We’re slowly moving into 2021, and the markets have begun picking up from the slower holiday season. Holiday breaks are over, and it’s time to work on the goals for this year. 2021 provides a fresh perspective after a year of historical movements. This year offers a unique opportunity for NASDAQ, perfect for our NASDAQ trading strategy.
The Election Year
For every year after a new election, NASDAQ has on average moved 28% up or down. This movement has happened every election year since 1988. It is a massive movement as NASDAQ commonly moves at a slower rate. To take advantage of this large movement, we need to employ a few steps.
Establish Direction
The direction is the first thing we need to determine. It’s tricky due to the division between the two main political parties of Trump and Biden. We don’t need to get political, but we have to understand the effect on the market. This division is causing uncertainty.
For a while, we had two parties, each claiming they were the winner. From top to bottom, they are almost opposites in policies and implementation strategies. Even after verifying the results, the market was still hesitant to commit.
It took some time before Biden was officially recognized and inaugurated. Now that it’s official, here are the questions we need to ask:
- How did the market react after the inauguration?
- Can the President realistically accomplish what he promised?
Now that we’ve passed through January, we saw a lot of consolidation. The market established the boundaries of a range. We can expect to see a large movement in the market of around 1,000 ticks, which will catch most of the market off guard. It happened before for the Russell 2000 when the market reacted to the news about the vaccines. Once the market reacts as bullish or bearish, then we can go to the next step.
Trading After the First Large Move
Once we know the direction, we can establish our positions. A 28% move is right around 10,000 ticks of movement, and one e-mini contract equals around $50,000 with that move. We plan to trade once we see that breakout from the range. For every one e-mini traded, we can expect around $4,000 a month. That is a lot of money, considering that this is only one symbol.
$4,000 a month is the low end of what you can get if you place your position in line with the market direction. If we catch it at the right moment, we can capitalize on the full $50,000 value. If you trade three e-mini contracts, then you can walk away with at least $4,000 a month from now until November this year.
If you manage to find a market that reacts similarly, you can get even more money this year. For now, NASDAQ looks to be very profitable, and we can expect to walk away with some good money earned after all is said and done.
A Better Outcome?
There is always the possibility that we can earn much more, but we are taking a more conservative look for now. We can’t be 100% certain as we are in a different environment. The market has been moving unusually since 2020. Even then, history shows us that there is a good possibility that our NASDAQ trading strategy will lead to success.
