Trade of the Day: QID Crossovers

(click above for larger image)

Here's an anatomy of a series of theoretical trades using the 4-8-21 period EMA with 3-minute bars with QID today:.

Trading Rules:
BUY on 4-EMA crossing above 8-EMA, confirmed with 21-EMA cross
SELL on 4-EMA crossing below 8-EMA, confirmed with 21-EMA cross
SELL on Volume Spike if price has run up (reversal can be too fast and give up gains)
SELL Short on 4-EMA crossing below 8-EMA

Ideally you want to have a set up with 4 & 8 EMAs crossing over the 21 EMA.

I use a candlestick chart with 3-minute bars, but in fast acting markets the 1-min bar can give you a better timing, albeit your reaction time may not match the 1-min bar. I shift back and forth in my charting program (Quotetracker) between 1-min and 3-min bars.

Other things to mark/track on your charts:
1. Daily Trendlines - What is the previous day's & week's high/low
2. Historical charts - Past 1-3 months, what is trend? Channel, up, down, sideways?

Some notes:
1. If trading at top of channel in historical charts be prepared for reversal (e.g. Nasdaq)
2. Breakouts from channel when a trading range has been established for some period (OIH is a good example of this)

Trade # 1
BUY: $36.025
SELL: $35.88

Profit/Loss: -$0.145
500 shares: ($72.5)
1000 shares: ($145)

Trade #2
SELL SHORT: $35.97
COVER: $35.77

Profit/Loss: $0.20
500 shares = $100
1000 shares = $200

Trade #3
BUY: $35.90
SELL:$36.40 (note volume spike at 1121am, price = $36.55)

Profit/Loss: $0.50
500 shrs = $250
1000 shrs = $500

Trade #4
BUY: $36.42
SELL: $36.78 (1-MIN BAR ON SELL SIGNAL OR FOLLOW SELL ON GAIN = $200)

Profit/Loss: $0.36 OR $0.23
500 SHRS = $180/$115
1000 SHRS = $360/$230

Trade #5
BUY: $36.63
SELL:$36.82 (on vlume spike)

Profit/Loss: $0.19
500 shrs = $95
1000 shrs = $190

Trade #6
BUY 36.67
SELL 36.94

Profit/Loss: $0.27
500 shrs = $135
1000 shrs = $270

TRADE #7 LONG QLD
BUY: $113.75
SELL:$114.20

Profit/Loss: $0.45
500 shrs = $225 (note, due to price of the shares, max. shares = 500)

GRAND TOTAL:
500 shrs = PROFIT $847.50 (minus commissions on 7trades x $5 = $35) = $812.50 net
1000 shrs = PROFIT $1,470 (minus 6x$10 and 1x$5 = $65) = $1,405 net

Next post...putting it all in action!