QQQQ index trading, charting

I miss playing with the charts to figure out trades and back testing and whatnot, so I like getting back into this again. It let's me do my own thing.



This morning I had not really formulated all of the rules and plans for trade management nor had I really thought the whole thing through. Seeing as the older option pricing is not as easy to sift as a stock I could not really work out the full potential of some variances of the trades.

In the above chart I entered the short trade, in hindsight I know why but I do not know why I did not enter the long trade instead or as well. I saw the setup, the huge gap (don't trade against a large gap...DUH!) and should have gone long where indicated. I know I certainly thought about it but I was stuck in my one trade mindset this morning.

I bought a put (July 23, 44 put) for 50 cents and held it for a 10 cent stop loss. Once the price hit the low of day the first time I recognized that it was a prime entry for a long call being that it was not only at a support level but it was immediately following a large gap down. If I had a choice to play a gap I would choose to always play it to fade the gap. I think I was sidetracked with other trading today and that is partly why I was not on the ball.

So a 10 contract trade at a 10 cent loss leaves a $100 loss.

The long trade was also 50 cents (July 23, 44 call) a few minutes earlier. I should have sold the put for a profit (9 cents or $90 dollars) and bought the call.

Following my various plans would have me exiting the call trade at 67 cents for a 17 cent profit (I marked it down when I saw it as if trading it, not just backtesting). With the 10 contract tradee that was $170.

Using the trailing stop or EOD produced the same result as it was a great uptrending day, exit was $1.35 or an 85 cent profit, $850.

So, entering the put trade at teh ideal time and entering the call trade at it's ideal time would have me netting $750, not bad for an indecisive trade after taking both sides. I would expect that there would be times where the day whipsaws me out of both trades for a loss but it would take a lot of that to eliminate these sorts of gains. I almost exited the put trade, had I had more confidence in my trade plan (newly formulating) I would have exited and bought the call. Each time that I take a profit decreases the odds of ending on a down day. Had I actually done that today I could have easily netted over $900.

Should have, would have, could have means nothing in trading other than to teach a lesson or enlighten on a tweak to a system.

Jeff.