Wednesday, March 26, 2008

QM Divergence 3-26-08

Our QM trade setup this morning combined divergence of our oscillator with price. This setup was confirmed with a doji candle. Now a lot of people tell me that trading the QM is "risky" because it is a volatile and high priced futures contract. However, risk is all in the eye of the beholder. For a mere $.12 stop I was able to let our profits ride to $1.08. Remember, risk is all what you make it.

Entry 104.38
Stop 104.26
R = 12 ticks
Initial target 104.70 (100% retracement)
R to R ratio: 2.65

Actual exit was at 105.46 for +59 points or +9 R
My exit was an opposing divergence signal in the opposite direction confirmed with a bearish hammer. This is a more aggressive exit than a trailing stop, however, it works well in certain markets. If one wanted to play things more conservatively, they would exit half their position at the 161% retracement level and then wait for an opposing signal to exit (you don't always get one of course).

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