Good morning, traders! I had a weekend filled with chart analysis. I analyzed a ton of trades focusing on one particular setup and I’m excited to share it with you. But first, let’s discuss the markets and what’s happening in and around them.
Silicon Valley Bank has been dominating the headlines over the weekend. Banking relies heavily on trust, and when a giant like this experiences difficulties, it can create panic. If it can happen to one bank, it can happen to others, and if enough people start thinking this way, they may rush to the bank to withdraw their money, which can have widespread consequences.
That’s why the government was quick to guarantee that all Silicon Valley Bank depositors will receive their money back. We don’t want a repeat of the 2008 financial crisis, and I don’t believe the government wants it either.
- S&P 500 futures update: We are currently trading below support levels, and there is a possibility that we could see a push up towards our downtrending white line, as shown in the chart. However, I would not trust this move until we change direction and move back above the 200 M.A., which is represented by the yellow line.
- Forecast: I can see a relief bounce coming as the market is not down significantly, and we are currently sitting at these levels. However, overall, we are not receiving great news, and there are no indications that we are set for a smooth ride upwards.
This weekend, I conducted a backtest on over 200 trades! I am currently looking to develop and implement a new trading strategy, and I was on the hunt for ideas this weekend. While I still want to continue testing it, I am happy with the results so far, and I plan to use this strategy for now.
Why do a backtest?
Imagine some of the best players in the sports world right now. Now, imagine if they said to you, “I don’t practice or plan or review film, or really do any prep work, I just go out and play.” You would probably 1. be jealous that they could play at that level without trying, and 2. be confused since you likely believe that these guys are performing at their best because they are in excellent form.
However, we know that they do prepare constantly. They train, they review film endlessly. They know what works and what doesn’t.
Trading is no different. Without a plan, you might as well be guessing. The truth is that trading is a business and must be treated as such. You must be able to show up every single day and execute YOUR plan consistently.
I’ll keep it short and simple.
- I’m looking for a crossover of the MACD lines. If we’re in an uptrend, ideally we want to see a pullback towards 0, then a crossover, and vice versa for a downtrend.
- s the trade in the same direction as the 200 MA? In other words, am I going with or against the trend?
Those are the main rules, and I want those two to be present for 99% of trades. Then I have two additional rules, and I want to use one or both of them in combination with rules 1 and 2
- Is there a divergence between the MACD and price? Is the MACD moving higher as the price is settling?
4. Do the 8 and 13 MA align? In other words, if I’m going long, is the 8 above or crossing above the 13, and vice versa for a short position.
That’s it folks! Those are the only criteria I’m looking for in a trade. If I see a combination of these things happening, I’ll take the trade. I had just above a 50% win rate on the 200+ trades I took this weekend. I think I can improve that figure as I move forward and learn to recognize the patterns emerging on my screens. This is a start, and I plan to keep a record of these trades, including the stat sheets, KPIs, and all the other goodies. I want to share my strategy with others and hopefully help them along the way.
Let’s start the week off right. Wait at least 15 minutes before jumping into anything today. Let the prices settle. It was quite an eventful weekend, which matched how last week was. Maybe we’ll settle back into normalcy this week. Happy trading!
Although I am an investor by profession, I am not YOUR financial advisor. All content and information on this website including our programs, products and/or services is for informational and educational purposes only, does not constitute financial advice and does not establish any kind of financial advisor-client relationship by your use of this website. A financial advisor-client relationship with you is only formed after we have expressly entered into a written agreement with you that you have signed including our fee structure and other terms to represent you in a specific matter. Although we strive to provide accurate general information, the information presented here is not a substitute for any kind of professional advice, and you should not rely solely on this information. Always consult a professional in the area for your particular needs and circumstances prior to making any professional, legal, investing and financial or tax related decisions..