Dow Jones Industrial Average trade idea: How to play the long term trend accelerating higher

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Part 1) Introduction

VolatilityMarkets suggests trend-inspired trades that capitalize on market trends.

In the short term Dow Jones Industrial Average has been decelerating higher. In the long term Dow Jones Industrial Average has been accelerating higher. With the long term trend being the stronger of the two, we propose a long trade idea with a one week time horizon.

Part 2) Trade idea details

Buy $ 42,321 USD of Dow Jones Industrial Average, take profit at $ 34,522.7894 level with 50.01% odds for a $ 999 USD gain, stop out at $ 32,929.0981 with 50.0% odds for a $ 1,000 USD loss through 1w time horizon.

The BoxPlot below outlines the take profit and stop loss level placement of the trade idea, the inter-quartile range of expected traded outcomes, as well as the best and worst case scenario on the whiskers.

Scenario analysis

There is a 50.01% probability that the take profit level will independently trade over the 1w timeframe.

There is a 50.0% probability that the stop loss level will independently trade over the 1w timeframe.

There is a 25.0% probability that neither the stop loss level nor take profit level will independently trade over the 1w timeframe.

There is a 25.01% probability that the strategy succeeds by having the take profit level touch and the stop loss level not touch over the 1w timeframe.

Part 3) DIA trend analysis

DIA last price was $ 33,726.00 . The long term trend accelerating higher is stronger than the short term trend decelerating higher. This trade goes long when price has been moving higher and accelerating over the past 23 days.

Price summary

Today’s last mid price was $ 33,726.00.

Price changes

Over the past 23 Days, the price has increased by 15.83% percent.

Long-term trend analysis

This trade goes long when the price was moving higher but decelerating over the past 23 days.

Over the past 23 days, the price has on average been accelerating $ 8.00 per day

Short-term trend analysis

This trade goes long when the last change was higher but decelerating.

Over the last session, the price has decelerated $ -147.00.

Part 4) DIA value analysis

Over the past 23 days, the DIA price increased 17 days and decreased 6 days. For every up day, there were 0.35 down days. The average return on days where the price increased is 1.3117% The average return on days where the price decreased is -1.2124% Over the past 23 Days, the price has increased by 15.83% percent. Over the past 23 days, the average return per day has been 0.6883% percent.

Market skew

Over the past 23 days, the DIA price increased 17 days and decreased 6 Days.

For every up day, there were 0.35 down days.

The average return on days where the price decreased is -1.2124%.

Part 5) DIA worst/best case scenario analysis

Within 1 week, our worst case scenario where we are 95% certain that this level won’t trade for DIA, is $ 31,342.3702 , and the best case scenario overnight is $ 36,109.6298 . levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that $ 32,929.0981 could trade and that $ 34,522.7894 could trade. These levels are within statistical probability.

Expected range

Within 1 week, our worst case scenario where we are 95% certain that this level won’t trade for DIA, is $ 31,342.3702 , and the best case scenario overnight is $ 36,109.6298 . levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that $ 32,929.0981 could trade and that $ 34,522.7894 could trade. These levels are within statistical probability.

Probability vs payout chart

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

Key takeaways

  • Price today $ 33,726.00.

  • Over the past 23 days, the DIA price increased 17 days and decreased 6 Days.

  • For every up day, there were 0.35 down days.

  • The average return on days where the price increased is 1.3117%.

  • The average return on days where the price decreased is -1.2124%.

  • Over the past 23 Days, the price has increased by 15.83% percent.

  • Over the past 23 days, the average return per day has been 0.6883% percent.

  • Over the past 23 days, The price has on average been accelerating: $ 8.00 per day higher.

  • Over the last session, the price increased by $ 304.00.

  • Over the last session, the price increased by 0.9014 %.

  • Over the last session, the price decelerated by $ -147.00.