Click on the chart to enlarge it.
At any rate, if the NMA was selected as the stop process (recommended since the trade was being driven from above) the exit was triggered the week ending 4/30/04 (shown on chart), a full 20 months after the entry signal!
This shows you how high timeframe analysis really helps find the big, long-term trends. The total profit here from a one contract position here was in excess of $21,000. And remember that the initial risk was about $1,500, making this a 14-to-1 risk-to-reward trade!
Note that these calculations don't include the NMC Add On trade generated in March of 2003 that also never violated its NMA until 4/30/04. This second position was worth another $14,000, for a total of $35,000.
Had the Fast NMA been employed as the stop mechanism (not recommended in this instance), the stop would have been hit the week ending March 21, 2003 (see arrow on chart) for a profit of about $6,000. That's still a 4-to-1 trade based on initial risk.
Then the following week a re-entry trade would have put you back in for another $5,000+ profit before the exit on the week ending July 18, 2003 (see arrow). This trade required a little less risk than the first one, so the reward-to-risk was still approximately 4-to-1.
(This is the end of Part 8. Go to Part 9.)
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