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Technical Trading Strategy: Perfect Order

Kathy Lien

DOI: 10.1002/9781119212997.ch16 (Economics, Econometrics and Finance)
License: not stated (all rights reserved)

Abstract: The perfect order is a strategy that can be high profit but low probability and low frequency. This means there could be numerous stop outs before a long trend emerges. For an uptrend, a perfect order would be a situation in which the 10-day simple moving average (SMA) is at a higher price level than the 20-day SMA, which is higher than the 50-day SMA. To optimize the perfect order strategy, traders should also look for average directional index (ADX) to be greater than 20 and trending upward. Entry and exit levels are difficult to determine with this strategy, but generally speaking, one wants to stay in the trade for as long as the perfect order remains in place and exit once the perfect order no longer holds. Perfect orders do not happen often, and the premise of this strategy is to capture the perfect order when it first happens.

Published on 08 Dec. 2015