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<font size=3 color=black
face="Times New Roman">Bob,
<font size=3 color=black
face="Times New Roman">
<font size=3 color=black
face="Times New Roman">I have developed a
mechanical system similar in nature to what you are talking about. Using a series
of calculations I arrive at support/resistance zones for the day, which frequently
correspond to one or more of the S/R numbers you mentioned. I then use the TRIN
as a filter which tells me how I should trade from these support/resistance
zones. I have only tested this system for two months so far, but I am very
pleased with the results up to now. At this point the system was built on the
KISS principal because I eventually would like to have my broker trade it for
me. However, I suspect that I might be able to enhance its performance some by
adding another indicator or two, but this of course would take away from its
simplicity factor. Anyway I agree with you that there are key price levels for
the market each day. Learning how the market reacts to those price levels can
be a rewarding exercise.
<font size=3 color=black
face="Times New Roman">
<font size=3 color=black
face="Times New Roman">E
<font size=3 color=black
face="Times New Roman"><a
href="">http://groups.yahoo.com/group/snpforecasts/
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>
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<font size=2 color=black
face=Tahoma>-----Original
Message-----
From: BobR
[mailto:bobrabcd@xxxxxxxxxxxxx]
Sent: Friday, May 02, 2003 7:23 PM
To: realtraders@xxxxxxxxxxxxxxx
Subject: [RT] Mechanical trading
<span
>
<font size=2 color=black
face="Courier New">There are certain paths that price takes each day, not always the
same, but<span
>
there is a general routine of testing certain key numbers popularized by
various traders over the years. One set of levels are the first hour
high
and low for breakouts and S/R work. Another is the value area high
and low
based on 70% price distribution of the previous day, a third are the
standard R1 and S1 pivot levels that so many traders are aware of.
Putting
this together in a systemitized sequence of expectations and what to do at
each level is an interesting exercise, especially when using a market
environment tape composed of Tick, Trin, Vix, CompQ, NF.X to dictate the
overall modus operandi. At first glance it appears to be an unuseable
mix
of trading breakouts and support/resistance levels. Today we had a
bullish
"High5" tape dictating long trades only. There are various
ways today's
trade could have gone in terms of entering with 1, or 2 or 3 contracts and
exiting partials at specific levels. Here is one way to see it
today. Mkt
opened with a 15 minute shakeout, reversed with very positive TICK
readings,
acompanied with a positive COMPX, a TRIN triangle breakdown, VIX decline
from Thursday. That shakeout formed the first hour low...buy 2 contracts at
that low with a stop below the low(pnf charts used here). SP then
rallied
to the value area high(exit one), tried to correct, then jammed on up to
the
R1 (SellPivot, exit 2nd contract) where it produced a more sizeable drop
back to the value area high which is now support. With a successful
test of
the va high and time still early in the day, buy two more contracts.
Sell
one at the restest of R1. Sell the second at R1+4.25 points.
Why +4.25?
guess because once price passes a popular level by X points, that level
becomes support and 4.25 is said to be the X number. ES worked the
same,
divide cumulative profits by 5. Did I take these trades, you'll never
know,
;-) This is research. Over the years I've toyed with these three sets
of
levels, and more recently the Duffy pivot channels and found them all to
have utility. Why no trades beyond lunch today? ADX went to pot and
there
was no trendstrength.
Have a good weekend,
bobr
This post and the others is by no means an endorsement of the service this
methodology comes from, since that isn't allowed here.
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