A Spread Betting Strategy Created by Many
In November 2010 I thought it might be fun to try and create a new spread betting strategy. I asked the members the spread betting forum to post in turn the parameters to create the strategy. The idea is we will all learn how to develop new spread betting strategies and the thought process that is required. It turned out to be a very popular discussion and the resulting strategy is detailed on the page below. If the discussion is still ongoing feel free to join in.
A New Spread Betting Strategy
– name to be determined
Setup
Buy criteria:
Price > 200 day EMA
200 day EMA rising
RSI(14) < 30 (oversold)
Volume decreased for two successive days
Price decreased for two successive days
Sell criteria:
Price < 200 day EMA
200 day EMA declining
RSI(14) > 70 (overbought)
Volume Decreasing for two successive day
Price increased for two successive days
Entry Triggers
Buy:
When price passes high of previous bar
Sell:
When price passes low of previous bar.
Stop Placement
The examples that follow below use the values:
N = 3
X = 1.5
Y = 2.5
Using a 10 period ATR value.
Buy:
Set our stop below the low of the last N bars. Lets call it NLow
If NLow is between closePrice-(XxATR) and closePrice-(YxATR) then we use NLow. So closePrice-(XxATR)>= NLow >= closePrice-(YxATR)
If NLow is greater than closePrice-(XxATR)then we use closePrice-(XxATR).
If NLow is less than closePrice-(YxATR)then we use closePrice-(YxATR).
Sell:
Set our stop above the high of the last N bars. Lets call it NHigh
If NHigh is between closePrice+(XxATR) and closePrice+(YxATR) then we use NHigh. So closePrice+(XxATR)<= NLow <= closePrice+(YxATR)
If NHigh is less than closePrice+(XxATR)then we use closePrice+(XxATR).
If NHigh is greater than closePrice+(YxATR)then we use closePrice+(YxATR).
% of funds to risk per trade
In this strategy we will risk a maximum of 2% of total funds per trade.
Position Size
Since we know the entry price, stop position and % of funds we will risk we can calculate the position size using the following calculation. Alternatively you can use my free position size calculator.
Buy:
(% of funds to risk in £ pounds)/(Entry price – Stop Position) = £ pounds per point stake
Sell
(% of funds to risk in £ pounds)/(Stop Position – Entry Price) = £ pounds per point stake
When to move stops
We will employ a trailing stop solution and trail our stop at 2.5xATR(10) of the closing price.
The discussion continues. Join in here
