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About Mark Hodge
Expertise
Questions related to technical analysis, strategies, risk, trading plans, trading psychology and money management. Experience in trading all markets and timeframes with expertise in futures (e-minis, currency futures, commodities, European Markets-DAX) and equity options. Unfortunately I am not allowed to offer any specific trading advice (i.e. should I go long the DAX today).
Experience
I have been involved in the industry since 1995 working for Morgan Stanley Dean Witter and American Express Financial Advisors before becoming a full time trader. As Head Education Coach with Rockwell Trading I have coached hundreds of students around the world to achieve their trading goals with simple strategies, a sound trading plan and proper money management for the leveraged markets.
Organizations
Currently serving as Rockwell Trading's Head Education Coach www.rockwelltrading.com and moderator for Rockwell's Day Trading Forum at www.rockwelltrading.com/forum
Education/Credentials
Formerly licensed as a financial advisor with Series 6, 7, and 63 licenses. B.A. in Organizational Communications with a Business Minor from California State University, Sacramento.
Past/Present Clients
I have worked with institutional traders, brokers, proprietary trading firms and private traders but respect their anonymity.
One of the few distinguished World Cup Advisors www.worldcupadvisors.com
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You are here: Experts > Money > Day Trading > Day Trading > Technical Tools
Expert: Mark Hodge
Date: 4/27/2008
Subject: Technical Tools
Question
Hi Mark,
I have been having some success trading 30-40 day credit spreads on individual stocks, starting small with just a few contracts. Time decay is on my side and my strikes are placed far enough away from the underlying that there is room for price movement in the underlying. I generally use a few technical indicators such as the MACD along with fundamental outlook to guide me in my stock selections. As there are so many technical indicators available, do you have an opinion on which are most important? Can I concentrate on the "top four" or "most important five" for instance? I'm not trying to take a shortcut, but it seems impossible to be truly knowledgeable about the dozens of possibilities! Thanks in advance for any input you may offer.
Answer
Hello John,
I was tempted not to answer this because I haven't traded credit spreads for a long time. I like them, but with my current trading they don't fit into my plan.
With this said, it sounds like you're right on track with what you need to know to be successful with credit spreads. I've been using proprietary software for awhile now, but am a HUGE believer of simple trendlines and Bollinger Bands. If you can become comfortable with Bollinger Bands and trendlines on a daily or weekly chart, they would probably be a nice compliment to what you are currently doing, just entering credit spreads below the trend (whether the trend is up or down).
Take a look at Bollinger Bands and let me know what you think. Here is a recording of one of our Weekly Wrap Ups that we hold for daytraders. The settings for Bollinger Bands shouldn't be adjusted because of the timeframe, but the drawing of trendlines would be the same:
https://admin.acrobat.com/_a750161837/p51314719/
Happy Trading!
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