Technical Analysis.

This "Short-Term Trade" was based on our volume indicators.

This “best Short-term trade”
is a continuation of the previous best trade,
where we left a QQQQ Call position open. 

NOTE: We discuss our “best trades” 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.

For this “best trade”, "Buy QQQQ Calls  #1, 2" are opened
in order to close it later with profit if the index moves in our favor.
 

When do you normally close a particular “Best Trade”?

Under normal circumstances, we exit from a trade when we see a clear, unambiguous volume signal. The actual signal we look for must not necessarily be as pronounced as the one that got us into the trade. In order to play it safe, we sometimes even terminate a trade in the absence of a volume signal - for instance when we are up by 20 - 30%, or in the presence of certain market affecting factors, such as news on geopolitical events, Fed announcements, options expiration, and others. In other words, there are certain situations where we may ignore our volume indicators. It is our belief that in options trading, it is often better to take a quick profit rather than overstaying and putting the entire investment at risk.

Chart Different Views:

To put the magnitude of a volume spike in perspective, it is essential to look at charts spanning various time periods. For instance, while a volume spike may look imposing and seem critical on 1-day or 5-day chart, that same spike may not loom as large on a 30-day chart, and it might perhaps even seem insignificant on a 60-day chart. Volume spikes that appear noteworthy on short-term charts must thus always be placed in the context of the higher time periods, so that misinterpretations of their potential impacts on mid- or long-term trends can be avoided. For instance, a prominent spike appearing on a 5-minute chart could well affect an index in the short term, but it may not necessarily have much of an impact on the prevailing long-term trend.

Your trade horizon appears to apply only for the short-and mid-term. What about the long-term? Do your indicators work for long-term time frames?

Yes, they do. In fact, our indicators work for any time frame. In our “Best Trade” feature, we generally show short-term trades, because our trades are based on options, and it is our strong opinion that the short-term time frame is the best way to trade options. If you are more interested in trading the mid- and long-term, visit the "Charts Example" section. You will find several examples there that apply to mid-and long-term trades.