The NLO strategy (Nasdaq Long Only)

Description

The NLO strategy is designed for day trading the Nasdaq market indices. The strategy, designed by trader Eric Wagner, is based on these principles.

1. Only buy signals are given.
2. Intra-day seasonal effects are combined with technical analysis.
3. The proprietary seasonality filter identifies bullish market days.
4. Signals can only appear during bullish market days.

Although it is a day trading strategy, the number of buy signals is fairly limited. The strategy designer recommends automated trading.

 

Suitable for	: Nasdaq market index
Instruments	: Futures and CFD
Trading type	: Day trading
Trading tempo	: Up to 1 signal per day
Using NanoTrader Full	: Manual or (semi-)automated

The strategy in detail

The NLO strategy only trades on Tuesday, Wednesday and Thursday. The seasonality filter excludes Mondays and Fridays. If the seasonality filter determines the market is bullish (indicated by the green chart background) on Tuesday, Wednesday and Thursday up to one buy signal can occur.

When to open a position?

A buy signal occurs when the market price is above a channel based on a combination of moving averages. This event must occur between 9h00 and 11h00 CET. This period is indicated by a stronger green colour in the chart background. A buy signal is indicated by a dark green line in the chart background.

When to close a position?

The open position is managed using two top features of the NanoTrader platform: multiple profit targets in order to maximize profit and a Break-Even-Trail stop loss (betrail).

The strategy uses three profit targets. The betrail stop loss order is placed 54,5 points below the entry price. When the first target is reached, the stop loss moves to the break-even level. When this occurs, the trader can no longer lose.

The NLO strategy closes any remaining position automatically at 20h00 CET. This period is indicated by the purple colour in the chart background.

Note: The NanoTrader places and manages all these orders automatically, but the trader can still cancel or change the orders in the chart. Orders can be clicked and dragged to another price level.

This example shows a new position. The position is protected by three profit targets and a stop loss.

This example shows the position after the first profit target was reached. The stop loss moved automatically to the trader’s break-even price (his entry price). This trader has locked his profit in  and cannot lose anymore.

This example shows the position after the second profit target was reached. The break-even stop automatically converted into a trailing stop. Notice that the quantity of the stop loss order automatically changes, after the targets are reached!

Conclusion

The NLO strategy is easy to understand and use. It integrates proven concepts such as multiple profit targets and a BE-Trail stop loss. The strategy only trades buy signals and only when it considers the market to be bullish. In theory the perfect combination.

Practical implementation

Using the NanoTrader Full follow these steps:

• Select the Nasdaq and open the chart.
  

• Select the template study "WHS NLO" in the "WHS Strategies" folder.

• If required, adapt the settings.

• If you want to trade semi-automatically (open position manually, close position automatically), activate TradeGuard+AutoOrder in the chart. If you want to trade automatically, activate AutoOrder in the chart.