The Technical Trigger to Find Bullish Bursts in Nvidia
Date Published: 2019-01-25
DisclaimerThe results here are provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation.
LedeNever get blind sided again by a bear market.
PrefaceRecently we wrote on The Exact Bearish Trigger in Nvidia. Today we look at the other side.
There is a technical set up such that it triggers bullish times to trade Nvidia, even in a bear market, that has shown triple digit returns during the bear market of late 2018, and quadruple digit returns (1741%) over the last three-years.
Finding these patterns should be straight forward. And with the upgraded Trade Machine, which is now a stock backtester as well as an option back-tester, now they are.
There is such a technical condition, and we will review it, right now. Also, if this trigger looks familiar, it should, it is the same bullish trigger that has worked with Amazon, as well.
The Short-term Bullish Option Trade in NvidiaWe will examine the outcome of going long an out-of-the-money (strike price is set to the 40 delta) call option, in options that are the closest to 30-days from expiration. But we follow three rules:
* Never Trade Earnings
Let's not worry about stock direction or earnings, let's try to find a back-test that benefits from volatility. Here it is, first, we enter the long call.
* Use a technical trigger to start the trade, if and only if these specific items are met. As of this writing, 1-25-2019, the conditions are not yet satisfied.
Wait until the day that the stock price crosses above the 10-day moving average and the 50-day moving average (DMA) is above the 200-DMA and the 21-DMA is above the 50-DMA. Those last two requirements are sometimes called "stacked moving averages." Here is a nice simple image of the technical requirement:
You can set an alert in Trade Machine®, which will track all of these moving parts for you, and message you when it triggers. In fact, you can do this with a portfolio of stocks for a portfolio of bullish and bearish triggers. Never get blind sided again by a bear market.
* Finally, we set a very specific type of limit:
* Use a 30% limit
* Close the trade after 15 trading days, if the limit has not been hit.
At the end of each day, the back-tester checks to see if the long call is up 30%. If it is, it closes the position. If after 15 trading days the limit has not been hit, the call is closed so not to suffer total time decay.
RESULTSHere are the results over the last three-years in Nvidia:
The mechanics of the TradeMachine® Stock Option Backtester are that it uses end of day prices for every back-test entry and exit (every trigger).
Setting ExpectationsWhile this strategy had an overall return of 1781%, the trade details keep us in bounds with expectations:
➡ The average percent return per trade was 23.9%.
Checking the Moving AverageYou can check moving averages for NVDA on the Pivot Points tab on www.CMLviz.com.
Back-testing More Time Periods in NvidiaNow we can look at two bear markets. First, We check the six-months from 2018-07-01 through 2018-12-31. NVDA stock was down 44.7% during that time period, but getting bullish at the right times was unscathed:
In a period where NVDA stock saw a negative 44.7% return, this bullish trigger saw a 197% positive return.
WHAT HAPPENEDTrade Machine gives you the capacity to trade beyond luck.
Tap here to see it for yourself
You should read the Characteristics and Risks of Standardized Options.
Past performance is not an indication of future results.
Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment.
Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.
Please note that the executions and other statistics in this article are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity and slippage.