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My 3rd Quarter Trading Plan

TradingPub Admin | July 6, 2015

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One year ago, I started my trading journey with Nadex. I was immediately drawn to this trading platform because I liked the idea that all of my trades were capped with a maximum risk and a maximum reward. There was no way a trade could run away from me. I also liked the fact that Nadex is a federally regulated exchange (CFTC) and not an offshore bucket shop.

Trading isn't easy. If it were, everyone would be raking in money hand over fist. It requires patience, alertness and hours of study to manage your trading emotions and to master strategies with a proven track record of performance.

Like most successful veteran traders I've talked to, I have made my fair share of rookie mistakes. Name a trading mistake, and I'm pretty sure I've made it.

One of the key elements of successful trading is to have a trading plan. This is your road map to trading. Without a trading plan, traders can trade randomly, jump in on untested theories, and lose money.

In this article, I'm going to share how I am going to map out my trading day for the 3rd Quarter of 2015 in my live trading account.

Daily Trading Calendar:

Before I start trading, I check the Economic Calendar for the day on Investing.com. During Earnings Season, I also take a look at the Earnings Calendar  on Morningstar.com  to see which companies are reporting for that day, and whether results are being released before the market open or after market close.  Finally, I take a quick look at Google News, CNBC and Bloomberg  to see if there's any overnight geopolitical news that might affect the markets. Now I'm ready to trade.

5:00 am - 8:00 am EDT: The London Breakout Strategy

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The London Breakout Strategy

If I wake up early enough, I check the Economic Calendar, and pull up the charts for the GBP/USD. I watch the price movement of this currency pair between 2am-5am. What I'm looking for is to see if a breakout is occurring during this time frame. If there's economic news being released out of the UK, it normally happens at 4:30 am. If the market breaks out bullish, I BUY from support, If the GBP/USD breaks bearish, I SELL from resistance. I set my expiration for 3pm daily on this trade.During the 4th Quarter of 2014, I had a great deal of success with this trade. Not so much in the 1st Quarter of 2015. With the US Dollar Index trading at near 14 year highs, and the GBP/USD trading at 12 year lows, there was a lot of tension in this trade. Sometimes negative UK news reports would result in a huge uptrend. The real culprit was the Dollar Index falling that day. I find that this strategy works more reliably when there is a little more balance between the strength of the US Dollar vs. the British Pound.

This is not my favorite strategy, because it requires me to get up really early. But if I'm awake and I really like the setup, then I have no problem trading this strategy in my live account.

7:00-9:00 am EDT - German DAX "Strudel" Strategy

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The DaX Strategy Chart

This is my favorite trading strategy, and it has held up remarkably well since I first developed it in August 2014. This was based on a Futures strategy from Tom Busby that I adapted and applied to Nadex. It doesn't require special charts or lots of indicators. Simply pull up the hourly charts on the Nadex Germany 30 (DAX) Index at 7am EDT and monitor the development of the hourly candlestick. Once you are convinced that the hourly candlestick is bullish, then BUY from the first Nadex strike price BELOW the 7am hourly opening price. Once you are convinced that the hourly candlestick is bearish, then SELL from the first Nadex strike price ABOVE the 7am hourly opening price. It's really that simple. Click on the link above for a more detailed description of this strategy.

Over the past 60 trading days, which is almost 3 months of trading, the rules of this strategy held 90% of the time. If you managed to get into every trade, then 54 of your 60 trades would have expired in the money for full profit. 6 of those trades would have settled out of the money.

Important Note: There is no DAX feed on ThinkorSwim. To get this feed, you will need Nadex charts, Investing.com, Ninja Trader or other charting platforms with a DAX feed.

9:00-11:00 am EDT - The FTSE 100 "Footsie" Strategy

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FTSE Strategy

Just like the "Strudel" Strategy, the 9:00-11:00am "Footsie" Strategy is remarkably consistent. Simply pull up the hourly charts on the Nadex FTSE 100 Index at 9am EDT and monitor the development of the hourly candlestick. Once you are convinced that the hourly candlestick is bullish, then BUY from the first Nadex strike price BELOW the 9am hourly opening price. Once you are convinced that the hourly candlestick is bearish, then SELL from the first Nadex strike price ABOVE the 7am hourly opening price. It's really that simple. Click on the link above for a more detailed description of this strategy.

Over the past 60 trading days, which is almost 3 months of trading, the rules of this strategy held 75% of the time. If you managed to get into every trade, then 45 of your 60 trades would have expired in the money for full profit. 15 of those trades would have settled out of the money, so loss management is more important. With a recent 75% probability of success, I still like this strategy.

Important Note: There is no FTSE 100 feed on ThinkorSwim. To get this feed, you will need Nadex charts, Investing.com, Ninja Trader or other charting platforms with a FTSE 100 feed.

11:00am-1:00pm EDT: The Lunchtime "Caret" Trade

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BTG Caret Trade

I don't trade this strategy daily, but I do keep an eye on it to see if a setup is in play. If the S&P 500 is rising going into the 11am hour and continues to rise, I look for signs of exhaustion and reversal on declining lunchtime volume. If a reversal is confirmed, then I SELL from a Nadex strike price above the peak of the reversal. A very nice trade if the setup reveals itself. For full details on this strategy, Click here.

1:00-7:00pm EDT - GBP/USD "Afternoon Delight" Trade

06 24 2015_AfternoonDelight

This is a very consistent strategy that is extremely simple to execute. All you really need is a 15 minute chart of the GBP/USD and the MACD indicator. I'm looking for a MACD crossover after 1pm. If the crossover is BULLISH, then I BUY the GBP/USD at a strike price BELOW where the market was at the crossover. If the crossover is BEARISH, then I SELL the GBP/USD at a strike price ABOVE where the market was at the crossover. Pretty simple. The only thing I don't like about thisstrategy is that Nadex goes dead from 5pm-6pm EDT. Still, I rarely lose when I trade this strategy. Click Here for details on this strategy.

8:00-10:00pm - Nikkei 225 "Kanpai" Strategy

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Sake Strategy Trading Chart

4 Consecutive Days of the Nikkei 225 "Kanpai" Strategy. Click on Chart to Enlarge

Kanpai means "Cheers" in Japanese, and this is a nice trade to end the day. Just like the "Strudel" strategy, the 8pm hourly candlestick controls the 9pm hourly candlestick the vast majority of the time. Simply pull up the hourly charts on the Japan 225 (Nikkei) Index at 8pm EDT and monitor the development of the hourly candlestick. Once you are convinced that the hourly candlestick is bullish, then BUY from the first Nadex strike price BELOW the 8pm hourly opening price. Once you are convinced that the hourly candlestick is bearish, then SELL from the first Nadex strike price ABOVE the 8pm hourly opening price. It's really that simple. Click on the link above for a more detailed description of this strategy.

Over the past 60 trading days, which is almost 3 months of trading, the rules of this strategy held 85% of the time. If you managed to get into every trade, then 52 of your 60 trades would have expired in the money for full profit. 8 of those trades would have settled out of the money.

Important Note: There is no Nikkei 225 feed on ThinkorSwim. To get this feed, you will need Nadex charts, Investing.com, Ninja Trader or other charting platforms with a Nikkei 225 feed.

A Full Day of Trading Opportunities.

The strategies I follow cover a full day of trading from 5am-10pm. That does not mean I am glued to my computer for 17 hours looking for trading opportunities. Once I hit my daily profit target, I'm done for the day. Sometimes I just don't fully trust a strategy, and I move on. And yes, some days I take a break from trading.

Important Note: If you are brand new to trading these strategies, please don't take my word as gospel.  Try them out for yourself in DEMO MODE until you are convinced whether it's the right strategy for your trading style.

The strategies I follow cover a full day of trading from 5 am-10 pm. That does not mean I am glued to my computer for 17 hours looking for trading opportunities. Once I hit my daily profit target, I'm done for the day. Sometimes I just don't fully trust a strategy, and I move on. And yes, some days I take a break from trading.

 

 

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Trading Strategies with Nadex
By Cam White, TradingPub