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HIGH PROBABILITY TRADING STRATEGIES FOR ANY MARKET AND ANY TIME FRAME

FIGURE 2.18 SPX Daily Data with a 21-Day Lookback Period

execution can be made, stops would typically have to be a long way from the entry price with a relatively long lookback period. The 21-day lookback period is probably too long to use for this data because both lines of the indicator usually do not reach the OB and OS zones before a reversal is made, and the lag from price reversal to momentum reversal is usually several bars when price has moved a significant distance from the swing high or low. Let’s take a look at a shorter 8-day lookback period. Figure 2.19 shows the same period as the SPX 21-day lookback but with a little less data so you can see the momentum reversals more clearly. The up and down arrows show most of the momentum reversals. I’ve also circled a couple of periods in the indicator window when the momentum became choppy with reversals every few bars. There are a couple of obvious factors from this data and indicator chart. First, at the price highs and lows the momentum reversals tended to be made in the OB and OS zones and right on or within just one or two bars of the price high or low. For any indicator

Profile for ERIC  Hunt

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

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