IJH Strategy

This strategy is based on a barchart.com chart showing IJH with two studies. The first study is the donchian channel with a time frequency of "Daily" and a width for the Donchian Channel of 2. The second study also has a time frequency of "Daily" and it has a red simple moving average with a time length of 8 days, and a blue simple moving average with a time length of 60 days.

Trade Rules

Taking a Position

A breakout signal is generated when there is an end-of-day close outside the channel. If this breakout is an upward breakout, and if the slope of the red moving average is positive, you can go long. If this breakout is an downward breakout, and if the slope of the red moving average is negative, you can go short.

Setting Stops

If the slope of the red line is inconsistant with the slope of the blue line, the stop should be fairly tight. If shorting, the stop should be set equal to the high of the day before the position is bought. If not shorting, then the stop should be set at the low of that day. If the slope of the red line is consistant with the slope of the blue line, then the stop can be much looser. The stop can be set at the most recent pivot high or pivot low.

Other Rules

Do not let a winning trade turn into a losing trade. In other words, once the investment gets "in the money" a break even stop order should be placed.

A signal that yields an entry price very near a double top or a double bottom should be ignored.

If a weekly trend is signaled, it can be followed using the same rules as described above. To determine whether a weekly trend has been signaled, simply change the barchart.com chart so that the time frequency is weeks rather than days, and interpret the chart according to the usual rules.

After receiving a counter-trend signal, it is often best to wait a couple of days, and let the price do a "Pinnochio" through the 8 moving average before buying a position. (The 8 moving average is the red line. A signal is a counter-trend signal, if the slope of the red line is inconsistant with the slope of the blue line.) If the price then closes on the "wrong" side of the red line, the trade should not be taken. If the price closes on the "correct" side, then the trade can be taken at that time. It is left to the trader's discretion, to determine whether he should wait 1 or 2 days for the "Pinnochio". If there is a reconfirmation of the downtrend on day 1 after the initial signal, then the position should be taken on day 1.