Since the Covid-19 Market Selloff in the Spring of 2020, the US Equity Indices have made a steady, rebound. Looking at the charts, the uptrend shows that roughly 7 out of 10 trading days are bullish, compared to the previous day.
Let's take a look at the emini Nasdaq (/NQ) Daily Chart.
This chart is grinding steadily upward, riding above the 3 EMA, the T-Line (8 EMA) and the 50 and 200 day Simple Moving Averages. With this kind of uptrend, you just want to stay long until the market closes below the T-Line.
Here's a simple, set-it-and-forget-it way to trade this uptrend with Nadex. The simple proposition is that the /NQ will close tomorrow ABOVE today's close.
- Record the previous day's close. In this example it was 11636
- At 6pm ET, when Nadex opens, find the Daily Expiry (4:15pm) strike price nearest the previous close. In this case, the strike price was 11632
- Place a Limit/GTC Order to BUY the US Tech 100 (Sep) Index >11632 for $50 per contract.
- Select the number of contracts you wish to trade. For any trade I make, I like to be as close to 2% account risk per trade. This is a demo account with a $16,000 balance. 2 percent is $300, so 6 contracts were purchased.
- Maximum Risk is $300 on this trade. Maximum reward is also $300 (less exchange fees).
- Place the Limit order and wait for it to fill.
Let's see how this trade is playing out:
- The Limit Order was placed at 6PM ET Monday Evening
- The Limit Order filled at 7:15am Tuesday Morning.
- After taking some heat at the Opening Bell, the trade moved up sharply.
- With 4 hours, 51 min. remaining in this trade, it is up $168 out of a maximum $300 available.
I'm going to let this trade run until expiration. All it has to do is finish 1 tick above 11632 to collect the maximum profit of $300 and to confirm the resumption of the bullish uptrend.
If the NQ settles at or below 11632, then I collect $0, and I forfeit the $300 I put up as risk money to secure the trade. It will be a small 2% loss against a trend where the odds were on my side.
Trade Conclusion
This trade took a little bit of heat in the morning, but took off in the afternoon settling at 11726, well above the 11632 strike price. Maximum profit of $300 was collected (less exchange fees), for a 100% return on capital risked.
