.

                              Oct/Nov 31-1, 2017.

                              Dec 12-13, 2017.

 

French Presidential Elections:

Round 1:            April 23, 2017.

Round 2:            May 7th. 2017.

German Federal Elections:

                              24th. September 2017.

 

Addendum: Summary of the 6 Additional Day Trading Strategies I Use.

 

1. Arbitrage Trade

The Arbitrage Trade seeks to activate trades that have a high probability of success by utilizing early bearish or bullish movement on the Wall St DBT to trade the German DAX or vice versa.

2. Momentum Trade.

With the momentum strategy one aims to enter a strong trend and remain in the position as long as technicals are supportive.

3. Swing/Continuation Pattern Trade.

The objective of this strategy is to identify high probability swing or continuation pattern trades.

A. Flag Formation.

 The flag pattern forms what looks like a rectangle. The rectangle is formed by two parallel trend lines that act as support and resistance for the price until the price breaks out. In general, the flag will not be perfectly flat but will have its trend lines sloping.

B. Pennant Formation.

The pennant forms what looks like a symmetrical triangle, where the support and resistance trend lines converge towards each other.

C. Descending Triangle Formation.

The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. No one can tell for sure how long it will last. There are instances when descending triangles form as reversal patterns at the end of an uptrend, but they are typically continuation patterns. Regardless of where they form, descending triangles are bearish patterns that indicate distribution.

D. Ascending Triangle Formation.

As above but the ascending triangle is a bullish formation that usually forms during an upward trend as a continuation pattern.

4. Bollinger Band Trade

The Bollinger Band Squeeze occurs when volatility falls to low levels and the Bollinger Bands narrow. Periods of low volatility are often followed by periods of high volatility. Therefore, a volatility contraction or narrowing of the bands can foreshadow a significant advance or decline. Once the squeeze play is on, a subsequent band break signals the start of a new move.

5. Channel/Range Trade.

In the context of technical analysis, a channel is defined as the area between two parallel lines and is often taken as a measure of a trading range. The upper trend line connects price peaks (highs) or closes, and the lower trend line connects lows or closes.

 

6. Candlestick Pattern Trades

Candlestick pattern trades seek to “scalp” profits through trading highly recognizable candlestick formats.

A. Formation: Hammer.

The hammer pattern normally appears when a short term down trend is about to change. The longer the length of the taper the better.

B. Formation: Bullish Engulfing.

With the bullish engulfing formation pattern the longer the bullish candle the higher the probability that the BUY move it indicates will persist.

C. Formation: Bearish Engulfing.

The bearish engulfing formation pattern indicates the higher the probability that a SELL price movement is in the ascendance.

D. Formation: Shooting Star.

The shooting star pattern normally appears when a short term up-trend is about to change. The longer the length of the taper the better.

E. Formation: Doji.

The Doji pattern normally appears when there is complete indecision as to future trend. The next significant candle that appears after the Doji is used to anticipate trend.

F. Formation: Spinning Top.

Like the Hammer the Spinning Top pattern normally appears when a short term down trend is about to change. The longer the length of the taper the better

Christopher Quiqley

B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley was born in 1958 in Dublin, Ireland. He holds a Bachelor Degree in Accounting and Management from Trinity College Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the stock market in 1989 in Belmont, California where he lived for 6 years. He has developed the Wealthbuilder investment and trading course over the last two decades as a result of research, study and experience. This system marries fundamental analysis with technical analysis and focuses on momentum, value and pension strategies.

Since 2007 Mr. Quigley has written over 80 articles which have been published on popular web   sites based in California, New York, London and Dublin.

Mr. Quigley is now lives in Dublin, Ireland and Tampa Bay, Florida.

© 2017 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules