Monday, November 10, 2008

GE Monday

A refreshingly obvious and easy GE / NYAD divergence trade this morning.
Trade setup as per previous posts:
Do not enter setup for first 30 minutes.
Trace GE and NYAD slope when they start to diverge - in this case 10:00
After 20 - 30 minutes extend the NYAD slope line - blue line
Wait for reversal in either GE or the NYAD - in this case GE reverses down at 10:30
Parabolics fire a SELL (inital trade signal) and 6 minutes later the 816 crosses down (confirmation). We are now double short (2 positions).
GE crumbles down to the NYAD slope mirror - pink line at 10:56 and continues to ride it down in sync with the NYAD's continuing downslope behavior.
EXIT - at 11:0 the parabolics fire a COVER signal as GE comes off 2 little dojis.
Although the 816 has not crossed in GE, the NYAD 1 minute bars display an 816 cross in conjunction with a parabolics reversal to the upside.
As I've mentioned in previous posts, I often toggle to the 1 minute bars for an exit signal in an attempt to capture as much gain as possible. This tends to lead to whipsaws, but that's the risk management tradeoff that works for me. Another option is to close half the position and let the remainder ride. That would have worked nicely in this scenario as GE is down another .21 since I closed my position and the NYAD is once again downslope, but I'm off for the rest of the day and wanted to be flat.
Net gain: $ .43 for 56 minutes exposure.
This was a long duration trade relative to previous GE examples but, Hey!, every once in while you get a runner like this that just keeps going.

1 comment:

Woodshedder said...

Well done. I'm enjoying how you are using the NYAD.