The QQQQCrash+ with Stocks

Posted by: Pro

Updated:
08.25.09
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Description:

In the last system we demonstrated that a combination of the QQQ Crash system with the 3x2 system produced some good results backtested. And since we posted the system, it actually triggered a trade on Tuesday, the day after Christmas, which was successfully exited on Wednesday at the close after the QQQQ had 2 up days.

The system works even better when applied to stocks. We added one more twist when playing it with stocks - to only buy stocks that are gapping down the day the system triggers. It actually works fine without that condition but so many trades trigger that its not realistic to play it in practice. As you'll see from the simulation below, the system works remarkably well, playing on the long side only, in the bear market years of 2000-2002. Its a great way to play volatility.

So here's the system:

BUY: at the open when a stock closes 1.5 standard deviations below the 10 day moving average of its lows on the prior day AND when its gapping down

SELL: at the close when the stock has had 2 up days in a row.