BetonMarkets Strategy Part 2: Trend Trading

The most popular style of trading is attempting to ride a trend. And for good reason - it works. Not every time of course, but just a few of the winning trades which extend for a long period of time will more than make up for all the losers. This is how the now-famous turtle traders made millions in the futures markets in the 1990's. A smart BetonMarkets player can emulate their basic strategy to grow their account into the stratosphere, if they have the patience to wait for the big ones.

Probably the best wager type to use is an expiry bet. My advice is to shoot for the stars on these - go at least 90 days out and pick a level about as far out as BOM will let you. You want the big odds payouts when you catch a good trend.

As discussed in the last article, trends start after a breakout from a range. There are several different methods of deciding when to enter your position.

• Channels and Trendlines

• Reversal patterns

• Oscillator indicator patterns

• Moving averages

Let's take a closer look at that last one, as using moving averages is a very simple and very popular way to time your entries. Here is a method of doing that for trading the DOW:

Use a 6-month chart with Dow Jones Index. Change the bar chart to line, the Indicator to Moving Average and the number of days to 100. Then, use another chart but this time put 250 as the number of days.

Example of trend-following strategies using the Simple Moving Average

Looking at a 6-month DOW chart last year, by the middle of May the price crossed below the 100 day SMA, then took less than a month to cross below the 250 day SMA and continue going downward.

When a price moves below a moving range chances are it is following a path of least resistance. Looking further along the chart, you will see that by the middle of May the price moved above the 250 SMA at around 10440 and continued upward to touch the 100 SMA at around 10520 after a few days.

Perhaps you can use this for a One Touch bet. At this game it is worth buying a bet just above or below the next major SMA. So you need to see when the price moves above or below a major SMA and look where the next major SMA is.

Another case is when the price moved below the 100 day SMA at around 10600 it is reasonable to expect that it will continue to fall and perhaps move below the next level. This time if you want prove your assumption you could buy a bet for One Touch or Bear Expiry betting that the market will continue to fall.

When the market is at 10600, the 250 day SMA is at 10450-10480. You can place a bet that the Dow Jones index trades at or through 10450 within the next 30 days. If the market then trades at 10450 even for a second in the middle of the trade, your bet expires and you get the payout.

This strategy is simple (but not always guaranteed). However, your total risk is the cost of the bet and this is different from spread-betting because the worst that could happen is that you lose your bet. Also there is no need for a stop-loss level; all you need is to bet and wait.

The BetonMarkets on-site charting allows you to plot up to 10 different SMAs. This could be used for plotting SMA trades over multiple time-frames.

In the final segment of this article series we will look at strategy dear to my heart, range trading reversals.

Disclaimer: The information on this website is for entertainment purposes only and is not to be taken as financial advice. Always consult your professional financial advisor before undertaking any investment or trading plan. In some jurisdictions financial betting at BetonMarkets.com might be considered online gambling and therefore be deemed illegal, so check with your local laws first. There is risk associated with trading or financial betting and you can lose money. Proceed at your own risk.

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