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Trading
Indices
STRATEGY
CHANGES
FOR
INDICES
You will notice differences such as periods of DMI
and stop "space".
Also, many Indices trade well by using a different MA or even disregarding the MA altogether and
taking every trade long and short.
Identifying these different strategy settings in order to maximise the strategy potential as well as the profit can only be done using the power of the SST SwingTrader or the SST ProPlus plug-in for eSignal.
Precise entry and stop levels are crucial to success and must be accurate. The SST software provides the accuracy and reassurance necessary for success as well as helping to remove the emotion from your trading decisions.
Trigger Gap is the distance between the +DI and the –DI lines. The ProPlus plug-in measures this precisely and we can therefore optimise and generate triggers when the DI lines are not quite touching or crossing. A DMI Trigger Gap of 7 means you look for a prospective trade when the DI lines are 7 apart or closer. This is extremely difficult to achieve manually (without the software)
Trigger days is the number of days that the prospective trade is valid for without triggering. 2 trigger days means that the trade must trigger within two trading days or it will be disregarded.
The
settings below have been tested and optimised using the SST
SwingTrader or the SST ProPlus Plug-in.
Below are just a few of the Indices that can be traded when using the SST software.
DOW JONES (DJIA)
7 DMI, 20 MA , 0.5% stop space (0.6% is slightly better), 1 Trigger Day after DMI cross, others at default.
N.B. The above settings still back test well for traders who prefer to work with tighter stops. However, much better results can be obtained with a wider stop which often results in stop & return trades. These alternative settings are:
14 DMI, 1.8 % stop space, 150 MA, 3 Trigger Days after DMI cross, DMI Trigger Gap of 0. |
S&P 500
60 MA, 2.0% stop space, 7 DMI Trigger Gap, 1 Trigger Day after DMI cross. |
FTSE 100
20 DMI, 6 DMI Trigger Gap, 25 MA, 1.4% stop space, 1 Trigger day after DMI cross. |
Australian ASX 200 Index
6 DMI, DMI Trigger Gap 1, 1.00% StopSpace, 130 MA, Open Gap 0%.
N.B. The above settings still back test very well for traders who prefer to work with tighter stops. However, slightly better results can be obtained with a wider stop which often results in stop & return trades. These alternative settings are:
16 DMI, 7 Trigger Gap, 60 MA, 1.6 % stop space, 3 Trigger Day after DMI cross.
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German DAX
15 DMI, 6 DMI Trigger Gap, No MA, 2.8 % stop space, 3 trigger days after DMI cross. |
CAC 40
13 DMI, DMI Trigger Gap 0, 1.5 % stop space, No MA, 200, 1 Trigger day after DMI cross.
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FTSE 250
15 DMI, 5 DMI Trigger Gap, 1.3% stop space, No MA, 3 Trigger Days after DMI cross, others default. |
Index |
SST SwingTrader (Yahoo) symbol |
Dow Jones Ind Ave |
^DJI |
S&P 500 |
^GSPC |
FTSE 100 |
^FTSE |
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ASX All Ordinaries (Australia) |
^AORD |
DAX |
^GDAXI |
CAC 40 |
^FCHI |
FTSE 250 |
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Swiss SMI
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^SSMI |
The Mini Futures Indices will be particularly useful for traders
who trade Emini contracts. They can also be used for CFD's and for Spread Betting and to see how the market is trading out of hours.
N.B. Some Futures Indices do not back test quite as well as the cash Indices. This is due to the fact that out of hours price movement and volatility on low volume often causes the strategy to enter later than with the cash Index and have stops further away. If you trade pure futures, such as EMini contracts, in my experience more profit can be made by timing the entry and exit points using the cash Index even though you are trading futures. You just need to allow for the "normal" difference between the cash and the future (i.e the average difference during trading hours). It is the TIMING of the entry and exit that needs to be correct rather than the price. In other words you want to enter the future trade at the same TIME as it is triggered on the cash chart. If you have some experience to confirm or disagree with this please let me know.
NOTE:
If you would like
to contribute to the SST Members' Site I would love to hear
from you. Please email me
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