Aaron
Lynch
 Of recent times, trading the SPI200 has been a little frustrating when trading only with ABC trading rules. There has been a strong trend in effect though it has been difficult to enter. Trades have been opening outside our limits or if you note the swing chart since the start of October there has not been a lower swing bottom only higher swing tops. From time to time certain markets that may in fact be your favourite do everything they can to make sure you can’t trade it. This has been a topic that has been raised in my discussions with students as a trading tutor with Safety in the Market.

So I will share with you what I have discussed with them. If you like index trading then the SPI200 is a good market, but not the only market. This is why I encourage people to look further afield as you may be missing good opportunities if you are only waiting for one market to fall into line for you. The major American market indices have proven to be very strong in their trend as well and ABC trading rules have delivered some great trades in October.

Looking at the SPI200 below we see it’s been difficult to take entry and in recent times the swing chart has been pointing up giving no opportunities at this stage to enter the run based on ABC rules alone.


click chart for more detail

If indices are your choice of market, rather than waiting for the SPI200 to meet your requirements you can put it on the back burner and focus on the other opportunities available.

The chart below is the Dow Jones Index Futures contract DJ-SPOTV. In October we have seen two potential ABC Long trades. The first trade was entered on the 8th of October at 9624 and as the market moved forward this run pulled up right on the 75% milestone once again signalling the importance of previous ranges and the need to move your stops once these important pressure points have been crossed.

Moving your stops to entry plus commission once the 50% milestone was crossed then running your stops 10 points behind the next pressure point would have seen the trade stopped out just under the 75% milestone. The exit would have been taken at 9825, this was a total move of 201 points. On 1 contract this would have given a profit of $2010 USD.


click chart for more detail

The NASDAQ 100 futures traded on the CME (Chicago Mercantile Exchange) are another popular index for the US markets. The recent ABC trade on the chart below, NQ-SPOTV, yielded a profit of 25 points. Trading the E mini NASDAQ contract would have profited $500 USD per contract or for traders using the NASDAQ 100 contract at $100 USD a point, a profit of $2500 per contract could have been taken. To find out the differences in each of the NASDAQ futures contracts go to the exchange website at www.cme.com and view each of the contract specifications.


click chart for more detail

You may also note on these two charts that both of these trades on the Dow and NASDAQ have been exited. The anticipation to enter again is certainly on the cards with both markets signalling a potential point C as I am typing this article. A brief study of the major indices shows some interesting trading opportunities. The following markets have either delivered trades using ABC rules or have potential ABC trades in the making with point C’s waiting to be confirmed:

DAX, DJ-STOX 50, Hang Seng , FTSE, CAC 40, Nikkei 225 and finally a recent strong trade on the S&P 500.

So for those thinking that ABC trading and indices have been quiet then think again, looking at other markets and opening your horizons is an integral part of successful trading.

Good Trading

Aaron Lynch