Last Updated on January 26, 2023 by Mark Ursell
This article describes a Nasdaq QQQ trading strategy. The strategy is easy to manage, and it will keep you on the right side of all the major trends.
You can watch the video below to see me demonstrating the strategy.
Table of Contents
This strategy is designed to work with the Nasdaq 100 Index and in particular, the QQQ ETF. The Nasdaq is a good index for traders who want to trade trending markets. Historically, the Nasdaq has shown very good long and short trends.
Tradinformed Backtest Model
The best way to become a better trader is to learn how to test the markets. Tradinformed Backtest Models are built in Excel, and you can use them to test different trading strategies, different indicators and different markets. To see the model being used, check out the video below.
You can get the model used in this strategy in the Tradinformed Shop.
The Trading Strategy
Market Direction Filter
In this strategy, I am using two long EMAs to provide the market direction. The logic behind this is that I want the trend to change slowly and avoid whipsaws. When the green shorter EMA is above the red longer EMA, I will only trade long. When the shorter EMA is below, the longer EMA, I will only trade short.
The settings that I am using for the EMAs are 150 and 180. In the video below, you can see me demonstrating different values.
I want to enter trades on a pullback. I am using a medium term MACD to identify a market pullback. For long trades, I wait until the MACD has turned negative. For short trades, I wait until the MACD has turned positive.
I am using a MACD with the settings 11, 23, 9
The key to this strategy is good trade management. When the market is trending, the strategy looks after itself.
ATR based Stop-Loss
My initial stop-loss is set using the ATR. I am using the setting of 2 * ATR.
ATR-based Trailing Stop
The beauty of the ATR trailing stop is that it reacts to the market. The trailing stop only moves in the direction of the market. So if the market moves in the direction of the trade, or becomes calmer, the stop will get tighter.
I am using the setting of 6 * ATR.
|Gross Winning Trades||$327,708|
|Gross Losing Trades||$-98,193|
|Percentage Winning Trades||45%|
|Average Winning Trade||11,300|
|Average Losing Trade||-2,806|
|Largest Winning Trade||$57,511|
|Largest Losing Trade||$-6,693|
You can watch me demonstrate the strategy in the video below.