Trading strategy: Morning Buy US

Description

The Morning Buy US strategy is a trend-following day trading strategy. The strategy focuses on American market indices. Only buy signals are acted upon. Short sell signals are not relevant. The positions are bought in the afternoon (morning in the US) at a specific point in time. Open positions are closed at the end of the day.

 

  
Suitable for : U.S. market indices (Dow, S&P 500 …)
Instruments: Futures and CFD
Trading type: Day trading
Trading tempo: Maximum 1 signal per day
Using NanoTrader Full: Manual or (semi-)automated

 

The strategy in detail

The Morning Buy US strategy uses the MACD 12,26,9 (moving average convergence divergence indicator) to determine a trend. The MACD is calculated over four hours (240 minutes). A positive MACD indicates a positive market trend.

When to open a position?

The MACD is positive when the fast MACD (12) lies above the slow MACD (26). Only when the MACD is a positive, a position is bought. In all other cases the trader does not act.

Buying a position is done at a specific point in time: 15h00. This is half an hour before the U.S. markets open.

When to close a position?

The Morning Buy US strategy uses a stop and a target. Both are expressed as a percentage versus the price at which the position was opened. The stop is fixed at 1% below the entry price. The target is fixed at 3% above the entry price. This is an ambitious target. It will only be reached a few times per year.

The strategy also contains a time filter: open positions are closed at 21h59. In most cases it is the time filter and not the stop or the target which will close the position.

 

This example shows a four-day period with a buy signal each day. The green background in the chart indicates that the 240’ MACD is positive. At 15h00 the trader buys his position. The first three days the position is closed each time by the time filter. The fourth day the stop is hit. The position is closed with a loss.


The results of the Morning Buy US strategy differ from market index to market index. These examples show back-tests over a four-year period. In our NanoTrader Full trading platform it is very simple for users to experiment with different market indices, stops and targets.

 

Result on the S&P 500 future.


 

Result on the Nasdaq future.

 

Conclusion

The Morning Buy US day trading strategy follows the market trend. The strategy limits itself to a positive trend and thus only opens long positions. Morning Buy EU is a trend following strategy in the broadest sense of the word. Given that both the stop and the target are far removed from the entry price they do not play a major role. Indeed, open positions are usually closed by the time filter at the end of the day. The trader buys a position at the start of the day if he expects a positive market trend. The remainder of the day he follows the trend. Days without a signal are not scarce.

Practical implementation

In NanoTrader Full follow these steps:
  • Choose the instrument you wish to trade.

  • Open a chart with the template study "WHS Morning Buy US".

  • Semi-automated trading? Simply activate the TradeGuard+AutoOrder or the AutoOrder function.