by Scott Rothbort
 on June 15, 2010

The 1% Rule Trade has the following parameters. If at 10:30AM the S&P 500 (SPX) is rising by at least 1% then traders should short sell index exchange traded funds (ETFs), futures or similar products. If at 10:30AM the S&P 500 (SPX) is declining by at least 1% then traders should purchase index exchange traded funds (ETFs), futures or similar products. The trade is to be unwound by the end of the same trading day and not held overnight. The timing of the unwinding of the trade within the day is discretionary with particular attention paid to taking profits. The index used for the trade is also discretionary.

Exceptions to the rule are on days: with a shortened trading schedule; days in which the monthly labor report is issued; days on which the FOMC takes or is scheduled to release monetary actions.