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May 9th, 2004
This week's “best trade of the week”
is a continuation of the
previous week’s best trade,
where we left a QQQQ Call position open.
This trade was closed with
20% of profit.
NOTE: We discuss our “best trades of the week” here mainly for educational purposes. The trading examples we illustrate are based principally on our volume indicators and market commentaries. Our main intent is to show you how you can apply our volume indicators and to explain the specific correlations that exist between volume spikes and the movement of the indexes. We do not mean to imply that you should follow our exact trades, but rather wish to suggest that you may make use of our volume analytics to develop your own trading style. We also urge you to paper trade before committing your money to the markets.
| Security | Return |
| Call #2 (QQQQ June) | +19.23% |
|
Total Profit: |
+$2,500 |
|
Nasdaq 100 Indicator |
Even though the trades shown above were not entirely without risk, they resulted in a profit of $2,500
Notes:
In the following, we would like to show you the motivating factors that led us to take above trades. For this purpose, we have created what we call a 'Table of Trade Motivators':VMA spike: An enduring uptrend or downtrend does not usually change its course unless the market generates a large spike in the Volume Moving Average to the upside or downside, which is reflective of significant selling or buying activity, respectively. This knowledge allows you to time your mid- and long-term trades.
Resistive volume: When we speak of ‘resistive volume’ or ‘volume to the upside’, we are referring to any amount of volume that is being generated as the index moves up.
Supportive volume: When we speak of ‘supportive volume’ or ‘volume to the downside’, we are referring to any amount of volume that is being generated as the index moves down.
To help you distinguish clearly between supportive and resistive volume, look at a 1-day JavaVolume™ chart using a volume moving average of either 5 or 15 minutes.
| Trade | Volume Motivation |
| Buy Call #2 04/29/2004 Was left opened last week |
After opening, the market immediately began to move lower, but shortly before 10:00 it encountered a moderately large supportive VMA spike to the downside. By 12:30, a very large supportive volume spike to the downside was generated, but the only impact this supportive VMA spike had on the market at this point was to temporarily halt the decline and move it slightly higher through to 13:45. The market continued its decline until it ran into another very large supportive VMA spike to the downside at 14:45. |
| Sell Call #2 05/04/2004 |
After initially opening higher, the market continued to move higher. By 10:00 the market encountered a very large resistive VMA spike to the upside. |
These are the trades which netted the returns shown above:
Date |
Trade | Strike | Expiration | Contracts |
Contract Price |
Amount | Profit |
| 04/29/2004 | Buy Call #2 | $100 | June | 100 | $1.3 | -$13000 | |
| 05/04/2004 | Sell Call #2 | $100 | June | 100 | $1.55 | +$15500 | +$2,500 |
|
Total: |
+$2,500 (+19.5%) |
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To see any of our past best trades, simply select from the list below.
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QQQQ Trading System QQQQ, SPY and DIA trading signals for conservative mid- and long-7 term traders ...
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