Market volatility is always a challenging factor in making sound investment decisions. Recently, bullish runs have resulted in market indices hitting new highs. At the same time, economic uncertainties and global instabilities create doubts that lead to broad-sweeping concerns about financial market performance.
For every investor that believes that we are in a cycle that will go on indefinitely, there is at least one other investor that sees the over-valuation and market-bubble conditions.
Add to this the low trade volume of the summer months and the previously smooth market runs all of a sudden start to get choppy.
Investors find themselves searching for strategies that will allow them to take advantage of these market conditions. Watch and learn from this video clips on vimeo.com.
One such strategy, the “Lock and Walk” is designed to generate positive returns in choppy market conditions.
While not a buy and hold technique and not involving short-selling, Lock and Walk makes use of support and resistance levels of the Nasdaq 100, NDEXNASDAQ:NDX, using them as the parameters within which trades are executed.
The basic idea is simple enough. The ProShares UltraShort QQQ QID, and the ProShares Ultra QQQ QLD, are traded when index support price and index resistance levels become tested or broken.
Simply, when the support level is tested by QLD target resistance to sell. When support breaks, sell QLD.
When the resistance level is tested by QID , target to sell. When resistance breaks, sell QID.
These are techniques already familiar to technical traders. Purchase near support and sell at resistance. Stop limit out when support breaks.
When Lock and Walk accumulates 67 basis points in gains, it shuts down, forcing the system to wait until the next trading day before resuming operations. This feature makes it unsuitable for buy and hold strategies. The technique functions as expected in choppy markets.
Irving, Texas-based NetPicks was started by Mark Soberman in 1996. The firm was launched during the height of the rise in popularity of online day trading. NetPicks has earned the reputation of providing quality trading education in modern fluctuating markets.
NetPick’s areas of expertise include futures, options, FOREX currencies, technical analysis techniques, exchange traded funds and stocks. Get started, head over to netpicksetfinvestor.com.
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