Wealthbuilder Stock Market Brief 16th March 2017.

Day Trade the News with Straddle Trades.

As part of my trading system I have 7 day trading strategies that I utilise. One such strategy employed is the
straddle. This strategy I use to: trade the news. (I list all the other 6 strategies below for review. Over the next few
months I hope to explain each in greater detail and provide examples of their technical set-up and actual execution).

The Straddle Trade.

The straddle trade strategy takes advantage of major market moving news events. It involves placing a long and
short trade simultaneously. Once the trend is identified, following news release, the negative side of the trade is
closed (or allowed stop out) and the positive side is allowed to run until technical break down occurs or profits are
banked by personal choice.

Up to two years ago I always used options to execute such trades but with the brilliant development of state of the
art trading platforms I not use spread betting instruments. Spread betting has the added advantage that profits are tax
free. I have opted for the IG Markets platform, but there are many other excellent platform providers to choose from.

Straddle Trade Execution.

Place the straddle trade near the close of the trading the day before the major news announcement.

Normally I place a 10 Euro bet on the Wall Street DFB (Daily Funded Bet). This is the financial instrument IG
Markets uses to track the Dow Jones Industrial Average. This means that for every point move in the index I will
win or lose 10 Euro. If I reckon the trend is going to go up I BUY the DFB. If the trend is expected to go down I
SELL the DFB. I normally use a 200 point sell stop, which means my maximum loss on the trade will be 2,000
Euro.

Depending on the announcement (the market may take a day or two to filter the news) I close the loosing position
or let it stop out. I stick with the winning trade until I see a technical breakdown happening. This allows me stay
with the momentum trend, which regularly follows such events, as long as possible. (Trading rule 3: Cut your
losses early, let your winners run).

For Your Straddle Diary.

For those of you interested in such straddle trades, please note the following 2017 major news events:

FED Meetings: May 2-3, 2017.

June 13-14, 2017.
July 25-26, 2017.
Sept 19-20, 2017.
Oct/Nov 31-1, 2017.
Dec 12-13, 2017.

French Presidential Elections:

Round 1: April 23, 2017.
Round 2: May 7th. 2017.

German Federal Elections:

24th. September 2017.

Addendum: Summary of the 6 Additional Day Trading Strategies I Use.

1. Arbitrage Trade
The Arbitrage Trade seeks to activate trades that have a high probability of success by utilizing early bearish or
bullish movement on the Wall St DBT to trade the German DAX or vice versa.
2. Momentum Trade.
With the momentum strategy one aims to enter a strong trend and remain in the position as long as technicals are
supportive.

3. Swing/Continuation Pattern Trade.

The objective of this strategy is to identify high probability swing or continuation pattern trades.

A. Flag Formation.
The flag pattern forms what looks like a rectangle. The rectangle is formed by two parallel trend lines that act as
support and resistance for the price until the price breaks out. In general, the flag will not be perfectly flat but will
have its trend lines sloping.

B. Pennant Formation.
The pennant forms what looks like a symmetrical triangle, where the support and resistance trend lines converge
towards each other.

C. Descending Triangle Formation.

The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. No
one can tell for sure how long it will last. There are instances when descending triangles form as reversal patterns at
the end of an uptrend, but they are typically continuation patterns. Regardless of where they form, descending
triangles are bearish patterns that indicate distribution.

D. Ascending Triangle Formation.

As above but the ascending triangle is a bullish formation that usually forms during an upward trend as a
continuation pattern.

4. Bollinger Band Trade

The Bollinger Band Squeeze occurs when volatility falls to low levels and the Bollinger Bands narrow. Periods of
low volatility are often followed by periods of high volatility. Therefore, a volatility contraction or narrowing of the
bands can foreshadow a significant advance or decline. Once the squeeze play is on, a subsequent band break signals
the start of a new move.

5. Channel/Range Trade.
In the context of technical analysis, a channel is defined as the area between two parallel lines and is often taken as a
measure of a trading range. The upper trend line connects price peaks (highs) or closes, and the lower trend line
connects lows or closes.

6. Candlestick Pattern Trades

Candlestick pattern trades seek to scalp profits through trading highly recognizable candlestick formats.

A. Formation: Hammer.
The hammer pattern normally appears when a short term down trend is about to change. The longer the length of the
taper the better.

B. Formation: Bullish Engulfing.

With the bullish engulfing formation pattern the longer the bullish candle the higher the probability that the BUY
move it indicates will persist.

C. Formation: Bearish Engulfing.

The bearish engulfing formation pattern indicates the higher the probability that a SELL price movement is in the
ascendance.

D. Formation: Shooting Star.

The shooting star pattern normally appears when a short term up-trend is about to change. The longer the length of
the taper the better.
E. Formation: Doji.
The Doji pattern normally appears when there is complete indecision as to future trend. The next significant candle
that appears after the Doji is used to anticipate trend.

F. Formation: Spinning Top.

Like the Hammer the Spinning Top pattern normally appears when a short term down trend is about to change. The
longer the length of the taper the better

Christopher M. Quigley 16th. March 2017

www.wealthbuilder.ie
info@wealthbuilder.ie

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