AboutMark 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
Expert: Mark Hodge Date: 5/2/2008 Subject: Technical Tools
Question 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!
---------- FOLLOW-UP ----------
QUESTION: Mark, Thank you VERY MUCH for the link to the presentation by Marcus and yourself. I certainly see the importance of trendlines as you indicated. I intend upon taking a closer look at the Bollinger Bands and how I can incorporate them into my stock selections. I visited the Rockwell website and must say I am intrigued. At present, my situation does permit dedicating much time, but I forsee retirement within a year, so my situation will change. Marcus mentioned Robert Green as being a webinar guest a few weeks back who presented the IRS issues regarding making a business out of trading. Is there an archive of that presentation that is available to me? If so I would appreciate the opportunity to view it. Thanks again Mark for your assistance.
John
Answer Hello John,
Sorry about the delay! Would you mind emailing me at support@rockwelltrading.com I think we have this archived for our students. I'll see if I can provide it to you, but it would be easiest if I had your email address.
