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YMH2, (3, -1) formula, Stretch profit, 17 January 2012


17 January 2012:
The trading day after holidays tend to rally.

March $5 Dow futures (YMH2), basis trading from unchanged, applying the (3, -1) formula and fading the first intra-day move, the first move was printed lower lows from unchanged less the Stretch calculation, 12390 - 34 = 12356. That said, ... waiting for unchanged less 1.618% of the Stretch = 12390 - 55 = 12335, whereafter YMH2 prices printed a higher low at 12330.

12390 - 55 = 12335 = (-1) of (3, -1), ...
12335 + 34 + 34 + 34 = 12437 = 12335
12335 + Stretch + Stretch + Stretch = 12335
12335 + 34 + 34 + 34 = 12437 completes the (3) of (3, -1) price measuring trading objective formula.
Trailing stops risked eights (8) points, i.e., risk $40 per contract
Reward : risk ratio = 12.75 : 1